Dean Baker's Blog, page 58

USITC Says All Gains from New NAFTA from Reduced Uncertainty, What Is the Impact of Trump's Tariff Threats?

The United States International Trade Commission's (USITC) analysis of Trump's new NAFTA projected modest gains, entirely due to a reduction of uncertainty associated with its rules on digital commerce. (It makes it harder to regulate Facebook and Google.) The gains the USITC attributed to reduced uncertainty from this fairly limited segment of the economy were extraordinary, but they raise the obvious question about the cost of uncertainty in other areas.

For example, Donald Trump is now twe...

Krugman on Sanders on Medicare for All

Last week Krugman devoted a column to dismissing the Democrats septuagenarians (Joe Biden and Bernie Sanders) as not being prepared to deal with the presidency in today's political environment. Part of his indictment of Sanders was an unwillingness to compromise, most notably on health care reform.

As Krugman put it:

"For Sanders, then, it seems to be single-payer or bust. And what that would mean, with very high likelihood, is … bust."

To back up this position, Krugman notes Sanders' unwilli...

China is Running Out of People, Just as Robots Take All the Jobs

That's what the Washington Post tells us. It notes the sharp slowdown in China's population growth and then tells readers:

"China’s population is forecast to peak at 1.45 billion as early as 2027, then slump for several decades. By 2050, about one-third of the population will be over the age of 65, and the number of working-age people is forecast to fall precipitously. Who will power the economy? Who will look after the elderly? Who will pay the taxes to fund their pensions?"

One might think...

That $2 Trillion Infrastructure Proposal Comes to 0.8 Percent of GDP

That might be helpful to that small group of Washington Post readers who don't know how large $2 trillion is over the course of a decade. It is also a bit more than 3.3 percent of projected federal spending over this period and 28 percent of projected military spending. But I'm sure everyone knew that.

The Cost of Mar-a-Lago Trips Compared with the Savings on Donald Trump's Salary

Donald Trump has made a big show of saying that because he is such a rich guy, he will donate back his presidential salary of $400,000 a year to the government. He regularly tells us which department or agency is the lucky beneficiary of his quarterly compensation.

Unfortunately, he feels no compunction about imposing extraordinary travel and security costs on the government by spending frequent weekends at his Mar-a-Lago resort or other Trump properties. This expense substantially exceeds th...

Lessons from the Trump Tax Cut

(This piece was first posted on my Patreon page.) The Trumpers were celebrating over the 3.2 percent GDP reported for the first quarter last week. They claimed it proved the success of their tax cuts.

But fans of arithmetic saw things differently. First of all, the jump in GDP was largely a fluke, with a big jump in inventory accumulations and a fall in imports accounting for almost half of the growth. Pulling these out, GDP growth was under 2.0 percent.

This isn’t just cherry picking. It is...

NYT Forgets to Mention that Boeing Plant with Quality Control Problems Is Non-Union

The New York Times had a piece describing the quality control issues that Boeing seems to be having at its plant in South Carolina. It would have been worth mentioning that Boeing moved operations from Seattle, where it has an experienced unionized workforce, to South Carolina to take advantage of lower paid non-union labor. This could have something to do with its quality control problems.

Contrary to What You Read in the Wall Street Journal, Trump's Tax Cuts Cannot Explain the Jump in Productivity

The Bureau of Labor Statistics reported that productivity increased at a 3.6 percent annual rate and is now up 2.4 percent over the last year. This is a big improvement from its 1.3 percent average growth rate since 2005.

This is very good news, if it proves to be real and is sustained. It would mean that we can have more rapid improvements in living standards and have more resources for things like a Green New Deal and Medicare for All. But folks should probably hold the celebration for now,...

Joe Biden and the Washington Post Are Wrong, China's Economy Is Already 25 Percent Larger than the U.S. Economy

I suppose it's hard for people in Washington to get data from the Washington-based International Monetary Fund, otherwise they would not tell people things like China is the world's second largest economy, after the United States. Using purchasing power parity data, which is what most economists would view as the best measure for international comparisons, China's GDP exceeded the U.S. GDP in 2015. It is now more than 25 percent larger.

Trump Fed Nominee Stephen Moore Predicts Big Downward Redistribution of Wealth if Trump Defeated

Moore said it would take the form of "the biggest sell-off in the stock market in American history." Since stock is overwhelmingly held by the wealthy, if the market plunges, it means that the wealthy will have relatively less wealth.

It is important to remember that the stock market in principle represents the value of future after-tax corporate profits. This means that any measure that should increase after-tax profits, such as the Republicans' corporate tax cut, should lead to a rise in th...