Dean Baker's Blog, page 422

Michael Gerson Is Unhappy that Republicans Were Forced to Give Up Core Commitment Against Taxes but Dems Didn't Give Up Core Commitment to Social Security (yet)

The polite position in Washington policy circles is that politics has yielded to extremes in both parties. That is a really nice children's tale, but it is more than a bit absurd for anyone interested in reality. While the Republicans have adopted many extreme positions, Richard Nixon and Dwight Eisenhower would be very comfortable with the center position in the modern Democratic Party.

Michael Gerson helped to clarify the fundamental asymmetry between the two parties' positions in his colum...

The Jerry Springer Show on the Washington Post Opinion Pages

Jerry Springer made himself famous by having a television show in which he encouraged people to say and do outrageous things. The Washington Post applies the same standard to people who rant about the debt and deficit on its opinion page.

Today's entry is from Marc Thiessen, who argues that the deficit is out of control due to excessive spending. Of course as all budget wonks know the reason that we have large deficits today is that the economy plunged after the collapse of the housing bubble...

NYT Runs Propaganda Piece to Promote Europe-U.S. Trade Deal

The NYT ran a news article promoting a trade agreement between the United States and the European Union. The article wrongly referred to the trade deal as a "free trade" agreement three times. The agreement is almost certain to include greater restrictions on intellectual property. These restrictions are forms of protection, they are the opposite of free trade. It would have been possible to both make the piece more accurate and save space by leaving out the word "free."

It also told readers...

NYT Tells Readers the Cause of Japan's Debt Problems

Those of you who didn't know the cause of Japan's debt problems, or perhaps that it even had debt problems, will be happy to know that the NYT has the answers for you. In an article on the new prime minister Shinzo Abe's plans for economic stimulus and expansionary monetary policy it told readers:

"At the root of Japan’s debt problems was a similar attempt in the 1990s by Mr. Abe’s Liberal Democratic Party to stimulate economic growth through government spending on extensive public works proj...

Economics in China: Employers That Can't Pay the Prevailing Wage Go Out of Business

The NYT has a confusing analysis of the China's economy in which it tells readers that the country suffers from a labor shortage because employers in certain sectors (nursing homes and restaurants) can't afford to pay workers enough to pull them away from other sectors. This is not evidence of a labor shortage, this is the way capitalist economies work.

As an economy grows and goes through sectoral shifts there will always be businesses and sometimes whole sectors that collapse because they a...

NYT Nails It on Social Security and the Chained CPI

"Chained CPI" is the new magic phrase going around Washington these days. This is how the government can cut Social Security and pretend it is not really cutting Social Security.

If anyone has not yet heard the story, the plan is to change the indexation formula for the annual cost of living adjustment by using the chained CPI to measure inflation. It's not worth going into the details (the people proposing it don't care, why should you?), but the point is that the chained CPI would reduce th...

Aaron Swartz: A Tragic Early Death

The NYT and others have reported on the death by suicide of Aaron Swartz at age 26. Aaron was a computer whiz who made major breakthroughs in software while still in his early teens. I knew Aaron because he e-mailed me with questions about some of my writings. After reading my book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, he asked me why we hadn't made it available in html. When I told him that no one on my staff had the time, he volunteere...

Wage Inequality: Opening Salvo

Dylan Matthews gets the award for the first news item on the new paper on wage inequality (still in draft form) from my former boss Larry Mishel, colleague John Schmitt, and friend Heidi Shierholz. Mishel, Schmitt, and Shierholz (MSS) take issue with the job polarization explanation of wage inequality, put forward most prominently by M.I.T. professor David Autor. Autor's claim is that the pattern of inequality we have seen over the last three decades can be explained in large part by a loss o...

Has Anyone Heard of the Trade Deficit?

It seems not, since neither the NYT nor the Washington Post seemed to think that the $6.6 billion jump in the monthly trade deficit that Census Bureau reported on Friday was worth mentioning. Fans of arithmetic (a tiny minority among DC policy types) like to point out that a large trade deficit implies negative national savings. In other words, if we have a trade deficit then by definition the United States as a whole has a negative saving rate.

This means that we either must have budget defi...

The NYT Can't Find Germany's Unemployment Rate

It is incredibly annoying to see a serious paper tell readers that Germany's unemployment rate is 6.9 percent. This is the measure of the unemployment rate using the German government's methodology. This methodology treats people who are working part-time but would like full-time employment as being unemployed. That is not how they are treated in the U.S. data. They would simply be counted as employed.

This error is especially egregious because anyone can quickly find Germany's unemployment r...