Dean Baker's Blog, page 83

Helping the Trump Administration to Reduce Highway Deaths: More on Pay by the Mile Auto Insurance

Last week I noted the Trump administration's professed concern that higher mileage standards would lead to more traffic deaths because fuel efficient cars make it cheaper to drive, therefore people will drive more. As I pointed out at the time, if Trump wants to discourage people from driving then shifting to pay by the mile insurance policies would have create much more disincentive than having them drive fuel inefficient cars.

I gave some links to the relevent literature in that blogpots, b...

Tariffs and Exemptions: A Way for Trump to Reward Friends and Punish Enemies

The NYT had a front page piece on how two major steel companies with close ties to the Trump administration are having enormous say on which companies are granted exemptions to his steel tariffs. While there is nothing in principle wrong with the affected companies giving their input on whether exemptions should be granted, given the lack of transparency and financial disclosure by top officials in the Trump administration, it is difficult to have confidence that these decisions are being mad...

The Story of Stagnant Wage Growth

This recovery has not been great for workers.They have seen modest real wage gains over the last five years, but these gains have not come close to making up the ground lost in the recession and the first years of the recovery.

Nonetheless, real wages have been growing for most of the last five years. In the last month has been an exception to this pattern, not because nominal wages have grown less, but because we had a large jump in energy prices, which has depressed real wage growth. Here's...

China and the United States: Who Has More Innovation to "Steal?"

One of the truly amazing aspects of Donald Trump's trade war with China is how all the pundits agree that we have a legitimate beef with China over stealing "our" intellectual property. This is true pretty much across the board, even among the harshest critics of Trump and his tariffs. As I have argued almost alone, this one needs a bit more thought.

First, the "our" part of the story needs some examination. The vast majority of us don't own any substantial amount of intellectual property tha...

The Trump Administration Thinks that Pay-by-the-Mile Auto Insurance Would Save Tens of Thousands of Lives in Traffic Accidents

I know that we shouldn't be telling readers what political figures think, but in this case, it logically follows from their claim that weakening fuel efficiency standards would save more than10,000 lives over the course of a decade. They gave several reasons for why weakening standards would save lives but the most important was that more fuel efficient cars would make it cheaper to drive, and therefore people would drive more and therefore be in more accidents. They assumed a very strong rel...

Donald Trump Retweets Fake News from CNBC

When I saw the Bureau of Labor Statistics' Employment Cost Index (ECI) numbers for the second quarter this morning I sent a note to some friends joking about how wage growth is skyrocketing, in the sense that it isn't. The report showed compensation rose 0.6 percent in the second quarter, this is actually a modest slowing from prior quarters.

As a practical matter, the numbers are erratic enough and the changes are small enough, that I wouldn't necessarily argue that wage growth has slowed ba...

The Trump Administration's Giant F**k You to Working People: Playing Games with Capital Gains Tax Rates

Okay, I'm going to plead guilty to playing lawyer without a license. The NYT reports that the Trump administration is proposing to unilaterally (as in no congressional action) change the way that capital gains are calculated for tax purposes.

The plan is to allow people to index capital gains for inflation. For example, under current law, if you bought 100 shares of stock for $100 per share ten years ago, and sell the shares today for $200, you would pay the capital gains tax on the full diff...

More Crisis Mongering

I'm beginning to feel like the mouthpiece for the complacency lobby, but we continue to see baseless articles in prominent places telling us that another financial crisis is imminent. The latest entry comes from Steven Pearlstein at the Washington Post, warning us that "The junk debt that tanked the economy? It's back in a big way."

The villain in this story is collateralized loan obligations (CLO). These are securities that put together a variety of loans and then are sold off in tranches. T...

Low Unemployment Reduces Discrimination: The Case of Trucking

The NYT had an interesting piece on how the tight labor market is forcing trucking companies to reach out to women and minorities to hire as truckers. Trucking is an industry that had historically been dominated by white men, but with fewer white men willing to work as truckers, the article argues that the industry has no choice but to look to other demographic groups.

This is a great example of how a tight labor market disproportionately benefits the more disadvantaged segments of the popula...

Quick Thoughts on Trump's "Amazing" Economy

Donald Trump has gotten some well-deserved ridicule his boasts about the "amazing" economy. While the 4.1 percent growth figure reported for the second quarter is impressive, it is hardly qualifies as amazing. There were four quarters in the Obama years with faster growth. Going back before the Great Recession there were many quarters with much more rapid growth. My favorite is the second quarter of 1978, back when Jimmy Carter was president, and the economy grew at a 16.4 percent rate.

But g...