2007–08 United States housing bubble

In 2006 Baker predicted that "plunging housing investment will likely push the economy into recession."^[11] That year he published "Recession Looms for the U.S. Economy in 2007", in which he predicted that weakness in the US housing market was likely in 2007 to push the US economy into a recession.^[11]

Baker won the Revere Award, along with Steve Keen and Nouriel Roubini, for predicting the crash of the United States housing bubble and the resulting recession, which occurred from 2007 to 2008.^[12][13] He warned about the coming crisis and the related government policies in multiple articles, op-eds and interviews from 2002 to 2005.^[14] Basing his outlook on housing price data sets produced by the U.S. government, Baker asserted that there was a bubble in the US housing market in August 2002,^[15] well before its peak,^[16] and predicted that the bubble's collapse would lead to recession. His prediction for when the recession would start was off by only one quarter.^{[17][18][19][20][21]}

Regarding the housing bubble, Baker was critical of Federal Reserve chair Alan Greenspan.^[22][23][24] He has also been critical of the regulatory framework of the real estate and financial industries, the use of financial instruments like collateralized debt obligation, and U.S. politicians and regulators' performance and conflicts of interest.^[25]

Baker opposed the U.S. government bailout of Wall Street banks on the basis that the only people who stood to lose from their collapse were their shareholders and high-income CEOs. Of any hypothetical negative effects of not extending the bailout, he said, "We know how to keep the financial system operating even as banks go into bankruptcy and receivership,"^[26] citing U.S. government action taken during the S&L crisis of the 1980s.^[27] He has ridiculed the U.S. elite for favoring it, asking, "How do you make a DC intellectual look less articulate than Sarah Palin being interviewed by Katie Couric? That's easy. You ask them how failure to pass the bailout will give us a Great Depression."^[28]

Rigged

Baker's 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer argues that changing how the U.S. economy has been managed over the past 50 years would add between $2 and 3.7 trillion (in constant 2016 dollars) to the U.S. GDP, between 11 and 20 percent. This is summarized in his Table 8-1:^[29]

In Rigged, Baker argues that, for example, focusing more on decreasing unemployment and less on minimizing inflation would primarily benefit the bottom 99%, though the top 1% would get some of those gains. Similarly, Baker says that changes in patent and copyright law over the past 50 years have violated their purpose under the Copyright Clause of the Constitution: "To promote the progress of science and the useful arts". He concludes that if the U.S. had spent the same amount on research and media with the results being placed in the public domain, everyone would be better off, with the possible exception of the ultra-wealthy. In particular, the world would be healthier not having to pay patent royalties to U.S. pharmaceutical companies.^[30]

He also writes that so-called free-trade agreements have exempted doctors and other highly paid professionals, not because of any intrinsic difference in what they do, but because they have more political power than organized labor.^[31]

Selected articles

• Baker, Dean; Weisbrot, Mark (December 1994). "The Logic of Contested Exchange". Journal of Economic Issues. 28 (4): 1091–1114. doi:10.1080/00213624.1994.11505613. JSTOR 4226888.
• Baker, Dean; Hassett, Kevin (May 12, 2012). "The Human Disaster of Unemployment". The New York Times.

Books

• Baker, Dean (1988). The Logic of Neo-Classical Consumption Theory. Ann Arbor, MI: University of Michigan. OCLC 68299542.
• Baker, Dean; Weisbrot, Mark (1999). Social Security: The Phony Crisis. Chicago, IL: Univ. of Chicago Press. ISBN 978-0-226-03544-4. OCLC 41090883.
• Bernstein, Jared; Baker, Dean (2003). The Benefits of Full Employment: When Markets Work for People. Washington, DC: Economic Policy Institute. ISBN 978-1-932-06604-3. OCLC 52467815.
• Baker, Dean (2006). The Conservative Nanny State How the Wealthy Use the Government to Stay Rich and Get Richer (Free e-book). Washington, DC: Center for Economic and Policy Research. ISBN 978-1-411-69395-1. OCLC 71423207.
• Baker, Dean (2007). The United States Since 1980. Cambridge, England: Cambridge University Press. doi:10.1017/CBO9780511510830. ISBN 978-0-511-27471-8. OCLC 252534980.
• Baker, Dean; Frank, Thomas (foreword by) (2009). Plunder and Blunder the Rise and Fall of the Bubble Economy. San Francisco, CA: Berrett-Koehler Publishers. ISBN 978-1-609-94478-0. OCLC 742517362.
• Baker, Dean (2011). False Profits Recovering from the Bubble Economy. San Francisco, CA: Berrett-Koehler Publishers. ISBN 978-1-609-94475-9. OCLC 740435886.
• Baker, Dean (2010). Taking Economics Seriously. Cambridge, MA: MIT Press. ISBN 978-0-262-01418-2. OCLC 939219451.
• Baker, Dean (2011). The End of Loser Liberalism: Making Markets Progressive (Free e-book). Washington, DC: Center for Economic and Policy Research. ISBN 978-0-615-53363-6. OCLC 765978209.
• Baker, Dean; Bernstein, Jared (2013). Getting Back to Full Employment: A Better Bargain for Working People (Free e-book). Washington, DC: Center for Economic and Policy Research. ISBN 978-0-615-91835-8. OCLC 866909924.
• Baker, Dean (2016). Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer (PDF). Washington, DC: Center for Economic and Policy Research. ISBN 978-0-692-79336-7. OCLC 961184821.