Dean Baker's Blog, page 502

The Wall Street Journal Gets it Right on 4th Quarter GDP

Yes, they noticed the role of inventories. It is still possible to find workers with the necessary skills in the United States.

Getting Fourth Quarter GDP Right

When the Mets were an expansion team in 1962 and on their way to losing a record 120 games, their manager Casey Stengel reportedly cried out in frustration after a Mets error, "can't anybody here play this game?" Readers of the coverage of the 4th quarter GDP report must have felt the same way. 

Most of the coverage was along the same lines as the Washington Post headline, "U.S. Economic Recovery Picks Up Pace." At the most basic level, this is true. GDP grew at a 2.8 percent annual rate, up ...

Do Unions Both Love and Hate Private Equity or Do the Atlantic's Economics Reporters Have Problems With Arithmetic?

It seems more likely that the issue is the latter. The Atlantic had a column headlined:

"unions hate private equity, but they love its profits."

However as the study cited in the update points out, it is not clear that limited partners, like pension funds, actually do better investing in profit equity than investing in stock index funds. There may be an issue with specific officials getting kickbacks from private equity funds, but it is not clear that unions in general would be happy about...

The Earth Orbits the Sun and Gingrich's Supply Side Economics Doesn't Work

The Post devoted a business section article to Newt Gingrich's supply side economics. It would have been useful to note the findings of the research on this topic, for example this Congressional Budget Office study. It found that even in a best case scenario the additional growth sparked by a tax cut could replace less than a third of the lost tax revenue. Even this effect would be temporary, with slower growth in later years implying larger deficits.

The Post should not just throw...

How Big Is the Transportation Budget?

The Washington Post tells us that Congress is considering a transportation bill that will spend $260 billion over the next five years. It would have been helpful to tell readers that this is equal to roughly 1.3 percent of projected spending over this period. It is a bit more than 3.7 percent of projected discretionary spending over this period.

Military Budget Cuts: Denominator Please

The Washington Post reported on the Obama administration's plans to cut the military budget. It reports that the administration plans cuts of $487 billion over the next decade, but warns that the cuts could be as large as $600 billion.

It is unlikely that many readers would the ability to assess the significance of cuts of this magnitude since few know how much the country is expected to spend on the military over this period. The baseline projections show that the government will spend...

Stanley Fish Gets It Wrong Big-Time on Inequality

In a NYT column on inequality and fairness, Stanley Fish told readers:

"Americans don't mind if income is redistributed as long as it is done by market forces and not the government. Income equality is fine if it is 'naturally' achieved, but if it is socially engineered it can be perceived as class warfare, a plot against the well-to-do."

Three paragraphs later he poses the rhetorical question:

"Is it fair that Internet pirates in China can appropriate without paying for it the intellectual p...

At the Washington Post, When It Comes to the Fed and the Economy "Rescue" Doesn't Mean the Same Thing as it Does Elsewhere

The print edition gave the headline, "they squabble: he rescues the economy," to a Dana Milbank column on Federal Reserve Chairman Ben Bernanke's loose money policies. Milbank's point is that Bernanke has clearly been shown to be right in having relatively expansionary monetary policies, as opposed to Republican critics who complained that this was debasing the currency and would trigger massive inflation.

However the notion of Bernanke and the Fed rescuing the economy would seem to require a...

Paying Internet Sales Tax Is Not an Accounting Nightmare

The NYT reported on state efforts to collect sales tax on Internet sales. It reported the complaints of businesses about this practice including that of one business owner that:

"It's not collecting sales tax that's the hard part; paying taxes in the jurisdictions is an accounting nightmare."

It would have been helpful to point out to readers that this is not true. There are companies that can do this for firms at a relatively low cost (similar to payroll companies). There is also low-cost...

Indiana Imposes Tax on Workers Who Support Unions

The NYT reported that Indiana's legislature approved a measure that requires that the workers who support a union at the workplace pay for the representation of the workers who choose not to pay for the union's representation. It would have been helpful to remind readers that a union is legally obligated to represent all the workers in a bargaining unit, regardless of whether a worker has opted to join the union.

This means that non-members not only get the same wages and benefits that the...