Dean Baker's Blog, page 93

Do CEOs Produce for Shareholders?

The reporting of pay ratios between CEOs and median workers has drawn considerable attention to the enormous gap. Most of this has taken a moral tone, noting that would take the typical worker hundreds of years, or in some cases, more than a thousand years to earn as much as the company's CEO gets in a year. While there are certainly important moral questions here, it is also important to ask a simple economic question.

Are the highly paid CEOs actually producing returns for shareholders? Thi...

NYT Says Treasury and IRS Are Worried That Plans for Getting Around SALT Deduction Limit Will Undermine Effort to Screw Blue States

The New York Times ran a piece on a warning from the Internal Revenue Service that it would not allow plans to circumvent the new limits on the State and Local Tax (SALT) deduction by providing a credit for contributions to state-established charitable funds. At one point the piece told readers:

"The Treasury Department and the I.R.S. are worried that the workarounds could further balloon the cost of the tax cuts, which are projected to add more than $1 trillion to the national debt over a d...

NYT Says Treasury and I.R.S. Are Worried That Plans for Getting Around SALT Deduction Limit Will Undermine Effort to Screw Blue States

The New York Times a piece on a warning from the Internal Revenue Service that it would not allow plans to circumvent the new limits on the State and Local Tax (SALT) deduction by providing a credit for contributions to state established charitable funds. At one point the piece told readers:

"The Treasury Department and the I.R.S. are worried that the workarounds could further balloon the cost of the tax cuts, which are projected to add more than $1 trillion to the national debt over a decade...

Washington Post Mistakenly Tells Readers There are Shortages of Workers

A Washington Post article reporting the decision by the Trump administration to not press employers to use E-Verify to prevent undocumented workers from getting jobs repeatedly tells readers there is a labor shortage, especially in farming, restaurants, and construction. The data indicate otherwise.

If there were a shortage of workers in these industries, we should see rapidly rising wages. We don't.

The Bureau of Labor Statistics establishment survey does not include farms, but we don't see...

The Fed Has to Distinguish Between Leaning Against Bubbles and Leaning Against Rising Housing Prices

MarketWatch had a short piece reporting that Michael Woodford, one of the country's most prominent macroeconomists, is now arguing that the Fed should actively look to stem the growth of asset bubbles like the housing bubble in the last decade. It points out that house prices have been rising rapidly in recent years. It also notes that Woodford argues the Fed should not distinguish between run-ups in house prices based on fundamentals and run-ups based on speculation.

As someone who advocated...

Oh No! We're Running Out of People

The United States has really awful policies on child care and parental leave. This makes it very hard for parents, and especially mothers, since they invariably get stuck with most of the responsibilities, to raise kids.

This is an outrage as Amy Westervelt points out in her Guardian column. But a declining birth rate, as the supposed downside for those of us not raising kids or thinking about it, doesn't pass the laugh test.

The prospect of less traffic congestion, less crowded parks and bea...

Catherine Rampell Is Mistaken: Protecting Microsoft and Pfizer's Patents In China Is Not "Our" Concern

It's rare that you get a more explicitly classist piece in a major newspaper than Catherine Rampell's column on Donald Trump's trade war with China. While its assessment of the Trump administration's blustery rhetoric and confused actions seems very much on the money, its assertions about the country's actual interests is not.

It tells readers:

"So rather than taking the time to learn about our actual complaints regarding China’s trade policy (primarily, intellectual property theft), or how...

The Marx Ratio: Not Clear Karl Would be Happy

Neil Irwin had an interesting Upshot piece in the NYT that takes advantage of new data on the median worker's pay at major corporations. The piece calculates the "Marx ratio" which is the ratio of profits per worker to the median worker's pay. It shows this number for each of the companies who have released data on their ratio of CEO pay to median worker's pay, as required by a provision of the Dodd-Frank financial reform act.

It's not clear exactly what this ratio is giving us. Suppose that...

Are We at Full Employment? Taking Issue With Paul Krugman (see addendum)

Paul Krugman had an interesting blog post this morning in which he attributed the continuing weakness of wage growth to an increase in monopsony power. I'm a skeptic on this one since the collapse in wage growth happens to coincide with the Great Recession. The big issue is whether the labor market is again back to its prerecession level of tightness when wages were rising considerably more rapidly.

To argue the case that it is, Krugman follows Jason Furman in dismissing the drop in prime-age...

The Trade Deficit with China: Up Sharply for Those Who Care

With Donald Trump declaring a truce in his "trade war" with China, it might be a good time to check the charts. According to data from the Commerce Department, the US trade deficit with China was $91.9 billion in the first three months of 2018. That's up from $78.8 billion in 2017 and $77.9 billion in 2016.

There are problems with this figure, as many people have noted. First, it is overstated due to the fact that we count the full value of a product exported from China, even though it m...