Morgan Stanley director Erskine Bowles got a couple of big things wrong in a “Room for Debate” comment in the NYT. First he refers to “our commission’s plan.” His commission did not produce a plan. To produce a plan it would have needed 14 votes. The plan that he and his co-chair, Alan Simpson, developed only got the support of 11 members of the commission.
He also refers to the crisis that will result from not taking steps to reduce the deficit as “the most predictable economic crisis in history.” Actually, the most predictable crisis in economic history was the downturn that we are now suffering from due to the collapse of the housing bubble. It was easy to see that the bubble would burst and lead to a large downturn, since there was no easy way to replace the $1.4 trillion in annual demand generated by the bubble.
There is no obvious crisis associated with the current budget path. It would be helpful if Bowles could spell out what he envisions, since a country that has its own currency faces no prospect of ever seeing a crisis like that facing Greece or Ireland, which don’t have their own currency. It is also worth noting that the interest burden on the debt, net of payments from the Fed to the Treasury, is only around 1.0 percent. This is the lowest that it has been in the post-war era.
Morgan Stanley director Erskine Bowles got a couple of big things wrong in a “Room for Debate” comment in the NYT. First he refers to “our commission’s plan.” His commission did not produce a plan. To produce a plan it would have needed 14 votes. The plan that he and his co-chair, Alan Simpson, developed only got the support of 11 members of the commission.
He also refers to the crisis that will result from not taking steps to reduce the deficit as “the most predictable economic crisis in history.” Actually, the most predictable crisis in economic history was the downturn that we are now suffering from due to the collapse of the housing bubble. It was easy to see that the bubble would burst and lead to a large downturn, since there was no easy way to replace the $1.4 trillion in annual demand generated by the bubble.
There is no obvious crisis associated with the current budget path. It would be helpful if Bowles could spell out what he envisions, since a country that has its own currency faces no prospect of ever seeing a crisis like that facing Greece or Ireland, which don’t have their own currency. It is also worth noting that the interest burden on the debt, net of payments from the Fed to the Treasury, is only around 1.0 percent. This is the lowest that it has been in the post-war era.
Read More Leer más Join the discussion Participa en la discusión
It really is bizarre, but apparently the NYT doesn’t know what line of work President Obama is in. Perhaps they think he is a jazz singer, a mystery writer, who knows? While the rest of us know that President Obama is a politician, the NYT somehow thinks he is a philosopher. It told readers this in the very first sentence of a front page article on Representative Ryan’s acceptance speech at the Republican convention referring to “President Obama’s governing philosophy.”
The article never explains how it came to the conclusion that President Obama has a governing philosophy. While a philosopher might have a governing philosophy, a politician responds to political pressures from powerful interest group. President Obama very obviously does the latter, the NYT gives us no information as to why it thinks that President Obama is a philosopher.
This piece also erred by following Representative Ryan in referring to his accusation about President Obama’s failure, “to act on the recommendations of his own bipartisan debt commission.” While the article did point out that as a member of the commission, Representative Ryan had voted against the plan put forward by the commission co-chairs, Morgan Stanley director Erskine Bowles and former Senator Alan Simpson, it did not point out that the plan actually was not adopted by the commission. To have been approved, the report would have needed the support of 14 members of the commission. It only had the support of 11 members. It is therefore inaccurate to refer to the report as coming from the commission.
The piece also does a he said/she said segment on Medicare, telling readers:
“Mr. Ryan made it clear that he would portray the Romney-Ryan ticket as protecting Medicare, not ‘raiding it,’ as he said Democrats would, saying his own mother’s reliance on the program should be proof of his commitment to it.”
Many readers may not realize that both Governor Romney and Representative Ryan have proposed replacing Medicare with a voucher program. This voucher system would not assure beneficiaries that they would have the money to afford a policy equivalent to the current Medicare program.
It really is bizarre, but apparently the NYT doesn’t know what line of work President Obama is in. Perhaps they think he is a jazz singer, a mystery writer, who knows? While the rest of us know that President Obama is a politician, the NYT somehow thinks he is a philosopher. It told readers this in the very first sentence of a front page article on Representative Ryan’s acceptance speech at the Republican convention referring to “President Obama’s governing philosophy.”
The article never explains how it came to the conclusion that President Obama has a governing philosophy. While a philosopher might have a governing philosophy, a politician responds to political pressures from powerful interest group. President Obama very obviously does the latter, the NYT gives us no information as to why it thinks that President Obama is a philosopher.
This piece also erred by following Representative Ryan in referring to his accusation about President Obama’s failure, “to act on the recommendations of his own bipartisan debt commission.” While the article did point out that as a member of the commission, Representative Ryan had voted against the plan put forward by the commission co-chairs, Morgan Stanley director Erskine Bowles and former Senator Alan Simpson, it did not point out that the plan actually was not adopted by the commission. To have been approved, the report would have needed the support of 14 members of the commission. It only had the support of 11 members. It is therefore inaccurate to refer to the report as coming from the commission.
The piece also does a he said/she said segment on Medicare, telling readers:
“Mr. Ryan made it clear that he would portray the Romney-Ryan ticket as protecting Medicare, not ‘raiding it,’ as he said Democrats would, saying his own mother’s reliance on the program should be proof of his commitment to it.”
Many readers may not realize that both Governor Romney and Representative Ryan have proposed replacing Medicare with a voucher program. This voucher system would not assure beneficiaries that they would have the money to afford a policy equivalent to the current Medicare program.
Read More Leer más Join the discussion Participa en la discusión
An article reporting on the Commerce Department’s release of data showing a small upward revision in second quarter GDP told readers that Federal Reserve Board Chairman Ben Bernanke faces a “delicate decision” in deciding whether to take further steps to boost the economy. While the piece notes the economy’s continuing weakness, it tells readers:
“More aggressive steps to stimulate the economy will also draw criticism from Republicans, who have demanded that Mr. Bernanke forswear additional monetary moves for now.”
While it might be beneficial to the Republicans to have a weak economy over the next two months, it is not Bernanke’s job to help them win the election. The Federal Reserve Board is supposed to target full employment and price stability. Since there is no evidence whatsoever of significant inflationary pressures in the economy, the Fed should be focused on the full employment part of the mandate.
The Fed’s charter does not say anything about not boosting the economy in a context where its actions could have an impact on the election. There can be little dispute that the economy is operating well below full employment which means that the Fed should be focused on increasing employment, even if the Republicans don’t want to see more job growth before the election. (As a practical matter, the Fed’s actions at its next meeting in mid-September are unlikely to have a noticeable impact on the economy by the election.)
An article reporting on the Commerce Department’s release of data showing a small upward revision in second quarter GDP told readers that Federal Reserve Board Chairman Ben Bernanke faces a “delicate decision” in deciding whether to take further steps to boost the economy. While the piece notes the economy’s continuing weakness, it tells readers:
“More aggressive steps to stimulate the economy will also draw criticism from Republicans, who have demanded that Mr. Bernanke forswear additional monetary moves for now.”
While it might be beneficial to the Republicans to have a weak economy over the next two months, it is not Bernanke’s job to help them win the election. The Federal Reserve Board is supposed to target full employment and price stability. Since there is no evidence whatsoever of significant inflationary pressures in the economy, the Fed should be focused on the full employment part of the mandate.
The Fed’s charter does not say anything about not boosting the economy in a context where its actions could have an impact on the election. There can be little dispute that the economy is operating well below full employment which means that the Fed should be focused on increasing employment, even if the Republicans don’t want to see more job growth before the election. (As a practical matter, the Fed’s actions at its next meeting in mid-September are unlikely to have a noticeable impact on the economy by the election.)
Read More Leer más Join the discussion Participa en la discusión
In a blog post yesterday Case Mulligan told readers:
“In reality, cutting unemployment insurance would increase employment, as it would end payments for people who fail to find work and would reduce the cushion provided after layoffs.”
Unfortunately Mulligan provides no evidence to back up his version of reality. By contrast, Jesse Rothstein, an economist at Berkeley, looked at the behavior of unemployed workers. He found that at most, the supply-side effect from the extended duration of unemployment benefits in this downturn increased measured unemployment by 0.1-0.5 percentage points. Furthermore, most of this increase was due to keeping workers looking for work and therefore being counted as unemployed. (When a worker stops looking for work, they are no longer counted as being unemployed.)
Rothstein’s calculations are only designed to pick up the incentive effect that Mulligan focuses on in his blog post. Since the benefits gave workers tens of billions of dollars that they would not have otherwise, they undoubtedly had a large demand side effect. The Congressional Budget Office estimates the multiplier for unemployment benefits as being 1.6, meaning that the $40 billion a year in extended benefits (roughly the amount at stake) would lead to an increase in GDP of $64 billion or more than 0.4 percent of GDP. If the increase in employment is proportionate, it would imply 560,000 additional jobs. This would swamp the negative supply side effect that Rothstein found in his research.
In a blog post yesterday Case Mulligan told readers:
“In reality, cutting unemployment insurance would increase employment, as it would end payments for people who fail to find work and would reduce the cushion provided after layoffs.”
Unfortunately Mulligan provides no evidence to back up his version of reality. By contrast, Jesse Rothstein, an economist at Berkeley, looked at the behavior of unemployed workers. He found that at most, the supply-side effect from the extended duration of unemployment benefits in this downturn increased measured unemployment by 0.1-0.5 percentage points. Furthermore, most of this increase was due to keeping workers looking for work and therefore being counted as unemployed. (When a worker stops looking for work, they are no longer counted as being unemployed.)
Rothstein’s calculations are only designed to pick up the incentive effect that Mulligan focuses on in his blog post. Since the benefits gave workers tens of billions of dollars that they would not have otherwise, they undoubtedly had a large demand side effect. The Congressional Budget Office estimates the multiplier for unemployment benefits as being 1.6, meaning that the $40 billion a year in extended benefits (roughly the amount at stake) would lead to an increase in GDP of $64 billion or more than 0.4 percent of GDP. If the increase in employment is proportionate, it would imply 560,000 additional jobs. This would swamp the negative supply side effect that Rothstein found in his research.
Read More Leer más Join the discussion Participa en la discusión
Ezra Klein gives us a graph from the Center on Budget and Policy Priorities that shows the ratio of debt to GDP from 2001 to 2019. The graph attributes the rise in the debt to various causes. The Bush tax cuts and the wars in Iraq and Afghanistan are shown to be major culprits.
There actually is a much better graph that people can use. This is the graph showing interest on the debt as a share of GDP.
Source: Congressional Budget Office.
Note that this one looks considerably less scary. We don’t get back to the same devastating interest burdens we faced in the early 90s until 2019. Yes folks, that was snark. Unless I’ve gone senile the interest burden we faced in the early 90s did not prevent us from having a decade of solid growth and low unemployment at the end of the period.
Am I pulling a fast one here by switching from debt to interest payments? Not at all. Suppose we issue $4 trillion in 30-year bonds in 2012 at 2.75 percent interest (roughly the going yield). Suppose the economy recovers, as CBO predicts, and the interest rate is up around 6.0 percent in 4-5 years. The federal government would be able to buy back the $4 trillion in bonds it had issued for roughly $2 trillion, immediately eliminating $2 trillion of its debt. This will make those who fixate on the debt hysterically happy, but will not affect the government’s finances in the least. It will still face the same interest obligation.
The point here is that the fixation on the debt by both parties has paralyzed economic policy so that tens of millions of people are now being needlessly forced to suffer the effects of unemployment. We need graphs that focus on the economy, not silliness that distracts from real issues in order to assign partisan blame. (Yes, the Bush tax cuts were stupid and the wars should not have been fought, but they did not get us in this mess.)
Ezra Klein gives us a graph from the Center on Budget and Policy Priorities that shows the ratio of debt to GDP from 2001 to 2019. The graph attributes the rise in the debt to various causes. The Bush tax cuts and the wars in Iraq and Afghanistan are shown to be major culprits.
There actually is a much better graph that people can use. This is the graph showing interest on the debt as a share of GDP.
Source: Congressional Budget Office.
Note that this one looks considerably less scary. We don’t get back to the same devastating interest burdens we faced in the early 90s until 2019. Yes folks, that was snark. Unless I’ve gone senile the interest burden we faced in the early 90s did not prevent us from having a decade of solid growth and low unemployment at the end of the period.
Am I pulling a fast one here by switching from debt to interest payments? Not at all. Suppose we issue $4 trillion in 30-year bonds in 2012 at 2.75 percent interest (roughly the going yield). Suppose the economy recovers, as CBO predicts, and the interest rate is up around 6.0 percent in 4-5 years. The federal government would be able to buy back the $4 trillion in bonds it had issued for roughly $2 trillion, immediately eliminating $2 trillion of its debt. This will make those who fixate on the debt hysterically happy, but will not affect the government’s finances in the least. It will still face the same interest obligation.
The point here is that the fixation on the debt by both parties has paralyzed economic policy so that tens of millions of people are now being needlessly forced to suffer the effects of unemployment. We need graphs that focus on the economy, not silliness that distracts from real issues in order to assign partisan blame. (Yes, the Bush tax cuts were stupid and the wars should not have been fought, but they did not get us in this mess.)
Read More Leer más Join the discussion Participa en la discusión
The economics profession tends to be bipolar. It swings from periods of wild optimism to wild pessimism while rarely stopping anywhere in the mild. Hence we had the new economy optimists in the late 90s who insisted that all the problems of scarcity had been solved forever by the wonders of the information age. Now we have Paul Krugman citing new work by Robert Gordon which tells us that growth is dead.
Wow, that’s quite a shift in a relatively short period of time. Let’s back up a second.
First, we should distinguish between two diametrically opposite problems, too few jobs and too many jobs. We have a lot of people today concerned with the problem of too few jobs. This is because we can produce everything we are now consuming with somewhere close to 18 percent of the potential labor force unemployed, underemployed, or out of the labor force altogether. In this context, if we snapped our fingers and productivity fell everywhere by 10 percent, it could actually be a good thing. We would suddenly have more people employed.
Of course in a rational world there would be other ways to employ these people since there are certainly useful things that they could do. Alternatively, we could have everyone work fewer hours, which would also be a good thing. But our problem at the moment is clearly not one of inadequate productivity, our problem is too few jobs.
Some folks may recall seeing a NYT piece last week on the new generation of robots being deployed in factories. According to the article, these robots effectively have sight so they can do very detailed tasks that previously required human labor. Many readers of this piece reacted by expressing concern that we would have no need for workers in the future.
Those who expressed such concerns (which are in fact needless) should be cheered by Krugman’s column. Insofar as Gordon is right about slow productivity growth, the fears that a robotic revolution will displace tens of millions of workers will prove to be wrong. But seriously, is there any reason to believe that Gordon’s analysis is correct; that productivity growth will grind to a halt?
It’s hard to see if you take the step of looking at the places where people work. A bit less than 12 percent of our current workforce is employed in the retail sector. Are there no opportunities for productivity gains here? What about the self-service checkout counters that many stores have now? As the costs of these counters fall and wages of clerks rise (the response to a labor shortage — remember inadequate productivity growth means workers are in high demand), wouldn’t we expect to see these counters displace workers? How about robots in the stocking department? Will we never be able to design robots that can go up and down aisles after hours and restock the items that are in short supply? That seems unlikely.
Moving on, we have about 10 million workers, or 8 percent of the labor force, employed in restaurants. There aren’t possibilities for productivity gains there? Have you heard the word “cafeteria?” In our world of labor shortages we might expect that cafeterias will come to displace sit down restaurants as wages rise. I’m not scared yet.
We have about 11 percent of our workforce employed in health care. Are there opportunities for efficiencies there? How about if we adopted a universal Medicare system so that hospitals and doctors offices didn’t have to employ so many people in the payments department. Yeah, this is politically difficult, but that doesn’t mean that it is not economically possible.
In the same vein, we can probably reduce the 800,000 people employed in the securities and commodities trading sector (i.e. investment banking) by 50 percent with a modest financial speculation tax. This would hugely improve the efficiency of this sector with no cost to the economy. Again, the obstacle is powerful interest groups, not anything inherent to the economy’s potential for growth.
Manufacturing still employs more than 9 percent of the workforce. Presumably people do not need to be convinced that there are still opportunities for productivity gains in that sector.
Also, a major way that the economy experiences productivity gains is that demand switches to areas that achieve large gains from areas that don’t. This means that if we can’t improve the productivity of cab drivers, then we will likely see fewer people taking cabs in the future. They will instead spend their money on other things. And before we despair too much about the lack of productivity growth, remember we still have all those unemployed people who could be doing productive work, making us all richer.
There is a slightly different story that what Krugman, or at least Gordon, is telling. The problem would not be that in general we are suffering from an inability to increase productivity, but rather we will run into bottlenecks in the form of labor shortages for skills that are desperately needed. This can in principle impede growth.
The problem with this story is that there is zero evidence for any such shortage now (in what sector of the economy are wage growing rapidly?) and it is difficult to see a story where one develops in the future. What are the jobs for which we will be unable to train people or attract immigrants from India, China or elsewhere? It is difficult to imagine what that would look like.
My take away on this, as someone who was never a new economy optimist, is that with good economic policy we will be able to maintain solid rates of productivity growth over any time horizon that we can intelligently discuss. (Sorry folks, none of us knows anything about the 22nd century.) Let’s get the policy right and get people back to work.
The economics profession tends to be bipolar. It swings from periods of wild optimism to wild pessimism while rarely stopping anywhere in the mild. Hence we had the new economy optimists in the late 90s who insisted that all the problems of scarcity had been solved forever by the wonders of the information age. Now we have Paul Krugman citing new work by Robert Gordon which tells us that growth is dead.
Wow, that’s quite a shift in a relatively short period of time. Let’s back up a second.
First, we should distinguish between two diametrically opposite problems, too few jobs and too many jobs. We have a lot of people today concerned with the problem of too few jobs. This is because we can produce everything we are now consuming with somewhere close to 18 percent of the potential labor force unemployed, underemployed, or out of the labor force altogether. In this context, if we snapped our fingers and productivity fell everywhere by 10 percent, it could actually be a good thing. We would suddenly have more people employed.
Of course in a rational world there would be other ways to employ these people since there are certainly useful things that they could do. Alternatively, we could have everyone work fewer hours, which would also be a good thing. But our problem at the moment is clearly not one of inadequate productivity, our problem is too few jobs.
Some folks may recall seeing a NYT piece last week on the new generation of robots being deployed in factories. According to the article, these robots effectively have sight so they can do very detailed tasks that previously required human labor. Many readers of this piece reacted by expressing concern that we would have no need for workers in the future.
Those who expressed such concerns (which are in fact needless) should be cheered by Krugman’s column. Insofar as Gordon is right about slow productivity growth, the fears that a robotic revolution will displace tens of millions of workers will prove to be wrong. But seriously, is there any reason to believe that Gordon’s analysis is correct; that productivity growth will grind to a halt?
It’s hard to see if you take the step of looking at the places where people work. A bit less than 12 percent of our current workforce is employed in the retail sector. Are there no opportunities for productivity gains here? What about the self-service checkout counters that many stores have now? As the costs of these counters fall and wages of clerks rise (the response to a labor shortage — remember inadequate productivity growth means workers are in high demand), wouldn’t we expect to see these counters displace workers? How about robots in the stocking department? Will we never be able to design robots that can go up and down aisles after hours and restock the items that are in short supply? That seems unlikely.
Moving on, we have about 10 million workers, or 8 percent of the labor force, employed in restaurants. There aren’t possibilities for productivity gains there? Have you heard the word “cafeteria?” In our world of labor shortages we might expect that cafeterias will come to displace sit down restaurants as wages rise. I’m not scared yet.
We have about 11 percent of our workforce employed in health care. Are there opportunities for efficiencies there? How about if we adopted a universal Medicare system so that hospitals and doctors offices didn’t have to employ so many people in the payments department. Yeah, this is politically difficult, but that doesn’t mean that it is not economically possible.
In the same vein, we can probably reduce the 800,000 people employed in the securities and commodities trading sector (i.e. investment banking) by 50 percent with a modest financial speculation tax. This would hugely improve the efficiency of this sector with no cost to the economy. Again, the obstacle is powerful interest groups, not anything inherent to the economy’s potential for growth.
Manufacturing still employs more than 9 percent of the workforce. Presumably people do not need to be convinced that there are still opportunities for productivity gains in that sector.
Also, a major way that the economy experiences productivity gains is that demand switches to areas that achieve large gains from areas that don’t. This means that if we can’t improve the productivity of cab drivers, then we will likely see fewer people taking cabs in the future. They will instead spend their money on other things. And before we despair too much about the lack of productivity growth, remember we still have all those unemployed people who could be doing productive work, making us all richer.
There is a slightly different story that what Krugman, or at least Gordon, is telling. The problem would not be that in general we are suffering from an inability to increase productivity, but rather we will run into bottlenecks in the form of labor shortages for skills that are desperately needed. This can in principle impede growth.
The problem with this story is that there is zero evidence for any such shortage now (in what sector of the economy are wage growing rapidly?) and it is difficult to see a story where one develops in the future. What are the jobs for which we will be unable to train people or attract immigrants from India, China or elsewhere? It is difficult to imagine what that would look like.
My take away on this, as someone who was never a new economy optimist, is that with good economic policy we will be able to maintain solid rates of productivity growth over any time horizon that we can intelligently discuss. (Sorry folks, none of us knows anything about the 22nd century.) Let’s get the policy right and get people back to work.
Read More Leer más Join the discussion Participa en la discusión
The Post had an interesting piece discussing the structural problems in the construction of the euro. While the basic points are largely accurate, it does misrepresent a couple of issues.
First, contrary to what the piece suggests, there was no general recognition at the time that the euro was created that Germany’s economy would somehow dominate the euro zone. In fact, in the 90s and even at the start of the last decade, Germany’s economy was viewed as seriously troubled. For example, Adam Posen, a prominent economist who now sits on the Bank of England’s monetary policy committee worried in 2002 that Germany was turning Japanese (that wasn’t a compliment).
The fact that Germany’s economy did turn out to dominate the euro zone was a major surprise. This shows the ability of economies to turn around quickly or at least in ways that are unexpected by economists (i.e. the people who are the expert sources for these pieces).
The other major misrepresentation or understatement in the piece was that the euro’s founders did not anticipate that the European Central Bank (ECB) would be run by ungodly incompetent people. The ECB ignored the growth of enormous housing bubbles in Spain and Ireland that were leading to enormous imbalances in the euro zone economies. It was 100 percent predictable that these bubbles would collapse and lead to enormous adjustment problems when they did. However the ECB opted to ignore their growth.
Remarkably, even today it takes zero responsibility for the failure to recognize the dangers posed by these bubbles and the consequences from their collapse. Any currency needs competent people to manage its central bank. If these cannot be found (a skills mismatch?), then the currency will face serious problems.
The Post had an interesting piece discussing the structural problems in the construction of the euro. While the basic points are largely accurate, it does misrepresent a couple of issues.
First, contrary to what the piece suggests, there was no general recognition at the time that the euro was created that Germany’s economy would somehow dominate the euro zone. In fact, in the 90s and even at the start of the last decade, Germany’s economy was viewed as seriously troubled. For example, Adam Posen, a prominent economist who now sits on the Bank of England’s monetary policy committee worried in 2002 that Germany was turning Japanese (that wasn’t a compliment).
The fact that Germany’s economy did turn out to dominate the euro zone was a major surprise. This shows the ability of economies to turn around quickly or at least in ways that are unexpected by economists (i.e. the people who are the expert sources for these pieces).
The other major misrepresentation or understatement in the piece was that the euro’s founders did not anticipate that the European Central Bank (ECB) would be run by ungodly incompetent people. The ECB ignored the growth of enormous housing bubbles in Spain and Ireland that were leading to enormous imbalances in the euro zone economies. It was 100 percent predictable that these bubbles would collapse and lead to enormous adjustment problems when they did. However the ECB opted to ignore their growth.
Remarkably, even today it takes zero responsibility for the failure to recognize the dangers posed by these bubbles and the consequences from their collapse. Any currency needs competent people to manage its central bank. If these cannot be found (a skills mismatch?), then the currency will face serious problems.
Read More Leer más Join the discussion Participa en la discusión
A NYT article on Governor Romney’s approach to the economy discussed his attitude toward regulation. It tells readers that Romney:
“stopped talking about the benefits of regulation, focusing instead on its costs. His campaign platform includes proposals to curtail rule making, like capping the total cost of regulation at the current level, without adjusting for inflation.”
What does a limit on the cost of regulation mean? Suppose that I have more oil than Saudi Arabia underneath my backyard, but recovering it requires an incredibly hazardous chemical that will cause the death of everyone in a 10-mile radius. (I live within DC, that’s a lot of people.)
Does Governor Romney give me the green light to wipe out the DC metro area because the regulation prohibiting drilling would be very costly? That would seem to be the implication of an approach to regulation that only looks at the cost.
This would be an absurd approach to regulation. If that is really what Romney is proposing then the NYT should feature a front page article on his crazy views on regulation. Voters should be made aware of how wildly out of line Romney is with current practices.
Alternatively, if this is not what Romney is saying, then the NYT should get his approach to regulation right.
A NYT article on Governor Romney’s approach to the economy discussed his attitude toward regulation. It tells readers that Romney:
“stopped talking about the benefits of regulation, focusing instead on its costs. His campaign platform includes proposals to curtail rule making, like capping the total cost of regulation at the current level, without adjusting for inflation.”
What does a limit on the cost of regulation mean? Suppose that I have more oil than Saudi Arabia underneath my backyard, but recovering it requires an incredibly hazardous chemical that will cause the death of everyone in a 10-mile radius. (I live within DC, that’s a lot of people.)
Does Governor Romney give me the green light to wipe out the DC metro area because the regulation prohibiting drilling would be very costly? That would seem to be the implication of an approach to regulation that only looks at the cost.
This would be an absurd approach to regulation. If that is really what Romney is proposing then the NYT should feature a front page article on his crazy views on regulation. Voters should be made aware of how wildly out of line Romney is with current practices.
Alternatively, if this is not what Romney is saying, then the NYT should get his approach to regulation right.
Read More Leer más Join the discussion Participa en la discusión
Annie Lowry has a nice blogpost in the Economix section of the NYT listing some of the areas where Republicans and Democrats seem to largely agree (meaning the leadership, not the base). I’d agree with her list and add a few more items.
Both parties seem to agree on an uncompetitive dollar, having the Fed and Treasury maintain the dollar at a level that prices U.S. goods out of many markets. The result is a large trade deficit (currently around 4 percent of GDP or $600 billion a year) and the loss of around 5 million jobs in manufacturing. This is a major source of downward pressure on the wages of the bulk of the workforce.
Both parties seem to agree on extending patent and copyright protections both in the U.S. and around the world. These are incredibly costly forms of protectionism and have the effect of redistributing income upward since very few people in the bottom 90 percent draw their income from patent rents.
And both parties seem intent on preserving too big to fail banks which get a subsidy of tens of billions of dollars a year from their implicit government insurance.
I could list others, but these items amount to substantial transfers from the rest of us to those on top. It is worth noting the agreement on these issues by both parties’ leaders.
Annie Lowry has a nice blogpost in the Economix section of the NYT listing some of the areas where Republicans and Democrats seem to largely agree (meaning the leadership, not the base). I’d agree with her list and add a few more items.
Both parties seem to agree on an uncompetitive dollar, having the Fed and Treasury maintain the dollar at a level that prices U.S. goods out of many markets. The result is a large trade deficit (currently around 4 percent of GDP or $600 billion a year) and the loss of around 5 million jobs in manufacturing. This is a major source of downward pressure on the wages of the bulk of the workforce.
Both parties seem to agree on extending patent and copyright protections both in the U.S. and around the world. These are incredibly costly forms of protectionism and have the effect of redistributing income upward since very few people in the bottom 90 percent draw their income from patent rents.
And both parties seem intent on preserving too big to fail banks which get a subsidy of tens of billions of dollars a year from their implicit government insurance.
I could list others, but these items amount to substantial transfers from the rest of us to those on top. It is worth noting the agreement on these issues by both parties’ leaders.
Read More Leer más Join the discussion Participa en la discusión
There may be a temptation by some in the business media to make a big issue out of the sharp decline in the Conference Board’s measure of consumer confidence. Those so tempted would be wrong.
The key point to note is that almost all of the decline was in the future expectations index. The current conditions index was essentially unchanged, edging down from 45.9 to 45.8. While current conditions index does fit reasonably well with current consumption, there is little correlation between the future expectations index and consumption. This index is highly erratic and therefore not a good predictor of consumption either present or future.
There may be a temptation by some in the business media to make a big issue out of the sharp decline in the Conference Board’s measure of consumer confidence. Those so tempted would be wrong.
The key point to note is that almost all of the decline was in the future expectations index. The current conditions index was essentially unchanged, edging down from 45.9 to 45.8. While current conditions index does fit reasonably well with current consumption, there is little correlation between the future expectations index and consumption. This index is highly erratic and therefore not a good predictor of consumption either present or future.
Read More Leer más Join the discussion Participa en la discusión
