Showing posts with label Economics and Policy. Show all posts
Showing posts with label Economics and Policy. Show all posts

Saturday, April 27, 2013


Over the course of the last few months, we've seen that austerity measures in Europe aren't working. One would think that they learned their lesson after the worldwide economic depression in the 1930s but they haven't. Neither have conservatives in this country who are so emotionally obsessed with the government spending less money that they really can't see how cuts in spending are harmful. Now we have the proof that not only are they harmful, they are decidedly not beneficial. In short, high public debt does not consistently stifle economic growth.

Thank you, Thomas Herndon!

Wednesday, November 21, 2012

The Productivity Dividend

Getting back to Stiglitz.

Many years ago Keynes posed a question. For thousands of years, most people had to spend most of their time working just to survived-for food, clothing, and shelter. Then, beginning with the Industrial Revolution, unprecedented increases in productivity meant that more and more individuals could be freed from the chains of subsistence living. For increasingly large portions of the population, only a small fraction of their time was required to provide for the necessities of life. The question was, How would people spend the productivity dividend?

This is that quote from Chapter 4 that I wanted to pull out and examine on its own. The reason for this is that it ties directly into our economy. In the United States, people spend that productivity dividend on consumption and, as Stiglitz notes, their consumption relative to others. This is where that whole "Keeping up with the Jones'" comes into play. In particular, he notes that Europe opted for more goods AND more leisure while America opted for less leisure and more goods.

So, are we really working harder and harder "for the family?" Or are we simply playing a continual game of catch up with no end regarding consumption? No doubt that our economy is heavily based on consumption but is that a good thing? Should we consider more leisure time and less of keeping up with the Jones'? As we  consider how to mend our economy, we should examine the basic question of the productivity dividend.

Another idea that came out of this quote was the issue of fear and anxiety about the future. There are many on the Right that believe America is going to end soon because of the president and the Democrats. Would they be worried about this if they had to provide the basics (food, clothing, shelter)? Further, would anyone worry as much about all the silly stuff we fret over if this were the case?

I doubt it.

Saturday, April 07, 2012

Who Will Take That First Step?

When someone like John H. Cochrane, a professor of finance at the University of Chicago Booth School of Business and an adjunct scholar of the Cato Institute, says the following

Austerity isn’t working in Europe.

We should ALL listen.

His recent piece for Bloomberg  offers some rare flexibility from the right that is worth noting. He begins by noting a very basic reality.

As incomes decline, tax revenue drops, and it becomes harder to cut spending. A downward spiral looms.

This is the crux of why we should all be concerned about flat lining middle class incomes.

He goes on to point out that spending more (something that I have also said) is not the answer.

Where will the money come from? Greece, Spain and Italy simply cannot borrow any more. So, say the Keynesians, Germany should pay. But even Germany has limits. The U.S. can still borrow at remarkably low rates. But remember that Greece was able to borrow at low rates right up to the moment that it couldn’t borrow at all. There is nobody to bail out the U.S. when our time comes. What should we do then?

Also, a very good point. So what's the solution?

Let’s call it “Growth Now.” Forget about “stimulating.” Spend only on what is really needed. We could easily stop subsidies for agriculture, electric cars or building roads and bridges to nowhere right now, without fearing a recession.


Rather than raise taxes further on the “rich,” driving them underground, abroad, or away from business formation, fix the tax code, as every commission has recommended. Lower marginal rates but eliminate the maze of deductions.

I could live with that. It has to be done anyway. Of course, there are difficulties.

“Structural reform” is vital to restore growth now, not a vague idea for many years in the future when the stimulus has worked its magic. It’s also a lot harder politically than the breezy language suggests. “Reform” isn’t just “policy” handed down by technocrats like rules on the provenance of prosciutto; it involves taking away subsidies and interventions that entrenched interests have grown to love, and have supported politicians to protect. They will fight it tooth and nail.

That includes D's, R's and everyone in between.

So, we know what we need to do. Who will be the first person to lead on doing it?

Saturday, December 10, 2011

Saturday Potpourri

Here's a piece from a few weeks ago on voter rage.

Even newcomers swept into office in 2010 on an antigovernment tide worry that they could be just as easily swept out after only a two-year stay since they have become part of the government that much of the public seems to abhor.

I agree. The myth that the Tea Party is immune to voter outrage is effectively over with Congress's approval rating below 10 percent. In fact, one could argue that it's gotten worse. Will voters make them aware of this?

Here's one big reason why conservatives don't like Mitt Romney.

I use Mankiw quite a bit on here as sound source for fundamental economics. The fact that the Mittser is using him is one of a few reasons why I don't think he'd be a bad president. Yet the fact that he is using Glenn Hubbard certainly gives me pause. Hubbard (along with Tim Geithner) should not be allowed anywhere near our economy as they (along with many others) were responsible for the collapse of 2008. If you want to know what Hubbard's all about, check out this clip from Inside Job.

Here's something I found a while back that I thought was interesting.

Fareed Zakira has been saying the same thing on CNN for the past couple of years. I'm not sure if I agree given the issue of consumer spending and demand. If those tax cuts go away for most Americans, I think that will affect our growth without a doubt. So, Colbert's logic is a little off. But I do like this line!

America does not have a national debt problem, instead, the U.S. has a negative revenue problem.

Sing it, brother!

Tuesday, May 10, 2011

This Guy Is the Shiznit

I found a new blog I plan on making a daily stop. Jim Wright is money. Period.

The part about this post that struck me was this:

Blowhard: Yeah. Whatever. We got him. It only took twenty years, it’s time for Barry to quit grandstanding. Gas is five dollars out in the Valley! (speaking of football, who just moved the goalposts? Zoinks! It’s weird old Mr Jenkins, the airport maintenance man!)

Dude: Exactly! It’s five dollars! When’s Oblamo going to do something about that? (And I’d have gotten away with it to, if it wasn’t for you rotten kids!)

Me: So, you guys are communists then?

Dude: (looks at me like I said “gay” instead of “communist”)

Blowhard: (looks at me like I just said “gay liberal vegetarian tree-hugging evolutionist who gives $5 hummers at the truck stop” instead of commie.”)

Me: Because, you know, that’s what it is when the government controls the price of stuff. Marxism. (Rut roe, Shaggy!)

Blowhard: The president can lower the price of gas if he wants to! He just doesn’t want to.

Me: Again, I don’t think you understand the concept of a free market. You’re saying that the president sets the price of commodities like gasoline? I’m pretty sure that’s not how capitalism works.

Yep, that's not how it works. Yet, President Obama is still getting the blame for high gas prices. My question is why. As has been said many times on here, the president and the government should not be running the economy. That's the job of the free market, right? To take care of itself. But when it doesn't, do the oil companies get the blame? The financial sector? Nope. The government does. It always gets the blame and rarely gets the credit. What a load of shit.

I've also been told several times on here that the president can't do much about the economy. If that's the case as well, again, why is he getting the blame? Why should we even talk about his economic policies?

Sunday, May 30, 2010

No Shit

In response to this article from the Washington Post, my friend Vincent had this to say.

Score another victory for corporate deregulation. Financial deregulation gave us the economic crisis, and energy deregulation helped give us this fine mess.

No shit, Vincenzo.

Certainly, I was mistaken when I predicted that the election of President Obama would make the Cult irrelevant. All I really needed to do was sit back and let their fucked up way of running things clearly demonstrate how ridiculously wrong they are in their borderline psychotic views on government.
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