Dean Baker's Blog, page 509

David Ignatius Hides Upward Redistribution Policies as Market Outcomes

People are inclined to give much more legitimacy to market outcomes than policy outcomes engineered by governments. That is why there is a whole industry devoted to convincing people that the upward redistribution of income over the last three decades, which has given the bulk of economic gains to the One Percent, is really just the result of the natural workings of the market.

David Ignatius is one of the people who works in this industry. His Post column today urges readers to contemplate t...

Harold Meyerson Commits the NYT Mistake on German Unemployment

Meyerson was trying to make the point that Germany is doing better than the U.S. in spite of its generous welfare state and lower level of inequality. But he used the official German unemployment rate to make his case, telling readers that Germany's unemployment rate was 6.5 percent in October. The OECD reports that Germany's harmonized unemployment rate, which uses the same methodology as the Bureau of Labor Statistics in the United States, was 5.5 percent in October. The OECD data makes his...

The New York Times Gets Germany's Unemployment Rate Wrong

The New York Times misled readers today by telling them that Germany's unemployment rate is 6.8 percent. This number is the official German measure of unemployment. It is not directly comparable to the U.S. measure of unemployment primarily because it counts people who are working part-time, but would like full-time jobs, as being unemployed.

There is no excuse for presenting this measure with clarifying the difference with the U.S. measure of unemployment. It is actually simple to get a...

Why Does Charles Lane Contrast Pro-Growth Policies With Reducing Inequality?

Charles Lane used his Washington Post column today to imply that the presidential election will be a contrast between Mitt Romney pushing pro-growth policies and President Obama trumpeting reduced inequality. While Mitt Romney's campaign will undoubtedly describe the choice in this manner, what possible basis is there for someone not on Romney's payroll to frame the choice this way?

There is no clear trade-off between growth and inequality either internationally or in recent U.S. history...

Impact of the Minimum Wage on Employment and Low-Income Families

Morning Edition had a piece on the minimum wage hikes that took effect in various states and cities at the start of the year. The piece included an interview with economist David Neumark who referred to research showing that a 10 percent hike in the minimum wage leads to a 1-2 percent drop in employment among minimum wage workers.

While there is research showing no job loss (as noted in the piece by David Cooper, an analyst at the Economic Policy Institute), it is worth noting what the 1-2...

Consumption Is Not Returning to Bubble Levels

The NYT did a piece on the prospects for consumer spending in 2012. It listed a number of reasons why spending would be "tepid." Actually, spending is not tepid, it is actually quite high relative to disposable income as noted by one of the sources in the article.

In the pre-bubble years, savings averaged more than 8.0 percent of disposable income. The saving rate fell sharply due to the wealth effects associated with the run up of stock prices in the 90s and house prices in the 00s. With...

Indiana Governor Mitch Daniels Wants to Tax Workers Who Support Unions

The NYT reports that Indiana governor Mitch Daniels is pushing legislation that will require workers who support a union to pay extra money to support the cost of representing workers who don't want to pay. Under federal labor law, a union is required to represent all the workers in a union, whether they opt to join the union or not. This means not only that all workers will receive the full pay and benefits negotiated by the union, but also that the union is required to represent workers...

Robert Samuelson Oversells the Case for Economic Optimism

Last summer news reports were filled with ill-informed predictions of a double-dip recession. Now there seem to be many accounts that misrepresent recent economic data to make a case for substantially stronger growth.

Robert Samuelson makes some of the standard errors in outlining a case for optimism. (In fairness, the column also presents a case for pessimism.) For example, he touts the jump in housing starts reported for November, saying, "Housing construction was up 9.3 percent in...

Trumping Incomplete Models on Financial Speculation Taxes

An NYT article on changes in governance rules in the European Union (EU) referred to the United Kingdom's opposition to a financial speculation tax supported by other members of the EU. The article noted that the UK cited a study done by the European Commission that found such a tax could lower GDP by 1.76 percent.

It is worth noting that this projected drop in GDP was derived from a model was intended as a work in progress, not a well developed forecasting technique. This model did not...

Trumping Incomplete Models on Financial SpeculationTaxes

An NYT article on changes in governance rules in the European Union (EU) referred to the United Kingdom's opposition to a financial speculation tax supported by other members of the EU. The article noted that the UK cited a study done by the European Commission that found such a tax could lower GDP by 1.76 percent.

It is worth noting that this projected drop in GDP was derived from a model was intended as a work in progress, not a well developed forecasting technique. This model did not...