Dean Baker's Blog, page 537

Robert Samuelson is Half Right: China Could Save the World

Robert Samuelson has a piece today arguing that China's intervention is necessary to save the world economy. He of course is right in arguing that China has enough economic strength to save the euro and prevent a downward spiral that would throw the world economy back into recession, as some of us have argued. 

However, the fact that China may have to play this role is due to the failings of the political leadership in both Europe and the United States. It is essential to remember that this i...

NYT Decides to Mock Wall Street Critics

The NYT used its news section to mock critics of Wall Street. It presented the comments of some of the people protesting Wall Street. While the people quoted in this article do appear to be confused about the role of the financial industry in the economy, the paper would have no difficulty finding articulate critics of the financial industry.

For example, it could present the views of Nobel prize winning economist Joe Stiglitz. Or, it could present the views of Nobel prize winning economist, ...

Thomas Friedman Shows Again That the Economy Offers Good-Paying Jobs for People Without Skills

Thomas Friedman made another pitch for a "Grand Bargain" in his column today. (This phrase does indeed appear in capital letters in Friedman's column.) The grand bargain involves cuts to Medicare and Social Security (which appear only as "entitlements" in Friedman's column) in exchange for stimulus.

There is no doubt that the economy needs more stimulus. The economy is losing close to $100 billion a month in lost output as a result of the collapse of the housing bubble. Furthermore, the...

The Post's Russia Standard Is Very Different from Its U.S. Standard

An article on Russia's economy reported on a speech by Russian Prime Minister Vladimer Putin:

"He talked about 'bitter pills' of economic retrenchment. He said wages had outstripped productivity, threatening inflation."

It then added a parenthetical sentence:

"That's largely because of government policies."

This is a sharp departure from the practice in reporting on U.S. and European economic problems. For example, when reporting on speeches or actions by Federal Reserve Board chairman Ben B...

China Could Reduce Inflation and Boost the World Economy at the Same Time

The NYT reports on evidence that China's economy is slowing, which it suggests is bad news for the world economy, since China has been a main engine of world growth in the last 2 years. The slowdown that China is experiencing is being deliberately engineered by its central bank as a way to combat inflation.

While the article implies that the slowdown makes it less likely that China would raise the value of its currency, which would increase its imports from the rest of the world and reduce...

Krauthammer in Full Rant Mode

President Obama wants to raise the tax rate on the wealthy back to the levels of the Clinton years, still leaving them 10 percentage points lower than the rates set in President Reagan's tax cuts. Charles Krauthammer confronts the threat.

Krauthammer warns of "a $1.5 trillion tsunami of tax hikes." (The tsunami is equal to approximately 0.7 percent of projected GDP or less than half of the Iraq-Afghan war induced increase in military spending.)

He then tells us that Obama's tax plans make...

Oil Is Priced In Dollars and It Doesn't Make an Iota of Difference

The Post discussed the turmoil in financial markets yesterday. It told readers that

"Crude oil fell more than 7 percent, to about $80 a barrel, its lowest price in four weeks."

It then went on to say:

"Market observers attributed part of the fall in raw-material prices to investors rushing into dollars. The dollar index moved to a seven-month high after the Federal Reserve announced its decision to buy up $400 billion in long-term debt. Commodities such as crude oil are priced in dollars, ...

President Clinton, Who Set the Bubble Economy In Motion, Is Giving Economic Advice

The NYT told readers that former President Bill Clinton is planning to write a book giving the country advice on how to improve the economy. At one point the article cites the material from the publisher:

"In the book, according to a statement from Knopf, Mr. Clinton says that the United States has lost its commitment to fiscal responsibility, shared prosperity and balanced growth."

Remarkably, the article does not point out that President Clinton endorsed the high dollar policy that led...

The NYT Is Wrong, China Can Save the World

The NYT ran a Reuters column in its business section that told readers that China lacked the ability to support the world economy. The piece essentially argued that China will act in its own interest, not the interest of floundering economies in the United States and Europe.

This piece ignores the actions that China is already taking. China's government has bought more than $1 trillion in U.S. government debt to keep up the value of the dollar, in order to sustain its export markets in the...

They Are Trade Pacts, not "Free-Trade" Pacts

The NYT referred to the trade agreements negotiated with South Korea, Panama, and Colombia as "free-trade" agreements. This is inaccurate. They increase many forms of protectionism, most importantly by increasing the extent of patent and copyright protection in U.S. trading partners.

The Obama administration and Congress are strongly opposed to free trade in intellectual output. The NYT should not misrepresent their views on such an important economic issue.