Dean Baker

Recent Articles

Post Pulls Out the Stops In Pushing Its Trade Agenda

The Washington Post is a huge supporter of trade agreements like NAFTA that put non-college educated workers in direct competition with low-paid workers in the developing world, while largely protecting the most highly educated workers like doctors and lawyers. They push this selective protectionism by calling it "free trade." They also call anyone who disagrees with their agenda of selective protectionism, which is designed to redistribute income upward, a protectionist. The paper really outdid itself today with a front page editorial that used the term "free trade" in the headline and 7 other times in a 900 word article. --Dean Baker

The Washington Post Is STILL Missing the Housing Bubble

The Post had a front page article with a headline warning readers that a "new round of foreclosures threatens housing market." Yes, well actually a huge oversupply of housing created by the bubble-driven construction boom is virtually certain to push prices back down to their trend level. This one really is not hard. Nationwide, inflation-adjusted house prices rose by more than 70 percent during the bubble. Over the hundred years from 1896 to 1996 they had just kept pace with the rate of inflation. Prices must fall by another 15 percent or so to get back to their long-term trend. Given this departure from long-term trends, and the continued massive oversupply of housing as measured by record vacancy rates, it would be very surprising if house prices stabilized at their current level. Another wave of foreclosures will be a factor depressing prices -- and could cause prices to overshoot on the downside -- but prices would be virtually certain to fall further in any case. The Post...

NYT Joins Efforts to Scare Public About the Size of Government Debt

Peter Peterson, the billionaire Wall Street investment banker, is devoting more than $1 billion to a campaign to whip up fears about budget deficits in order to force cuts in Social Security and Medicare. It almost looks as though the NYT has joined the effort. It printed an article today that uses a measure of government debt that is explicitly designed to be misleading. The article reports on the debt of Greece, but then adds in a discussion of the debts of other countries, including the United States. The calculations are misleading because they compare future obligations over many decades to the current year's GDP. The honest way to do this calculation is to compare future obligations to projected GDP over the time horizon in which these obligations will be met. However, this calculation would produce a much lower ratio. (The debt in the case of the U.S. would be around 6 percent of GDP.) It is also worth noting that in the case of the United States, the vast majority of the...

Judd Gregg Argues for Higher Unemployment

The Washington Post reports that Senator Gregg does not know why the government is spending money to create jobs. According to the Post, Mr. Gregg said of a jobs bill: "Why do we keep doing this? .... Why do we keep passing debt on to our children? Why do we keep running program after program out here that is shrouded in sweetness and light but not paid for?" As every economist knows, the point of spending money in a downturn is to boost the economy and create jobs. If we raised taxes to pay for the spending then the spending would provide a much smaller boost to the economy. It would have been worth pointing out to readers that Mr. Gregg apparently has no knowledge of economics and is supporting policies that raise unemployment. The statements from Senator Gregg, about issues that directly affect the lives of millions of people, are far more worthy than other comments that the Post and other media outlets have opted to highlight, such as then Senator Obama's use of the word "bitter"...

Fannie and Freddie's Losses Are Profits at Goldman Sachs

In a discussion of the future of Fannie Mae and Freddie Mac the Washington Post noted that the government had committed $125 billion to cover their losses. While the article reports that these losses have been a major political issue, it would have been useful to point out that the losses were, in effect, subsidies to banks. Fannie Mae and Freddie Mac buy mortgages in the secondary market. If they lose money it means that they paid banks more for these mortgages than they were worth. This overpayment is effectively a subsidy to banks who otherwise would have been left holding the mortgages on their books and likely would have incurred losses when they went bad. --Dean Baker

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