Dean Baker's Blog, page 512

The Washington Post is Pushing Ideology Again

Some of us may have thought the dispute over the extension of the payroll tax cut involves maneuvering between politicians who are looking to get re-elected next fall. They all have important interest groups who they rely upon for votes and/or campaign contributions.

However the Post told us that we are wrong to think this. Its lead front page article yesterday told readers that:

"at its heart, the fight over the tax cut is only the latest incarnation of the same ideological clash that has...

"Strong" Growth Ain't What It Use to Be

The NYT has a good piece noting factors that are likely to lead to somewhat stronger growth for the 4th quarter of 2011, but which will not be present in 2012. As a result, it suggests that we will see growth close to 3.7 percent in the fourth quarter, but this will fall back to 1.5-2.0 percent in the first half of 2012.

It is worth noting that even at a 3.7 percent annual growth rate it will take us until almost 2017 to get back to the economy's potential GDP. According to the Congressional ...

NYT Conflates Counterfeits and Unauthorized Copies

The NYT reported on the Immigration and Customs Enforcement Agency's seizure of unauthorized copies of goods, which it priced at $77 million. (It's not clear whether this is the value of the copies or the price of the goods that were being copied.) The piece repeatedly refers to these goods as "counterfeit."

It is not clear from the article that the goods were in fact counterfeit. If they were counterfeit, then consumers were deceived into believing that they were getting the brand product...

Erratic Patterns in Monthly Housing Starts

After being the big optimist who was bashing the double-dip gang in the summer and fall, I am now back to being the killjoy who refuses to join in the celebrations over the November data on housing starts reported yesterday. The point that I made in a prior post is that these numbers are highly erratic. This is especially true of the monthly data on starts of multi-family units, which were driving the jump reported for November.

This chart gives the basic picture.

Click for Larger Image

Sour...

Protectionism for Lawyers

The NYT had a good piece on Sunday on how the American Bar Association limits the numbers of law schools and lawyers in the country. This inflates the salaries of lawyers.

This sort of restriction should be viewed the same way as an tariff on imported steel. It has all the same negative effects on consumers and the economy. The main differences are that the restrictions on lawyers redistribute income upward to the top 5 percent or even 1 percent and the economic distortions are almost...

Housing Is Back!!!! Yet Again

The Post has another piece showing some pre-mature optimism on the housing market. The proximate cause was the jump in housing starts that the Commerce Department reported for last month. As the piece notes, this jump was driven almost entirely by an increase in starts reported for multi-family units. In fact, most of the gain was attributable to sharp rises in starts in the Northeast and West. The gains in the South were modest and starts in the Midwest actually fell. 

In fact, housing...

What Jobs Should Big Government Train Workers For?

The NYT reported that the Republicans in the House want the federal government to allow states to use unemployment insurance tax revenue to pay for job training. It quotes Representative James B. Renacci on this topic:

"In this uncertain economy, using unemployment dollars to subsidize the training of a new employee to re-enter the work force is just good public policy."

It would have been worth pointing out that there is no major sector of the economy that seems to be short of workers. Real ...

PolitiFact Goes Post-Modern

I will join in the piling on exercise. Politifact, which is supposed to verify the veracity of claims made by politicians, jumped into the world of language devoid of meaning in its selection of the "lie of the year." 

Politifact's "lie of the year" was the claim by Democrats that the House Republicans voted to end Medicare when they voted for Representative Ryan's system of premium supports, or vouchers. Under this plan, people who turn age 65 after 2022 would not get the traditional...

The Wall Street Journal Has Not Heard About the Housing Bubble

The housing bubble apparently still has not gotten word about the housing bubble. Of course it is easy to see how an $8 trillion bubble whose collapse wrecked the economy could escape the attention of the nation's premier business publication.

If the WSJ had gotten word about the housing bubble it would not have said silly things about the baby boom cohorts like:

"In part because of improvidence and weak wage growth, in part because many have lost jobs and in part because of the severe...

Inequality and Growth: Charles Lane Tells It Like It Isn't

Charles Lane tells Washington Post readers that:

"Western Europe's recent history suggests that flat income distribution accompanies flat economic growth. Which European country recorded the biggest decrease in inequality between 1985 and 2008? That would be Greece."

An argument based on a sample of one may fit the standards of the Washington Post, but it is not the sort of thing that normal people would find compelling. If we look the IMF's data on per capita GDP growth since 1980 one would ...