Dean Baker's Blog, page 68

More Fun with the Stock Market Plunge

The media continue to be in a panic over the drop in the stock market over the last few weeks. Fortunately for political pundits, there is no expectation that they have any clue about the subjects on which they opine.  For those more interested in economics than hysterics, the drop in the market is not a big deal.

The market is at best very loosely related to the economy. It generally rises in recoveries and falls in recessions, but it also has all sorts of movements that are not obvious...

Pay by the Mile Insurance is an Alternative to Higher Gas Taxes

Justin Gillis argued in a NYT column that higher carbon taxes face too much political resistance to be a serious option in the near future. He points to the difficulties faced by politicians who have proposed such taxes, most recently the rise of the Yellow Vest movement in France in opposition to carbon taxes imposed by French President Emanuel Macron. Gillis instead proposes measures, such as increased public transit options, which will give people an incentive to use less energy.

While Gil...

In the Real World Contingent Work Is Not Increasing, In the WaPo, the Gig Economy Is Everywhere

The media apparently just love the story of everyone being a gig worker, and like Donald Trump, they are not going to let the data get in the way. The Washington Post just ran a column telling us that gig workers are everywhere.

While this person and millions of others are struggling to get by with non-standard employment, the most recent survey from the Bureau of Labor Statistics shows there has been no increase in gig-type employment over the last decade. The proliferation of gig economy jo...

Thoughts on Putin, Economic Downturns and Democracy

A friend called my attention to this Project Syndicate piece by Kenneth Rogoff, a Harvard economics professor and former chief economist at the I.M.F. Rogoff  argues that Russia will need major economic reform and political reform in order for its economy to get back on a healthy growth path.

In the course of making his argument, Rogoff makes a quick and dirty case that the fact Putin was able to win re-election despite the economic downturn in 2015-2016 resulting from the collapse of wo...

No, Donald Trump Is Not Leaving Us Poorly Prepared for the Next Recession

There is a popular theme in the media these days that the Trump administration is leaving us poorly prepared for the next recession. The basic story is that high deficits and debt will leave us less room to have a large stimulus when the next recession hits. This is wrong, at least if we are talking about the economics.

Before laying out the argument, let me first say that I do not see a recession as imminent. The recent plunge in the stock market means that the rich have less wealth, not tha...

Harvard’s Choice: Hedge Funds or Scholarships

The New York Times highlighted the findings of a remarkable study last week. The study, by Markov Processes International, examined the 10-year returns of the endowments of the 8 Ivy League schools. The study found that all 8 endowments had lower returns than a simple mix of 60 percent stock index funds and 40 percent bonds. In some cases, the gap was substantial. Harvard set the mark with its annual returns lagging a simple 60-40 portfolio by more than 3.0 percentage points. 

This findi...

Thomas Friedman Shows Us Why Democracy is Facing Huge Problems

When the columnist with the longest tenure at the country's leading newspaper has no clue on the biggest issues facing the world, then it is a good sign that the elites in general have no idea what they are doing. He notes the disaffection of large numbers of middle class people in both Europe and the United States with the status quo.

Friedman correctly observes that "average work no longer returns an average wage that can sustain an average middle-class lifestyle." However he absurdly blame...

Serious Arithmetic Problems at the Washington Post

Two commenters on my previous post on a NYT oped, which asserted that one-fifth of the federal budget went to farm subsidies pointed out the error can be partly attributed to a linked article in the Washington Post. (The actual figure is less than 0.5 percent.)

That piece includes the sentence:

"At close to $1 trillion a year, the farm bill’s price tag is high."

Incredibly, the next sentence directly contradicts this assertion correctly pointing out that:

"But the bill’s drafters used the bas...

Are We Really Spending One Fifth of the Budget on Farm Subsidies?

That's what New York Times readers are likely to believe after seeing this oped by Gracy Olmstead. The piece is an argument against farm subsidies, or at least their current form, which primarily benefit wealthy farmers. 

It referred to these subsidies in 2018, as being "nearly $900 billion worth." The link provided in the piece is to an article on the new farm bill. It covers ten years. More importantly, the vast majority of the money in the bill is not for farm subsidies but for the Su...

How Large Does the NYT Think China's Trade Surplus with the U.S. Should Be?

The NYT ran a piece on China's economy implying that it is reeling from the tariffs that Donald Trump has imposed on imports from China. The article outlined China's economic problems and then told readers that China's President Xi:

"has been forced to make concessions to the United States as President Trump’s trade war intensifies."

The problem with the claim that Xi has been "forced" is that China's trade surplus with the United States is actually considerably larger in 2018 than it was in...