Dean Baker's Blog, page 420

A Liberal Agenda Without Full Employment?

There were numerous news stories and columns touting the liberal agenda that President Obama put forward in his second inaugural address yesterday (e.g. here and here). While the speech certainly hit on several issues that have historically been important to liberals, the failure to mention full employment was a major omission.

The fact that the economy is still more than 9 million jobs below its trend growth path implies enormous suffering. Not only are millions of people unnecessarily unemp...

Inequality and Technology: Did the Robots Do It?

Adam Davidson has an interesting piece in the NYT Magazine on the debate over whether technology is responsible for the growth in inequality over the last three decades or whether the increase has been primarily the result of policies that have redistributed income upward. (As the author of The End of Loser Liberalism: Making Markets Progressive, I am firmly in the latter camp.) The immediate basis for the piece is a new paper by Larry Mishel, John Schmitt, and Heidi Shierholz that questions...

Krugman versus Stiglitz on Inequality and Economic Growth

Joe Stiglitz had an Opionator piece in the NYT arguing that inequality was bad for growth. Krugman responded by taking issue with a couple of the points raised by Stiglitz: that upward redistribution of income leads to fiscal problems and that upward redistribution of income leads to stagnation.

On the first point, Krugman correctly notes that the tax code is at least marginally progressive. This means that in general upward redistribution of income should increase revenues, the opposite of w...

Patent Monopolies Lead to Corruption, # 21,508

The NYT has an article on how Amgen managed to get a provision into the budget deal signed at the start of this year which could get it $500 million in additional revenue from Medicare over the course of the decade. The piece reports that this was a victory for Amgen's extensive lobbying network on Capitol Hill.

This sort of corruption is exactly what economic theory predicts when the government gives companies monopolies in certain markets, as it does with patent protected drugs. When a comp...

Steve Rattner Wants People In China to be Poor

What is wrong with people who write opinion pieces for the NYT, they seem to think it is a good thing that people in China are poor. Today Steve Rattner has a column that compares India and China that comments about, "India’s better demographics." What does this mean, that India maintains rapid population growth, while China has been able to reduce its population growth to a trickle? (A blogpost yesterday had the same complaint about China's slower population growth.)

Partly as a result of C...

George Will Will be Horribly Disappointed that His Scheme to Kill the Affordable Care Act Will Not Work

You gotta love a guy sitting around thinking of ways to kill a bill that extends health insurance to people who don't have it and ensures that people who have insurance and then lose their job due to illness, can continue to be insured. That's what George Will does for a living and he is very happy today because he thinks he has a way to kill the Affordable Care Act (ACA).

Will looked at Chief Justice Roberts' rationale for casting the 5th and deciding vote in support of the constitutionality...

The NYT is Upset that Wages in China Are Rising

Wow this is really getting incredible, yet another piece about how China is going to be suffering because it has a declining labor force. The big problem seems to be that we may not be able to count on cheap tee-shirts from China. The prescription is that Chinese people should have more kids so that we can have more cheap labor. The downside is that it will take 20 years before the kids born today will be able to join the labor force.

That is only a slight caricature of the blogpost by the us...

The Fed Didn't Realize the Housing Bubble Was Driving the Economy

The Post and other news outlets wrote about the release of the transcripts from Federal Reserve Board's Open Market Committee (FOMC) meetings from 2007. The transcripts are striking with the FOMC members still largely oblivious to the collapse that was taking place around them.

I've not read through the whole set of transcripts, which probably exceed 1000 pages, but what is remarkable to me is a seeming complete failure to understand the extent to which the housing market was driving the econ...

The Economy Doesn't Care About the Debt Ceiling Debate

The Washington Post is still banging the drum trying to tell readers that the the budget battles in Washington are going to slow the economy with an article headlined, "last debt ceiling debate indicates more economic hurt likely as another fight looms." While many readers may be too young to remember, this is exactly what the Post and other media outlets were telling us last month about the standoff over the "fiscal cliff." There were numerous news stories telling us that consumer confidence...

Good News on Social Security: We Aren't Living Longer

Two weeks ago the NYT ran a lengthy column by two social scientists, Gary King and Samir Soneji, under the headline "Social Security: It's Worse Than You Think." The column waned that the Social Security shortfall will actually be larger than currently projected because life expectancies are increasing more rapidly than the trustees had assumed. I had criticized the piece at the time because, among other things, it took no account of how its claim on improving health might affect other aspect...