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December 9, 2011

Latest Posts from Economist's View

Latest Posts from Economist's View

The European Summit

Posted: 09 Dec 2011 04:45 AM PST

I have some comments on the European Summit:

What the European summit must accomplish

Paul Krugman: All the G.O.P.’s Gekkos

Posted: 09 Dec 2011 12:24 AM PST

Myths about "job creators":

All the G.O.P.'s Gekkos, by Paul Krugman, Commentary, NY Times: Almost a quarter of a century has passed since the release of the movie "Wall Street," and the film seems more relevant than ever. The self-righteous screeds of financial tycoons denouncing President Obama all read like variations on Gordon Gekko's famous "greed is good" speech, while the complaints of Occupy Wall Street sound just like what Gekko says in private:... "Now you're not naïve enough to think we're living in a democracy, are you, buddy?" ...
And, according to ... Intrade, there's a 45 percent chance that a real-life Gordon Gekko will be the next Republican presidential nominee. I am not, of course, the first person to notice the similarity between Mitt Romney's business career and the fictional exploits of Oliver Stone's antihero. ... But there's an issue here that runs deeper than potshots against Mr. Romney.
For the current orthodoxy among Republicans is that we mustn't even criticize the wealthy, let alone demand that they pay higher taxes, because they're "job creators." Yet the fact is that quite a few of today's wealthy got that way by destroying jobs rather than creating them. And Mr. Romney's business history offers a very good illustration of that fact. ...
Bain Capital, the private equity firm that Mr. Romney ran from 1984 to 1999 ... specialized in leveraged buyouts... The idea was to increase the acquired companies' profits, then resell them.
But how were profits to be increased? The popular image — shaped in part by Oliver Stone — is that buyouts were followed by ruthless cost-cutting, largely at the expense of workers who either lost their jobs or found their wages and benefits cut. And while reality is more complex..., it contains more than a grain of truth. ...
So Mr. Romney made his fortune in a business that is, on balance, about job destruction... And because job destruction hurts workers even as it increases profits and the incomes of top executives, leveraged buyout firms have contributed to the combination of stagnant wages and soaring incomes at the top that has characterized America since 1980. ...
Contrary to conservative claims, liberals aren't out to demonize or punish the rich. But they do object to the attempts of the right to do the opposite, to canonize the wealthy and exempt them from the sacrifices everyone else is expected to make because of the wonderful things they supposedly do for the rest of us.
The truth is that what's good for the 1 percent, or even better the 0.1 percent, isn't necessarily good for the rest of America — and Mr. Romney's career illustrates that point perfectly. There's no need, and no reason, to hate Mr. Romney and others like him. We do, however, need to get such people paying more in taxes — and we shouldn't let myths about "job creators" get in the way.

Links for 2011-12-09

Posted: 09 Dec 2011 12:06 AM PST

[I may have lost a few links today - apologies, especially if one of them was yours.]

"The Societal Dangers of Income Inequality"

Posted: 08 Dec 2011 01:48 PM PST

Another quick one -- an interview with Bruce Judson:

Bruce Judson on the Societal Dangers of Income Inequality, by Bryce Covert: ...Bryce Covert: You talked about the societal dangers of growing income inequality in your 2009 book It Could Happen Here before it was on the national agenda. What made you pay attention to the trend?
Bruce Judson: I started discussing the book with Harper Collins in 2007. At that time, a number of prominent people were also very concerned about it, including Paul Krugman, Robert Reich, Elizabeth Warren, and Roosevelt Institute Chief Economist Joseph Stiglitz. They all said it was dangerous for our democracy. But I kept wondering why. What happens next? So I started my own research.
In the book, I took a historic perspective on what happens when extreme inequality arises in a society. It describes a series of steps, or a narrative, for how growing economic inequality can ultimately lead a democracy to implode. The book argued that if economic inequality in America continued unchecked, it would lead to a dysfunctional economy, even greater political polarization, ultimately political paralysis, anger and mistrust throughout the society, protests, and eventually reform or some type of political instability.
Sadly, each of the stages of misery seems to be happening like dominoes falling. And I am convinced the Occupy movement reflects the coalescing of the deep and unfortunate anger that pervades our society as a result.
BC: What historical trends stood out as most similar to our situation?
BJ: I was terrified by the similarities between our society and the era of the Great Depression. As a nation, we were moving toward levels of economic inequality we had not seen since the financial crash of the late 1920s. My reading of history, of events surrounding the New Deal era and the Depression, is that excess inequality tended to be associated with high speculation and a lack of appropriate constraints on the financial industry.
In essence, I came to believe growing economic inequality was intimately linked to economic catastrophe, which would be so great that it would tear our social fabric. ...[continue reading]...

Not Good Enough

Posted: 08 Dec 2011 11:52 AM PST

Quick note on a travel day:

Weekly Initial Unemployment Claims decline to 381,000

The labor market seems to be improving, but the pace of change is far, far too slow. I've been hoping for an acceleration in job creation at some point, but it's hard to see that happen any time soon with so much uncertainty hanging over Europe.

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