Dean Baker's Blog, page 492

An Arithmetic Lesson for Steven Pearlstein

Washington Post business columnist Steven Pearlstein often has thoughtful things to say about the economy; not today. He has one of those charming "pox on both your houses" pieces in which he even-handedly denounces the left and the right.

The denunciation of the right is fine. Complaints about economic harm from high taxes and over-regulation are utter nonsense as we all know. (We have low taxes and business-friendly regulation already.) It's the attacks on the left that defy arithmetic and ...

Fracking Jobs in Ohio: Numbers Please!

The Washington Post had a major story on the front page of its business section about the dilemma that Ohioans face over allowing fracking. After all, most believe that it will create jobs, but they also believe that it will damage the environment. That is really a tough call.

It would have helped if the paper had devoted a paragraph or two to putting some numbers behind this tradeoff. While it is difficult to put numbers on the environment side, in large part because the industry has worked ...

Only in the Washington Post: No Link Between Growth and Jobs

The link between job growth and economic growth is one of the most solid relationships that you will find in economics. The reason is that it is almost definitional.

If we hold the length of the average work year constant (it doesn't change quickly -- although perhaps it should), then the rate of economic growth is equal to the rate of productivity growth plus the rate of job growth. (Yes, there is a multiplicative element here for serious nerds, but it doesn't matter for what we are talking ...

Spain's "Debt Crisis" Was Created by the ECB

The NYT had an article on how Spain is struggling to both reduce its deficits to address its debt crisis and try to simultaneously promote growth. It would have been worth pointing out that Spain's debt crisis is almost entirely a result of the European Central Bank's policy.

By explicitly refusing to act as a lender of last resort and imposing austerity conditions on Spain and other euro zone countries, the ECB has raised questions in financial markets about Spain's ability to pay its debt. ...

The French Don't Need Rich People to Spend Money

An article in the NYT on a proposal by French presidential candidate Francois Hollande to raise the top marginal tax rate on people earning more than $1.3 million a year to 75 percent told readers:

"Many economists argue that a 75 percent tax bracket — compared with the current top bracket, 48 percent — would be self-defeating, driving high-paying jobs and the spending that comes with them to countries like Britain and Switzerland."

It is unlikely that many economists complained about the...

Ireland's Economy Is Slumping BECAUSE It Is Following the ECB-IMF Bailout Program

A Washington Post article on the weak state of Ireland's economy began by telling readers:

"Of all Europe's crisis countries, Ireland has been perhaps the most adamant about pushing ahead with the budgetary, banking and other steps urged by its international lenders.

Yet more than a year into its bailout, economic growth is lagging, high unemployment seems entrenched, and households and banks remain weighed down by the debts accumulated during a heady real estate boom."

The second sentence...

Job Training That's Cheap, but Not Necessarily Useful

There's an old story about a drunk who is looking by the curb for his car keys in the middle of the night. A bystander offers to help and asks the drunk where he lost his keys. The drunk tells him that he dropped them in the bushes. The bystander asks the drunk why he is looking by the curb if he dropped his keys in the bushes, to which the drunk replies, "the light is better here."

That seems to be the logic that the NYT discovered in a piece that looked at job training programs. It notes...

The Washington Post Still Misses the Housing Bubble (European Edition)

The Washington Post told readers that the euro zone crisis stemmed from governments living beyond their means in an article on an EU summit to deal with the region's economic crisis. The lead sentence is:

"The leaders of 25 European countries on Friday signed a new treaty designed to prevent the 17 members of the eurozone from living beyond their means and avoid a repeat of the region's crippling debt crisis."

Of course the crisis was not caused by governments spending beyond their means...

The Washington Post Runs a Column Complaining That No One Hears About the Liabilities of Medicare and Social Security

Seriously, they really did. If I was Peter Peterson, I would sue if I saw this column. After all, he has spent a billion dollars hyping the liabilities of Social Security and Medicare and now the Washington Post is telling us that no one has heard about them. Someone must have run off to Mexico with his money.

Oil Prices Are Determined in the World Market: It's Not Just Something That President Obama Says

The Washington Post had an article celebrating the fact that the public is confused about the causes of higher oil prices. This is sort of like a fourth grade teacher being delighted that his students don't know arithmetic. 

Undoubtedly much of the public is confused about the cause of higher oil prices because of articles like this one. It treats the issue as a he said/she said dispute, at one point quoting President Obama:

"the amount of oil we drill at home doesn't set the price of gas on ...