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Wednesday, November 30, 2011

Robert Reich on the Disequilibrium of Employee Wages vs. Corporate Profits in Share of the Economy

Robert Bernard Reich, American politician, aca...                         Image via WikipediaOn American Public Media's Marketplace today, Robert Reich cited a statistic that may be the most stunning I have heard since the financial crisis of 2008: currently, the share of the economy represented by employee wages is the smallest it has ever been since measurements were first taken (in 1939, I think). And the share of the economy represented by corporate profits is the LARGEST it has ever been since measurements were first taken.

So much for the "rising tide lifts all boats" theory! And is it REALLY class warfare, Marxism, socialism, etc., to assert that this extraordinarily unbalanced situation is objectionable and needs to be corrected?

Remember: Free markets tend toward equilibrium. So this level of disequilibrium cannot be the result of an unmanipulated market. The next question: has the greater level of manipulation taken place from "the right," or "the left," for lack of better words? Again, I suggest: follow the money, and see who has received the greatest benefit from the current situation.

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Sphere: Related Content

Wednesday, March 30, 2011

Is it Time to Reinvent Human Resources?

Did you catch this article in the last issue of Reader's Digest, about the supposed dirty little secrets of the HR profession?

If not, you should read it. As you'll see, the article created a firestorm of comment postings on the Reader's Digest online edition. And in my mind, it brought back to the surface the very mixed feelings I have had over the years toward the human resources function in organizations.

Here is a brief rundown of the points of conflict:

1. On the one hand, I have felt that a good human resources department in a large organization, in which ownership and/or top management is several levels removed from day-to-day operations, provides employees with valuable protections against the kinds of abuses that owner-managers of smaller enterprises can often get away with if they want to.

2. On the other hand, when I have needed to hire people, I have sometimes felt that a human resources operation often simply "gets in the way" of the effort to find a well qualified candidate, and sometimes introduces unnecessary delays with excessive "process."

3. On the one hand, I have experienced the ability of smart human resources professionals to leverage the size and purchasing power of a large organization to negotiate outstanding healthcare benefits packages.

4. On the other hand, I have often wondered how much productive capital could be freed up if a more streamlined, standardized, and sensible healthcare system rendered the incredibly redundant function of "Corporate Benefits Administrator" unnecessary. As someone who has always had serious issues with the basic premise of an employer-based health insurance system, I ask, how can one possibly think that it's efficient to essentially require each employer to structure and administer its own specific healthcare plan? But for now it's a moot point. We had a window of opportunity to work toward finally divorcing the unholy relationship between our employment and our access to healthcare services. And we blew it. Or the Administration and Congress that we elected in 2008 blew it.

Just a few of many issues on a topic that, as anyone who reads the Reader's Digest piece will surely agree, is truly a Pandora's box. We can all take some comfort in the likelihood that the author, for the sake of enticing readers, likely exaggerates a great deal in this dismal presentation of the state of HR by presenting only the most extreme and provocative of comments from her sources.

Nevertheless, if the article motivates senior managers and executives to take a fresh look at the role of HR in their organizations, it will have served a very valuable purpose. Sphere: Related Content

Monday, March 21, 2011

Immigration Think Tank Comments on Rising Entrepreneurship Rate Among Immigrants

The Partnership for a New American Economy, an organization focused on U.S. immigration policies and issues, has released a statement on new Kauffman Study findings that the representation of immigrants among new entrepreneurs has more than doubled since 1996.

“For generations, immigrants have founded businesses that are both the cornerstones of our national economy and the corner stores of our local neighborhoods," said New York mayor Michael Bloomberg, co-chair of the Parternship for a New American Economy. "This study is one more reminder that when you move past the political rhetoric, the facts are clear - immigrants are a tremendous source of innovation and enterprise. If we are serious about fixing our economy and creating jobs, then we must fix our broken immigration system.” Sphere: Related Content

Congressional Commission Releases Report on Economic Security Implications of China's Increasing Influence

The U.S.-China Economic Security Review Commission, created by Congress to report on the national security implications of the bilateral trade and economic relationship between the United States and the People’s Republic of China, has released a new report on the implications of China's growing influence on such international organizations as the International Monetary Fund, the World Bank, the Asian Development Bank, APEC, the United Nations, and the Group of 20.

Trends explored in the report include China’s growing role as a source of aid to the developing world, its increased clout within international organizations, and growing effectiveness in directing agendas toward China's national interests. Sphere: Related Content

Illinois Congressman's Bill Would Create Tax Brackets Up to 49 Percent for the Very Wealthy

Font sizeThe Fairness in Taxation Act, introduced March 17 by Rep. Jan Schakowsky (D-IL), would create new tax brackets ranging from 45 to 49 percent on personal incomes ranging from $1 million to $1 billion and over.

Schakowsky, a member of President Obama's 18-member National Commission on Fiscal Responsibility and Reform, is co-sponsor of the legislation along with Rep. Raul Grijalva (D-AZ) and Rep. Keith Ellison (D-MN), as well as Rep. Jesse Jackson, Jr. (D-IL), Rep. Donna Edwards (D-MD), Rep. Bob Filner (D-CA), Rep. Jerry Nadler (D-NY), Rep. Steve Cohen (D-TN), Rep. John Yarmuth (D-KY), and Rep. Peter DeFazio (D-OR).

According to a statement from United for a Fair Economy, a think tank focused on "the concentration of wealth and power" in the U.S. and a growing gap between the richest and poorest Americans, the legislation enjoys the support of the Campaign for America's Future, another progressive think tank.

"Any sensible program for deficit reduction must begin with changing the massive tax cuts for the very wealthy," said Roger Hickey, co-director of the Campaign for Americas Future. "Those tax giveaways were a major cause of our current deficit. In an era of excessive inequality we should end Bush-era tax cuts for the wealthiest Americans. We need progressive revenues not just to bring down deficits, but also to finance investments in jobs and sustainable growth. The introduction of the Fairness in Taxation Act is an important step that will be popular with the American people."

Sources: Press Release from United for a Fair America Sphere: Related Content

Sunday, November 22, 2009

Ventry of UC Davis on NPR: Tax Deductions on Mortgage Interest, Property Taxes "Bad for the Economy"

Economist Dennis Ventry of the University of California at Davis said on NPR's All Things Considered today that tax deductions for mortgage interest and property taxes are bad for the economy.

Why? Because homebuyers simply price the expected deduction into their calculation of how much they can afford to pay for a house. This, in turn, artificially inflates the price of homes. Mortgage lenders and real estate brokers benefit but not, according to Ventry, the economy as a whole. And the inflationary effect of the deductions may have also fueled the housing bubble, while suppressed tax revenues helped drive up the Federal budget deficit.

Ventry also pointed out that the deductions for mortgage interest and property taxes are a classic example of an upside-down (i.e., regressive) subsidy, since, contrary to popular understanding, groups at the highest income levels receive many times more financial benefit due to the ability to deduct interest on huge mortgages and high property taxes on very expensive homes.

He also said that the only economist he could imagine taking issue with this argument would be one who works for the National Association of Realtors.

This is a compelling case and, to me, is an interesting inversion on a tax-related concept that I have also argued about in this blog: that popular debate centered on complaints about taxation is basically an irrelevant political straw man aimed at winning votes for conservatives from rank and file wage-earners. In my view, the amount of taxes paid by a wage-earner are similarly “capitalized” into the market price of labor.

Everyday wage-earners would not, as conservatives are fond of arguing, “keep more of what they make” if taxes were cut. Over the long run, tax cuts would simply reduce the real wage levels that workers could command. So they wouldn't "keep more"--they'd simply "make less." Think this isn't true? By all means, offer a cogent argument that persuades me otherwise.

In other words, if your taxes are cut, your employers in the long run won’t let you realize the windfall: they will simply pay you less, because they know your taxes are lower. So you might as well at least get some decent government services out of a bargain that's already a pretty raw deal for the average wage-earner.

On the other hand, cuts on income and capital gains taxes are also “upside down,” regressive subsidies, since they offer a tremendously higher financial benefit to those at upper income levels who earn not only higher wages but also earn much than the average worker from non-wage sources, such as interest income and capital gains.

Upside-down tax policy is by and large responsible for the enormous increase in wealth concentration among a small percentage of the overall U.S. population that has taken place since the 1980s. Again, I'd love to see an reasoned argument that could convince me otherwise. Bring it on. Sphere: Related Content

Sunday, September 6, 2009

“Naked Lunch” Economics: Our Everyday Micro-Vignettes of Money, Morality, and Evil

I once knew an entrepreneur who insisted that, in a free enterprise system, a for-profit entity should have no heart. In this person’s view, every business issue should be described, evaluated, and decided upon solely in black-and-white, financial, profit-or-loss terms.

I am 100 percent convinced that this person sincerely believed that, because it showed. This mindset was reflected in this person’s relationship to every aspect of business--products, employees, customers, vendors, competitors, and so on. And although the final outcome remains to be seen, I believe this mindset will have a profound impact in shaping the ultimate destiny, for better or worse, of the enterprises in question.

It would almost be stating the obvious to say that there is plenty of evidence in our society that this kind of mindset is not at all uncommon. And although I am by no means an uncritical proponent of the new-agey economic ideas of David Korten, I believe that this mindset is perhaps the most compelling reason why Korten’s concept of “The Evil Corporation” is something that we cannot entirely dismiss and must to some extent reckon with.

Evil is not a very popular word in an age of political correctness and relativism, but the examples, small and large, that each day show us the reality of evil are legion, if we only care to look just below the surface. And one of the deepest mistakes we can make as human beings is to try to hide from the moral, good-and-evil dimensions of money and how we use it to mediate our relationships with one another.

Like a Faustus selling his soul for 20 years of unfettered pleasure, we can hide for a time from the reality that there is a moral dimension to money. But sooner or later, one way or another, the party will end, and the thing from which we have been hiding will come back to haunt us. And when it does, the intensity with which that thing tries to reach out and grab us by the throat, or perhaps some other part of the anatomy, may be proportional to the extent to which we have been hiding from it.

I have felt for some time that the evils that each of us, on an individual basis, really need to worry about are not the glaring atrocities of history, but the deceptively small moral decisions that each of us deal with every day. What did you do with money today? Did you make some sort of compromise at work that made you feel just a teensy weensy bit uncomfortable inside? Did you buy something, large or small, that you don’t want your spouse to know about?

Like any of the tools and resources that we homo sapiens create to help us manage, navigate, and negotiate our physical and sociocultural environments, money is in itself neutral. Like the knowledge of how to split the atom or to link up computers in a vast, global network, it creates the capacity for good, both great and small, every bit as much as it does for evil, great and small.

If you want to get a good learning experience about the potential for money to be used for good or ill in our relationships to one another, try going through an estate settlement. There are few experiences in this life that more effectively bring to the surface, for all to see, those aspects of our personalities that we normally try to keep safely closeted away, in the dark. There are few experiences that reveal more about our strengths, weaknesses, hopes, fears, goals, dreams, anger, anxieties, hangups, unresolved early conflicts, petty resentments, seething hatreds… and so on. There are few occasions in life that create a more intense opportunity to evaluate, at an existential level, just what it is that we really are.

It all makes me think of the concept of the “Naked Lunch” from the late novelist William S. Burroughs. Naked Lunch moments are those occasions in life that, suddenly and unexpectedly, yet undeniably, confront us with the sheer, barefaced reality of some abomination that has, all along, been staring at us, in plain sight, from the end of our fork, even in the midst of our previously half-conscious motion to raise it to our lips. Sphere: Related Content

Friday, August 28, 2009

The Recovery of One

Referencing my comments in an earlier post about the period of mixed signals we now seem to be entering, one potential concern is that, in this age of the 24-hour news cycle, we may be over-reporting on the indicators.

Just as over-monitoring a stock portfolio can pose the danger of losing out on long-term returns by overtrading based on inevitable short-term fluctuations, excessive real-time news coverage of every tiny bit of released economic data could inflict further damage on public sentiment and, in turn, the economy.

For example, if we are in fact bottoming out or starting to move toward recovery, over reporting negative short-term indicators could needlessly prolong collective pessimism and keep consumer expenditures depressed. It could also drive businesses to maintain a defensive posture on their cashflow longer than they need to.

But the coverage is what it is--for reasons that are largely economic. It’s simple supply and demand. Editorial decisions to supply economic news as the main topical thrust are simply responses to what the audience is demanding. And currently, the public remains very hungry for economic news.

People are consuming economic news on a scale unprecedented in recent history. It‘s basic psychology. People seek out economic news because the feeling of being informed gives them a sense of having some level of control over the situation.

The danger, however, is the element of illusion in this sense of control. Without the big-picture context that a seasoned professional in a field like economics or finance might have, a general news consumer absorbing short-term stories may have the illusion of knowing far more than he or she actually knows. This, too, can drive ill-advised decisions.

Yet the 24-hour cycle self-perpetuates. Especially after the incessant bombardment with bad news, week after week, in the early part of the year, the public is so starved for any little morsel of good news that they’re ready to latch onto the smallest little bite. And when they bite, their raised hopes can then be disproportionately dashed by the next nip of bad news.

This is particularly true among those who are out of work, underemployed, facing strained family budgets or trying to keep struggling businesses afloat. And the danger is that the cycle of raised and dashed hopes could perpetuate the downward curve, or keep us treading water at the bottom for a longer time.

The unemployed may become more frustrated every time they hear bad news on jobless claims, and grow less inclined to pound the pavement. Business owners may hesitate to take the risks necessary to drive renewed growth, especially the risk of taking on new staff. This could prolong the crisis of the unemployed.

It’s a cycle that can be broken only by decisive action. And action, ultimately, must start at the individual level. Gandhi once said that, in terms of the cosmos, “Almost everything you do will seem insignificant, but it is important that you do it.” Echoing this idea in a comment on one of my blog posts on healthcare reform, one of my Facebook friends, Cheryl Batoon, emphasized the importance of “the power of ONE” in effecting political change and countering the destructive impact of misinformed negative rhetoric.

The power of one means you, no matter who you are, or what your current situation is. There is a wry sort of joke that has been much repeated during this crisis: if your neighbor is unemployed, it’s a recession. But if you are unemployed, it’s a depression. And for the out-of-work individual or the financially struggling business owner, the resolution ultimately depends on individual action.

Action has to start somewhere. Spending one dollar triggers a ripple of subsequent transactions that raise the impact of that one dollar by many multiples. And the actions of one individual create a similar multiplier effect within society.

From chaos theory we learn that a butterfly fluttering its wings somewhere along the coast of Africa can alter the course of a hurricane. Similarly, the buck-and-change you spend for a cup of Joe from the 7-Eleven could alter the course of the recovery.

So take some action. Take some risks. Spend an extra buck at the store today. If you’re in business and finally finding a bit more room in your operating margin or credit line, hire one more person, even if it’s for an unglamorous, low-paying position, to take one more person off the unemployment rolls and get them spending again. If you’re out of work, hit the Send button on just one more online job application today. It might be the one that ends your depression of one and your still-working next-door neighbor’s recession of one. Sphere: Related Content

Wednesday, August 26, 2009

The Cycle of the Storm

For the past several weeks, and often within the course of a given week, the tone of news about the economy has been like a roller coaster. One week housing starts or corporate earnings are unexpectedly up. The public likes it, and so does Wall Street.

Yet another week a surprising uptick in jobless claims hits. The public turns pessimistic again and the Dow takes a dip. Then Chairman Bernanke says there are strong indications that the economy has bottomed.

So we’ve entered a period of mixed signals and ambiguous indicators. Think back to the first quarter of this year, and it shouldn’t be hard to see the difference. After a brief period of collective optimism as the new administration came took over, the stark realities of an incredible tsunami of layoffs set in. The stories seemed increasingly grim as we stumbled our way through a tough and frightening first quarter.

In keeping with the season, the green chutes stories started showing up in the spring, and early in the summer some of the bolder pundits were among the earliest to pronounce the recession dead.

Against the backdrop of the beginning of 2009, the current mixed signals seem, in contrast, to be a good sign. Recovery doesn’t happen all at once, so it stands to reason that at the beginning of a recovery the signals would be mixed.

Just as there was a succession to the tumbling of the various sectors--starting, of course, with the banks and the big investment houses--there will be a sequence to the recovery. The crisis began with the banks, and the recovery seems to be starting with the banks. There’s really an elegant symmetry to the whole thing. A line from Yeats, “A terrible beauty is born,” comes to mind.

Remember, the signals were also mixed at the beginning of the downturn. Through 2007 and the first three quarters of 2008, the picture was cloudy and confusing. Unemployment began to rise well before the Bear Sterns and Lehman collapses. There were plenty of signs early on that something was amiss with the economy, but most people didn’t really have a clue what was coming.

There were recurring stories in the news about the subprime mortgage crisis, but people were too distracted by the noise of the energy-price crisis. But the true crisis, already well into its formation behind the scenes, wasn’t about energy at all.

Most people who were starting to feel the pinch of a nascent downturn thought it was all about the gas, until the collapse of the big financial firms in the fall of 2008 brought on a storm of a magnitude that no one was expecting. It was an economic equivalent of getting caught off-guard by hurricane Katrina. Few knew how serious the economic storm would actually be, so most of us were unprepared.

Indeed, one could say that the life cycle of a recession is like unto the life cycle of a hurricane. There is a period of gathering clouds, when no one is sure what course the storm will take and how much strength it will gather at sea before making landfall. This was 2007 and most of 2008. Especially given the behavior of the stock market, it would have been just as easy for the casual observer, entering 2008, to conclude that another boom could be in the making rather than a astronomical bust.

But then the storm struck in all of its wrathful, furious glory, leaving an immediate trail of astonishing devastation. This was the fall of 2008.

Then we went “into the eye,” a period of deceptive calm that gives few warnings of the fury that is still to come. This was the period from around just before the election through shortly after President Obama’s inauguration.

Once we were out of the eye, a second wave of fury ensued with the staggering tumult of job cuts as companies were forced to deal with decapitated credit lines, dreadful year-end results, and abysmal first-quarter forecasts.

In the spring the clouds showed some signs of breaking up and the storm signs of weakening. And through the summer bursts of sunlight have begun to show through gaps in the cloud cover. Is it time to send a bird out of the ark to see if it brings back a sprig of leaves?

Let’s just hope, to follow the metaphor through, that this is the end of the current hurricane season, and that there isn’t a Rita building strength in the tropics to unleash a second wave of fury after the economic Katrina. Sphere: Related Content

Monday, August 24, 2009

More on the Origin of “The Dismal Science”

In an earlier post I promised to elaborate on my research into the origin of the nickname “The Dismal Science” for economics. For the sake of keeping that promise, and for the benefit of those who may not already know, I’ll share my finding that the term appears to originate with the 19th-century British “man of letters” Thomas Carlyle.

However, as some of you also may know already, there is much more than meets the eye behind that deceptively simple citation of historical fact. My exploration of the context in which Carlyle appears to have coined the phrase has taken on such a life of its own that it now appears that the best medium for sharing it will actually be a short e-book rather than a blog post.

Hence, I will take this opportunity to announce the forthcoming e-book Thomas Carlyle, Racism, and the Dismal Science: Clues to Hidden Truths About the Modern Conservative Movement?

I expect to release the e-book sometime in September, and will likely make it freely available to registered subscribers to Undismalization. To reserve your copy, please register per the instructions here.

The release of Thomas Carlyle, Racism, and the Dismal Science may also end up being the debut of the Undismal Press imprint. Stay tuned for further details as the project nears completion. Sphere: Related Content

Wednesday, August 19, 2009

On the Profoundly Ironic Illogic of Screaming “Keep Your Government Hands Off My Healthcare!”

When a system has been in place throughout your entire nation since well before you were born, it’s easy to make the conclusion--unwarranted, given a lack of exploration of the evidence--that it's normal and that it makes sense. So it is, it seems, with the opinion of many Americans about our employer-based healthcare system, which is anything but normal among the major economies of the Western world.

It is a natural human phenomenon, one of the faults in our cognitive wiring. Thinking that “the way it’s always been” is normal and sensible is no different than a child who is just beginning to become aware of foreign languages refer to his or her own native tongue as “normal talk.”

To those who, at town hall meetings, are screaming “KEEP YOUR GOVERNMENT HANDS OFF MY HEALTHCARE,” or brandishing signs with similar messages of indignant protest, I would ask you to take a close, critical look at one very fundamental but largely ignored question.

To indulge, for the sake of argument, in some phraseology that might among some readers get my non-party-affiliated, more-or-less centrist self branded as a lot more Lefty than I in fact really am, I would like to ask: why in the WORLD, out of all the scenarios one could possibly envision, would you want your EMPLOYER’S bottom-line-driven hands on your healthcare?

If you are concerned about a government healthcare plan infringing upon your privacy and your constitutional rights to life, liberty, and the pursuit of happiness, I would suggest taking a closer look at whether you might be much more vulnerable to abuses in those areas from your employer.

The right to privacy is all but non-existent in a workplace setting. Once you cross the threshold of your office building, you waive, by implied contract, many of the rights and protections you enjoy when you are out in public. Your employer can archive your e-mails and read them if they wish. Your employer can monitor your activities with hidden cameras, without your knowledge. Your telephone calls "may be recorded for training and quality assurance purposes." And your employer, of course, is involved much more intimately in your daily life than the government could ever be, unless, perhaps, you work for the government.

The potential for abuse may be greatest in small-to-midsize companies, in which the administrative infrastructure for ensuring the protection of employee rights to privacy and non-discrimination may be non-existent, as may the checks and balances to prevent personal and private information from getting into the wrong hands and being misused.

Here is just one of many scenarios. Imagine you work for a small firm of about 25 people, in which, as is often the case in small offices, there is virtually no privacy, and everyone pretty much knows everyone else’s business.

Let's suppose, further, that you or a dependent covered under your plan have had a serious, chronic illness that will require very expensive treatment for some time to come. And everyone in the office knows it, from the owner of the company right down to the guy who comes in to empty the trash at night.

And suppose, for the two years running during which this illness has been an issue, your company's health insurance provider has hit your company with a hefty increase in premiums. In a small office, it wouldn't be hard for the owner, or the operations or HR manager, or whoever else might be responsible for benefits, to put two and two together and figure out just what might be playing an important role in the increasing costs.

And finally, imagine that, after years of glowing performance evaluations, the boss suddenly becomes concerned about some previously undiscussed flaws in your performance, and dismisses you for cause -- or, even more stealthily, promotes you to be head of a new department and then, not long afterward, decides that the new department no longer fits the corporate strategy, eliminates the department and, by extension, the need for your job.

Illegal? Yes. But also difficult, if not virtually impossible, to prove. And even if you could prove it, doing something about it would be very costly--both monetarily and, quite possibly, professionally. Most employees, particularly in small communities, or in smaller industries in which managers in competing companies tend to know one another, would likely rather move on than risk the possible stigma that can follow someone who has sued a prior employer.

Do you think this scenario is unlikely? I don't. I'm sure it plays out in various permutations and combinations all the time, all over the U.S., with its wonderful, employer-based healthcare system. The best healthcare system in the world, say those who are fighting the current reform effort and screaming at the town hall meetings.

Unfortunately, many of us seem to be stuck in a cognitive loop when it comes to seeing the flaws in the most basic attribute of our current system, and to envisioning alternatives. Sphere: Related Content

Monday, August 17, 2009

So Now the Public Option Seems to be Off the Table -- And That's a Crying Shame

President Obama, in the spirit of his reputation as The Great Compromiser--which I do in fact applaud as one of his stronger political attributes that enables him, like Bill Clinton, to at least get SOME things accomplished in the face of stiff opposition from within his party and without--has now backed down entirely on the much and very unfairly maligned "Public Option" for healthcare reform.

The fringe contingents of tea-baggers and town-hall-meeting disrupters, spurred on by their deceitful talk-radio gurus, like mustacheoed villains in an old melodrama, appear to be winning the battle.

I think that this is a crying shame, for the following key reasons:

  • Proposed as the "alternative" to a public option is a seemingly vaguely defined notion of "nonprofit cooperatives," a model that some commentators have argued is virtually untested and has a shaky track record in areas of the U.S. where it has been tested.

  • I have a sinking feeling that, without a public option, whatever plan ultimately passes will result only in a very limited change to the status quo. The non-profit cooperatives may not impose sufficient checks-and-balances on the for-profit insurers, with all their clout and public relations, marketing, and lobbying muscle.

  • Non-profit organizations that DO become successful usually do so by acting a lot like for-profit organizations. I know that from the experience of having worked for a successful non-profit. And just look at Blue Cross/Blue Shield as a key example from the healthcare industry itself. So the differences between the private insurers and the non-profit "options" may end up being very superficial.

  • As I have argued previously, I believe that the biggest flaw in our current system is also its most basic attribute: it is employer-based. Calling any new initiative a "reform" without substantively addressing this basic flaw is, in my opinion, highly suspect.

  • The President's backing down on this issue in spite of a strong majority in both the House and Senate--and, for goodness sake, a filibuster-proof majority in the Senate--is a testament to just how powerful are the special interests who support the status quo. For example, as I have discussed in a previous post, there is evidence that the one senator who arguably has the most influence on the process may be vulnerable to heavy pressure from the healthcare industry.
Oh, well. At least we'll hopefully get some baby steps toward a better system. I guess meaningful reform may have been too much to hope for. Maybe after another 30 years of Waiting for Godot. Sphere: Related Content

Monday, August 10, 2009

No Revisit, This Time, On Employer-Based Health Insurance

In the earliest stages of his administration's engagement with the healthcare reform issue, President Obama made it clear that a "Canadian-type" model won't work for us, at least not now, since we are not starting from scratch.

This makes complete sense from a pragmatic perspective. If we were to try to start from scratch, the likely result would be the same 30-plus years of inaction we have already endured, with the status quo becoming worse and worse.

But, speaking from the North American summit today, President Obama made another remark that made his point on "the Canadian question" a bit clearer. He said that the reason a Canadian model won't work is that "we have an employer based system here," suggesting that he is resigned to the idea that a revisit of the employer-based insurance model is something that simply can't happen now.

This is a shame. Again, from a pragmatic perspective, he is probably correct. Any short-term effort to dismantle the system of employer-based coverage would almost surely be doomed to fail. Not the least among the reasons for this is the level of influence that industries vested in the status quo appear to have on our legislators.

But I hope the administration and its supporters do not lose sight of a revisit of employer-based coverage as a longer-term issue, because I believe that the employer-based model is the single biggest flaw in our current system.

Within the rest of the industrialized world, the employer-based system is truly an oddity. It is a remnant of the so-called "Gilded Age" in the United States, which on one hand is famous for the prosperity achieved by the few but on the other for the abuses of workers that were permitted by a hands-off government.

The fundamental flaw of employer-based healthcare is this: everything can be hunky-dory for your regular checkups, treatment of mild chronic illness, and so on, until you either get very sick, change jobs, or lose your job. When you don't need your health plan all that much, everything is fine. But when you get sick enough to REALLY need your health plan, chances are you will lose it, because you may also be too sick to work and, as a result, will lose your job.

This flaw in the model is so basic and obvious that it goes beyond illogic and into the territory of absurdity and insanity. I challenge anyone to persuade me otherwise with a cogent argument for why this model makes sense.

But until then, I can only conclude that there will be no meaningful healthcare reform until the employer-based model is either replaced entirely or supplemented with a viable, robust system of backup coverage for those who lose their employer-based coverage due to illness, economics, or other reasons. Sphere: Related Content

Saturday, August 8, 2009

Identify Yourself!

If you read this blog regularly, I’d like to ask a favor. To ensure that you receive the most timely possible alerts on new postings, as well as information on opportunities to receive supplementary publications or ancillary products that we may announce from time to time, I would like to enroll you as a registered subscriber. To register, please e-mail haywardwc@gmail.com with the minimum information of your first name, last name, and preferred e-mail address for receiving updates.

Additional information, such as your city, state/province, country, mailing address, telephone number, organizational affiliation, job title, etc., may also help us serve you better in the future as this project develops further, but is entirely at your discretion.

Last but not least, enrolling as a registered subscriber will help us meet our objective of achieving a consistent and growing readership base which, in turn, will help ensure the long-term viability of Undismalization as a self-sustaining electronic publication.

We will not share your personal information with any third parties without your express permission.

So please take a moment to e-mail the information requested above. Thank you in advance for considering participation as a registered subscriber and for taking the time to read Undismalization. As always, your comments, critiques, and proposals for guest contributions are welcome.

Respectfully yours,

W. C. Hayward, Editor Sphere: Related Content

Monday, August 3, 2009

Boring and Interesting at the Same Time

Recently some loosely related fragments of thought about economics were circulating in my mind. They seemed to be trying to find a way to coalesce into some form of higher level connection.

The first fragment was simple enough, on the surface. I was wondering what the origin was of “The Dismal Science” as a nickname for economics. One might think I would have looked into that before deciding to name my blog Undismalization, but I didn’t. So I finally decided to do some research into the question.

But before I began that research, I had already started to form some speculative hypotheses. One was that the name may have emerged as a reference to what some might simplistically think of as a “dryness” of the field compared to some other sciences, due to its focus on money and numbers. I reasoned that this supposed dryness, in the popular mind, might in turn make economists vulnerable to some of the same stereotypes to which practitioners of related fields, like accounting, fall victim.

As it turns out, I will need to deal in a separate post with the results of my investigation into the actual origin of the Dismal Science nickname, since it took me in a very surprising and unexpected direction that is quite different from the relationship that ultimately emerged among the original strands of thought that led to this post.

But meanwhile, as I continued to speculate about the nickname’s origin, my thoughts shifted to current representations of economists in popular culture, namely a couple of television advertising campaigns. One features Ben Stein and Shaquille O’Neil. Another uses actors to portray nerdy-looking economists who are, as they say, “with the government and here to help.” They go house to house and knock on doors--which, predictably, are peremptorily closed in their faces.

So the popular mind thinks of economists as dry, monotone, socially awkward types. According to the stereotype, they are all nerds. And they are all male, a misleading stereotype that in itself is worthy of further study. If you‘ll forgive my own indulgence, for the sake of argument, in a different stereotype, I know of some economists whom I would have to describe as “hot babes.”

I hope this point will be taken from my intended perspective of suggesting respectfully that being both an economist and a hot babe could be viewed as an empowering redefinition of what it means to be either. I approach this issue, of course, from a heterosexual male point of view, but the same principle could just as well apply to male economists who would defy the stereotypes.

But as portrayed in popular culture, economists are guys who probably didn’t get too many dates in high school. Or college. Or grad school. Or as postdoctoral fellows. Or as tenured professors, think-tank scholars, or investment analysts. And so on. So, I wondered, is this stereotype related to the origin of the Dismal Science nickname?

These two strands of thought made me think back in turn on how, years ago, I used to describe my undergraduate economics courses to people who would ask me how I liked them. Usually, the person asking the question seemed to be operating from a preexisting assumption that economics courses were boring.

The question always made me chuckle to myself, because my feeling about the issue was somewhat two-sided. The best way I could answer was to say that the courses were “boring and interesting at the same time,” or that they were “interesting but could still put you to sleep.”

I’ve mentioned this before in this blog, but I’ll repeat it for the benefit of newer readers: I’m not an academically credentialed economist. My formal training in economics is limited to an undergraduate minor. So I only got so far into advanced level coursework, and I have little doubt that if I had gone further in the field the courses would have become more stimulating.

But “boring and interesting at the same time” was only a slight indulgence in hyperbole for the elementary- to intermediate-level courses I took. On one level I was attracted to the elegantly pure logic of the process of thinking through how the basic market forces of supply and demand play out in scenarios at the macro and micro levels, ranging from the determination of energy prices or mortgage rates to the formulation of urban land use policies.

Yet I’d still often find myself dozing in class, or paying a lot more attention to unrelated distractions, such as how some fellow student a couple of seats away was crossing and uncrossing her legs (who knows -- maybe she went on to get her PhD and is now one of those “hot babe” economists I mention above!), than to the professor’s lecture.

Maybe this was all a random function of the personalities of the professors whose courses I happened to select. They were a notch above the Ben Stein stereotype in personality and charm, but not a very big notch. So, I wondered, is this further evidence that observations about common personality traits among some economics practitioners may have something to do with the Dismal Science nickname?

But I then thought about how engaging and unboring some of the most noted economists are--to me, at least. I’ll leave it to others to judge whether the fact that I consider the likes of Paul Krugman, Larry Summers, and Austan Goolsbee to be interesting people may simply mean that I am boring.

And then I thought about how ironic it is that Ben Stein, the figure whose public persona arguably embodies most closely the “nerdy economist” stereotype, has, to the best of my understanding, only a shaky claim to being an economist. Trained as an attorney, he holds only an undergraduate degree in economics.

Do these stereotypes discourage some bright and talented people from becoming economists, just as the nerd stereotype, in general, discourages some people from taking up other sciences? If so, that’s a shame--because the current crisis, and the dumbed-down, reduced-to-soundbites character of so much of the media dialogue about it, demonstrates just how much need there is for engaging, passionate economics experts who can communicate authentic, innovative ideas to the public on how to solve our problems and move forward constructively.

Yet the debate that is trickling down to the “man on the street” level seems to still be frozen in a language that dates, at the latest, to the Cold War, and that has limited relevance to complexities of the global, interdependent, technology-driven world we live in today. The language of this debate is simply inadequate to the task of helping the constituents of our elected officials make informed decisions on what policies and rules of the business playing field they should support. Yet maintaining this outdated language seems to help the cause of those whose interests are best served by conserving the status quo.

In some cases, conservative commentators seem to be deliberately perpetuating stereotypes about economists as part of their rhetorical strategy. Rush Limbaugh, for example, has verbally caricatured Austan Goolsbee as “one of those eggheads, those Ivy-educated economists,” in the Obama administration.

I know that there are professional economists among the readers of this blog, and I intend no offense to any of them. I am not suggesting that there are not plenty of economists who are among the best and brightest in intellect and who have personality, passion, and social and communication skills to match.

But given the fact that my undergraduate experience partially reinforced the negative stereotypes, and given the prevalence of those stereotypes in popular culture, it may be worth a pause to ask whether the so-called Dismal Science is doing a good enough job at selling itself for what it in fact really is: a very important and most Undismal science that focuses on one of the most fundamental ways that human beings in organized societies navigate their relationships to one another: through the medium of money. As such, it’s a science that should inspire excitement rather than a fear of being bored to death. It’s a science that should matter a lot to everyday Joes and Janes as well as intellectuals.

And, who knows -- maybe a Web gallery of “The Sexiest Economists Alive” would be a lighthearted yet empowering way to start breaking the stereotypes. Sphere: Related Content

Monday, July 20, 2009

The Undismal Weekly Wrapup - July 12-18, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

Interesting week, with major themes focusing on cautious optimism on signs of recovery (but with a tone of expectations management on its pace) and next moves for the Fed.

America Needs a National Manufacturing Policy. Now. (Huffington Post)
In a guest column for the Huffington Post, Sen. Sherrod Brown (D-Ohio), Chairman of the Senate Banking Subcommittee on Economic Policy, points to the pivotal role of the declining manufacturing base in the U.S. in the current plight of the middle class, and argues for an urgent need for “a national plan … that aligns federal actions with the goal of strengthening our manufacturing sector.”

Experts Tell Congress to Lay Off the Fed (Wall Street Journal)
David Wessel of the Wall Street Journal reports that 250 noted economists, including Robert Shiller, have urged congress not to cave in to pressure to intervene in the Fed’s policy making efforts, driven by critics of the central bank. They also caution that efforts currently under discussion to revisit the Fed’s powers and governance structure could backfire.

Geithner Says Global Economy Faces Recovery Setbacks (Bloomberg)
Speaking in Saudi Arabia, U.S. Treasury Secretary Timothy Geithner cautions that the recovery of the global economy is likely to be gradual with a higher than normal share of temporary fluctuations and reversals, due to such factors as wealth lost during the crisis and the heavy increase in public debt, according to this report for Bloomberg from Rebecca Christie.

McCulley Says Fed Needs To ‘Be Irresponsible’ If Prices Tumble (Bloomberg)
Dakin Campbell reports for Bloomberg on advice to the Fed from Paul McCulley of Pacific Investment Management Co., who argues that, if the U.S. economy falls into a protracted slump similar in character to Japan’s lengthy recession, the central bank may need to initiate radical interventions that set aside the normal context of keeping inflation within a targeted level.

Paulson Defends His Response to Economic Crisis (Associated Press)
Responding to the substantial second-guessing of the Bush administration’s responses to the economic crisis toward the end of 2008, former Treasury Secretary Henry Paulson contends, according to this report from AP’s Ann Flaherty, that the actions prevented suffering of a “far more profound and disturbing level.”

Summers: Economy Has Moved Back from Catastrophe (Associated Press)
Obama economic advisor Larry Summers makes a case, as reported by AP’s Jim Kuhnhenn, for cautious optimism -- based on several indicators, including a decrease in public gloom evidenced by declining Google searches for the phrase “economic depression,” a slower pace of economic contraction, improving consumer confidence, and stronger quarterly earnings reports.
Sphere: Related Content

Thursday, July 16, 2009

Brought to You by Big Government

This Plant Has Worked 307 Days Without a Lost Time Accident.
The Best Previous Record Was 286 Days.
Report All Unsafe Conditions to Your Foreman.

My diverse and rather circuitous professional life has taken me at times to facilities where signs are displayed that read like my subhead above. It strikes me that these signs probably wouldn’t exist without unions and their negotiating power, without government regulations, and without “big-government” agencies like the Occupational Safety and Health Administration (OSHA).

There would be far fewer, if any, people who have job titles like Safety Director. Industrial plants would be less likely to hold regular safety meetings, during which rank-and-file workers report and discuss hazards they have observed and brainstorm with their peers and superiors about creative ways to eliminate them. Workers would not have the benefit of the increasing body of knowledge, accumulated through such processes, about how to work safely, provide safety training to new employees, and stay proactively on the lookout for previously unknown hazards as they emerge constantly in the work environment.

Those from a more laissez-faire point of view would argue that, in a truly free market, industry self-regulation would take care of all that. But history, let alone a common-sense understanding of human nature and its unchecked workings in pursuit of short-term gain, tells us otherwise.

During the years when I used to ride the Metrorail daily from suburban Maryland into Washington D.C., a hand-painted sign showed up at a construction site near the Catholic University of America station. It read:

Unions -- The People Who Brought You the Weekend

The sign made a good point, and there are many other rights, privileges, benefits, and protections, taken for granted by the U.S. workforce of today, that originated with unions, big government, and other elements of the so-called Left:
  • The 40-hour, five-day workweek -- brought to you by unions and big government
  • Child labor laws -- brought to you by big government
  • Laws prohibiting minors from performing certain hazardous duties -- brought to you by big government
  • Required Material Safety Data Sheets instructing employees on how to safely handle toxic or otherwise hazardous substances -- brought to you by big government
  • Overtime pay at time-and-a-half -- brought to you by big government
  • Companies no longer able to recklessly expose their employees to hazardous materials like asbestos without proper protection -- brought to you by big government
  • Companies required to provide adequate safety equipment to employees doing hazardous work -- brought to you by unions and big government
  • No more non-illicit sweatshops in the U.S. -- brought to you by big government
  • Workers’ compensation laws and insurance coverage -- brought to you by big government
  • Unemployment compensation for laid-off workers -- brought to you by big government
  • Minimum wage laws -- brought to you by big government
  • Laws prohibiting racial and gender discrimination and sexual harassment -- brought to you by big government
  • The Internet as an important tool for conducting daily business in the workplace -- brought to you by big government
I could go on and on. But I think this list of twelve good things is already long enough to make you wonder just what it is that those who bash big government and unions really want. Sphere: Related Content

Tuesday, July 14, 2009

The Flaws of Quasi-Darwinist Arguments for a Pure Laissez-Faire System

Adam Smith, having published The Theory of Moral Sentiments, in which the theory of “the invisible hand” first appears, precisely a century before Darwin’s Origin of the Species, created a model involving a “selection process” in the realm of commerce that could be said, from an analogous perspective, to anticipate Darwin’s theory of natural selection in the realm of biology.

Just as sexual selection in Darwin is a force that drives “the survival of the fittest,” Smith’s invisible hand of self-interest in the marketplace could be said to drive a selection process by financially rewarding the most innovative and efficient individuals and organizations, while destroying those that are not effective. The strong businesses survive and the weak fail.

Since Darwin, however, links between laissez-faire and Darwinist thinking have appeared frequently, at least in popular parlance, with the survival-of-the-fittest concept supporting the premise that a pure laissez-faire system is more efficient because it is more natural. In this line of reasoning, pure laissez-faire prevents weaker entities from being propped up artificially by having resources allocated to them based on factors other than their fitness for survival, such as government controlled protections, privileges, subsidies, etc.

The same kind of reasoning is also applied to debate on such issues as minimum wage laws, environmental and safety regulations, union organizing rights, and executive compensation. Those whose opinions lie in the further reaches of the free-market side of the continuum argue that such regulations interfere with the natural ability of the market to maintain efficiency by rewarding the fit and penalizing the unfit.

However, like many attempts to take ideas from the natural sciences and apply them to the social sciences, the use of Darwinist concepts in economics is highly prone to error. In the natural world, the question of which individual organism or species is more fit for survival is context-specific. And the physical contexts are, in effect, immutable. For example, an alligator is not at all fit to survive in an arctic environment, but a polar bear is. Move either of these creatures out of its native environment, and survival is virtually impossible.

If we set aside for a moment the current controversy over the accuracy of the global warming theory and man’s role in causing it, it is for practical purposes an immutable reality that it is very cold in the arctic and very hot in the tropics. These conditions impose hard physical constraints on what determines fitness for survival.

But socioeconomic environments are far from immutable. Free societies have the ability to decide what rules will apply to the economic playing field, and what we ask in return from those who benefit from society’s provision of a marketplace and labor force from which a profit can be made. And -- forgive the cliché -- if you choose not to decide, which is exactly what laissez faire thinking asks society to do in relation to the rules of business, you still have made a choice.

In a market entirely free of regulations, society makes a choice that creates a situation in which he who already has the gold rules. Already-accumulated wealth creates a distinct -- though not entirely insurmountable -- advantage in the competitive playing field and sets up a situation in which, to resort to another cliché, the rich get richer and the poor get poorer.

The problem with all this is that a fully unregulated free enterprise system with no governmentally imposed checks and balances would inevitably end up allocating some rewards to businesses and individuals that are based on factors other than efficiency, effective performance, and fitness for survival.

For example, in a market without minimum wage levels or provision for organizing unions, businesses would be free to pay the lowest wages they could possibly get away with and pay employees a much smaller portion of the value they produce. Businesses that get so large that they become monopolies can drive out any attempts at competition and continue to be rewarded based solely on their size and accumulated capital, even though they may, as they grow in size and power, lose much of their efficiency and ability to innovate.

Large, well financed entities can acquire powers, almost governmental in nature, to control their markets, such as by restricting access to vendor relationships or distribution channels. This can keep inferior products on the market well after they have passed their “natural” life cycles, because would-be innovators have too many barriers to market entry.

Misallocation of rewards can occur on the individual level as well. Some of the earliest people to succeed financially in the American colonies were not among the most successful in their native countries. Otherwise, they would have had no incentive to come to The New World.

Aside from those coming to escape religious persecution, we could make a simple division of the earliest generations of Europeans in the American colonies into three basic categories:

1. People who were wealthy -- but not among the wealthiest of the wealthy -- who had the personal funds, social standing, or connections to acquire the financial backing to come and seek greater fortunes that they hoped would gain them entry to the ranks of the wealthiest of the wealthy. In this category were those, for example, who received the first land grants from the King of England.

2. “Middle class” people, such as merchants and skilled tradesmen, artisans, and craftsmen, who sought opportunities to increase their economic and social status by providing goods and services to those in the first category.

3. People from lower social strata who came as indentured servants or paid workers in more menial categories, expecting to increase their standing by providing labor to those in the first two categories.

By omitting from the discussion those who did not arrive by choice, I mean no offense. The history of slavery in America could be the subject of another, even longer post on how a virtually unregulated market perpetrated a gross abuse of human potential.

Granted, this sketch of the earliest Europeans in the colonies is one that undoubtedly omits many complexities. Nevertheless, I think it’s valuable for illustrating (1) that those in all three categories were not among the most successful of their peers in Europe; (2) that choosing to change their socioeconomic environment -- to a new and more open market -- enabled them to use their native abilities to a greater benefit than they would have achieved in Europe ; and (3) that, therefore, their status in the European hierarchy was determined by factors other than their inherent “fitness for survival,” which could be altered by a change of socioeconomic context.

In other words, in a new market in which basic resources were not controlled by the wealth and power of an existing hierarchy, individuals throughout the food chain could achieve a level of success that would be unlikely in their “native” environment.

But as we moved through subsequent generations, the playing field changed, and a new hierarchy emerged here in the United States. Those whose families were here first, when resources were more freely available, could benefit simply by virtue of connections to those who were here first.

In spite of this, the nation was -- and still is -- a land of opportunity. But the accessibility of opportunity has arguably diminished with each generation as control of resources has become more concentrated. So even though survival of the fittest was likely to have been an important factor among all three categories of the original settlers, as time went on it became less of a factor as various persons and entities gained control over more of the playing field.

If you’re not convinced, let’s look at a very tangible -- and personal -- example of the diminution of opportunity, to which many readers should be able to relate: the declining affordability of higher education.

When my older brothers and sisters went to college in the 1970s, it was very possible for a college-age kid to earn enough from part-time and summer jobs, paying not substantially more than minimum wage, to pay tuition at an above-average state university.

But between their college years and mine, and through all the years since, the wages accessible to a high school graduate by no means kept up with the inflation rate of college tuitions. When my older siblings went to school, “working your way through” without becoming encumbered with loans was entirely feasible. By the time I entered college, it was still feasible, but quite difficult. Tuition, at the same university my older siblings attended, inflated so rapidly that it nearly doubled between my freshman and senior years.

So higher education has become less accessible. It is a major key to success in the competitive world of business, and an important means of measuring, on a basis that is largely independent of one’s initial station in life, one’s ability to succeed.

Today, I believe it would be virtually impossible for a student at my alma mater to complete an undergraduate degree in four years without extensive financial help from family, scholarships, grants, or heavy loan debt. Marked obstacles limiting access to the playing field have been erected, hindering individuals who could otherwise succeed.

Those from less affluent families have fewer opportunities to even enter the game than they did 35 years ago. On the other hand, at certain elite private universities, a mediocre high school student who happens to have a wealthy family can secure admission purely on the basis of an alumnus parent who can pay tuition out of deep pockets. That student, in turn, can gain substantial professional or business advantages over brighter but less affluent peers through the social connections that can come from attending an elite university.

It’s an example of the market allocating rewards based on criteria other than fitness for survival. The heirs of those who truly earned rewards through enterprise and innovation can become complacent and decadent; yet their socioeconomic advantages can allow them to continue reaping benefits in the marketplace, at a cost to society of hindering competition from those who might otherwise be superior innovators. In turn, it’s a clear example of the fallacy of quasi-Darwinist arguments for a pure laissez-faire system.

It’s also an example of the need for some level of government involvement in maintaining a truly level playing field. In the higher education example, the appropriate role of government should of course be the subject of active, constructive debate. I have utmost respect for our elite private universities, which have, indeed, produced some of our greatest leaders in business, science, public service, and other domains. And I hold our top public institutions in similar regard for their aspirations -- often successful, in my view -- to offer education comparable to their elite private counterparts, even though many have in the process become prohibitively expensive.

I don’t necessarily believe in the concept of an unconditionally free, four-year college education. But there are many options that could produce an outcome more equitable and productive than the status quo, including various forms of public-private financing partnerships, or free junior colleges and postsecondary technical schools as an extension of the public school system, followed by various financing options for those with the ability and desire to move on to the junior and senior year -- work study programs, loan forgiveness in exchange for public or military service, and so on.

Natural ability is of course a crucial factor in success, but many people with substantial natural ability are hindered from maximizing their potential. Surely the cost to society is great, and it’s difficult to see a legitimate basis for denying that efforts to find the right model to correct these inequities would be worthwhile. Surely the wealthiest nation on earth has the resources to accomplish this, if only we would work together to find better, more creative ways to allocate them. Sphere: Related Content

Monday, July 13, 2009

The Undismal Weekly Wrapup -- July 5-11, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

A Possible Bailout for Small Business (Forbes)
Brian Wingfield reports on the possibility, currently under consideration by the Obama administration, of making a portion of the original $700 billion TARP allocation available to aid small enterprises via the small business administration.

Do We Need Another Stimulus? (Washington Post)
Economists and politicians weigh in on the issue, including: Robert Reischauer, President, The Urban Institute; Rep. Donna Edwards (D-Maryland); Rep. John Boehner (R-Ohio), House Minority Leader; Mark Zandi, Chief Economist, Moody’s Economy.com; Martin Feldstein, Professor of Economics, Harvard University; Dino Kos, Former New York Fed Executive Vice President; Douglas Holtz-Eakin, Former Director, Congressional Budget Office; and Lanny Davis, Former Special Counsel to President Clinton.

Fed's Stern: First Stage Of Recovery 'Close At Hand' (Wall Street Journal)
Michael S. Derby reports on comments by Gary Stern, President of the Minneapolis Fed, who cites positive indicators in consumer spending, manufacturing, and housing sales, while also cautioning about the possible pitfall of asset price instability, which could hinder the recovery and is difficult to control through the Fed’s normal monetary policy arsenal.

How Did California Get Into This Mess? (Los Angeles Times)
Examining the complex, multifaceted causes of California’s budget crisis, John Vasconcellos contends that there’s plenty of blame to go around, not only in the realms of government but also among California voters, whose contradictory support of both tax reductions and increased services placed the state government in a quandary.

The Stimulus Trap (New York Times)
Commenting on the political predicament President Obama may soon find himself in amidst declining public confidence in his economic policies, economist Paul Krugman makes the case that the current best option is to pause and observe, giving the original package time to work, while simultaneously evaluating options for strengthening the current policies should they prove to have been insufficient.

Weekend Opinionator: Is GM Back from the Dead? (New York Times)
Tobin Harshaw explores opinions from various analysts on what’s in store for General Motors after a fast-track emergence from bankruptcy. Sphere: Related Content

Tuesday, July 7, 2009

The Undismal Weekly Wrapup -- June 28-July 4, 2009

Analytical Summaries of Key Stories of the Week on Economics and Public Policy

A Setback on Jobs (New York Times)
In an analysis of unexpectedly high job losses reported for June, David Leonhardt describes the state of the economy as “stepped back from the precipice of depression” but far from being in good shape.

As U.S. Celebrates July 4th, Rest Assured that Obama is No Socialist (Chicago Tribune)
Citing opinions from economists and other experts, columnist David Greising characterizes the widespread cries of “socialism” from President Obama’s critics as intellectually lazy, arguing that the administration’s policies have been working “at all times from a capitalist frame of reference.”

In a Crisis, Rethinking Fiscal Federalism (New York Times)
Harold Pollack of the University of Chicago School of Social Service Administration and Ed Kilgore, Managing Editor of The Democratic Strategist, contend that complex fiscal crises occurring across the U.S. at the state and local levels reflect “a frayed partnership between states and the federal government.”

New White House Office to Redefine What Urban Policy Encompasses (Washington Post)
President Obama’s newly created Office of Urban Affairs seeks to “redefine the word urban and set the tone for policies not only for inner cities but for nearby suburbs as well, according to this report from Robin Shulman of the Washington Post

Taking Stock: Economy and Government on July 2, 2009 (The Atlantic)
Continuing to characterize the present crisis as a “depression,” Richard Posner cautions that, in spite of signs of “incipient recovery,” prospects for the economy remain uncertain amidst continuing fundamental problems of unemployment, underemployment, declining home prices, and reduced personal consumption.

U.S. Stimulus a Small Patch for Big Economic Hole (Reuters)
In this news analysis piece, Emily Kaiser takes stock of the impact thus far of the federal stimulus package, especially in the context of the daunting difference in magnitude between the federal program’s $787 billion scale vs. the “$12 trillion in household wealth that has been wiped out since the recession began.”

Why This Recession is Hitting Men Harder (Wall Street Journal)
Featuring commentary by experts from the Economic Policy Institute and the Center for Economic Policy and Research, this report from Andrea Coombes examines the factors behind and social impact of the gap in unemployment levels between men (10.5 percent in May) and women (8 percent), especially given that male dominated industries account for half of job losses since the beginning of the recession. Sphere: Related Content
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