Baker was born into a Jewish family[4] and grew up in theLake View neighborhood ofChicago, Illinois.[5]: 205–209 In 1981, Baker graduated fromSwarthmore College with a bachelor's degree in history with minors in economics and philosophy. In 1983, he received a master's degree in economics from theUniversity of Denver. In 1988, he received a PhD from theUniversity of Michigan in economics.[2][6]
In 1999, Baker and Weisbrot co-founded theCenter for Economic and Policy Research (CEPR), a US independent, nonpartisanthink tank that produces economic research on US national affairs (social security, healthcare, the US national budget), and international topics (the global economy, theInternational Monetary Fund or Latin America policy).[8] In that same year Baker was a senior research fellow at the Preamble Center for Public Policy.[9]
Baker has consulted with officials from theWorld Bank and provided testimony to theJoint Economic Committee of the U.S. Congress and to theOECD's Trade Union Advisory Council.
From 1996 to 2006, Baker was the author of a weekly online commentary on the economic reporting ofThe New York Times andThe Washington Post,[10] theEconomic Reporting Review. Since 2006, he has continued this commentary on his blogBeat The Press, formerly published atThe American Prospect and now on CEPR's website.
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 theUnited 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 onequarter.[17][18][19][20][21]
Regarding the housing bubble, Baker was critical of Federal Reserve chairAlan 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 likecollateralized debt obligation, and U.S. politicians and regulators' performance and conflicts of interest.[25]
Baker opposed theU.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 theS&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 thanSarah Palin being interviewed by Katie Couric? That's easy. You ask them how failure to pass the bailout will give us aGreat Depression."[28]
Baker's 2016 bookRigged: 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]
policy
billions of 2016 USD
% of savings
% of GDP
low
high
low
high
low
high
full-employment
$1,115
$2,300
56%
62%
6.0%
12.3%
financial sector waste
$460
$636
23%
17%
2.5%
3.4%
patent/copyright monopolies
$217
$434
11%
12%
1.2%
2.3%
corporate governance
$90
$145
5%
4%
0.5%
0.8%
protecting highly paid professions
$100
$200
5%
5%
0.5%
1.1%
Total
$1,982
$3,715
10.6%
19.9%
InRigged, 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 theCopyright 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]
As a graduate student at the University of Michigan, Baker was arrested at two sit-ins protesting RepresentativeCarl Pursell's votes for military aid to theContras. In 1986, Baker defeated Donald Grimes in the Democratic primary and ran unsuccessfully against Pursell to represent Michigan's second Congressional district; his candidacy opposed aid to the Contras.[32][33][34]
). Washington, DC: Center for Economic and Policy Research.ISBN 978-1-411-69395-1.OCLC 71423207.
