Dean Baker's Blog, page 523

Post Goes After the Job Killing Regulation Myth

Two years ago the Republican party adopted a requirement that every time a party member used the word "regulation" it had to be preceded by the phrase "job-killing." Those who failed to comply were thrown out of the party.

The Post has a nice front page piece looking at the evidence that regulations are in fact serious job killers. The piece reports what almost all economists would acknowledge: regulations both eliminate and create jobs. Their net effect tends to be small.

Tell that to your f...

Robert Samuelson Misses the Fix to the Housing Market

Some folks are still missing the $8 trillion housing bubble and Robert Samuelson seems to be one of them. In reviewing the housing market it is important to notice that there is a very different story by regions. In many areas (e.g. Las Vegas and Phoenix), bubbles have fully deflated and we should look for house prices to stabilize and even rise some in the years ahead. In other areas, like Los Angeles and Boston, there is likely still some air in the bubble. In these markets, prices are...

Do the Washington Post's Analysts Have Names?

A front page Washington Post article told readers:

"Analysts, however, said the United States could risk another downgrade of its credit rating and do further damage to business and consumer confidence if the supercommittee process implodes in a chaotic display of partisan rancor — for example, if a deal is approved by the supercommittee but is killed on the House floor. And analysts are deeply concerned that lawmakers could 'de-trigger' the automatic cuts, undoing even the modest steps...

Ayn Rand Is Not a Supporter of Free Markets

It is misleading to imply, as Morning Edition did, that Ayn Rand's philosophy was about free markets. The idea of promoting oneself at the expense of others, advocated by Rand, is consistent with taking advantage of whatever support one is able to get from the government in this process.

For example, the top executives of Wall Street banks are happy to take advantage of the implicit government guarantee given to too-big-to-fail banks as well as the explicit guarantee that is given through...

The Supercommittee Looks to Impose a Much Bigger Hit to Seniors Than the Wealthy

The NYT reported that the supercommittee remains deadlocked on taxes. It reports that Republicans are willing to agree to $250-$300 billion in tax increases by eliminating loopholes in exchange for reducing the top tax rate to 28 percent instead of allowing it to rise back to the Clinton era level of 39.6 percent. While the piece notes that this would be a windfall for high income taxpayers, it would have been worth reminding readers that the sums being proposed are less than 2 percent of...

Dealing With the Budget Deficit: Does the Middle Class Have to Take the Hit?

Adam Davidson has a piece in the NYT magazine about how the middle class will have to take a hit to deal with the country's deficit. It's a bit quick to reach this conclusion.  

First, the piece too quickly dismisses the possibility of getting substantial additional tax revenue from the wealthy. It presents the income share for those earning more than $1 million as $700 billion, saying that if we increase the tax rate on this group by 10 percentage points (from roughly 30 percent to 40...

WAPO Goes Overboard for Trade, Again

The Washington Post, which once told readers that Mexico's GDP had quadruped between 1987 and 2007 to bolster its case for NAFTA (the actual increase was 83 percent), was in the exaggerated numbers again mode yesterday in discussing the impact of a trade agreement on Japan. In reporting the projections from a model, the article told readers that as a result of the trade agreement (inaccurately described as a "free trade" agreement):

"consumer prices would drop 39 percent."

There is no model t...

Banks Take Partial Write-Downs on Greek Debt, Why Not With AIG?

Floyd Norris has an interesting piece discussing the credit default market in European debt. He notes that the volume of issuance has not increased in recent months even as spread between the interest paid on the bonds of heavily indebted countries and Germany has increased. (France is an exception, which is easily explained by people wanting to bet that its situation will deteriorate.)

Norris explains the limited issuance as likely being the result of the way in which Greece's debt is being ...

Do NYT Reporters Get a Bonus for Each Time They Can Use the Phrase "Free Trade" In an Article?

An NYT piece on Japan's plans to join trade talks that include the United States and other Asian countries used the phrase "free trade" six times, including in the headline. These deals will not lead to literal free trade, since they are unlikely to do much reduce the barriers that protect highly paid professionals like doctors and lawyers. Also, they are also likely result in the increase of some protectionists barriers, most notably patent and copyright protection, which are high...

The Stock Market's Effect on Consumption Is Limited and Slow

An NYT article discussing the impact of the European sovereign debt crisis on the U.S. economy raised the possibility that it could lead to a fall in the stock market, which would then slow consumption. It is worth noting that consumption tends to respond with a lag to changes in the stock values, and even then the impact is relatively limited.

For example, the tech crash began in March of 2000, however consumption rose by 3.8 percent, 4.0 percent, and 3.6 percent in the following three...