Dean Baker's Blog, page 494

David Brooks on U.S. and European Welfare States

David Brooks tells readers that, if we count tax expenditures, the United States has a larger welfare state than many European countries, including Denmark, the Netherlands, and Finland. This is true, but it is important to understand what is being measured.

Brooks is looking at what we pay for social welfare expenditures, not what we get. This can be very different, as is most obviously the case with health care. As a share of its GDP, if we add in tax expenditures (e.g. the deduction for...

Social Security and the Economy

Allan Sloan is a conscientious columnist with whom I occasionally have serious disagreements. The finances of Social Security is one of those occasions.

Sloan's Fortune column this week provides one of those occasions. The focus is the deterioration in the near term projections for Social Security. Sloan compares the 2011 Social Security Trustees report with the 2012 projections from the Congressional Budget Office (CBO) and finds a worsening of $300 billion in the projected cash flow of the ...

The NYT Wants Germans to Work on Sundays

Germany, like many other countries, restricts the ability of businesses to operate on Sunday and holidays. One of the main reasons for such restrictions is to ensure that workers will have the opportunity to spend time on these days with their families.

The New York Times is very unhappy about such policies. It devoted a major news article to criticizing this sort of "overregulation" in the German economy.

While it is arguable that Germany would be better off without restrictive hours for...

Post Calls Obama a Corporate Hack

A front page article on President Obama's plan to cut the corporate tax rate to 28 percent from 35 percent, with offsetting eliminations of loopholes told readers in the second paragraph:

"Obama released a long-awaited plan to overhaul the nation's corporate tax code that plays directly to his base." [This line only appeared in the article that appears on-line as the print edition.] The bulk of Democrats have not been clamoring for a cut in the corporate tax rate, although many people in...

Unemployment Insurance and Spending: Bond Purchases are Reallocations from Other Saving

In his Economix piece this week, Casey Mulligan picks up on his theme from last week that unemployment insurance (UI) benefits may not boost spending in aggregate, since the money needed to pay benefits is withdrawn from other spending. He agrees with my earlier point that the money is not coming from current tax revenue, but rather from deficit financing, then says that:

"But that 'financing channel' still does not make the payments free from the perspective of today's economy.

Suppose the ...

The Washington Post Thinks That Bankers Act in the Best Interest of the Economy

That is what readers of a piece on the Fed's recommendations for housing policy are likely to take away. At one point the article comments:

"More than perhaps any other federal agency, the Fed was established to operate independently of both the president and Congress so that it would be free of political pressures when judging what's best for the economy."

What is most extraordinary about the Fed is the fact that it includes provides the industry it oversees, the banking industry, with the a...

News for Joe Nocera: Things Not to Love About the Mortgage Settlement

In his column on the mortgage settlement last weekend Joe Nocera praised the fact that it would mean that more people would be able to stay in their homes and that some compensation will be paid to foreclosed homeowners in situations where the banks did not follow the rules. He also criticized those on the left who criticized the deal "before the ink was dry." 

Of course there was a reason to criticize the deal before the ink was dry. The settlement was announced before it was actually...

Washington Post Reports on Incompetent Managers In Manufacturing Industry

The Washington Post told readers that the manufacturing industry is suffering from incompetent managers and therefore is not hiring as many workers as it should. According to the Post, managers don't realize that it is necessary to raise wages to attract more workers and instead are whining that they can't get the workers they need to fill vacancies.

While the Post describes the situation as a being a "shortage," the data make it clear that the problem is simply incompetent managers. As...

Post Tells Us That the Surge in Temporary Jobs Reflects "Fundamental Change in American Workplace"

That's the headline of a Washington Post piece that told readers that more than one quarter of the workers who have found new jobs in the recovery are working in temporary positions according to government data. (It also refers to private surveys that show a higher percentage.)

The only problem with this story is that employment in the temporary help sector is still down by almost 20 percent from its pre-recession level, as can be seen in the chart accompanying the piece. As Texas Governor...

Modern Monetary Theory: What's Modern About It?

In a newspaper that relies on the same old crew of reliably wrong experts for the vast majority of its economic reporting, it's good to see this piece by Dylan Matthews on Modern Monetary Theory (MMT). I've had many people ask me my assessment of MMT.

I consider many of the leading proponents of MMT to be friends and generally find myself on the same side of political debates. However, I have to confess to being a bit unclear as to what exactly separates MMT from the good old Keynesian...