Dean Baker's Blog, page 94

Would Better Measurement of Software Cut US Trade Deficit in Half?

That's what a story in the Financial Times tells readers. I don't think they have much of a case.

The argument is attributed to Hal Varian, Google's chief economist and a former professor of mine when I was in grad school at Michigan. According to Varian, if we accurately counted the value of software in smartphones it would add $200 billion to US exports, cutting our trade deficit in half.

The first item to point out is that our trade deficit is currently running at an annual rate of $640 bi...

Would Better Measurement of Software Cut U.S. Trade Deficit in Half?

That's what a story in the Financial Trimes tells readers. I don't think they have much of a case.

The argument is attributed to Hal Varian, Google's chief economist and a former professor of mine when I was in grad school at Michigan. According to Varian, if we accurately counted the value of software in smartphones it would add $200 billion to U.S. exports, cutting our trade deficit in half.

The first item to point out is that our trade deficit is currently running at an annual rate of $640...

Wealth Inequality: It's Not Clear What It Means

The NYT had a column by Christina Gibson-Davis and Christine Percheski telling readers that wealth inequality had grown much more among families with children than among the elderly. While there is little doubt that inequality has increased hugely over the last three decades (they look at the period from 1989 to 2013), with the implications they describe for inter-generational mobility, there are serious problems with their use of wealth.

First, it is important to note that while the authors'...

More Mind Reading at the NYT: Tells Readers What Trump "Regards" as "Welfare"

It's really great that the New York Times' reporters are able to read people's minds, especially when it comes to Donald Trump. After all, the guy constantly contradicts himself, and makes assertions that clearly are not true, so it might be difficult for most of us to know what he really believes.

But NYT reporters can cut threw the confusion with their mind reading powers. An article on the failure of a House Republican bill for renewing food stamps and farm subsidies told readers:

"he [Rep...

NYT Says Federal Reserve Board Is Wrong, United States Could Not Produce More Manufactured Goods

Economists usually are inclined to trust the data coming out of the Federal Reserve Board and the government statistical agencies, but the NYT told us they are wrong in an article on trade negotiations with China. The article refers to a disputed promise by the Chinese government to reduce its annual trade deficit with the United States by $200 billion.

The piece explicitly dismisses the significance of this promise. It tells readers:

"Economists say that the purchase by China of $200 billion...

More Thoughts on a Job Guarantee: What Is At Issue?

Jared Bernstein and I had a piece earlier this week discussing the problems that a government job guarantee would address along with some of the problems which make us reluctant to endorse one. I thought it would be useful to summarize the four areas in which we have serious concerns about the economic response:

1) The number of people currently employed who would opt for a guaranteed job.

Proponents of a guarantee argue that most private sector employers would improve their wage and benefit...

NYT Takes Notice: Gains from College Are Not the Same for Everyone

The NYT ran a column highlighting new research by Tim Bartik and Brad Hershbein showing that the earnings premium from graduating college is not the same for everyone. Specifically, the research finds that the premium is lower for people from lower income families than for people from middle income families.

It is good to see this divergence in experiences getting attention in the paper. While this has been known to researchers for many years (see this 2010 piece by John  Schmitt an...

Amazon's $1.6 Billion Quarterly Profit Does Not Justify Its $780 Billion Market Cap

Kevin Roose had a piece in the NYT about the large number of tech companies that are going public without ever having made a profit. As the piece points out, the strategy is to use low prices to build up a large market niche and then jack up prices once people become dependent on the company.

Roose touts Amazon as a successful model for this strategy:

"Those years of investments paid off, and Amazon is now the second most valuable company in the world, with $1.6 billion in profit last quarte...

US Health Care Spending Began to Diverge from Everyone Else In the 1970s, not 1980s

Austin Frakt had an interesting NYT Upshot piece noting that the US leads the world in health care spending per capita, but badly trails most other wealthy countries in life expectancy. He notes this divergence began in 1980.

While that is true in terms of life expectancy, the divergence in spending actually began in the 1970s. According to the OECD, the United States was near, but not at the top, in terms of health care spending as a share of GDP. Both Canada and Denmark devoted a larger sha...

Good Washington Post Piece on the Potential Downsides of Having an Amazon Headquarters in DC Area

Since I and others have raised questions about Jeff Bezos–owned paper's boosterism of Amazon when it comes to the location of the company's second headquarters, it is worth calling attention to this very fair piece that points out some of the downsides of having Amazon in the DC area. There are two issues that might have been worth more attention.

The piece notes that the specifics of the incentives being offered by the District of Columbia and Northern Virginia have not been made public. Thi...