Dean Baker's Blog, page 504

The 70s Don't Look Like This Downturn

Robert Samuelson tried to explain the Fed's failure to recognize that the collapse of the housing bubble, which had been driving the economy in the last cycle, would lead to a serious downturn. He blamed it on complacency that resulted from the relatively stable growth of the prior quarter century. He compared this to the complacency following the 60s boom that led to the 70s inflation.

The comparison is more than a bit off. In the four years since this downturn began, GDP growth has...

Hasn't Anyone at the NYT Heard of Exchange Rates?

The NYT has a lengthy piece on how Apple has outsourced all of its manufacturing operations over the last two decades. This is seen as telling a larger story about the loss of U.S. manufacturing jobs.

Remarkably, the piece never once mentions exchange rates. This is a major determinant of relative prices. If the dollar rises by 30 percent against other currencies, as it did in the late 90s, then it becomes 30 percent more expensive to produce goods in the United States relative to other...

A Moving Story in the NYT Magazine

Actually the story is that people are not moving. Adam Davidson had a piece noting the sharp decline in the percentage of the population that is move out of state each year.

While the share of movers has fallen sharply, there are two important points about the data worth noting. First, there has been a downward trend in share of interstate movers in the population since the late 70s. There is an obvious reason for this: the aging of the population. People are most likely to pick up and move w...

Thomas Friedman Wants Us to Follow Greece

At least he does when it comes to restructuring our Social Security system. One of the widely ridiculed features of Greece's social welfare system was a differential retirement age for the public pension system that made the qualifying age for their Social Security system dependent on a worker's occupation. According to a widely repeated account hair dressers could retire at age 50.

The co-chairs of President Obama's deficit commission, Morgan Stanley director Erskine Bowles and former...

Educating Steven Rattner on Government Debt

Steven Rattner remains convinced that handing future generations trillions of dollars of government bonds imposes a burden on them and is very unhappy that I don't see things that way. Let's try this one more time.

Let's say that we add $10 trillion to the national debt over the next decade. We'll assume that it is owned domestically. That is of course not true, but the foreign ownership of debt is determined by our trade deficit, which in turn depends on the value of the dollar, not the...

Where Does Ezekiel Emanuel Get His Wage Data?

Ezekiel Emanuel told readers of the necessity of controlling health care costs in order to allow workers to see real wage growth and to free up spending for other areas of the budget. To make this case he comments:

"During those 30 years [1980-2010], the only sustained period when real hourly earnings increased was 1990 through 1998 — which coincided almost exactly with a period of unusually low increases in health care costs."

That is not what the data from the Bureau of Labor Statistics...

Would Mrs. O'Grady Be an Outstanding Teacher In Nicholas Kristof's Evaluation System?

Nicholas Kristof used his column Sunday to tell readers about how an exceptional teacher, Mildred Grady, had made a huge difference in the live of a young African American boy. According to Kristof, the Ms. Grady saw the boy, a known trouble-maker, steal a book from the library. Instead of turning him in, she bought several other books by the same author, which the boy subsequently stole from the library and read. As a result he became attached to reading. He went college and then law school ...

$1 Million Dollar Prize! Can You Find Someone Who Holds the View That Steve Rattner Rants Against In the NYT?

Steve Rattner is very upset. He tells NYT readers

"Debt doesn't matter? Really? That's the most irresponsible fiscal notion since the tax-cutting mania brought on by the advent of supply-side economics. And it's particularly problematic right now, as Congress resumes debating whether to extend the payroll-tax reduction or enact other stimulative measures.

Here's the theory, in its most extreme configuration: To the extent that the government sells its debt to Americans (as opposed to...

Michael Gerson Complains that the Washington Post Won't Print Serious Pieces on Economic Policy

That is the nature of the complaint in his column, that no one is talking about poverty, even if he probably doesn't realize it. Of course there are people talking about the factors behind poverty, the most important of which is the weak economy. When we had low unemployment and strong growth at the end of the 90s, even those at the bottom of the income ladder were seeing greater opportunities.

To get from here to there would require more stimulus, more aggressive action from the Fed, and a l...

Taking Campiagn Promises Seriously: Remember Renegotiating NAFTA?

Ezra Klein tells us today that candidates take campaign promises seriously. I haven't reviewed the research, but it is easy to identify some important campaign promises that President Obama made over the course of his campaign that he clearly has not taken seriously while in office.

His pledge to renegotiate NAFTA was important in gaining support from manufacturing workers in many key primary states. This pledge was clearly never taken seriously once he got in the White House.

President...