Category Archives: Economy

The Fed On The Road To Nowhere

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Economic policymakers may have us, as the Talking Heads put it in their 1985 hit, on the road to nowhere. [Credit: qednet.biz]

Eco­nom­ic pol­i­cy­mak­ers may have us, as the Talk­ing Heads put it in their 1985 hit, on the road to nowhere. [Cred­it: qednet.biz]

For­mer Fed­er­al Reserve Chair­man Ben Bernanke has been called the man who saved the world.  His extra­or­di­nary inter­ven­tions in the fall of 2008 have almost uni­ver­sal­ly been rec­og­nized as hav­ing pre­vent­ed a sec­ond Great Depression.

But a new study by the Swiss-based Bank for Inter­na­tion­al Set­tle­ments (BIS) sug­gests that Bernanke saved the world from a cri­sis that was at least part­ly of his own mak­ing.  Worse, it argues that the course he set and that his suc­ces­sor Janet Yellen and oth­er cen­tral banks are fol­low­ing will pro­duce anoth­er and per­haps graver crisis.

Gov­ern­ment mon­e­tary and fis­cal pol­i­cy­mak­ers have lost their way, the BIS argues.  So bad­ly that they don’t just need a new direc­tion.  They need a new compass.

Con­tin­ue read­ing →

Inequality: What We Earn vs. What We Consume

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Is inequality better measured by what we earn or what we spend? The difference is surprising. [Credit: Politic.org]

Is inequal­i­ty bet­ter mea­sured by what we earn or what we spend? The dif­fer­ence is sur­pris­ing. [Cred­it: Politic.org]

Is your stan­dard of liv­ing bet­ter mea­sured by what you earn or by what you buy?

The ques­tion may seem an odd one, but it is crit­i­cal to under­stand­ing the prob­lem of ris­ing inequal­i­ty. Con­tin­ue read­ing →

Paul Krugman and the Inequality Deniers

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Recent criticism of Thomas Piketty's Capital in the 21st Centruy has drawn the ire of the splenetic Paul Krugman. [Credit: National Review]

Recent crit­i­cism of Thomas Piket­ty’s Cap­i­tal in the 21st Cen­tu­ry has drawn the ire of the sple­net­ic Paul Krug­man. [Cred­it: Nation­al Review]

There is grow­ing con­cern among peo­ple on the Right and Left about income inequal­i­ty. But you wouldn’t know that from read­ing Paul Krugman’s lat­est screed.

What stirred Krugman’s bile this week was crit­i­cism of econ­o­mist Thomas Piketty’s book, Cap­i­tal in the 21st Cen­tu­ry, a work that has attained canon­i­cal sta­tus among the Left on both sides of the Atlantic. Con­tin­ue read­ing →

Ukraine Economic Woes Could Hold Key To Peace

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Uniformed troops believed to be Russian stand guard outside a Ukrainian military base in Crimea. Is there a peaceful resolution to this crisis? [Credit: Business Insider]

Uni­formed troops believed to be Russ­ian stand guard out­side a Ukrain­ian mil­i­tary base in Crimea. Is there a peace­ful res­o­lu­tion to this cri­sis? [Cred­it: Busi­ness Insider]

Ukraine’s inter­im gov­ern­ment, whose part the Admin­is­tra­tion has tak­en in the Crimea cri­sis, includes a promi­nent polit­i­cal leader who has in the past urged his coun­try­men to fight the “Mus­covite-Jew­ish mafia” and called on his gov­ern­ment to halt the “crim­i­nal activ­i­ties” of “orga­nized Jewry.”

The author of this calum­ny, Oleh Tyah­ny­bok, is a leader of Ukraine’s Svo­bo­da (“free­dom”) par­ty, who in Decem­ber 2012 was named Per­son of the Year by read­ers of the coun­try’s lead­ing news mag­a­zine, Kor­re­spon­dent.

Such are the com­plex­i­ties that lurk not far beneath the sur­face in the ongo­ing cri­sis over Russia’s incur­sion into Crimea. Con­tin­ue read­ing →

Vince Young And Economic Mobility

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Vince Young in happier times. His rapid rise and sudden fall constitute a cautionary tale. But behind it all there is good news about economic opportunity and upward mobility. [Credit: Dallas Morning News]

Vince Young in hap­pi­er times. His rapid rise and sud­den fall tell a cau­tion­ary tale. But a new study pro­vides wel­come news about eco­nom­ic oppor­tu­ni­ty and upward mobil­i­ty. [Cred­it: Dal­las Morn­ing News]

Vince Young is bank­rupt.  The sto­ry of a star col­lege quar­ter­back who rose from hum­ble cir­cum­stances to impos­si­ble wealth only to plunge into insol­ven­cy in the course of eight years is one marked by extrav­a­gant spend­ing, fool­ish invest­ments and, he has argued in court doc­u­ments, exploita­tion by agents, busi­ness asso­ciates, fam­i­ly and friends.  His is an extreme exam­ple of eco­nom­ic mobility.

Reports of Young’s bank­rupt­cy fil­ing coin­cid­ed with the release this week of a new study by a group of Har­vard and Berke­ley econ­o­mists that reached an unex­pect­ed con­clu­sion: upward eco­nom­ic mobil­i­ty is not the exclu­sive province of entre­pre­neurs, enter­tain­ers and star ath­letes like Young. The Nation­al Bureau of Eco­nom­ic Research [NBER] report con­clud­ed that “chil­dren enter­ing the labor mar­ket today have the same chances of mov­ing up in the income dis­tri­b­u­tion (rel­a­tive to their par­ents) as chil­dren born in the 1970s.” Con­tin­ue read­ing →

Frenemies of the Poor

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The 50th anniversary of the President Johnson's declaration of a War on Poverty has provoked strong views on whether it has succeeded or failed. The truth lies somewhere between. [Credit: Huffington Post]

The 50th anniver­sary of the Pres­i­dent John­son’s dec­la­ra­tion of a War on Pover­ty has pro­voked strong views on whether it has suc­ceed­ed or failed. The truth lies some­where between. [Cred­it: Huff­in­g­ton Post]

It’s not much of an exag­ger­a­tion to say that right now Repub­li­cans are doing all they can to hurt the poor, and they would have inflict­ed vast­ly more harm if they had won the 2012 elec­tion. More­over, GOP harsh­ness toward the less for­tu­nate isn’t just a mat­ter of spite (although that’s part of it); it’s deeply root­ed in the party’s ide­ol­o­gy.  Paul Krug­man, “Ene­mies of the Poor,” Jan­u­ary 12, 2014

The 50th anniver­sary of Pres­i­dent Johnson’s War on Pover­ty has occa­sioned a good deal of moral exhi­bi­tion­ism. Lib­er­als heap praise on the pro­grams and flat­ter them­selves for sup­port­ing the trans­fer of an esti­mat­ed $20.7 tril­lion (in 2011 dol­lars) in cash and non-cash ben­e­fits from those who earned it to those who did not. And they are rel­ish­ing the oppor­tu­ni­ty to denounce con­ser­v­a­tives as ene­mies of the poor, moti­vat­ed by ide­ol­o­gy and spite.

Some con­ser­v­a­tives, like the Her­itage Foundation’s Robert Rec­tor, are using the anniver­sary to declare the War on Pover­ty lost. Rec­tor recent­ly was quot­ed as say­ing that “the War on Pover­ty has been a com­plete cat­a­stro­phe.” Con­tin­ue read­ing →

Unemployment Benefits and Harry Reid’s Pain

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Harry Reid has embraced the pain of sequestration in his proposal to extend jobless benefits. But does it address the problem? [Credit: Roll Call]

Har­ry Reid has embraced the pain of seques­tra­tion in his pro­pos­al to extend job­less ben­e­fits. But does it address the prob­lem? [Cred­it: Roll Call]

“I think it’s real­ly unfair that it would be so easy to turn the sequester around and allow us to do some­thing for the long term to take care of this issue. But no, the Repub­li­cans like the pain. They like the pain.”  — Sen­ate Major­i­ty Leader Har­ry Reid, April 24, 2013

Har­ry Reid (D‑NV) has late­ly embraced the pain of sequester. On Thurs­day, Reid advanced a pro­pos­al to off­set the cost of extend­ing “emer­gency” unem­ploy­ment ben­e­fits with auto­mat­ic cuts in med­ical spend­ing for the elder­ly and dis­abled. Con­tin­ue read­ing →

The Fed and the Consequences of Bad Predictions

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South Africa's government in recent years voted to jail people who make unauthorized and inaccurate forecasts. Good thing for the Federal Reserve that their bad predictions don't carry consequences. [Credit: University of MN]

South Africa’s gov­ern­ment in recent years vot­ed to jail peo­ple for mak­ing unau­tho­rized and inac­cu­rate weath­er fore­casts. Good thing for the Fed­er­al Reserve that their bad pre­dic­tions don’t car­ry con­se­quences. [Cred­it: Uni­ver­si­ty of MN]

The South African gov­ern­ment in recent years con­sid­ered a bill to jail peo­ple who pub­lished inac­cu­rate and unau­tho­rized fore­casts of severe weather.

Hold­ing peo­ple account­able for their pre­dic­tions seems a bit harsh in this sea­son of pre­dic­tions. But the South Africans do have a point: pre­dic­tions have con­se­quences. That’s as true of pre­dic­tions about the econ­o­my as about the weath­er, some­thing that the Fed­er­al Reserve might do well to pon­der. Con­tin­ue read­ing →

Maximum Wage: Solution to Inequality?

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The Swiss campaign to limit executive pay fell short, but are there good solutions to the problem of income inequality?

The Swiss cam­paign to lim­it exec­u­tive pay fell short, but are there good solu­tions to the prob­lem of income inequality?

We know that people’s frus­tra­tions run deep­er than these most recent polit­i­cal bat­tles. … They expe­ri­ence in a very per­son­al way the relent­less, decades-long trend. … And that is a dan­ger­ous and grow­ing inequal­i­ty and lack of upward mobil­i­ty that has jeop­ar­dized mid­dle-class America’s basic bar­gain — that if you work hard, you have a chance to get ahead. .I believe this is the defin­ing chal­lenge of our time: mak­ing sure our econ­o­my works for every work­ing Amer­i­can. It’s why I ran for Pres­i­dent. It was at the cen­ter of last year’s cam­paign. It dri­ves every­thing I do in this office. — Pres­i­dent Obama

Eco­nom­ic inequal­i­ty is a polit­i­cal­ly potent issue.  Van­der­bilt Uni­ver­si­ty pro­fes­sor Lar­ry Bar­tels believes that it was a crit­i­cal one in the 2012 Pres­i­den­tial race, adding 2 to 3 per­cent­age points to Pres­i­dent Oba­ma’s share of the vote and 1 per­cent in bat­tle­ground states.  The Pres­i­den­t’s advan­tage on this issue, Bar­tels says, was large­ly sym­bol­ic, hav­ing more to do with the per­cep­tion that his oppo­nen­t’s great wealth had detached him from the con­cerns of ordi­nary vot­ers. Peo­ple moti­vat­ed to vote for the Pres­i­dent because of this issue did so more because of who they believed Mitt Rom­ney was than because of what the Pres­i­dent pro­posed to do. Con­tin­ue read­ing →

The Good News Pope Francis Missed

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Pope Francis's inaugural encyclical celebrated the gospel and excoriated markets. But did he overlook some very good news? [Credit: Telegraph]

Pope Fran­cis’s inau­gur­al encycli­cal cel­e­brat­ed the gospel and exco­ri­at­ed mar­kets. But did he over­look some very good news? [Cred­it: Telegraph]

In writ­ing about the joy of the gospel, Pope Fran­cis over­looked some very good news – about mar­kets, about com­pas­sion, about poverty.

His first encycli­cal (Evan­gelii Gaudi­um, “The Joy of The Gospel”) has drawn atten­tion less for its focus on mis­sions than for its eco­nom­ic pro­nounce­ments. Pres­i­dent Oba­ma favor­ably cit­ed the doc­u­ment in his recent remarks on eco­nom­ic mobil­i­ty, while some con­ser­v­a­tive com­men­ta­tors have offered up harsh crit­i­cisms. Con­tin­ue read­ing →