Dean Baker

Recent Articles

American Idol Special: Was the Vote Kosher?

First, Beat the Press extends its congratulations to Taylor Hicks, the new American Idol. Now, for the serious question, was the vote fair? The issue here has to do with the voting mechanism. As we know the vote took place through phone-in voting. (People could also text message in their favorites). The problem is that the enthusiastic response by Idol fans often left the phone lines busy. For example, the Washington Post Idol wrap-up reported that a special on-line speed dialing service was able to get through with less than one-quarter of its calls. If most calls don't get through, then the votes recorded for each contestant will end up being roughly the same, regardless of how many people intended to vote for them. This can be seen with a simple example. Suppose the system accepts 10 calls a minute for each contestant (they had separate phone numbers). Now suppose that Katharine McPhee had 1000 calls and Taylor Hicks had 2000 calls. Since the system will only accept 10 calls a...

Can We Buy New Home Sales Data?

The Commerce Department's data for new home sales in April showed a 4.9 percent increase from March. Many news reports took this as evidence of the continued strength of the housing market. A bit of caution is appropriate here. First, monthly data are always erratic. This should be a mantra for anyone trying to track the economy. If a particular data source shows data that are out of line with other data we have on the economy, then it was probably driven by some quirk in the data. Second, the new home sales data show contracts signed, not actual sales. The difference is the number of contracts that are cancelled. A year ago, when buyers thought that prices were going through the roof, cancellations were relatively rare. Now there are reports of cancellation rates in the neighborhood of 20-30% in some markets. This means that completed sales may actually be dropping, even if contracts are rising. There is evidence for this proposition in the April report. The inventory of unsold homes...

Problems With Venezuelan Numbers

It appears that Mexico is not the only Latin American country for which the media have difficulty with official statistics. Apparently, the media have been anxious to tout high poverty numbers for Venezuela. The problem appears to be that they want to cite poverty data for 2004, which showed a large upturn in the poverty rate in the immediate wake of a strike in the oil sector. The Venezuelan economy rebounded sharply, beginning in 2004, and the poverty rate predictably fell back below its previous levels. However, even though the 2005 data is now available, the media continues to use the much higher numbers from 2004. My colleagues at CEPR posted a short piece on Venezuelan poverty today. --Dean Baker

Rising Wages for Nurses? Nanny State to the Rescue

The New York Times had an article today that could have badly used a bit of economic analysis. The article reports on a provision in the Senate immigration bill that removes the cap on the number of nurses who can enter the country each year. The problem, as described in the article, is that the country faces a large and growing shortage of nurses. The decision to turn to immigrants is striking, since this is not what Congress did to meet the large shortages of doctors, lawyers, accountants, economists, CEOs and other occupations that draw very high wages. In other words, the Senate is making a decision to consciously try to depress the wages of nurses, in a way that it has not done for other professions that command high wages. It would have been reasonable to ask why nurses are being singled out in this way. There certainly is no economic argument for holding down the wages of nurses but not the wages of workers in more highly paid occupations. --Dean Baker

Washington Post Still Believes in Mexico's Post-NAFTA Growth Miracle

It is now 36 days since the Washington Po st published an article that reported that Mexico's economy has grown at a world record 17.5 percent annual rate since NAFTA was implemented in 1994. (According to IMF data, annual growth averaged 2.9 percent.) They have refused to print a correction despite repeated calls and e-mails from my colleagues at CEPR. The Post has a very strong policy on correcting errors, which was printed in a recent column by the ombudsman ("Policy vs. Reality in Correcting Errors" 5-7-06; B 6): "The Washington Post is committed to correcting all errors that appear in the newspaper, just as we are committed to the kind of careful journalism that will minimize the number of errors we print. Preventing and correcting mistakes are two sides of the coin of our realm: accuracy. Accuracy is our goal, and candor is our defense." -- The Post Stylebook As I noted before, the Post had taken a strong editorial stand in support on NAFTA. I will allow them to explain this...

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