Dean Baker

Recent Articles

Depressing Our Way to Recovery

Deficit obsession is a sure recipe for sluggish growth.

Two and a half years after the official start of the recovery from the 1990--1991 recession, the U.S. economy is still experiencing weak growth and is generating relatively few jobs. (See the chart "A Feeble Recovery.") Employment has barely regained its pre-recession peak in 1990. More people who seek full-time work have had to settle for part-time employment. Comparatively well-paid manufacturing jobs continue to disappear, replaced by jobs in restaurants, hotels, and temporary employment agencies. Investment growth has also been the slowest of any postwar recovery.

After the Fall

Alan Greenspan is known for his guarded pronouncements, carefully crafted in order to soothe financial markets. But in his semiannual testimony before the House Banking Committee this February, Greenspan did not mince words. He pointedly explained why stock prices should only rise as fast as disposable income. This would imply a growth rate for stock prices of just 5 percent annually. For investors who have come to expect double-digit returns, this is quite a letdown.

Energy Insurance

The vast majority of scientists who study climate issues now agree that carbon emissions are a potentially disastrous problem. However, economic fears have obstructed even the mildest remedies. Particularly in the United States, voters resist taxes that would raise fuel costs, and there has been little political support for massive investment in new technologies or mass transit systems.

Patent Medicine

Absurdly high prices have put lifesaving prescription drugs out of reach for millions of Americans and for hundreds of millions of people in developing countries. In large part, patent protection is to blame. The patent system is a trade-off: Consumers pay a monopoly price on a drug for 17 years to provide incentives for firms to undertake research that yields large profits. But the patent system is not the only way to support drug research. Alternatives that have a proven track record of success already exist--specifically, research supported by foundations, universities, and the government. Shortening patent terms and putting most pharmaceutical research in the public domain would cut costs for consumers as well as for government.