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Dean Baker

Dean Baker

Dean Baker is a macroeconomist and codirector of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is a regular Truthout columnist and a member of Truthout's Board of Advisers.

Articles by Dean Baker

Free college and pay-by-the-mile auto insurance

11 days ago

From Dean Baker
Recently, Washington Post columnist Catherine Rampell reported on the negative reactions of college presidents to the idea of free public college. The context was a media dinner with a dozen college presidents, most of whom were leading non-flagship public schools, according to Rampell.
The presidents were asked if they thought it was likely that the government would adopt free college along the lines proposed by presidential candidates Senators Bernie Sanders and Elizabeth Warren. Rampell reports that no one raised their hand. When asked whether they thought free college was a good idea, again, no one raised their hand.
The negative response to the proposal of free college from a group of college presidents, assumed to be authorities on the issue, was presented as

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Greenhouse gas emissions and the right to dump sewage on your lawn

29 days ago

From Dean Baker
In debates over protecting the environment, and especially global warming, it is standard practice to refer to the pro-protection side as being in favor of government regulation and the anti-protection side as being pro-free market. This is nonsense and it is nonsense in a way that strongly benefits the enemies of environmental protection.
There is a simple way to think about environmental protection. If I build a home and want to dispose of my sewage in the cheapest possible way, I will just dump it on my neighbor’s lawn. Environmental regulation means having the government say that I can’t do this.
It is bizarre that somehow the prohibition of dumping my sewage on my neighbor’s lawn is treated as government regulation interfering in the market. The government is

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General Trump’s strange offensive in his trade war

December 13, 2019

From Dean Baker
Just when many policy types thought that Donald Trump was about to wind down his trade war with China and work out a deal, he announced that he was in no rush to reach an agreement. He said that he might wait until after the election next year, boasting about the “massive” amount of money he was pulling in from his tariffs.
In addition to his China attack, Trump also imposed tariffs on steel and aluminum from Argentina and Brazil, complaining that they were manipulating their currencies. Moreover, his administration announced plans to put a tariff as high as 100 percent on wine and cheese imported from France in retaliation for France’s plans to tax internet services. This tax will largely hit U.S. tech giants like Google and Facebook.
Each of these moves by themselves

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Simple economics that most economists don’t know

December 6, 2019

From Dean Baker
Economists are continually developing new statistical techniques, at least some of which are useful for analyzing data in ways that allow us to learn new things about the world. While developing these new techniques can often be complicated, there are many simple things about the world that economists tend to overlook.
The most important example here is the housing bubble in the last decade. It didn’t require any complicated statistical techniques to recognize that house prices had sharply diverged from their long-term pattern, with no plausible explanation in the fundamentals of the housing market.
It also didn’t require sophisticated statistical analysis to see the housing market was driving the economy. At its peak in 2005 residential construction accounted for 6.8

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China has hugely outgrown the U.S. under Trump

November 29, 2019

From Dean Baker
This is one in the “whose is bigger?” category; which country has added the most to their GDP over the last three years. There is not any particular reason anyone should care about this, except that Donald Trump has made a big point of touting something about how no one says China will soon be the world’s largest economy anymore.
In fact, China’s economy surpassed the U.S. economy in 2015, using the purchasing power parity measure of GDP. This measure, in principle, uses a common set of prices for all goods and services for all countries’ output. Most economists consider it the best measure of the size of a country’s economy for most purposes.
China has continued to grow much faster the United States, meaning the gap between the economies is growing. China’s economy is

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Should we have billionaires?

November 20, 2019

From Dean Baker
The Democratic presidential campaign has taken a strange twist in recent days, with candidates being asked whether we should have billionaires. While there may be some grand philosophical questions at stake here, I will stick to more mundane economic ones. The real question is: How do you want the economy to work?
The basic story is that if we have a market economy, some people can get very rich. If we buy the right-wing story, the superrich got their money from their great contribution to society. If we look at it with clearer eyes, the superrich got their money because we structured the economy in a way that allowed them to get super rich.
In some cases, that can mean that they had important innovations that made large numbers of people better off. While many of us

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The United States is the world’s second largest economy: when it comes to climate change, it matters

November 7, 2019

From Dean Baker
The New York Times has an article on the Trump administration’s decision to pull the United States out of the Paris Agreement on climate change. The first sentence wrongly describes the United States as “the world’s largest economy.” Actually China passed the United States as the world’s largest economy early in the decade. According to the I.M.F. its economy is now more than 25 percent larger than the U.S. economy. It is projected to be more than 50 percent larger by 2024.
This matters because China actually has moved aggressively to adopt clean energy. It is now by far the world leader in the use of solar and wind power and electric car sales. The fact that the Trump administration is determined not to cooperate in efforts to reduce greenhouse gas emissions is

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Mark Zuckerberg is a rich jerk

November 1, 2019

From Dean Baker
Last week, New York Times columnist Timothy Egan had a piece headlined “Why Doesn’t Mark Zuckerberg Get It?” The piece then goes on to document how Facebook has become a medium for spreading lies and nonsense all over the world, that many ill-informed users have come to believe.
This is what Egan wants Zuckerberg to “get.” While it would be nice if Zuckerberg understood the problems created by Facebook, and took effective measures to address them, the problem with Egan’s piece is that there is no reason to expect that Zuckerberg would get this point.
Zuckerberg is not a political philosopher concerned about the public good. There is a zero evidence he is a deep thinker of any sort. He is a Harvard boy who stumbled into a good idea and had the necessary connections to

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Blame the policies, not the robots

October 26, 2019

From Jared Bernstein and Dean Baker
The claim that automation is responsible for massive job losses has been made in almost every one of the Democratic debates. In the last debate, technology entrepreneur Andrew Yang told of automation closing stores on Main Street and of self-driving trucks that would shortly displace “3.5 million truckers or the 7 million Americans who work in truck stops, motels, and diners” that serve them. Rep. Tulsi Gabbard (Hawaii) suggested that the “automation revolution” was at “the heart of the fear that is well-founded.”
When Sen. Elizabeth Warren (Mass.) argued that trade was a bigger culprit than automation, the fact-checker at the Associated Press claimed she was “off” and that “economists mostly blame those job losses on automation and robots, not trade

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Taxing financial transactions is more strategic than taxing high wealth

October 11, 2019

From Dean Baker
Presidential candidate Joe Biden is considering to propose a financial transactions tax as part of his campaign for the Democratic nomination, according to a recent report from The Washington Post. This is big news for those of us who have long advocated such a tax.
Sen. Bernie Sanders has taken the lead on this issue among presidential candidates, including a financial transactions tax — also known as an FTT — as part of his plan for making college tuition free. Several other candidates also support a financial transactions tax, but if the Democratic Party’s leading centrist candidate endorses the tax, it would mark a new degree of acceptance within the mainstream of political debate.
Interestingly, Sen. Elizabeth Warren is not among those supporting a financial

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There is no economic justification for drilling in the Arctic Wildlife Refuge

September 30, 2019

From Dean Baker
Earlier this month, the U.S. Department of the Interior released its final environmental impact study on plans to drill for oil and gas in the Arctic National Wildlife Refuge (ANWR). While the study noted environmental risks, it gave the go-ahead for drilling in this incredibly sensitive area.
This summer, my small town of Kanab, Utah, agreed to sell water to a frac sand mine and processing plant that would be operating just over 10 miles from Zion National Park. The county planning commission also approved a conditional use permit that would allow the mine to go forward.
What both of these actions have in common is that they are gratuitous acts of environmental destruction. This is not a story of tough trade-offs between the environment and the economy.
Those do exist

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Rigged: How globalization and the rules of the modern economy were structured to make the rich richer

September 11, 2019

From Dean Baker
The richest 1% have done extraordinarily well over the last four decades. But income has stagnated for the majority. This was not an accident. It was by design.
My book, Rigged, highlights five areas where US policies were deliberately structured to redistribute income upwards.
IP laws were strengthened, making patent & copyright monopolies longer and stronger
This hugely increased the share of GDP that goes to sectors like pharmaceuticals, medical equipment, computers, and software. And it made stakeholders in these sectors hugely wealthy.
But it was unnecessary. Alternative mechanisms for financing innovation and creative work – such as direct public funding for pharmaceutical research, with new drugs selling as generics – would not have led to the same sort of upward

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Combatting global warming and austerity

September 10, 2019

From Dean Baker
In the United States, proposals for a Green New Deal have been getting considerable attention in recent months as activists have pressed both members of Congress and Democratic presidential candidates to support aggressive measures to combat global warming. There clearly is much more that we can and must do in the immediate future to prevent enormous damage to the planet.
However, major initiatives in the United States to combat global warming will almost certainly require some increases in taxes. There is likely some slack in the U.S. economy (perhaps we’ll see more slack as a result of Donald Trump’s misfires in his trade war), but a major push involving hundreds of billions of dollars of additional annual spending (2-3 percent of GDP) will almost certainly

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Government-granted patent monopolies are driving up drug prices

September 9, 2019

From Dean Baker
Most of the leading Democratic presidential contenders have put forward a plan to reduce drug prices. But for some reason, none of them have embraced the simple idea of not making drugs expensive in the first place. Specifically, none of the contenders have proposed moving away from the current system of financing the research and development of new drugs through government-granted patent monopolies.
The point is a simple one that should be obvious to people in policy debates. Drugs are almost invariably cheap to manufacture. Drugs that sell as generics, with free-market competition, are rarely expensive. The drugs that cost tens or hundreds of thousands of dollars annually are almost always subject to patent monopolies or some related form of government protection.
If

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Austerity-obsessed Europe could combat climate change without raising taxes

September 3, 2019

From Dean Baker
In the United States, there has been much attention given to the various proposals for a Green New Deal. While there have been legitimate questions about paying for a large push to reduce greenhouse gas emissions, many accept the need for such measures for the survival of the planet.
However, there has been less attention paid to the failure of European countries to act in this area, in spite of the fact that a substantial program would be virtually costless for Europe. There has been far more attention paid to the politics around Brexit in the United Kingdom than to the important question of how Europe will address global warming.
Just to be clear, the European countries have been far better global citizens in this area than the United States. Their per-person

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The incentive for pushing opioids: patent monopolies

September 1, 2019

From Dean Baker
It’s probably too simple and obvious to be worth mentioning, but it seems none of the news coverage on the suits against opioid manufacturers say that the reason that companies like Purdue Pharma and Johnson & Johnson had so much incentive to push their drugs was that the government gave them patent monopolies that allowed them to sell their products for prices that were far above the free market level. While generic manufacturers also made money on opioids, the largest profits were made the brand manufacturers, who also did the most pushing.
One of the unintended consequences of government granted patent monopolies is that it gives companies incentive to mislead physicians and the general public about the safety and effectiveness of their drugs. The costs from the

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China goes generic!

August 28, 2019

From Dean Baker
The New York Times had a piece about a new law in China that reduced penalties for importing drugs that have not been approved by China’s regulatory agency. While it is not clear from the piece how far-reaching this change in the law will be in practice, the potential impact for both China and the world is enormous.
India has continued to be a massive supplier of generic drugs, both to its own people, but also to the rest of the world. Many drugs that are subject to patent protection in the United States are available at free market prices in India. The gap in prices is often more than 100 to 1. (India’s generics vary in quality, but their largest manufacturers are comparable in quality to U.S. manufacturers.)
The United States has been pushing for years to force India

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Brazil, the Amazon, and Global Warming: It ain’t quite what the media tell you

August 25, 2019

From Dean Baker
Brazil has gotten a huge amount of bad press with the fires in the Amazon with the emphasis on the harm its development policies are doing to efforts to limit global warming. While the policies of Brazil’s right-wing president, Jair Bolsonaro, are disastrous, there is an important part of the story that is being left out of most discussions.
The reason that we are worried about global warming is because rich countries, most importantly the United States, have been spewing huge amounts of greenhouse gases into the atmosphere for well over a century, while destroying the native forests on their lands. They also have paid to have forests in other countries destroyed in order to meet their resource needs.
This is the context in which the destruction of the Amazon is a

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The U.S. economy is not the world’s largest

August 24, 2019

From Dean Baker
I know that reality often has little place in our political debates, but is there any way we can the New York Times and other news outlets to stop saying that the U.S. economy is the world’s largest? It happens not to be true.
According to the I.M.F., using purchasing power parity measures, which most economists view as the best measure, China passed the United States in 2015 and is now more than 25 percent larger. Maybe reporters and editors get a kick out of saying that the U.S. is the world’s largest economy, but since it happens not to be true, it would be good if they stopped saying it.

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China did not trick the US — Trade negotiators served corporate interests

August 22, 2019

From Dean Baker
The New York Times ran an article last week with a headline saying that the 2020 Democratic presidential contenders faced a serious problem: “how to be tougher on trade than Trump.” Serious readers might have struggled with the idea of getting “tough on trade.” After all, trade is a tool, like a screwdriver. Is it possible to get tough on a screwdriver?
While the Times’s headline may be especially egregious, it is characteristic of trade coverage which takes an almost entirely Trumpian view of the topic. The media portray the issue of some countries, most obviously China, benefiting at the expense of the United States. Nothing could be more completely at odds with reality.
China has a huge trade surplus with the United States, about $420 billion (2.1 percent of GDP) as

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Good news: The stock market is plunging

August 17, 2019

From Dean Baker
The stock market enjoys a mythological place not only among mainstream media types, but also among many progressives. For some reason this measure of expected future corporate profits is taken as a measure of economic well-being.
The fact that the media obsesses over the stock market hardly needs to be mentioned. If there is one item about the economy that we can be sure will be repeated every day, it is the movement in the Dow or the S&P 500. And, needless to say, an upward movement is good news and a downward movement is bad news.
But the view that the stock market is telling us something about the well-being of the economy goes far beyond just ill-informed media types. In the lead up to the 2016 election, Justin Wolfers, a University of Michigan economics professor,

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Progressive policies may hurt the stock market. that’s not a bad thing.

August 15, 2019

From Dean Baker
Last week, we saw the media terrified over a plunge in the stock market following an escalation of Donald Trump’s trade war with China. There are good reasons to be concerned about Trump’s ill-defined trade war and reality TV tactics, but the plunge in the stock market is not one of them.
While the idea that the stock market is a measure of the health of the economy permeates news reporting and popular understanding, it has no basis in economics. The stock market is a measure of the expectations of future profits of companies that are listed in the exchange. It is only coincidental when it provides information about the health of the economy. It is important that the public understand this distinction as the 2020 election draws closer.
The basic logic here is simple.

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Yet another New York Times column gets the story on automation and inequality completely wrong

August 13, 2019

From Dean Baker
I am a big fan of expanding the welfare state but I am also a big fan of reality-based analysis. For this reason, it’s hard not to be upset over yet another column telling us that the robots are taking all the jobs and that this will lead to massive inequality.
The first part is more than a little annoying just because it is so completely and unambiguously at odds with reality. Productivity growth, which is the measure of the rate at which robots and other technologies are taking jobs, has been extremely slow in recent years. It has averaged just 1.3 percent annually since 2005. That compares to an annual rate of 3.0 percent from 1995 to 2005 and in the long Golden Age from 1947 to 1973.
In addition, all the official projections from places like the Congressional Budget

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Why is Facebook, the world’s largest publisher, immune to publishing laws?

July 30, 2019

From Dean Baker
Mark Zuckerberg may not think he needs a new job, but he does. It’s long past time Facebook be classified as a publisher, where it can be held responsible for the content that appears in posts on its system.
The issue here is the special exemption to liability that Facebook and other internet platforms get from Section 230 of the Communications Decency Act of 1996. This law was passed in the early days of the internet and was intended to set up rules for governing communications that paralleled the ones for print and broadcast media. At the time, Congress decided to include Section 230, which protects Facebook and other internet platforms from the same sort of responsibility for content that print or broadcast media face.
To see what is at issue, suppose that a Facebook

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The “aging crisis” is actually just a labor crisis for the wealthy

July 24, 2019

From Dean Baker
The New York Times told us last week that China is running out of people. That might seem an odd concern for a country with a population of more than 1.4 billion, but you can read it for yourself:
“Driving this regression in women’s status is a looming aging crisis, and the relaxing of the draconian ‘one-child’ birth restrictions that contributed to the graying population. The Communist Party now wants to try to stimulate a baby boom.”
What exactly is supposed to be China’s “aging crisis?” China has had a low birth rate for the last four decades, as the government consciously tried to slow the country’s population growth. As a result, it does have an aging population and a declining ratio of workers to retirees, but this raises the obvious question, “So what?”
We see

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Trump’s fixation on intellectual property rights serves the rich

July 15, 2019

From Dean Baker

Between making threats of actual war with North Korea and Iran, Donald Trump has also gotten us into a trade war with China. Trump’s ostensible reason for this trade war — the large US trade deficit with China — actually did have some basis in reality, but in practice the trade war is straying into turf that is likely to offer few gains for US workers and could actually lead to sizable losses.
A major theme in Trump’s campaign was that China is a world-class currency manipulator that deliberately keeps down the value of its currency to give its products an advantage in international trade. The basic story is true; China did intervene heavily in currency markets to keep the value of its currency from rising against the dollar.
However, it would probably be more

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Replace patent monopolies with direct public funding for drug research

July 2, 2019

From Dean Baker
It is impressive to see many of the leading Democratic candidates put forward bold progressive proposals. Unfortunately, in the case of prescription drugs, their imagination has been notably weak. While there have been proposals for lowering drug prices, none of them have been willing to attack the fundamental problem: government makes prices high by granting patent monopolies.
This is a simple but incredibly important point that is often lost in the debate. We frequently hear comments about how progressives want the government to intervene in the free market to bring drug prices down through various mechanisms.
That story turns logic on its head. In almost all cases, drugs are cheap to manufacture. It is government-granted patent monopolies or some other form of

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Under Trump, manufacturing job growth slows to a trickle

June 25, 2019

From Dean Baker
Donald Trump put manufacturing jobs at the center of his economic platform in 2016. He endlessly harped on the loss of relatively good-paying manufacturing jobs.
He blamed this job loss on “terrible” trade agreements and other countries “manipulating” the value of their currency to get an advantage in trade. He put China at the top of the list of bad actors, promising to declare them a currency manipulator on day one of his administration, which would directly lead to economic sanctions.
While Trump has engaged in considerable bluster in his trade negotiations, they have not led to much of a payoff for U.S. manufacturing workers to date. At the most basic level, instead of shrinking, the trade deficit has gotten larger under Trump.
In 2016, the last year of the Obama

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Donald Trump’s capricious tariffs open the door to corruption

June 12, 2019

From Dean Baker
Donald Trump has repeatedly proclaimed his love for tariffs, even dubbing himself “Tariff Man.” While Trump clearly does not understand how tariffs work, some of the discussion in the media has been off target as well. It’s worth trying to get the basic story straight.
First, it has been widely pointed out that Trump is wrong in thinking that China or other targeted countries are paying tariffs to the U.S. Treasury. To make it simple, a tariff is a tax on imports.
It can be thought of as being like a tax on cigarettes or alcohol. The buyer is the one who most immediately pays the tax on Chinese or other targeted imports. However, the tax will generally not be borne entirely by the consumer.
The seller — in this case, producers in the countries subject to the tax — will

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New York City moves forward with paid vacation measure

June 9, 2019

From Dean Baker
Workers in the United States now put in more time than workers in any other wealthy country, including Japan.
This week New York’s city council will begin to consider a measure put forward by Mayor Bill de Blasio that would guarantee workers in the city at least 10 days of paid time off per year. This proposal is an important step toward bringing the United States inline with the other rich countries in guaranteeing its workers some amount of paid vacation.
As a new report from Adewale Maye at the Center for Economic Research shows, the United States is very much an outlier from its peer countries in not guaranteeing its workers any paid vacation days or holidays. Countries in the European Union all guarantee workers at least four weeks of paid vacation (it’s a

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