Dean Baker's Blog, page 458

Projected Social Security Shortfall Dwarfed by Wage Growth

That could have been the headline of a Boston Globe article on the size of the projected Social Security shortfall if the paper had not decided to use its news section to scare readers about the state of Social Security. In keeping with this effort, the headline of a recent article read:

"Social Security surplus dwarfed by future deficits."

The article then gave a series of numbers which could only be intended to scare readers since it is extremely unlikely that even 0.1 percent of the Globe'...

The Ryan Budget's Savings Come From Shutting Down the Federal Government

The Washington Post seriously misled readers in an article on the Ryan budget. It asserted:

"The Congressional Budget Office [CBO] estimates that it [the Ryan Budget] would not bring the federal books into balance until around 2040. And most of its savings come from the long-term restructuring of entitlement programs."

Actually, in percentage terms by far the biggest savings in the Ryan budget comes from essentially shutting down the federal government, except for Social Security, health care...

Obama's Campaign Never Heard About the Housing Bubble

Those wondering why the Obama administration has not been more aggressive in pushing for stimulus got their answer today in a Washington Post article on the selection of Representative Paul Ryan as Mitt Romney's running mate. The article includes a statement by Jim Messina, the head of President Obama's re-election campaign:

Messina attacked Ryan by saying:

"As a member of Congress, Ryan rubber-stamped the reckless Bush economic policies that exploded our deficit and crashed our economy. Now...

Representative Ryan Has Been Unwilling to Say Which Tax Deductions He Would End

A NYT piece praised Representative Ryan's willingness to specify the items in the budget that he would cut to meet his deficit targets. (Actually, according to the Congressional Budget Office's analysis of his proposal it would eliminate just about everything in the federal budget by 2040, except Social Security, Medicare, Medicaid, and the Defense Department.) However the piece did not point out that Representative Ryan, like Governor Romney, has refused to identify the tax deductions he wou...

NYT Flunks Labor Law 101: In the United States Workers Can be Fired Anytime the Boss Wants

A NYT article on efforts to change Italy's labor laws contrasted the protections for Italian workers with those for workers in the United States. It told of the lengthy legal process that an employer had to follow to fire a worker who he alleged had been caught stealing with the situation in the United States:

"By contrast, a private sector employer in the United States could have terminated the worker as soon as a theft was detected, unless a union contract was involved or antidiscrimination...

Yahoo Assigns Arithmetic Challenged Team to Cover Social Security

There have been numerous stories about how workers don't have the necessary skills for the available jobs. There is little evidence of this in the data. Wages are not rising rapidly in any major occupational grouping. If employers could not find workers with the necessary skills then they should be raising wages to pull away the limited group of qualified workers from competitors, unless of course the employers were too incompetent to understand that higher wages are necessary to attract work...

The "Clean Development Mechanism" Can Be Gamed: Who Could Have Known?

The NYT has an article on how companies in the developing world have increased production of coolants that contribute to global warming in order to get credits for destroying them. This is the outcome of some of the perverse incentives created by the Clean Development Mechanism in the Kyoto agreement.

This sort of gaming was predictable and predicted at the time. The basic problem was that there was no well-developed baseline against which to assign credits to ensure that money was only paid...

Eduardo Porter Is Badly Confused About Free Trade and Protectionism

NYT columnist Eduardo Porter seriously misrepresents the issues in the trade debate in his column today. First of all, he misrepresents recent trade deals by referring them as "free trade" agreements.

While advocates of these trade pacts like to call them "free trade" agreements in the same way that President Reagan wanted to call the MX missile the "Peacekeeper", that doesn't make the assertion accurate. A major part of all the trade deals the United States has negotiated over the last two d...

European Leaders's Efforts to Restore Confidence Causes Growth to Flag

A NYT article noted new evidence of economic weakness in Germany and Italy then told readers:

"flagging growth is complicating European leaders’ quest to restore confidence in the euro zone."

Of course one of the main reasons that growth in Europe is weak is the austerity measures that have been imposed across Europe. The loss of demand from the government means that there is less demand in the economy and therefore less growth. Apparently those in leadership positions believe that the confid...

Unemployment Is Cyclical: Taking Jeffrey Sachs to School

Jeffrey Sachs has played a useful role in challenging the economic orthodoxy in many areas over the last three years. However when he tries to tell us that the current downturn is structural not cyclical he is way over his head in the quicksand of the orthodoxy.

Let's start with his simple bold assertion:

"Consider the new U.S. unemployment announcement. If you are a college graduate, there is no employment crisis. 72.7 percent of the college-educated population age-25 and over is working. Th...