Dean Baker's Blog, page 514

SOPA Will Cost Jobs! The NYT Should Talk to an Economist, not the Chamber of Commerce

Standard economic models show that tariffs cost jobs. The reason is that they make consumers pay more money for the protected product. This pulls money away that could be spent in other areas. If the spending took place elsewhere, it would create more jobs than the additional money earned by the protected industry.

The same logic applies to increasingly stringent protections for copyright, except the economic waste and resulting job loss is likely to be much larger. Tariffs rarely raise the p...

NYT Forgot to Mention That Ryan's Medicare Plan Raises Costs

The NYT neglected to mention that the Congressional Budget Office has repeatedly found that adopting plans providing more choice within Medicare, like the one by Representative Paul Ryan and Senator Ron Wyden touted in this article, raise rather than lower the cost of providing care. The basic problem is that private insurers are very good at cherry picking patients -- better than government bureaucrats in preventing cherry picking. This means that private insurers will find ways to get...

NYT Presents Good Analysis of State Tax Breaks for Business

Businesses are increasingly playing a game of telling states that they will shut their doors and move elsewhere unless they get tax breaks. This is the old "why not?" philosophy. Good piece in the NYT on the issue.

7-8 Percent Pension Returns Are Not "Hopeful"

There are more arithmetic problems at the NYT. It noted that pension returns have been very low in recent years and then commented:

"Pension plans hope to make up these lost years and reach performance targets that in some cases are still set at a hopeful 7 to 8 percent a year."

Bizarrely, the NYT seems to think that low returns in the recent past should imply low returns in the future. In fact, the exact opposite is true.

The low returns in the recent past were the result of a drop in stock ...

Bruce Bartlett Uncovers the Most Misleading Poll Question of All Times

Bartlett found a poll ( I beleive an NYT poll) that asked the extent to which people agree or disagreed with the statement:

"it is the responsibility of government to reduce income differences."

Since we live in a country in which the government pursues a wide range of policies that increase income differences, most poll takers could not help but be confused by this sort of question. After all, we have a government that subsidizes Wall Street by providing too big to fail protection and...

Ben Bernanke Did Not Save Us from a Second Great Depression

The Wall Street Journal felt the need to tell readers that Bernanke's action to provide liquidity to the banking system:

"may have prevented a repeat of the Great Depression."

This is not true. We know how to reinflate an economy after a collapse. It just requires massive amounts of government spending, as happened during World War II. The first Great Depression was not caused just by the failure to counter the initial financial crisis effectively. It was attributable to an inadequate policy ...

Mark Zandi and the NYT Hugely Underestimate the Number of Vacant Homes

The NYT cited Mark Zandi as saying the number of vacant homes is roughly 1 million, which he puts as equal to the gap in household formation that resulted from the recession. According to the Commerce Department, if the vacancy rate was back at its pre-bubble level, there would be 3 million fewer vacant units.

How Does the NYT Know That Prohibiting Millionaires from Getting Food Stamps Is Part of a Desire to Make the Rich Pay More?

The NYT told readers that the Republican proposal to prohibit people with income of more than $1 million a year from receiving food stamps and unemployment insurance:

"demonstrates an increasing desire among members of Congress to find some way to make sure that the wealthiest Americans contribute more to reducing the deficit and paying for middle-class tax relief."

As the piece notes, it is almost impossible to find any millionaire who received food stamps. The article reports that...

Companies that Offer Jobs at Below the Market Wage Can't Find Workers

That is what NPR told listeners in a story about AAR Corp on Morning Edition [no link yet]. It told listeners that AAR, which hires mechanics to maintain planes, has had great difficulty attracting workers. According to the piece, its starting wages are between $12-15 an hour ($24,000-$30,000 a year), with wages topping out at $28 an hour ($56,000 a year). It didn't give any information about benefits.

The piece indicated that these are jobs that require a fair amount of skill and involve a c...

The NYT Does He Said She Said on the Shape of the Earth and Income Inequality

The NYT doesn't know it, but the income of the rich rises and falls with the stock market because [top secret: they own lots of stock.] Sorry, but this piece on the decline in the relative income share of the top 1 percent is beyond silly. We know the income of those at the top drops in relative terms every time the market takes a dip.

Of course the stock market took a plunge in 2009, therefore we knew, even before we got the data, that their share of total income would fall. This is why it i...