Dean Baker's Blog, page 467

The NYT Decides to Square With Its Readers About Medicare and Social Security

In the middle of an article that is largely devoted to discussing the absurdity of Republicans attacks on the Affordable Care Act's cost controls for Medicare, given their repeated efforts to slash funding for the program, the NYT told readers:

"such talk underscores how far Republicans and Democrats are from truly squaring with the public about curbing the growth of the major entitlement programs: Medicare, Medicaid and, to a lesser extent, Social Security."

While the NYT might want to see t...

George Will Is Partially Right

In his column today George Will argued that teachers in Chicago were being reasonable in objecting to the large implicit pay cuts that would result if they were required to put in roughly 30 percent more hours for no increase in pay. However, he also implied that teachers in Chicago are currently overpaid.

This is not clear. Government workers in general get roughly the same compensation as private sector workers after adjusting for education and experience. Will refers to the generous pensio...

Greece's Exports Rose Since Joining the Euro, but Its Imports Rose More

The NYT Magazine has a piece discussing Greece prospects for increasing its exports. While it will certainly have to increase its exports to have a sustainable trade deficit, it is worth noting that a lack of exports was not Greece main problem.

From the inception of the euro in 1998 until the crisis hit in 2008, there was only one year in which Greece's exports fell (2002). In three years, exports grew at a double digit rate.

Greece has a serious trade deficit because its imports grew even m...

NYT Misrepresents Loses at Postal Service

The NYT reported on the worsening delivery record at the Postal Service as it makes plans for further job cuts and the shutdown of hundreds of processing centers. At one point the article told readers:

"A decline in mail volume, particularly first-class mail, which accounts for the bulk of revenue, has produced steady losses for the Postal Service — an average of $1 billion a month in the first half of the fiscal year — and forced it to propose closing about half its processing centers and cu...

Strong June Car Sales Make a Mockery of Consumer Confidence Measures

The media waste far too much time reporting on various consumer confidence measures. These really are not a very good indicator of anything, they often just reflect the tone of reporting in recent weeks.

This is especially true of the future expectations index. This index is very volatile. Consumption is not. What does that tell us?

The current conditions measure is a bit better, but it is more a contemporaneous measure that a predictive one. In other words, if people are buying a lot this mo...

New York Times News Article Tells Readers the Fix to the Euro Zone Crisis

The solution to the euro zone crisis is a topic that is hotly debated among economists. Some have argued that the debt troubled countries in the periphery must undergo years of austerity and high unemployment with the idea that this will eventually lower wages and prices enough to allow them to regain competitiveness with Germany and other countries in northern Europe. Other economists have maintained that the only practical solution is for the Germany and other northern European countries to...

Patent Monopolies Lead to Corruption, #27,561

Today GlaxoSmithKline is offering up evidence, coughing up $3 billion as a fine for having lied about the safety and effectiveness of several of its big drugs. Yes, this is the incentive that we give to drug companies when the government grants patent monopolies that allow them to sell drugs for hundreds or even thousands of times the cost of production.

Economic theory predicts that this form of government intervention will lead to enormous economic distortions, including the sorts of misrep...

David Brooks Doesn't Like Obamacare #4567

David Brooks devotes his column today to telling the Republicans that if they don't like Obamacare then they will have to have with an alternative to the one that President Obama and Governor Romney developed. His preferred alternative is a plan that appears in the conservative journal National Affairs.

It's not worth going through all the details, but the essential line in the story is that if we all had individual policies somehow the market will constrain health care costs. The plan would...

Why Should Unemployed Manufacturing Workers Care If Engineering and Design Jobs Move Overseas?

Steven Pearlstein has a lengthy and somewhat confused discussion of offshoring in his Post column today. First of all, the discussion would be much more straightforward if it just referred to trade. There is no theoretical difference between the impact of imports through trade in general and the impact of outsourcing. It makes little difference to the U.S. economy whether a Chinese manufacturer sells computers to retail stores in the United States like Wal-Mart and Costco, or if Apple contrac...

Thomas Friedman Wants to Cut Your Social Security and Medicare Benefits, Again

Thomas Friedman is once again pushing to cut back those lavish $1,100 a month Social Security benefits and to make seniors pay more for health care. That is the implication of his enthusiastic support for the proposal set forward by Morgan Stanley director Erskine Bowles and former Senator Alan Simpson.

This plan calls for Social Security cuts of roughly 3 percent for near retirees by reducing the annual cost of living adjustment. It promises further cuts down the road by raising the retireme...