Dean Baker's Blog, page 69

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Hickel Response on Degrowth

[This is the last piece in an exchange with Jason Hickel on growth.My last piece is here.]

Baker says “I am at a loss to understand why we would have a war on growth.”  I don’t know why he is at a loss.  I explained the reasons for this in my previous post.  There are two I focus on. 

(1) Because growing the GDP means growing energy demand, and this makes the task of switching to renewable energy significantly more difficult (nearly three times more difficult between now a...

Ivy League Schools Use Endowments Effectively to Make the Very Rich Even Richer

The New York Times reported on an analysis of returns on the endowments of the Ivy League schools over the last decade. It found that all the schools endowments lagged a portfolio that was 60 percent stock index funds and 40 percent bond funds. (The gap with index funds would be even larger if the mix were 70 percent stock, 30 percent bonds.)

The Ivies invest heavily in hedge funds, which typically charge fees equal to 2 percent of the money invested plus 20 percent of returns over a benchmar...

NYT Says Protests in France Undermine Macron's Efforts to Give More Money to the Rich

Okay, that's not exactly what it said. Instead the headline of an article on the protests in France told readers "Unrest in France hinders Macron’s push to revive economy."

The policies in question include ending a wealth tax on the rich, cutting retirees' Social Security benefits, and a series of measures designed to reduce the power of unions. While it is possible that Macron has taken these steps because he really does believe that this is the best way to boost economic growth, it is also...

Robert Samuelson Says That He Is Very Closed-Minded and Won't Accept Wage Stagnation

Sorry, I misread that one. This is what he quoted my friend Steve Rose saying about the people who disagree with him on income stagnation. Yes, it's Monday and Robert Samuelson is once again trying to insist that everyone's income is rising just fine.

The bizarre part of the story is that no one is really disagreeing on the facts, just how we talk about them. Before-tax income has been largely stagnant over the last four decades. For families at the middle and bottom, there has been some rise...

Trump and China: Going with Patent Holders Against Workers

[This piece was originally posted on my Patreon site.]

While most of us don’t have access to the inner workings of the Trump administration to know exactly what is going on with its negotiations with China, given the public accounts and statements, it seems workers have clearly lost. Trump seems to have made the concerns of companies like Boeing, who want more help maintaining their control over technology, his top priority. The impact of an under-valued Chinese currency, which has led to a l...

Will Degrowthing Save the Planet?

[This is the third piece in an exchange with Jason Hickel on growth. Hickel's response will be the last piece in the series.]

Jason Hickel responded to my earlier piece on degrowth arguing that in fact economic growth is inconsistent with a sustainable environment and that we have to get people to reject growth as an economic goal if we are going to limit the damage from climate change and excessive resource use more generally.

First, let me point out where we do agree. It is necessary to tak...

The Corruption from Tariffs on Prescription Drugs

Right, I meant "patents," but the logic is the same. When you have a government intervention that raises the price above the free market price then you provide a lot incentive for gaming and corruption. The NYT had a very good piece on this topic just last week. Of course the tariffs on clothes that were being evaded/avoided in that piece were just 10-25 percent. By contrast, patent monopolies raise the price of drugs by the equivalent of several thousand percent. Therefore the incentive for...

An Inverted Yield Curve: Should We Be Worried?

A NYT article on the stock market's plunge also noted that the yield curve, defined as the gap between the interest rate on 10-year Treasury bonds and two-year notes, is close to being inverted. The interest rate on 10-year bonds was just 0.12 percentage points higher than the interest rate on 2-year notes. The piece points out that an inverted yield curve has historically been associated with a recession in the near future.

While I would not rule out a recession (we will have another recessi...

Stability without Growth: Keynes in an Age of Climate Breakdown

[This post by Jason Hickel. He is responding to a post I did on the possibility of having growth in a sustainable economy. I will post a rejoinder later in the week. Jason will then get the last word in this exchange.]

What do Keynesian Democrats think about the movement for post-growth and de-growth economics?  Dean Baker, a senior economist at the Center for Economic Policy Research in Washington, DC, has given us some insight into this question.  In a recent blog post, republishe...