Dean Baker's Blog, page 541

Increased Demand Gives Firms the Need to Hire, Not the Confidence

The NYT told readers that the Obama administration wants to increase the demand for goods and services, "which could then give employers the confidence to hire." Actually, an increase in the demand for goods and services forces employers to hire at the risk of losing business.

If a restaurant doesn't have enough staff to serve its customers, it will lose customers. If a factory doesn't have enough workers to fill its order then it loses orders. Increased demand forces businesses to use more l...

Increased Demand Gives Firms the Need to Hire, Not the Confiudence

The NYT told readers that the Obama administration wants to increase the demand for goods and services, "which could then give employers the confidence to hire." Actually, an increase in the demand for goods and services forces employers to hire at the risk of losing business.

If a restaurant doesn't have enough staff to serve its customers, it will lose customers. If a factory doesn't have enough workers to fill its order then it loses orders. Increased demand forces businesses to use more l...

Thomas Friedman Is Making Sense, Are the End Times Here?

He gets it right on global warming. I'm off to re-read the Corinthians.

Post Calls Attention to the Big Benefit that the Wealthy Get from the Capital Gains Tax Cut

This is a very nice front page piece. This is what newspapers are supposed to.

Another Lesson on National Income Accounting for Robert Samuelson

National income really is very basic stuff. It gets taught in every intro econ class. Anyone writing on economics should know it inside out. They should be able to do it blindfolded, with one hand tied behind their back, and standing upside down.

Unfortunately, it seems that most people reporting and writing on economics for major news outlets can't do national income accounting at all. Let's take Robert Samuelson at the Washington Post. I had a lesson on this topic for him last month, which ...

Gregory Mankiw's Bad Memory on Investment

Gregory Mankiw says that the economy's big problem is a lack of investment in equipment and software. And, he has some remedies that he suggests for President Obama. He is pushing tax reform, more NAFTA-style trade agreements, reduced regulation and weakening the power of workers.The general story is that we want to be even more business friendly.

Of course we did have a president who tried being business friendly. His name was George W. Bush. Gregory Mankiw should remember him since he was P...

Thomas Friedman Thinks the Tea Partiers Are Extremists of the Left

Thomas Friedman is once again orthogonal to reality. In his column today he urges a "grand bargain" where the Republicans abandon extremists of the right and agree to tax increases and Democrats abandon extremists of the left and agree to cut Medicare and Social Security (euphemistically referred to as "entitlements"). There is one little problem with Friedman's story.

Support for Social Security and Medicare is not confined to extremists of the left. Overwhelming majorities of every group...

The Post Insists on Talking to Economists Who Do Not Understand the Economy

The Post is world-renowned for having relied on David Lerah, the chief economist at the National Association of Realtors and the author of Why the Housing Boom Will Not Bust and How You Can Profit from It as its main expert on the housing market during the build-up of the housing bubble. Remarkable it still seems to rely exclusively on economists who do not understand the housing market as sources on economic issues.

It headlined an article on President Obama's stimulus package:

"economists g...

The Post Does More Mind Reading of Politicians

When discussing President Obama's stimulus package, the Post told readers:

"The toughest critique came from Republicans who see key elements of the president's plan as stimulus spending that they say is likely to add to the deficit without creating jobs."

Of course the Post has no clue how how Republicans "see key elements." Like the rest of us, the Post's reporters know that the Republicans routinely say that they don't believe that the stimulus created jobs, but it has no idea how they...

David Brooks Thinks That Most Children Will Die Before the Age of 5

We can infer this based on his confident assertion that tens of millions of workers will absolutely have to experience prolonged bouts of unemployment because of the collapse of the housing bubble. He bases this assertion on a book by Kenneth Rogoff and Carmen Reinhart that reviewed eight centuries of financial crises.

Rogoff and Reinhart find that the it typically takes 8-10 years to recover from the effects of a financial crisis. They therefore infer that we should it expect 8-10 years to r...