Dean Baker's Blog, page 49

Important Note on Taxing CEO Pay: CEOs Rip Off Their Companies

This is an important point to mention in reference to Bernie Sanders' plan to tax corporations with large gaps between CEO pay and the pay of an average worker. High CEO pay is not based on their contribution to corporate profits or returns to shareholders, rather it is a result of their ability to control the corporate boards who set their pay. 

This means that the most likely response of companies to a tax on excessive pay gaps between the average and the median worker is to find ways...

China's Economy Is Already More Than 25 Percent Larger Than the U.S. Economy

The Washington Post seems more than a bit out of touch with reality in this piece on China's celebration of the 70th anniversary of the Communist revolution there. The article tells readers:

"China is now the world’s second-largest economy and could overtake the United States for top spot as soon as next year."

According to the I.M.F., China's economy passed the United States to become the world's largest in 2015 and is now more than 25 percent larger than the U.S. economy.

The piece also get...

The Solution to the Country’s Debt and Deficit Problem

For most people, the country’s national debt and annual deficit are not major concerns. However, for a substantial portion of the policy types who make, write, and talk about economic and budget policy, debt and deficits are really big deals. And, the fact that our budget deficit and debt are both large by historic standards, and growing rapidly, is an especially big deal.

The list of people in this category is lengthy. It starts with the Peter J. Peterson Foundation (which displays the debt...

Peter Navarro's "Huge Victory" on International Postal Agreement Will Save U.S. 0.0025 Percent of GDP

Yes folks, the Trump administration is fighting hard to put America first. Its threat to pull the U.S. out of an international postal agreement will save the United States between $300 million and $500 million annually, according to the New York Times. For those folks who aren't use to dealing with hundreds of millions of dollars, this comes to approximately 0.0025 percent of GDP.

According to the article, "Peter Navarro, President Trump’s trade adviser, said the decision was a 'huge victory...

Is There Any Lesser Authority Than Alan Greenspan?

That is undoubtedly the question that readers of Robert Samuelson's column on negative interest rates are asking. At one point Samuelson tells readers:

"No less a figure than former Federal Reserve chairman Alan Greenspan has suggested that it’s just a matter of time before negative rates come to the United States."

For folks too young or too old to remember, Alan Greenspan was chair of the Fed as the housing bubble grew to ever-larger dimensions. He insisted everything was just fine, in fa...

NYT Does Mind Reading of Uber Execs

In an otherwise useful NYT article on the "gig economy," Neil Irwin tells us:

"The company [Uber] views its role as making a market between people who want a ride and people who want to get somewhere. In other words, it sees itself more like a stock exchange or an auction website. The New York Stock Exchange doesn’t set the price of General Motors stock, nor eBay the price of Beanie Babies."

Actually, Irwin doesn't know how Uber "views" its role. This is a claim the company is making about it...

Business Insider Does PR Work for Wall Street

I have known reporters at Business Insider. I had been under the impression that it tried to be a serious news outlet. Apparently I was mistaken.

It ran an article this morning attacking the financial transactions taxes being proposed by Senators Bernie Sanders and Kamala Harris in their presidential campaigns, that was based entirely on an analysis by an industry funded group.

The gist of the piece is that colleges and universities would pay the tax from their endowments, as would pension fu...

Health Care Premiums and Taxes

There's an old joke about a lawyer who is questioning a doctor on an autopsy they had done on someone who was allegedly a murder victim.

The lawyer asked the doctor, "did you check whether the patient was breathing?"

The doctor answers "no."

The lawyer then asks "did you check whether the patient had a pulse?"

The doctor again answers "no."

The lawyer then asks, "so how did you know that the patient was dead," to which the doctor responds, "because his brains were sitting in a jar on my desk....

Patents and Copyright: Protection Racket for Intellectuals

Last week I was asked on Twitter why proposals for replacing patent monopoly financing of prescription drugs with direct public financing have gained so little traction. After all, this would mean that drugs would be cheap; no one would have to struggle with paying tens or hundreds of thousands of dollars for drugs that are needed for their health or to save their life. (This is discussed in chapter 5 of Rigged [it’s free].)

Public funding would also eliminate the incentive to misrepresent th...

WSJ Thinks Higher Social Security Taxes Are a Bigger Deal to Workers than Losing Ten Times as Much Money to Upward Redistribution

That's what readers of this article on a Democratic proposal which would both increase Social Security benefits and phase in a 1.2 percentage point increase in Social Security taxes (on both workers and employers) over 25 years. The article tells readers:

"Someone making $50,000 now faces an employee-side Social Security payroll tax of $3,100 a year. Under the bill, that tax bill would rise to $3,125 in 2020, which Mr. Larson pitches as an extra 50 cents a week. The tax would continue rising...