Salon.com > Economics http://www.salon.com Fri, 03 May 2013 23:40:23 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 Austerity opposition goes mainstream http://www.salon.com/2013/04/27/a_lesson_to_the_left_it_will_no_longer_do_to_simply_be_anti_austerity_partner/ http://www.salon.com/2013/04/27/a_lesson_to_the_left_it_will_no_longer_do_to_simply_be_anti_austerity_partner/#comments Sat, 27 Apr 2013 15:00:00 +0000 http://www.railrode.net/?p=13283171 JacobinAusterity is collecting a lot of high-flying enemies these days. In the past month the manager of PIMCO, the largest bond-buying firm in the world, top figures at Blackrock, one of the most influential investment banks in the world, the President of the European Commission, Jose Manuel Barroso, and Martin Wolf, world-renowned finance commentator for the Financial Times, have all come out vigorously against austerity.

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]]> http://www.salon.com/2013/04/27/a_lesson_to_the_left_it_will_no_longer_do_to_simply_be_anti_austerity_partner/feed/ 12 Whoops! Turns out debt doesn’t ruin economies http://www.salon.com/2013/04/17/whoops_turns_out_debt_doesnt_ruin_economies/ http://www.salon.com/2013/04/17/whoops_turns_out_debt_doesnt_ruin_economies/#comments Wed, 17 Apr 2013 11:45:00 +0000 http://www.railrode.net/?p=13273402 Carmen Reinhart and Kenneth Rogoff are two very, very well-respected Harvard economists. They are the authors of a very well-received account of the financial crisis and its antecedents. In 2010 they released a paper that is among the most influential economic papers of the modern era. The paper argued that countries with a debt-to-GDP ratio above 90 percent average negative GDP growth. (The paper also suggested that correlation is causation, in the direction neoliberal misers prefer.) In other words, this was, for many people, concrete proof -- with numbers and a chart -- that government debt is bad for the economy and should be reduced even in the midst of a recession and an employment crisis. The authors have briefed leaders and legislators around the world on their finding, and the paper has essentially been used to justify most debt hysteria around the world, since its publication.

But! Whoops, turns out they were wrong, about that one central fact that has been repeated as the gospel truth by purveyors of Tough Talk on debt the world over for the last three years. They screwed up their spreadsheet. Turns out average GDP growth in countries with debt-GDP ratios 90 percent and higher is positive, not negative.

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]]> http://www.salon.com/2013/04/17/whoops_turns_out_debt_doesnt_ruin_economies/feed/ 73 Liberals should fear Chris Christie http://www.salon.com/2013/04/09/liberals_should_be_scared_of_chris_christie_partner/ http://www.salon.com/2013/04/09/liberals_should_be_scared_of_chris_christie_partner/#comments Tue, 09 Apr 2013 17:23:00 +0000 http://www.railrode.net/?p=13265861 Two years ago, Gov. Scott Walker of Wisconsin introduced his falsely named "budget repair bill." In doing so, he transformed himself from an obscure Midwestern governor to the personification of a nationally orchestrated, well-funded right-wing movement that was more – much more -- than just an attempt to balance the budget on the backs of public service workers. His plan, concocted in quite public collaboration with the Koch brothers, was to gut public sector collective bargaining rights altogether.
AlterNet

The right had a new champion. Having weakened and nearly destroyed the private sector union movement in America over the last 30 years, it was time to home in on a new target: public sector unions and, in fact, the very idea that a fair society requires a robust public sphere. (Hint: This is true for the non-wealthy, less so for people who can buy their way into private schools, private beaches, private jets and so on.)

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]]> http://www.salon.com/2013/04/09/liberals_should_be_scared_of_chris_christie_partner/feed/ 16 Can the Great Depression help solve our unemployment crisis? http://www.salon.com/2013/04/09/a_disaster_in_slow_motion_understanding_our_unemployment_crisis_partner/ http://www.salon.com/2013/04/09/a_disaster_in_slow_motion_understanding_our_unemployment_crisis_partner/#comments Tue, 09 Apr 2013 16:37:00 +0000 http://www.railrode.net/?p=13265825 The question we must ask today, as we remember the Works Progress Administration is: why isn’t there the political will to take dramatic steps to address today’s jobs emergency?
Next New Deal

Let’s start with the obvious; there was a far greater share of Americans unemployed in the Great Depression. In 1934, unemployment peaked at 24.9%.  One-out-of-four people officially out of work is much more of a crisis than one-out-of ten (9.6%), the peak in the current recession in 2010. The impact is even greater than two-and-a-half times, as such a huge drop in consumer spending means that marginal businesses able to survive 10% unemployment rates were swept away in the Depression. And during the Depression – much more than now – it was impossible not to know people whose lives had been devastated.

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]]> http://www.salon.com/2013/04/09/a_disaster_in_slow_motion_understanding_our_unemployment_crisis_partner/feed/ 6 Reagan aide disqualifies himself from the conversation http://www.salon.com/2013/04/04/don%e2%80%99t_catch_his_eye_david_stockman%e2%80%99s_alien_abduction_partner/ http://www.salon.com/2013/04/04/don%e2%80%99t_catch_his_eye_david_stockman%e2%80%99s_alien_abduction_partner/#comments Thu, 04 Apr 2013 17:08:00 +0000 http://www.railrode.net/?p=13261637 I hope I’m not being narrow-minded, but it seems to me there is a small number of enthusiasms that immediately disqualify those who indulge them as serious thinkers or policymakers.  When you learn that your Federal Reserve Chairman was an acolyte of Ayn Rand, for example, or that someone in Congress involved with budget policy remains a Rand devotee, you know instantly something’s gone terribly wrong.  You might even begin wondering whether this isn’t some monstrous financial equivalent of Caligula’s appointing a horse to the Roman Senate – or a ‘Rand’ to the American one.

We’ve all had the feeling:  You fall into conversation with some stranger on the subway or bus.  Or perhaps you are seated beside him at a concert or some other event.  Whatever the venue or circumstance, the conversation goes pleasantly for a while.  Your interlocutor makes various interesting observations about this subject or that.  He shows himself to experience the world much as do you and most others you’ve known.  He might even say something arrestingly perceptive or thoughtful at some juncture during your chat.  Then, without warning, it happens:  In the middle of a perfectly good sentence he throws in, as a sort of throwaway line or aside, some such observation as, ‘like that time the Venusians performed those experiments on me up on Telos Nine, before taking me back to the Bryant Park carousel and then flying home.  (They still call me, you know.)’

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]]> http://www.salon.com/2013/04/04/don%e2%80%99t_catch_his_eye_david_stockman%e2%80%99s_alien_abduction_partner/feed/ 25 When neoliberalism exploded http://www.salon.com/2013/03/09/the_world_according_to_milton_friedman_partner/ http://www.salon.com/2013/03/09/the_world_according_to_milton_friedman_partner/#comments Sat, 09 Mar 2013 14:00:00 +0000 http://www.railrode.net/?p=13223343 HOW DID IT HAPPEN? In the early 1970s, Western governments, academia, and the media understood the relationship between the state and the market according to the same liberal consensus that had been in place since the end of World War II. During what is commonly called the “golden age of capitalism,” government, capital, and labor had reached the uneasy agreement that markets produced social ruin when left to their own devices. The state was needed to mitigate inequality, to provide basic services, and — through a combination of monetary and fiscal means — to even out capitalism’s boom-bust cycle. By the early 1980s, all that had changed: the British and American governments, joined by large segments of the media and intelligentsia, declared that the state was the root of social evil, that free markets could do nearly everything better than government, and that the economic crises of the past were the result of state meddling.
Los Angeles Review of Books

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]]> http://www.salon.com/2013/03/09/the_world_according_to_milton_friedman_partner/feed/ 54 The politician vs. the economist http://www.salon.com/2013/03/05/the_politician_vs_the_economist/ http://www.salon.com/2013/03/05/the_politician_vs_the_economist/#comments Tue, 05 Mar 2013 13:00:00 +0000 http://www.railrode.net/?p=13219026 It was billed like a prize fight -- “one night only!” Politico wrote -- with liberal New York Times columnist and Nobel Prize winner Paul Krugman versus conservative-esque MSNBC host and former Republican congressman Joe Scarborough. The venue: Charlie Rose. FIGHT!

While Krugman was the early favorite among liberals, he seemed unprepared for Scarborough’s aggressive debate style. While the economist seemed to expect an academic and substantive discourse, the former congressman came prepared with opposition research on Krugman’s past statements and debated his foe like he would an opposing candidate in an election. Scarborough was on the attack from the beginning and didn’t let up, even mocking the Nobel laureate at times, and occasionally misrepresenting his own or Krugman’s arguments to make a point.

"Why don't we try to argue about the substance and not play gotcha?" Krugman said exasperated.

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]]> http://www.salon.com/2013/03/05/the_politician_vs_the_economist/feed/ 65 Living in a “post-work” society http://www.salon.com/2013/02/26/living_in_a_post_work_society_partner/ http://www.salon.com/2013/02/26/living_in_a_post_work_society_partner/#comments Tue, 26 Feb 2013 16:31:00 +0000 http://www.origin.railrode.net/?p=13212537 In Sunday’s New York Times, conservative columnist Ross Douthat invokes the utopian dream of “a society rich enough that fewer and fewer people need to work—a society where leisure becomes universally accessible, where part-time jobs replace the regimented workweek, and where living standards keep rising even though more people have left the work force altogether.” This “post-work” politics may be unfamiliar to many readers of the Times, but it won’t be new to readers of Jacobin.
Jacobin

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]]> http://www.salon.com/2013/02/26/living_in_a_post_work_society_partner/feed/ 13 Southern poverty pimps http://www.salon.com/2013/02/19/southern_poverty_pimps/ http://www.salon.com/2013/02/19/southern_poverty_pimps/#comments Tue, 19 Feb 2013 19:59:00 +0000 http://www.origin.railrode.net/?p=13205166 Contemporary American politics cannot be understood apart from the North-South divide in the U.S., as I and others have argued.  Neither can contemporary American economic debates.  The real choice facing America in the 21st century is the same one that faced it in the 19th and 20th centuries — Northernomics or Southernomics?

Northernomics is the high-road strategy of building a flourishing national economy by means of government-business cooperation and government investment in R&D, infrastructure and education.  Although this program of Hamiltonianism (named after Washington’s first Treasury secretary, Alexander Hamilton) has been championed by maverick Southerners as prominent as George Washington, Henry Clay and Abraham Lincoln (born in Kentucky to a Southern family), the building of a modern, high-tech, high-wage economy has been supported chiefly by political parties based in New England and the Midwest, from the Federalists and the Whigs through the Lincoln Republicans and today’s Northern Democrats.

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]]> http://www.salon.com/2013/02/19/southern_poverty_pimps/feed/ 122 Why don’t people want to elect economists to run stuff? http://www.salon.com/2013/02/18/why_dont_people_want_to_elect_economists_to_run_stuff/ http://www.salon.com/2013/02/18/why_dont_people_want_to_elect_economists_to_run_stuff/#comments Mon, 18 Feb 2013 20:09:00 +0000 http://www.origin.railrode.net/?p=13205052 Two economists have come together to research the question of whether or not countries are smart enough to put economists in charge of everything. Their surprising conclusion: Nope, not really! There are hardly any economist prime ministers and surprisingly not that many economist central bankers, at least if we're talking PhD economists and not "guys who took an Econ class once."

At Ezra Klein's WonkBlog, Brad Plumer summarizes the study and asks, "why aren't more countries run by economists?" Here's why: Because everyone hates economists. Economists are the worst. They're usually very convinced of their own genius, though. And they act like because they use math, their "science" is more sciencey than sociology or whatever, but it is still mostly just a bunch of made-up stuff. If a bunch of economists had been running the world prior to the 2008 financial crisis the 2008 financial crisis would not have been averted because almost no one predicted it.

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]]> http://www.salon.com/2013/02/18/why_dont_people_want_to_elect_economists_to_run_stuff/feed/ 44 Economists: A $9 minimum wage won’t hurt jobs http://www.salon.com/2013/02/14/economists_a_9_minimum_wage_wont_hurt_jobs/ http://www.salon.com/2013/02/14/economists_a_9_minimum_wage_wont_hurt_jobs/#comments Thu, 14 Feb 2013 18:23:00 +0000 http://www.origin.railrode.net/?p=13201445 In his State of the Union address this week, President Obama proposed a $9 federal minimum wage, indexed to inflation, from the current $7.25. The White House has stated that the proposal would mean a raise for 15 million low-income workers and lot of people are pleased: The AFL-CIO and the Service Employees International Union  have praised the idea, as have a number of Democrats in Congress.

House Speaker John Boehner really hates the idea. "When you raise the price of employment, guess what happens? You get less of it," he said Wednesday. But a number of commentators and economists have already intervened in the emerging polemic to challenge Boehner's assumptions about minimum wage hikes and less employment.

Time's Christopher Matthews noted:

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]]> http://www.salon.com/2013/02/14/economists_a_9_minimum_wage_wont_hurt_jobs/feed/ 6 Not all unemployment rates are created equal http://www.salon.com/2013/02/08/no_one_wins_with_high_unemployment_partner/ http://www.salon.com/2013/02/08/no_one_wins_with_high_unemployment_partner/#comments Fri, 08 Feb 2013 20:50:00 +0000 http://www.origin.railrode.net/?p=13195331 The recent CBO report projects real GDP growth to be a measly 1.4% this year, down from a rate closer to 3%, they claim, were it not for all the fiscal cuts baked in the 2013 cake:

CBO estimates that economic growth in 2013 would be roughly 1½ percentage points faster than the agency now projects [i.e., 1.4%] if not for the fiscal tightening.

By Okun’s rule, this suggests unemployment will stick at about 8% this year — about where it is — instead of a number a lot closer to 7%. (Okun’s rule turns that 1.5% faster GDP growth into about 0.75 of a percentage point [ppt] lower unemployment.) In fact, the CBO predicts that the unemployment rate this year will move from all of 7.9% in the first half of the year to 8% in the second half. Thanks, dudes.

Actually, we should thank them for the warning — and even R’s are sounding Keynesian (OK, military Keynesianism, but still …) right now.

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]]> http://www.salon.com/2013/02/08/no_one_wins_with_high_unemployment_partner/feed/ 1 Must-see morning clip http://www.salon.com/2013/01/15/must_see_morning_clip_89/ http://www.salon.com/2013/01/15/must_see_morning_clip_89/#comments Tue, 15 Jan 2013 15:47:00 +0000 http://www.origin.railrode.net/?p=13171565 Comedian Jon Stewart lunged upon economist and New York Times columnist Paul Krugman, who this weekend blasted the comedian for making fun of his one trillion-dollar platinum coin idea, which Krugman theorizes could pay for the U.S. deficit.  Krugman told ABC News this weekend that Stewart "is ruining his own brand" by turning the topic into a farce. But on last night's "Daily Show," Stewart defended himself, saying, "If somebody is ruining their brand with a trillion dollar coin idea, I don't think it's the non-economist."

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]]> http://www.salon.com/2013/01/15/must_see_morning_clip_89/feed/ 33 The brutal truth about how childhood determines your economic destiny http://www.salon.com/2013/01/13/the_brutal_truth_about_how_childhood_determines_your_economic_destiny/ http://www.salon.com/2013/01/13/the_brutal_truth_about_how_childhood_determines_your_economic_destiny/#comments Sun, 13 Jan 2013 17:00:00 +0000 http://www.origin.railrode.net/?p=13169422 AlterNet "Give me the child until he is seven," the old Jesuit teachers say, "and I will give you the man."

Back in 1964, filmmaker Paul Almond set out to test that theory by documenting the lives of a group of seven-year-old British children. Some were born to the manor; others grew up in charity homes. There were tykes from both the countryside and the city. Almond wanted to know if the destiny of the children had already been scripted by the circumstances of their birth -- particularly those of class. His film Seven Up! has grown into a series spanning over five decades. Every seven years, like the cycle in some mythological saga, Michael Apted, the assistant on the original project, has returned to these children as they have morphed before our eyes into awkward adolescents, tentative adults, and now, the paunchy survivors of late middle-age.

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]]> http://www.salon.com/2013/01/13/the_brutal_truth_about_how_childhood_determines_your_economic_destiny/feed/ 18 Help us, Nate Silver! http://www.salon.com/2013/01/06/help_us_nate_silver/ http://www.salon.com/2013/01/06/help_us_nate_silver/#comments Sun, 06 Jan 2013 17:00:00 +0000 http://www.origin.railrode.net/?p=13162276 Statistics cannot be any smarter than the people who use them. And in some cases, they can make smart people do dumb things. One of the most irresponsible uses of statistics in recent memory involved the mechanism for gauging risk on Wall Street prior to the 2008 financial crisis. At that time, firms throughout the financial industry used a common barometer of risk, the Value at Risk model, or VaR. In theory, VaR combined the elegance of an indicator (collapsing lots of information into a single number) with the power of probability (attaching an expected gain or loss to each of the firm’s assets or trading positions). The model assumed that there is a range of possible outcomes for every one of the firm’s investments. For example, if the firm owns General Electric stock, the value of those shares can go up or down. When the VaR is being calculated for some short period of time, say, one week, the most likely outcome is that the shares will have roughly the same value at the end of that stretch as they had at the beginning. There is a smaller chance that the shares may rise or fall by 10 percent. And an even smaller chance that they may rise or fall 25 percent, and so on.

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]]> http://www.salon.com/2013/01/06/help_us_nate_silver/feed/ 26 IMF economists apologize for austerity forecasts http://www.salon.com/2013/01/04/imf_economists_apologize_for_austerity_forecasts/ http://www.salon.com/2013/01/04/imf_economists_apologize_for_austerity_forecasts/#comments Fri, 04 Jan 2013 21:13:00 +0000 http://www.origin.railrode.net/?p=13162209 While Congress debates the details of an austerity consensus, Europe is staring at the wreckage of harsh austerity packages that have brought countries like Greece to their knees. This week, as the Washington Post reported, IMF top economist Olivier Blanchard issued an "amazing mea culpa" for failing to foresee how austerity measures would undermine economic growth.

“Forecasters significantly underestimated the increase in unemployment and the decline in domestic demand associated with fiscal consolidation,” Blanchard and co-author Daniel Leigh, a fund economist, wrote in a paper on growth forecast errors. The authors essentially admit that they failed to consider important factors about how regions might react to austerity in times of financial crisis when they advised IMF austerity policy.

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]]> http://www.salon.com/2013/01/04/imf_economists_apologize_for_austerity_forecasts/feed/ 16 “Thelma and Louise,” Waylon Jennings: The best fiscal cliff tweets http://www.salon.com/2012/12/28/thelma_and_louise_waylon_jennings_the_best_fiscal_cliff_tweets/ http://www.salon.com/2012/12/28/thelma_and_louise_waylon_jennings_the_best_fiscal_cliff_tweets/#comments Fri, 28 Dec 2012 16:17:00 +0000 http://www.origin.railrode.net/?p=13156504 With the fiscal cliff approaching, confused panic, intransigent realpolitik and "Thelma and Louise" references abound in Twitter's snarky corners:

 

[embedtweet id="284654631806697472"]

 

[embedtweet id="284201238508228608"]

 

[embedtweet id="284423162467319808"]

 

[embedtweet id="284469059150565376"]

 

[embedtweet id="284683954903199745"]

 

[embedtweet id="284684399583322112"]

 

[embedtweet id="284683866734723072"]

 

[embedtweet id="284691250169409537"]

 

[embedtweet id="284690707707461634"]

 

[embedtweet id="284573893518319616"]

 

And the BBC's Paul Mason gets to the point:

[embedtweet id="284445545592926209"]

 

 

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]]> http://www.salon.com/2012/12/28/thelma_and_louise_waylon_jennings_the_best_fiscal_cliff_tweets/feed/ 0 Powerball’s dark side http://www.salon.com/2012/11/28/powerball_has_its_dark_side/ http://www.salon.com/2012/11/28/powerball_has_its_dark_side/#comments Wed, 28 Nov 2012 15:12:00 +0000 http://www.origin.railrode.net/?p=13109040 "What we sell is dreams," Colorado's State Lottery director Abel Tapia told USA Today.

Today, Tapia is right -- the dream market is booming before tonight's Powerball lottery which has a jackpot of more than $500 million, the largest ever.

Powerball, which is sold in 42 states,Washington, D.C., and the U.S. Virgin Islands, has not had a winner in two months, rolling over the prize money and culminating in a ticket-buying frenzy today. Americans across the country who do not regularly play the lottery are shelling out for a one-in-175 million chance at Romney riches.

On days like this, when the promise of mega winnings turns the lottery into a news story, it seems its least pernicious. Local and national papers are flush with cheerful tales of comfortable, middle class Americans waiting in long gas station lines to buy a handful of tickets, joining offices pools and spinning cliched yarns about retiring in luxury on a desert island.

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]]> http://www.salon.com/2012/11/28/powerball_has_its_dark_side/feed/ 15 Moody’s strips France of AAA credit rating http://www.salon.com/2012/11/20/moodys_strips_france_of_aaa_credit_rating/ http://www.salon.com/2012/11/20/moodys_strips_france_of_aaa_credit_rating/#comments Tue, 20 Nov 2012 15:51:00 +0000 http://www.origin.railrode.net/?p=13103717 PARIS (AP) — France's government has shrugged off the latest downgrade of its credit rating, saying Tuesday that it just needs time for reforms to the sluggish economy to take root.

In a setback for President Francois Hollande's Socialist administration, Moody's Investors Service stripped Europe's No. 2 economy of it of its prized AAA credit rating late Monday on concerns that its rigid labor market and exposure to Europe's financial crisis were threatening its prospects for economic growth.

This is the second ratings downgrade to have hit France this year: Standard & Poor's agency lowered its score in January. The third leading agency, Fitch, still ranks France at AAA-rating but warned it could still be downgraded.

Finance Minister Pierre Moscovici insisted that France's credibility remains strong and that the government's plan to reduce unemployment and restore growth would bear fruit.

France has come under scrutiny as its €2 trillion ($2.5 trillion) economy has stagnated, with many leading French companies laying off workers. Meanwhile, Hollande has struggled to reassure economists that his attempts to revive the French economy will be successful.

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]]> http://www.salon.com/2012/11/20/moodys_strips_france_of_aaa_credit_rating/feed/ 6 Study: Unhappiness hurts fiscal health http://www.salon.com/2012/11/15/study_unhappiness_hurts_fiscal_health/ http://www.salon.com/2012/11/15/study_unhappiness_hurts_fiscal_health/#comments Thu, 15 Nov 2012 22:42:00 +0000 http://www.origin.railrode.net/?p=13100091 Whether it's treating yourself to an extravagant dinner after a stressful day or picking up a new pair of boots during a nasty breakup, people tend to spend more when they're feeling blue. Anecdotal evidence like this inspired researchers at Harvard University to look into the matter and what they found probably won't surprise you: feeling down can take a serious toll on your wallet.

As part of the study, a select group was shown a sad movie (this one, perhaps?) and were then asked to make financial decisions. Compared to subjects who had not watched the video, the sad group were far more likely to make choices that presented a short-term benefit, but were less profitable in the long run.

Blame it on "present bias," a phenomenon that makes us crave immediate gratification at the expense of even greater rewards later on. It's a tendency that many people exhibit in everyday life, but add a little melancholy into the mix and you've got yourself a recipe for financial disaster. Lead researcher Jennifer Lerner explains that "compared with neutral emotion, sadness -- and not just any negative emotion -- made people more myopic, and therefore willing to forgo greater future gains in return for instant gratification."

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