Dean Baker's Blog, page 481

George Will Makes It Up to Go After Public Sector Workers

Okay, I know that picking on George Will might seem like cheap fun, but as oped columnist for the Washington Post we are supposed to take him seriously. Today Will is beating up on states that don't follow his pro-rich prescriptions focusing on California and my home state of Illinois.

Let me start with my favorite Will line:

"From September through December 2008, the premium that investors demanded before they would buy California debt rather than U.S. Treasurys jumped from 24 to 271 basis p...

Ruchir Sharma's Entry in the "Most Things Wrong in a Short Column" Contest

I'm shorting Morgan Stanley after reading the NYT column on China by Ruchir Sharma, the head of emerging market equities at Morgan Stanley Investment Management. The piece begins by telling readers:

"more than half of Americans think China is already the world’s leading economy — an astonishing misperception, given that China’s gross domestic product is still less than half of America’s."

That is not what our friends at the IMF say. On a purchasing power parity basis, which assigns the same s...

Federal Reserve Board Credibility, Plus 50 Cents, Will Get You a Cup of Coffee

Since folks have asked my thoughts (you had to ask?) on the Krugman-Bernanke debate, I will throw in my two cents. The question at hand is whether the Fed can plausible generate more inflation, and thereby lower real interest rates and reduce the unemployment rate by announcing a commitment to higher inflation rate over the near future. This could mean, for example, committing itself to 4 percent inflation over the next 5 years.

If this policy was successful, it would lead to lower real inter...

The Social Security Trust Fund and the "Money Has Been Spent" Line

With the release of the latest Social Security trustees report the scare stories have been coming fast and furious. In this vein, Marketplace radio had an interview with Olivia Mitchell, the head of the Pension Research Council. In this interview, Mitchell commented on the bonds held by the Social Security trust fund:

"If you take a narrow view, what you understand is that there's a trust fund, which is supposed to be the piggy bank whereby if the funds run short, the Social Security Administ...

Government Spending Bad: What Some Economists Say

In reporting on the victory of François Hollande in the first round of the French presidential elections the NYT noted Mr. Hollande's opposition to further austerity measures. It then told readers:

"But while Mr. Sarkozy puts his emphasis more on spending cuts, reducing the tax burden on companies and liberalizing the labor market, Mr. Hollande has charted a traditional socialist path of public spending and job creation. That, some economists say, is likely to make matters worse, possibly sen...

CNN Forget to Look at Its Chart When Warning of the "Burgeoning Cost" of Social Security

It's always a good idea to look at the data that you present to readers when you write about it. It appears that CNNMoney forgot to do this in an article whose first sentence warned of the, "the burgeoning costs of Medicare and Social Security."

The chart shows a modest uptick in the cost of Social Security, measured as a share of GDP, over the next two decades, then a line that is essentially flat over the remaining 55 years of the projection period. Medicare does have costs that could be ca...

The Primary Cause of Social Security's Bleak Outlook Is Upward Redistribution

In an article on the release of the 2012 Social Security trustees report the Washington Post told readers that:

"Social Security’s bleak outlook is primarily driven by the ever-larger numbers of people in the baby boom generation entering retirement."

Actually the fact that baby boomers would enter retirement is not news. Back in 1983, the Greenspan Commission knew that the baby boomers would retire, yet they still projected that the program would be able to pay all promised benefits into the...

Remember When Mexico Presented a Contrast to Argentina?

It seems like just yesterday when Mexico was being held up as a paragon of free enterprise, in contrast to Argentina, which was nationalizing its oil company. (Okay, it was two days ago.) Anyhow, it seems that Mexico's government is preparing to impose new restrictions on its state-owned oil company.

The Right's Inventive Approach to Income Inequality

Just as it refuses to accept global warming or evolution, much of the right is busy trying to deny the evidence on income inequality. As Thomas Edsall notes in his column today, they don't have much of a case.

The big point that they are hitting on these days is that most middle income and poor people get health insurance, either from their employer or the government, which costs lots of money. If we add in this expense to their cash income, then the rise in inequality does not seem as large....

Robert Samuelson Has Never Heard of Paul Krugman (or Me)

Regular readers of the Washington Post know that they have a hard time getting information at the newspaper, buried as it is in the center of the national's capital. Robert Samuelson gave more evidence of this problem in his column today on the renewed difficulties facing Spain.

Samuelson told readers:

"in truth, no one has a neat solution to end Europe’s financial nightmare."

Actually, many of us have proposed what would seem like a pretty neat solution, have the European Central Bank guaran...