Dean Baker's Blog, page 517

Net Exports Create Growth and Jobs, Not Exports

The NYT had a good piece on Ireland's effort to get back on a solid growth path. At one point it refers to a 5.4 percent rise in exports as an encouraging sign:

"driven by gains from Pfizer, Intel, SAP and other multinational companies that were drawn to Ireland in the 1990s and 2000s by its low taxes, well-educated English-speaking work force and access to the European market."

Actually, this picture is less clear. Many of the exports associated with these companies are likely to be...

David Brooks Teaches People How Not to Talk About Regulation

Some people try to teach by providing step by step instructions. This can be very tedious. David Brooks instead teaches by example. In his column today, David Brooks commits two of the great sins that would not appear in any serious discussion of regulation. 

First he discusses the cost of the regulations put in place by different presidents:

"George W. Bush issued regulations over eight years that cost about $60 billion. During its first two years, the Obama regulations cost between $8...

Robert Samuelson Misuses the Euro Crisis to Advance His War on the Welfare State

A newspaper that doesn't fact check its news articles can hardly be expected to fact check its opinion pieces. This mean that Robert Samuelson can get away with just about anything he wants in his column.

Today it is a diatribe against the welfare state. He tells readers that the euro crisis is the grand reckoning of the welfare state. Now that the euro zone economies are growing slowly and have aging population, the welfare state is no longer sustainable.

If the Post had fact checkers, they ...

At University of Pennsylvania, How Did Presidential Pay Compare to Pay of Other Employees?

In an article on the pay of presidents at private colleges and university, the NYT implied that an Occupy group was wrong to complain about the $1.3 million annual pay for Amy Gutmann, president of the University of Pennsylvania, because her salary "is less than 1 percent of the institutional budget." It would have been helpful to give a comparison to the salaries of professors and other university employees and also to report how it increased in the last decade. This is done for other instit...

Roger Cohen Wonders If a Financial Transactions Tax Is Feasible, Someone Has to Tell Him About the UK

NYT columnist Roger Cohen told readers that ideas like a:

"tax on global financial transactions, have been around for years but they're almost impossible to apply."

He wouldn't say this if he was familiar with the United Kingdom. The United Kingdom has been taxing trades of stock for centuries. It raises between 0.2-0.3 percent annually ($30-$40 billion in the United States). There are many other financial transactions taxes in place in other financial markets.

It is not clear what makes Mr. ...

The Washington Post Can't Get Data on European Debt

That must be the case, since if the Post actually knew the history of European debt it would not begin its lead front page story with a sentence like:

"The head of the European Central Bank signaled Thursday that the institution might be willing to take more-aggressive steps to stem the region's debt crisis, but only if the 17 nations that share the euro unite behind a plan that could tame years of runaway spending."

Those who have access to data on government debt know that the...

Bailout Economics for David Brooks

David Brooks tells us that he is very concerned about the demands that value-less technocrats are imposing on the people of Germany to bail out the heavily indebted countries of southern Europe. He is worried that the bailout will be very costly and also that it will remove the link between effort and reward.

Both sides of this picture need a little further examination. First, let's take a look at that big cost story. What is needed first and foremost in this bailout is a guarantee of debt...

Steven Beard at Market Place Flunks Euro Crisis 101

Steven Beard apparently does not have access to data on budget deficits. He wrongly told Market Place listeners that the euro zone crisis is due to the fact that euro zone countries spent more money that they took in. This is wrong, wrong, and wrong!

The euro zone crisis is due to the fact the European Central Bank was managed by incompetent people who either did not see the housing bubbles across the continent and the world or did not understand their implications for the euro zone...

The Myth of Profligate Euro Zone Countries

Spain had a budget surplus before the economic collapse. Spain had a budget surplus before the economic collapse. Spain had a budget surplus before the economic collapse.

Perhaps repeating this line three times will help the type of people who have columns in the Washington Post on the euro zone crisis get some understanding of the issue. Today we get a lecture on southern country profligacy from Daniel M. Price. Yesterday, Post columnist Matt Miller told us how he misleads his daughter

Inflation Will Matter for the Future of the Euro

The NYT Magazine had a useful piece outlining some of the key issues on the future of the euro. It would been helpful to mention the issue of euro zone inflation as one of the key factors affecting the ability of euro zone countries to get through the crisis. The southern euro zone economies are currently uncompetitive with Germany and other northern euro zone economies. They can regain competitiveness either by having their nominal wages fall (the path suggested in the piece) or by having...