Dean Baker's Blog, page 498

Confidence Lags the Economy, It Doesn't Predict It

A NYT Economix blognote told readers that confidence about the economy is up and that this should be reinforcing leading to a stronger economy, as firms invest more and consumers spend more. The chart accompanying the note shows the opposite.

The recent levels of the Gallup Economic Confidence Index are getting back or slightly exceeding the peaks hit at the end of 2010, just before the economy nearly ground to a halt, growing just 0.3 percent in the first quarter of 2011. After 6 months of v...

A Competent Federal Reserve Board Would Help the White Working Class

So would trade policy that was not designed to lower their living standards. Nicholas Kristof devoted his column to the worsening plight of white workers without college degrees over the last three decades. He notes that the share of prime age workers with only a high school degree who have dropped out of the labor force has quadruped since 1968.

This can be explained in part by the Federal Reserve Board to pursue polices that promoted full employment. When the economy did achieve low rates o...

Does the NYT Really Not Know the Difference Between Nominal and Real GDP?

It seems not, since a graph accompanying an article on Greece's debt negotiations still shows countries like Spain, Greece and Italy with modest growth since the downturn began in 2007. In fact, all three economies have shrunk in when growth is adjusted for inflation. It will be interesting to see how long it takes the NYT to correct this one.

Germany Cannot Prosper in the Long-Run by Lending Money to Countries That Can't Repay Their Debt

A column by Norbert Walter in the NYT defended Germany against complaints over its trade surplus by pointing out that its export industry acts as an engine for Europe's economy. He accurately points that Germany's export industry boosts demand for supplier industries in Netherlands and France. He then inaccurately asserts that:

"unemployed workers in Madrid or Athens can easily move to Munich or Cologne for work."

We know that unemployed workers in Madrid and Athens cannot easily move to...

The Comment Gremlin

The evil doers put CEPR's website out of commission this morning. We managed to get it back up and restore the posts on BTP this afternoon. Unfortunately, it seems that comments on several recent posts were lost in cyberspace. Sorry to lose these words of wisdom. Don't take it personally.

The Recording Industry Complains About Free Speech (Seriously)

Cary Sherman, the chief executive of the Recording Industry Association of America (RIAA), had a column in the NYT complaining about "how the democratic process functions in the digital age." The gist of the complaint seems to be that the Internet allows for the widespread dispersion of views contrary to the interests of the RIAA through outlets that they cannot dominate. This apparently contrasts with traditional media outlets like the NYT which seems to have an open door for the industry...

Asset Bubbles and the Gold Standard

There are plenty of books on economics that are written by people who are very confused on the topic. When a news outlet like NPR chooses to devote a major segment to one such book, it should at least make sure that the person interviewing the author has some understanding of economics. That does not seem to have been the case in its treatment of Philip Coggan, who just wrote the book, Paper Promises: Debt, Money and the New World Order. 

According to the segment, Coggan's thesis is that...

Lessons on Economics and Politics for the Post: Democracies Have Unions

Washington Post columnist Charles Lane has decided that public sector unions are undemocratic. This will be a surprise to every democracy in the world, since all of them have public sector unions.

The basic argument seems to be that since unions prevent elected officials from paying as little as they miight want to their workers, they interfere with democracy. This is a bit hard to follow. If a pension fund manager refuses to manage the state's pension fund for a $100 an hour wage, or a...

The Post Is Confused About Unemployment

In a front page piece, the Post asked why, given the economy's recovery, so many less-educated workers don't have jobs? There is a very simple answer that could have saved the lives of many trees. The economy has not recovered much. While the unemployment rate has fallen by almost two percentage points from its peak in late 2009, the employment rate (EPOP), the percentage of people with jobs has risen by just 0.6 percentage points. (This adjusts for a change in population controls that...

NYT Gets Real and Nominal GDP Mixed Up

A chart that accompanied an article about negotiations on Greece's debt showed that GDP had risen since 2007 in all the crisis countries except Ireland. This is not true. GDP is down in all of the crisis countries,

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                                       Source: IMF.

It appears that the chart in the NYT is showing nominal GDP. This has risen since 2007 but only as a result of higher prices. Real GDP has fallen in all five crisis countries. (Sorry, I left off Portugal.)