Dean Baker's Blog, page 89

Washington Post Gets Story 180 Degrees Wrong: Oregon Rancher Wants Private Use of Federal Lands (see Addendum)

We all know about the problem who expect handouts from the government because they are too lazy or incompetent to make it on their own. The Washington Post wrote about a cattle rancher in Oregon who fits this bill, but so badly represented the facts most readers probably did not understand what is at stake.

The piece is about two ranchers in Southeastern Oregon, Dwight Hammond Jr. and his son, Steven, who were convicted of committing arson on federal property. According to the article, they a...

The Trump Tax Cut: The Story Is Investment

In a Washington Post analysis, Philip Bump assessed the evidence as to whether the Republican tax cuts passed last year are leading to the promised wage growth. He notes promises from Donald Trump about how the tax cut would lead to more hiring, which would push up wages.

While this is in fact what Trump promised on many occasions, this is likely due to the fact he didn't understand the logic of his own tax cut. His economists justified the promised wage gains not by any immediate hiring...

Contrary to What the NYT Tells You, the Fed Believes that Raising Borrowing Costs Slows Growth

The Federal Reserve Board yesterday raised interest rates. According to comments from Chair Jerome Powell and other Fed board members, they believe that the unemployment rate is approaching, if not below, levels where it could trigger inflation. The hike yesterday, along with prior hikes and projected future hikes, was done with the intention of keeping the unemployment rate from getting so low that inflation would start to spiral upward.

This is not the same as "express[ing] confidence that...

News Flash: Shorter Patents Are Not More Activist Government

Neil Irwin had an interesting piece discussing various proposals that would ensure that workers share in productivity gains if we start to see massive job displacement due to robots (not much to date). At one point he says this list would imply more activist government. This is not true. Most of the proposals (which can be found in my 2016 [free] book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer ) involve different ways in which the gov...

Not Everything Trump Says on Trade is Wrong: Countries Don't Always Benefit from More Trade

Donald Trump's tendency to make things up as he goes along naturally prompts a strong reaction from people who try to approach issues in a serious way. But serious people can sometimes get carried away in this reaction.

Glenn Kessler, the Washington Post's fact checker, got a bit carried away in trying to set readers straight on Trump's bizarre claim we have a $100 billion trade deficit with Canada. (We do have a trade deficit, but it is closer to $20 billion.) In his Fact Check piece, Kessle...

Former AIG Director Martin Feldstein Wants the Fed to Stop Worrying About Unemployment

No, this one is not at all a joke. Harvard Professor and former AIG director (yes, the one the government bailed out in 2008) Martin Feldstein wants the Fed to stop worrying about unemployment and just focus on inflation. His Wall Street Journal column argues for ending the Fed's dual mandate and instead just having an inflation target.

Before getting to the substance, it is worth a short digression on Feldstein's track record. Feldstein was sitting on AIG's board of directors as the insurer...

Robert Samuelson Tells Us About the Cowardice of the Pundit Class

Not deliberately of course, but he once again used his column to demand that Congress take steps to cut Social Security and Medicare. He denounced the politicians who don't share his agenda of making the lives of seniors harder as "cowards." Okay, nothing unusual here.

But let's take a step back into reality. The economy is hugely poorer today than it would have been if in the wake of the Great Recession we had effective stimulus. (Of course, we would be even better off if the folks running i...

There Is a Simple Way to Keep Companies from Shifting Profits to Tax Havens

The NYT had a good piece highlighting new research by Gabriel Zucman, Thomas Torslov, and Ludvig Wier indicating that multinationals may be shifting as much as 40 percent of their profits to tax havens. This is a pretty serious problem if we actually expect companies to pay their taxes.

As I have pointed in the past, there is actually a very simple mechanism that would pretty much block this sort of tax avoidance. If companies were required to give the government non-voting shares in an amoun...

More Crisis Mongering By People Who Insist on Not Learning the Lessons of the Housing Bubble

OMG! It's the Mother of All Credit Bubbles!. That's not my line, Steven Pearlstein is beating the drums in the Washington Post telling us we should be very afraid because a number of corporations are taking on too much debt.

His basic story is that corporate America is getting heavily leveraged, with many companies likely finding themselves in a situation where they can't repay their loans. I wouldn't dispute the basic story, but there are few points worth noting.

First, companies have an inc...

NYT Editorial on FDA Drug Approvals Misses Point: People Respond to Incentives

It's well known that intellectuals have a hard time dealing with new ideas. And, for better or worse, the NYT's editorial writers are intellectuals.

This made it painful to read its editorial criticizing the Food and Drug Administration's (FDA) efforts to hasten the approval of new drugs. The piece makes many important points about the problems with an accelerated drug approval process. This increases the risk that drugs will be approved that are of little benefit and possibly even harmful.

W...