Dean Baker's Blog, page 56

Trump Tariffs: Money to Reward Friends

Paul Krugman used his column today to criticize Donald Trump's tariffs for everything policy. While he provides a useful historical account of the abuse of tariffs in the 1920s, he left out one important reason why tariffs can be pernicious, especially in the hands of someone like Donald Trump.

Trump obviously views the presidency as a position to use for rewarding friends, punishing foes, and enriching his family. Tariffs give him a great opportunity to do this. 

Not only can he put a t...

Jim Hoagland and the Washington Post Agree to Play Straight Man in the Globalization Debate

Sometimes events in the world can lead one to believe in a higher power. Just after I had a Twitter exchange with Matt Yglesias on the backlash against globalization and other changes in society over the last four decades, Jim Hoagland was good enough to give me a beautiful example of the elite attitude that fostered the backlash.

As I said in my tweet in response to Matt:

"Yes, and that we cosmopolitan types aggressively pushed integration in a way that was designed to reduce the wages of th...

The Wonderful World of Free Market Drugs

(This post first appeared on my Patreon page.)

I write about the possibility of producing drugs without patent monopolies frequently for several reasons. First, drugs can be essential for people’s health or even life. It should not be a struggle for people to pay for them. Second, there is a huge amount of money at stake, way more than in almost any other realm of public policy. Third, it is such a great example where government intervention, in the form of patents and related monopolies, cre...

Is Uber's Stock Scam Evidence of a Successful Business Model?

Back in the old days, economists used to think that having a profitable business was evidence of a successful business model. This success could be based on things like ripping off workers and/or customers or destroying the environment, which obviously are not good, but if a business was not profitable, it would be hard to call it a success, whether or not it followed the law and social norms.

However, for Roger Lowenstein and the Washington Post, profits no longer matter. Lowenstein proclaim...

Robert Rubin, Who Made a Fortune on the Housing Bubble, and Wanted the Fed to Raise Interest Rates When the Unemployment Rate Was Over 6.0 Percent, Is Concerned About the Social Determinants of Health

Most people probably know of Robert Rubin as the person who thought deregulating finance and having a huge housing bubble was cool. They may also know that he hugely profited from the bubble personally as a top executive at Citigroup, a bank that was at the center of the bubble's finance and would have gone bankrupt in the crash, had it not been for a massive government bailout.

They may also know Robert Rubin as the person who pushed for an over-valued dollar, which led to a huge trade defic...

Robert Samuelson Warns China Might Pull Out Its Water Pistol and Sell U.S. Treasury Bonds

With the trade war between the U.S. and China heating up, Robert Samuelson warns us that China may just sell the trillions of dollars worth of U.S. assets it holds. While the idea is that this is a potential threat, it is not clear why.

Other things equal, China's decision to sell large amounts of Treasury bonds would drive up interest rates in the United States. That would be bad news, but if the Fed did not want interest rates to rise, then it could simply buy the Treasury bonds that China...

Trump’s Trade War with China and “Our” Intellectual Property

(This post first appeared on my Patreon page.)

Some events give extraordinary insights into the biases of the economics profession. The trade war with China clearly fit the bill.

The origins of the trade war can be traced to campaign promises Trump made to go after China over its large trade surplus with the United States, which he attributed to “currency manipulation.” The argument was that by intervening in currency markets (buying up U.S. dollars), China was propping up the value of the do...

We Wrecked the Planet but if the Young Just Read the Washington Post, They Will Only Blame Us for the National Debt!

You have to love Robert Samuelson. He writes a column noting that baby boomers are leaving the workforce, and some are dying off, leaving the country to our children and grandchildren. He concludes the piece with a comment on the national debt.

"To boot, there’s also a massive federal debt. Good luck."

Given the enormous damage that we have done to the environment, our children and grandchildren would be enormously forgiving if all they blamed us for is the national debt. Of course, since we...

The Money in the Trump-Kushner Peace Plan

The New York Times had an article on the Middle East peace plan being developed by Donald Trump and his son-in-law Jared Kushner. The piece tells readers:

"The idea is to secure financial commitments from wealthy Persian Gulf states as well as donors in Europe and Asia to induce the Palestinians and their allies to make political concessions to resolve the decades-old conflict with Israel. The White House has indicated that it is seeking tens of billions of dollars but would not identify a pr...

The Washington Post Argues that a Free Market Means that People Get to Dump Their Sewage on Their Neighbors' Lawn

That is the logic of a major article on the idea of a Green New Deal which equates measures to stem global warming with big government and socialism. If we recognize the emission of greenhouse gases as an externality that is doing serious harm to others, then it is equivalent to a massive dumping of sewage on other people's lawns.

Most of us would not think that government action to prevent this sort of massive sewage dump was "big government" or socialism. It is government that is taking the...