Dean Baker
Truthout, October 22, 2018

Dean Baker
The Hankyoreh, October 21, 2018

Dean Baker
Blickpunkt WiSo, 18. Oktober 2018

I don't especially want to defend nationalism, given the folks who wave this flag these days, but Matt Yglesias gets a few things wrong in criticizing John Judis' NYT piece earlier this week.

To start with he quotes Judis:

"As long as corporations are free to roam the globe in search of lower wages and taxes, and as long as the United States opens its borders to millions of unskilled immigrants, liberals will not able to create bountiful, equitable societies, where people are free from basic anxieties about obtaining health care, education and housing.”

...and then tells us "this is flatly untrue."

Okay, let's take a step back. Is Yglesias really arguing that if we had open borders, so that literally hundreds of millions of people from the poorest countries on the planet could come to the US, that it would not mean a decline in living standards for the workers already here? That seems more than a bit far-fetched.

Of course, we did not have open borders, so the real question is did the levels of immigration we had prevent us from having a generous welfare state? Here Yglesias would be on solid ground in saying no. Most research indicates that immigration of the level we have seen has not hurt the wages of native-born workers, although it does depress the wages of earlier immigrants, making the catch-up process longer than it otherwise would be.

More than two months have passed since an innocuous tweet went viral and a social media campaign targeting government corruption in Haiti began. Using the hashtags #PetrocaribeChallenge and #KotKobPetwoKaribea (“where is the Petrocaribe money?”), the camp

Dean Baker
Truthout, October 15, 2018

It was a few days after Christmas when Sears announced plans to close up to 120 Sears and Kmart locations. The year was 2011. With a market cap of only $3.45 billion, Sears looked like a good candidate for a takeover, but there were no takers. As Dan Prim

As we mark the 10th anniversary of the peak of the financial crisis, news outlets continue to feature pieces how another one, possibly worse, is just around the corner. This mostly shows that the folks who control these outlets learned absolutely nothing from the last crisis. As I have pointed out endlessly, the story was the collapse of the housing bubble that had been driving the economy. The financial crisis was an entertaining sideshow.

There is one story in the coming crisis picture that features prominently — the corporate debt burden, as discussed here. (This Bloomberg piece is actually well-reasoned.) The basic story is a simple one: corporate debt has risen rapidly in the recovery. This is true both in absolute terms, but even in relation to corporate profits.

The question is whether this is anything that should worry us. My answer is "no."

The key point is that we should be looking at debt service burdens, not debt, relative to after-tax corporate profits. This ratio was was 23.1 percent in 2017, before Congress approved a big corporate tax cut. By comparison, the ratio stood at more than 25 percent in the boom years of the late 1990s, not a time when people generally expressed much concern over corporate debt levels.

It is true that the burden can rise if interest rates continue to go up, but this would be a very gradual process. The vast majority of corporate debt is long-term. In fact, many companies took on large amounts of debt precisely because it was so cheap, in some cases issuing billions of dollars worth of 30-year or even 50-year bonds. These companies will not be affected by a rise in interest rates any time soon.

But clearly, there are some companies that did get in over their heads with debt. There are two points to be made here.

October 11, 2018

October 11, 2018 (Prices Byte)