Dean Baker's Blog, page 421

Manufacturers Were Too Dumb to Listen to Experts About How the "Fiscal Cliff" Was Damaging the Economy

The Fed reported a sharp jump in manufacturing output in December, demonstrating that factory owners were too dumb to realize that they were supposed to be cutting back production because of worries over the fiscal cliff. Earlier in the week the Commerce Department reported that consumers were also too stupid to realize that they were supposed to be cutting back their purchases over such concerns. Clearly the economy has serious problems when manufacturers and consumers refuse to act in the w...

The Washington Post Doesn't Like French Socialists

That is what readers of an article on the state of the French economy must have concluded. The piece paints a very dire picture of France's economy, comparing it unfavorable with Spain, which is praised for instituting severe austerity measures.

While Spain's austerity measures have succeeded in raising its unemployment rate to more than 25 percent, the highest in Europe, they have not brought about growth. Its economy shrank this year and is projected by the IMF to shrink by another 1.3 perc...

Japan's Weak Economic Growth Could be Due to Failed Macroeconomic Policy

A NYT article that reported on the surge in college education in China told readers, "Japan’s experience shows that having more graduates does not guarantee entrepreneurial creativity," referring to the growth slowdown of the last two decades. While it is possible that a lack of innovation is a factor in this slowdown, it is far from obvious that this is the case. Japan does still have a large trade surplus with the United States, suggesting that U.S. consumers like the things produced in Jap...

Japan's Weak Economic Growth Could be Due to Failed Macro Economic Policy

A NYT article that reported on the surge in college education in China told readers, "Japan’s experience shows that having more graduates does not guarantee entrepreneurial creativity," referring to the growth slowdown of the last two decades. While it is possible that a lack of innovation is a factor in this slowdown, it is far from obvious that this is the case. Japan does still have a large trade surplus with the United States, suggesting that U.S. consumers like the things produced in Jap...

The Demographic Crisis Ain't What It's Cracked Up to Be: Thomas Edsall Edition

Thomas Edsall devotes his blogpost this week to Walter Russell Mead and a number of others who tell him that demographic change is going to wipe out the welfare state. The problem is that the projections don't support this story. The impact of projected future demographic change on the budget is actually fairly limited.

In 2001 Social Security cost 4.1 percent of GDP (Table F-5). It current costs 5.1 percent of GDP (Table 3-1). Over the next two decades the cost is projected to increase by ro...

Fiscal Cliff Fantasies # 2134: Retail Sales Were Up 0.5 Percent in December

For some reason it was hard to find news about December retail sales in the papers. The Census Department reported they were up a healthy 0.5 percent. Remember all those stories from worried economists that told us how the fiscal cliff was already taking a toll. They told us about plunging confidence levels and consumers who were putting off purchases because of uncertainty about the resolution of the standoff.

Yes, some of us did ridicule the cliff mongers at the time. Consumers are used to...

How Much Do You Get Paid to Lose $6.2 Billion?

The answer is $11.5 million, at least if you work at J.P. Morgan. That is what Jamie Dimon took home last year according to the WSJ. This was half of his prior year's take, apparently this is the punishment for allowing his London Whale crew to engage in risky trading that cost the bank $6.2 billion.

When Going Private Costs More

Eduardo Porter had a nice piece in the NYT making the point that privatized services will often be less efficient than publicly provided services. Porter notes research that argues that when the service in question is not well-defined and easily measured it is likely to better provided directly by the public sector. This would be the case with education, health care and other major services that are largely provided by the government.

Business and Republicans: Appearances Are Not Necessarily Reality

The NYT ran a piece telling readers that business leaders do not have the same influence with Republicans in Congress that they had in the past, noting in particular their differences on using the debt ceiling as a bargaining chip in budget negotiations. It is important to note that the fact that politicians are willing to say that they would be prepared to push the government to a default doesn't mean that they actually would push the government to default.

It is relatively costless for a po...

Charles Lane Is Right: Medicare Should Not Protect Doctors

Charles Lane is on the money in his column today. There is no good reason for Medicare not to make public the procedures for which it is reimbursing doctors.

While most doctors are honest, many are not. If a doctor is carrying through an expensive procedure far more frequently than his peers, then people are right to be asking questions. This is not just an issue of ripping off Medicare, it is also a question of bad medicine. No one should ever be put through an unnecessary medical procedure...