Dean Baker

Recent Articles

No Correction on Mexican Growth at the Washington Post

To those following the issue, the Washington P ost still has not corrected the error in its reporting on Mexico's post NAFTA growth rate (" Mexican Deportee's U.S. Sojourn Illuminates Roots of Current Crisis ," 4-17-06:A1). My April 18th post noted that the growth data reported in this article implied that Mexico had enjoyed an average GDP growth rate of 17.5 percent a year in the post-NAFTA era, which would be a world record. The IMF data show Mexico's growth rate at a weak 2.9 percent. While the Post has taken a strong pro-NAFTA position on its editorial page, I wrote and continue to believe that this error was an honest mistake. The failure to correct this error after it has been called to their attention is harder to explain. (I also noted a similar error on growth in the Post's Sunday Outlook section, but we can give opinion writers more leeway.) Since the Post will make an effort to correct misspelled names in wedding announcements, it is difficult to understand its refusal to...

Arctic Oil Nonsense

Proponents of drilling in the Arctic National Wildlife Refuge are happy to make whatever outlandish claims are convenient to advance their cause. A few years ago, they were pushing the line that drilling in the Refuge would generate 500,000-750,000 jobs, citing a study by WEFA, one of the country's leading economic forecasting firms. We did a short analysis showing the faults of this study. When WEFA refused to stand behind its study, this outlandish job claim quickly disappeared from the debate. But the nonsense continues. President Bush claimed today that the country would be producing another million barrels of oil a day if President Clinton had allowed drilling in the refuge. He presumably meant this claim to impress his audience, implying President Clinton's opposition to drilling in the refuge is a major factor behind today's high oil prices. A few simple facts indicate otherwise. First, there is a world market for oil. What matters in determining the price of oil is how much...

The Housing Bubble: Why Did the Media Miss It?

As the housing bubble starts to unwind people will be looking for villains in this economic disaster. There are many, with the list including Alan Greenspan, the bulk of the economics profession, and of course, the reporters covering the housing market. As was the case with the stock bubble, there was very little attention paid to the underlying fundamentals in the market. Anyone who bothered to look at the data could have quickly recognized that the run-up in home prices in the years after 1997 had no historical precedent . From the early 1950s until 1997 (the years for which we have good data), house prices largely followed the overall rate of inflation. In the years since 1997, house prices have increased by 50 percent after adjusting for inflation. If housing prices have tracked the overall price level for 50 years, and then suddenly take-off relative to other prices, this is a fundamental change in a key sector of the economy. Fundamental changes in the economy are not impossible...

More Fact Checking Problems at the Washington Post

Last Tuesday, I pointed out that a front page Washington Post article had overstated Mexico's growth in the post-NAFTA era by a factor of five ( Mexican Deportee's U.S. Sojourn Illuminates Roots of Current Crisis , 4-17-06:A1). It appears that the Post's problems with arithmetic are continuing. The front page of the Sunday Outlook section had an article that refers to the rise to power of Hugo Chavez in Venezuela and Evo Morales in Bolivia ( Old States, New Threats , 4-23-06;E1). The article comments that "social tensions have exploded as a result of the unleashing of market economies that create rapid but uneven growth." Growth in Venezuela and Bolivia may have been uneven, but it certainly was not rapid. According to data from the Penn World Tables and the World Bank, per capita GDP in Venezuela was more than 10 percent lower when Hugo Chavez took office in 1998 than it had been in 1980. In Bolivia, per capita GDP had fallen by almost 15 percent between 1980 and 2005 (see also "...

"Protectionist," a Four Letter Word?

In many economic policy debates, the worst possible adjective is "protectionist." All right thinking people know that protectionism is bad. According to the economic in-crowd, only ignorant and reactionary people support protectionism measures. (The Post gives a nice example of this thinking in a piece explaining how the IMF will act to prevent protectionism in an economic crisis: " IMF Calls for Cooperation Ahead of Imbalances Meeting .") The image of hoary protectionism lurking on the horizon can be very effective for powerful interests seeking to push their agendas, but it has nothing to do with real world economic policy. The United States has all sorts of protectionist barriers, the most important of which apply to professional services like physicians' services and lawyers' services. These barriers take the form of licensing requirements that are deliberately designed to make it more difficult for foreign professionals to practice in the United States. If the United States was...

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