Dean Baker's Blog, page 52

Thoughts on China’s Currency

There is a conventional wisdom on China’s currency that gets repeated almost everywhere and never seems to be challenged in the media. The basic story is that in the bad old days China ‘manipulated” its currency, but that stopped years ago. At present, its currency controls are actually keeping the value of its currency up, not down. As much as I hate to differ with the conventional wisdom, there are a few issues here that deserve closer examination.

First, it’s great see that everyone now ag...

It Doesn't Matter At All That Oil is Priced in Dollars #43,656

The New York Times ran a piece on China's devaluation of its currency, which warned that the move could hurt China because commodities like oil, which are priced in dollars, will become more expensive for companies in China. While it is true that the devaluation will make imported goods more expensive, the fact that some are priced in dollars is irrelevant.

Suppose oil was priced in yen. Other things equal, the decision to devalue against the dollar would also mean that Chinese yuan is devalu...

New NAFTA Versus Old NAFTA

Marketplace radio did a piece last week that was essentially just giving the argument of the supporters of the new NAFTA. I will give a few thoughts on the other side.

First, the fact that NAFTA played a substantial role in reducing the power of unions and lowering wages of workers without college degrees doesn't mean that we can reverse these effects by eliminating NAFTA.

The new NAFTA certainly does not eliminate the incentive to outsource jobs to Mexico to take advantage of lower cost labo...

Newsflash: Trump and DeVos Do Not Want to Get Government Out of For-Profit College Industry

It is far too common for progressives to accept the right’s framing of economic issues. In the standard story, the right portrays itself as the champion of free markets. The image is of the rugged individualist who struggles against the current to come out ahead. They want to be able to make their way in business without the help or hindrance of the government.

In this story, liberals mess everything up by bringing in the government. They are so concerned that some people could get hurt that...

Are There a Million High-Paying Jobs in Finance Going Unfilled?

I'm asking because in an otherwise very reasonable column on doctors' pay, Washington Post columnist Catherine Rampell suggests that if Medicare for All cut doctors pay, that they might "otherwise go into even higher-paying careers, like finance." In fact, almost all doctors are in the top two percent of the pay ladder for U.S. workers and many are in the top one percent. It is not plausible that the vast majority have higher paying alternatives that they could otherwise pursue.

Doctors do go...

Does the New York Times Have an Editing Program that Automatically Puts "Free" Before "Trade?"

Readers must be wondering because it happens so frequently in contexts where it is clearly inappropriate. The latest example is in an article about the state of the race for the Democratic presidential nomination following the second round of debates.

The piece told readers:

"After a few candidates used the Detroit debate to demand that Mr. Biden account for Mr. Obama’s record on issues such as deportations and free trade, Mr. Biden was joined by some of the former president’s advisers, who c...

Washington Post Budget Reporting Tells Us Rick Scott Doesn't Give a Damn About Staggering Debt To Pfizer and Merck Left to Our Children

No one expects serious budget reporting from the Washington Post, so we might as well have some fun with the ridiculous items it gives us under this pretext. It had a major article about the Senate approval of a bipartisan plan which it tells readers, "increases military and domestic spending by $320 billion over two years compared to existing law. It increases overall discretionary spending from $1.32 trillion in fiscal 2019 to $1.37 trillion in 2020 and $1.375 trillion in 2021."

So the gist...

Missing Issues on the Economics of a Fed Rate Cut

A Washington Post piece on the issues surrounding a rate cut this week by the Federal Reserve Board missed many important points. First, and most importantly, it never once mentioned that inflation has been persistently below the Fed's 2.0 percent target. This matters both for the Fed's credibility and more importantly as a protection policy in the next downturn.

On the first point, the Fed has repeatedly stated that its 2.0 percent inflation target is an average, not a ceiling. That means th...

Profit Shares and Revised GDP Data

I was eagerly (okay, maybe not right word) awaiting the data revisions that accompanied the 2nd quarter GDP report that came out yesterday.One of the items that often gets substantially revised is profits. I was surprised that initial reports showed the profit share increasing slightly in 2018 from 2017. That surprised me both because I had expected a tight labor market to allow workers to reclaim some of the share they lost to capital in the weak labor market following the Great Recession an...

The Dangerously Irresponsible Arguments of the “Responsible” Budget Gang

Last week the Washington Post ran a column by Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, one of the many pro-austerity organizations that received generous funding from the late Peter Peterson. The immediate target of the column was the standoff over the debt ceiling, but the usual complaints about debt and deficits were right up front in the first two paragraphs.

“At the same time, the federal debt as a share of the economy is the highest it has ever b...