Dean Baker's Blog, page 449

How the Fed Boosts the Economy: Lessons for George Will

In his column today George Will notes the Fed's responsibility to maintain price stability and high employment and tells readers:

"Achieving the former is the best thing the Fed can do for the latter."

Apparently Will has not been following what has happened in the economy recently. While inflation has remained low and relatively stable, unemployment has soared. He also apparently does not recognize how the Fed hopes to boost economic growth through quantitative easing.

The biggest impact fro...

Chicago School Strike: The Failure of Charter Schools

A NYT article reports that one of the background issues in the strike of Chicago public school teachers is the increased use of charter schools, which is advocated by Chicago Mayor Rahm Emanuel. It would have been worth reminding readers that charter schools do not on average outperform the public schools they replace. If Emanuel is advocating increased use of charter schools he is either unfamiliar with recent research in education or has some motive other than improving student performance....

The Data Say the Housing Market Is Not in Poor Shape

A Morning Edition segment on the Fed's likely actions included a comment from Karen Dynan, the co-director of economic studies at the Brookings Institution saying:

"our housing market remains in very poor shape. It may have turned the corner, but conditions still look pretty bleak."

Actually house prices are pretty much back on their long-term trend path. The current sales rate is also at or above its trend level. It is true that house prices are still well below their bubble peaks, but that...

The Data Says the Housing Market Is Not in Poor Shape

A Morning Edition segment on the Fed's likely actions included a comment from Karen Dynan, the co-director of economic studies at the Brookings Institution saying:

"our housing market remains in very poor shape. It may have turned the corner, but conditions still look pretty bleak."

Actually house prices are pretty much back on their long-term trend path. The current sales rate is also at or above its trend level. It is true that house prices are still well below their bubble peaks, but that...

The Pay of Chicago School Teachers and Selected Others

Since the Chicago school teachers went out on strike Monday, many political figures have tried to convince the public that their $70,000 average annual pay is excessive. This is peculiar, since many of the same people had been arguing that the families earning over $250,000, who would be subject to higher tax rates under President Obama's tax proposal, are actually part of the struggling middle class. They now want to convince us that a household with two Chicago public school teachers, who t...

Did Education Secretary Arne Duncan Really Leave Chicago Schools a Mess?

That might be a good question for reporters to pose to Chicago Mayor Rahm Emanuel given his strong stand against Chicago's public school teachers. (It is appropriate to refer to this as a battle between Emanuel and the teachers. Almost 90 percent of the members of the bargaining unit voted to authorize a strike. This is clearly not a case of a union imposing its will on its members.) Emanuel has insisted that the schools need a major overhaul because they are badly failing Chicago's students....

The Washington Post Always Has a Good Word for Those Who Take Money from High Living Retirees

Today Fred Hiatt celebrates Rhode Island's Treasurer Gina Raimondo, who cut public employee pensions while partially replacing them with 401(k) accounts that should mean millions of dollars in additional revenue for the financial industry. This is the sort of upward redistribution that the Post loves.

In the course of praising Raimondo, the Post throws in a few lines about the need to cut Social Security, trying to scare readers with talk of the program's $7 trillion deficit over its 75-year...

Washington Post Continues NAFTA Cheerleading in Front Page Story

The Washington Post feels no need to observe normal journalistic standards when it comes the NAFTA. When the trade agreement was being debated in 1993 it virtually turned the paper (both the news and opinion pages) into an advocacy organization. It continues this pattern even to this day.

As a result, when NAFTA was being debated in the Democratic primaries in 2007, it had a lead editorial in which it harshly criticized the candidates and absurdly claimed that Mexico's GDP had quadruped since...

August Jobs Report: Read With Care

The Post had a good article reminding people that the jobs numbers are subject to large revisions. It is always important not to make too much of a single release.

I was among those surprised by the August numbers. I expected something like the July report, with 160,000 jobs. Even that is far from great (how does full employment in 2028 sound?), but at least we would be making up some lost ground. The 96,000 jobs reported for August is just treading water, keeping pace with the growth of the...

Romney and Robert Samuelson Are Wrong: Employers Are Not Reluctant to Hire

The Romney campaign has picked up a theme pushed by Republicans ever since President Obama entered the White House, employers are reluctant to hire because they are scared by regulations and taxes. Robert Samuelson picks up this line in his column assessing whether the economy can actually create 12 million jobs over the next 4 years.

There is a simple way to prove that employers have no reluctance to hire. We can look at average weekly hours. If employers are seeing increased demand but don'...