Dean Baker's Blog, page 464

Currency Values Anyone?

The NYT had a column today on rebalancing the global economy by Li Congjun, the head of Xinhua News Agency. While the article talks about the United States consuming too much and China consuming too little, remarkably the piece never once mentions currency values.

If the United States reduces its consumption, without a corresponding reduction in the value of the dollar, the textbook econ tells us that it just leads to unemployment, not a rebalancing. The events of the last four years have kin...

David Brooks Thinks that Romney and Bain are About Efficiency

Yes, that is what Brooks told readers. His column today mourns the fact that Romney and Bain are being blasted for being capitalists. He then tells readers:

"Romney is going to have to define a vision of modern capitalism. .... Let’s face it, he’s not a heroic entrepreneur. He’s an efficiency expert."

Brooks is certainly right that Romney is not a heroic entrepreneur, but it doesn't follow that he is necessarily an efficiency expert either. The private equity folks like to tell stories of how...

Insider Trading: Wall Street Job Creators at Work

Okay, it's not quite insider trading, but the NYT has an excellent article on how some hedge funds apparently get advance access to analysts' reports on companies' prospects.

Robert Samuelson Didn't Hear About the Stimulus

That what readers of his column calling President Obama a "distributionalist" and Governor Romney an "expansionist" must have concluded. Samuelson tells readers:

"By 'distributionalist,' I mean that Obama sees government as an instrument to promote economic and social justice by redistributing the bounty of a wealthy society. Economic growth is not ignored but tends to be taken for granted or treated as a less important priority. How else, for example, to explain Obama’s decision to push the...

M.R.I's Are Expensive Because of Government Intervention

Bill Keller used his NYT column today to outline a series of myths about President Obama's health care plan. At one point he tells readers:

"I’m a pretty devout capitalist, and I see that in some cases individual responsibility helps contain wasteful spending on health care. If you have to share the cost of that extra M.R.I. or elective surgery, you’ll think hard about whether you really need it."

The irony here is that under the current system it is government intervention that makes "the co...

WAPO's Major Article on the Future of Manufacturing Never Once Mentions the Value of the Dollar

Wow, you just have to sit back in awe at something like this. Imagine the lead sports story the day after the Superbowl. It talks about who had a good day, the big plays, the big mistakes, and it never once mentions the score of the game. That is pretty much what the Post managed to do in a front page business section piece on the future of manufacturing in the United States.

If the Post noted the value of the dollar, which is the prime determinant of the relative cost of good produced in oth...

David Brooks Says Our Elite Is Talented and Open

I really wanted to ignore David Brooks' piece today, but he was saying excessively silly things in criticizing my friend, Chris Hayes. Specifically, he was responding to the main point of Chris's new book, The Twilight of the Elites, that the elites have become corrupt and inbred.

Brooks tells us that Chris is wrong:

"I’d say today’s meritocratic elites achieve and preserve their status not mainly by being corrupt but mainly by being ambitious and disciplined."

Is that so? Perhaps Brooks can...

The Washington Post Throws a Barrage of Non Sequiturs at Readers in Fed Editorial

The Washington Post editorial board is firmly non-committal on the question of whether the Fed should take more steps to boost the economy. On the pro side we have the fact that the economy is well-below full employment and growing slowly. Furthermore, the Post acknowledges that there is no threat of inflation. Given the Fed's twin mandates for full employment and price stability, it seems like we have a clear answer here.

But no, that would be too easy. The Post tells us:

"The Fed may also n...

Birthday Boasts

Okay folks, today is my birthday so I’m going to be a bit self-indulgent here. Below is list of a number of important policy areas where I have been right at a time when the bulk of the economics profession was wrong. Yes, this is old-fashioned “I told you so” stuff. It can be seen as a bit arrogant and a bit obnoxious, but you have been warned.

I also understand that being right against the economics profession is not a terribly high bar. But hey, that is the competition.

1) The NAIRU Ain’t...

Spanish Government Takes New Steps to Increase Unemployment

That is the reality, it would have been an appropriate headline.