Dean Baker's Blog, page 96

Yes Kids, You Can Have a Promising Career Scaring People About the Debt: Just Ask George Will

Yes, we have yet another column warning about the government debt from George Will, with a brief interlude warning about household debt as well. Yes, the national debt is a really big number, but quickly, here is why we need not be as concerned as George Will wants us to be.

First, on the debt service point, Will wants us to be scared that interest rates will rise, making debt service a very large share of the budget. Well, the Fed controls interest rates and unless inflation starts to rise r...

Is the Washington Post Opposed to the European Union?

That is what readers of its lead editorial must be wondering. The editorial criticized Trump's trade policies, pointing out that the policies are creating uncertainties for businesses.

It then notes that Trump appears to view uncertainty as being a positive outcome:

"Last month, in fact, the president all but confessed that he sees uncertainty as a weapon against them in talks over revising the North American Free Trade Agreement. 'We can negotiate forever,' he said. 'Because as long as we h...

Donald Trump Is Not Very Good With Numbers #54,362: U.S. and China

Heather Long has a piece in the Washington Post detailing the demands that Donald Trump is making on China in exchange for not imposing tariffs. As she rightly points out, the list essentially amounts to asking China to remake its economy.

It would have been useful to point out how ridiculous this list of demands is, given the limited ability of the U.S. to hurt China with tariffs. The U.S. currently is importing a bit more than $500 billion a year from China. On an exchange rate basis, this...

Amazon Tripe on Helping Small Businesses In the Jeff Bezos Washington Post

Amazon, which fueled its enormous growth with billions in taxpayer subsidies, is trying to push the line that it is actually good for small businesses. Gene Marks, a consultant who blogs for the Post's business section, noted the company's claim that it actually is good for small businesses.

The basis for the claim is that 1 million small businesses use Amazon's network to sell their goods throughout the world. The company claims it has created 900,000 jobs based on these sales.

As Marks poin...

NYT Continues to Use Its News Section to Push for TPP

Many folks in the media seem to think it is part of their job to promote trade agreements like the Trans-Pacific Partnership (TPP), not only in opinion pages, but in the news section too. The NYT gave us yet another example of this effort in a piece on a hotly contested congressional race in Washington.

At one point the piece tells readers that the TPP: "...would have reinforced the nation’s embrace of free trade." This is not true.

The TPP had relatively little to do with free trade in the s...

The Robots Taking the Jobs Gang Are as Out of Touch with Reality as the Trumpers

I know we are supposed to view the AI and robot folks as great gurus of the future, but at the moment they look like people who have great difficulty with simple arithmetic. We just got new numbers on productivity today and they were not very good, and they were especially not very good in manufacturing, the sector where we are supposed to have the greatest fear of job-killing robots. And, it's not just the last quarter I'm talking about.

Productivity growth in manufacturing has averaged well...

NYT Presents a Story of Rising Productivity in the Fast-Food Industry

The NYT described the problems that fast-food restaurants are having in getting and keeping workers as a result of lower unemployment. It describes several ways in which restaurants have been able to maintain sales with fewer workers. It also suggests that many restaurants are likely to go out of business since they will not be profitable if they have to pay the wages necessary to keep workers.

This is how productivity increases in a market economy. Some restaurants will be able to find ways...

Doctors, Unlike Teachers, Do Well in the Modern Economy Because They Don't Face Foreign Competition

The NYT had an interesting piece on how many cities are bringing in foreign teachers, under J-1 visas, because US citizens are not willing to work for the pay being offered. This is yet another example of how political power shapes the market and thereby determines the pay in different occupations.

If it were simply an economic question, there would be far more money to be saved by bringing in foreign doctors than foreign teachers. The average pay for doctors in the United States is over...

The Fed's 2.0 Percent Inflation Target is an Average Not a Ceiling

This is an important point to remember in coverage of the Federal Reserve Board's plans on interest rates. Former Fed Chair Janet Yellen repeatedly reminded the public that the 2.0 percent target is intended to be an average.

The inflation rate, as measured by the consumer price expenditure deflator, has been under 2.0 percent for most of the last six years. This means the Fed should be prepared to allow the rate to rise modestly above 2.0 percent given its target. We will have a recession at...

George Mason and Koch Brothers

I can't say I've been following all the details here, but it's hard to see why a public university should have secret agreements with funders. If the Kochs don't want the terms of their funding exposed to the public, then the conditions probably are not proper. Universities should not be in the business of selling legitimating arguments for political positions.

The same story applies to private universities that want to be taken seriously. In fact, it would be a good rule to have as a conditi...