Dean Baker's Blog, page 489

Charles Murray's White Male Problem

Charles Murray is back in the Wall Street Journal rejecting the idea that poor economic prospects had anything to do with the fact that so many whites without college degrees dropped out of the labor force. There are a few points that are worth noting about this story. 

First Murray does a bizarre comparison by looking at real wages between 1960 and 2010. This is bizarre because wages rose rapidly through the sixties and into the early seventies, then largely stagnated.(I am using...

Oil Economics for Charles Krauthammer

Charles Krauthammer is angry at President Obama for not allowing more oil drilling and delaying the Keystone Pipeline. He suspects that he doesn't like fossil fuels. (There's something called "global warming," which could lead to hundreds of millions of deaths due to floods and droughts, but hey, we don't talk about that here.)

Anyhow, Krauthammer is upset that President Obama keeps saying that drilling everywhere all the time will not bring down the price of oil. Of course this happens to...

Which Economists Consider 7 Percent GDP Growth Laggardly?

The NYT reported that India is seeing somewhat of a growth slowdown tell readers that growth slowed from 9.9 percent in 2010, to 7.4 percent last year, and a projected 7.0 percent this year. It then added:

"while that is fast relative to developed countries, most economists consider it laggardly."

Actually, 7.0 percent growth is fast relative to the growth rate in the vast majority of developing countries as well. For example, last year Argentina and Panama were the only countries in Latin...

David Brooks Says the Congressional Budget Office Is Wrong About the Pace of Recovery

The Congressional Budget Office (CBO) projects that the interest rate on 10-year Treasury bonds won't hit 3.0 percent until the third quarter of 2014 and that even at the end of the next presidential term they will still be hovering near 4.0 percent, a lower rate than at any point during the budget surplus years of the Clinton administration.

This might lead people to think that budget deficits are not having a serious negative effect in driving up interest rates. But David Brooks tells...

NPR Ends He Said/She Said

NPR deserves some serious congratulations. As a matter of policy they now reject the concept of he said/she said journalism; creating the image of balance even when one said is clearly true and the other isn't.

This would mean for example, they would not just air Republican complaints that the Obama administration is responsible for the high price of gas and the Obama administration's response that the price of oil is determined in world markets, which can only be affected to a very limited e...

Expanding Or Privatizing Social Security: Clive Crook Isn't Sure What He Wants to Do

Clive Crook seems to want to both expand and privatize Social Security in part to address the real problem that retirees do not have enough money to have a decent standard of living. Before addressing his main policy proposal, it's worth addressing a few things that he gets wrong.

First, he complains that the program is adding to the deficit telling readers to:

"Forget the "trust fund" and its holdings of government debt. That's money the government owes to itself: It nets out to zero."

Yes, ...

Simon Johnson Defends Populism

Simon Johnson had a nice blogpost in the NYT arguing that populism has often been a source of good economic ideas in U.S. history with a focus on populist sentiment for breaking up too big to fail banks. At one point Johnson notes some of the constructive measures pushed by populists, noting that the direct election of senators and the income tax were both populist ideas.

One other item that should be on this list is ending the gold standard. This was a rallying cry for the populists...

Economics 101 for George Will

George Will has decided that it is unconstitutional for state and local governments to negotiate contracts with their workers that have the governments paying for some of the time of union staff. He found $900,000 of such payments in the Phoenix police contract and decided that is an unconstitutional gift.

It would be interesting to see how Will compares this to CEOs of companies that contract with the government paying themselves tens of millions of dollars a year. That might seem a much...

The Wall Street Journal Tells Us That We Should Learn to Love Inequality

Last week Allan Meltzer had a column in the WSJ telling us that we should stop complaining about inequality and start loving it. His main point is that inequality is increasing everywhere, therefore there is nothing that we can do about it.

Neither part of this story is especially true. As Paul Krugman, Mark Thoma and others have already noted, inequality has not increased anywhere to the same extent as in the United States and in many countries there has been little or no change in most...

Post Both Oversells and Undersells Consumption in Recovery

A front page Washington Post article touted the 1.1 percent jump in retail sales reported for February. The piece said that the jump came in spite of the increase in the price of gas. This is only partly true, since more than a third of the increase in spending was due to increased spending on gas.

In the short term, higher gas prices are likely to be associated with increased spending, since people find it difficult to reduce their gas purchases. Over a longer period of time, they are...