Dean Baker's Blog, page 98

Exonerating Bad Economic Policy For Trump's Victory

There seems to be a big market for analysis that argues upward redistribution did not play a role in the switch of many voters from Democrats to Donald Trump in 2016. The NYT wrote up the latest effort in a major article headlined, "Trump voters driven by fear of losing status, not economic anxiety, study finds."

The study, by Diana C. Mutz, a professor of political science and communications at the University of Pennsylvania, focused on the change in people's economic circumstances between 2...

Basic Income Might Spread Bounty of Capitalism, but So Would Weaker Patent and Copyright Protection

A NYT article on Finland's plan to end its experiment with a basic income for its citizens, noted its attraction, including to some rich people in Silicon Valley:

"In much of the world, the concept of basic income retains appeal as a potential way to more justly spread the bounty of global capitalism while cushioning workers against the threat of robots and artificial intelligence taking their jobs."

There would be less need to be concerned about spreading the bounty if the government did n...

IMF Strikes Out in Projecting Unemployment as Badly As the Fed

Those of us pushing the Federal Reserve Board to hold off on raising interest rates have pointed out that the members of the Fed's Open Market Committee, like other economists, have repeatedly over-estimated the non-accelerating inflation rate of unemployment (NAIRU), the unemployment rate at which inflation would start spiraling upward. In 2014, they had put it at 5.4 percent. Today the unemployment rate stands at 4.1 percent, with no evidence of acceleration in the inflation rate.

If the Fe...

Privatization Isn't Necessarily Done to Save Money

The NYT had a very good article on the deterioration of the quality of public sector jobs over the last two decades. The piece notes the decline in pay and benefits for teachers, prison guards, and a wide variety of other public sector workers. As a result, many workers are leaving the public sector and vacancies are often left unfilled.

At one point the piece comments:

"Short of money, many states have also privatized services like managing public water systems, road repair, emergency servi...

Message to NYT Times: Growth in Our Trading Partners Is Good for the United States

The NYT ran a piece about a revised trade pact between the European Union and Mexico with the headline, "In a message to Trump, Europe and Mexico announce trade pact." The piece tells readers:

"...it sends a message to Mr. Trump that some of America’s closest trading partners are moving ahead with deals of their own — potentially leaving American exporters on the losing end in foreign markets."

This is not how this treaty would be viewed in standard economics. While some US exporters may lo...

If the Debt Mongers Were Serious: The Cost of Patent and Copyright Monopolies

The papers are full of pieces deploring the debt the U.S. government is accumulating under the Trump administration. However, we can know that these people are not serious because they never take into account the implicit debt created by the granting of patent and copyright monopolies.

The story here is a simple one. The government grants these monopolies as a way of paying for research and creative work. What is at issue here is a simple logical point that cannot be disputed by honest people...

Finance 202 Meets Economics 101

The Washington Post decided to give us "Finance 202" to tell us that tax cuts at this point in the business cycle are a bad idea. The gist of the argument is that the economy is approaching full employment, so there is little room left for further stimulus. The piece also tells us that because of increase indebtedness, the government will be less will positioned to provide stimulus to the economy in the next recession.

There are several points worth noting on this one. First, the Washington P...

NYT Ignores Lower U.S. Food Prices as Benefit from Trump Trade War

The NYT had yet another piece about the potential political fallout if China retaliates for Trump's tariffs by imposing tariffs of its own on U.S. agricultural exports. It noted that farmers in some states could turn against the Republicans, highlighting the Senate race in North Dakota in today's paper.

It is striking that it seems no one is mentioning the benefit to U.S. consumers from lower food prices that would be implied by lower farm prices. While the actual savings may not be very larg...

China's "Currency Devaluation Game"

Donald Trump was apparently angry about the value of the Russian ruble and the Chinese yuan against the dollar. He complained in a tweet that both are playing the "Currency Devaluation game" in a tweet yesterday.

Neil Irwin rightly points out that the complaint against Russia is bizarre, both because we don't have much trade with Russia, but also because the most obvious reason its currency is falling is sanctions pushed by the United States and other western countries. The story with China i...

The Tax Simplification H&R Block Won't Allow: Let the IRS Do It

The Associated Press had a fact check on Donald Trump's promise of a simplified tax form. The piece noted that the IRS has had a simplified "1040EZ" form for decades and it is not clear that the form will be any shorter or simpler with the new tax law. It did correctly point out that many fewer people will itemize their deductions, which will make filing simpler for them.

It would have been worth pointing out that the Trump administration could have made the filing process much simpler but ch...