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January 5, 2012

Latest Posts from Economist's View

Latest Posts from Economist's View


"The Decline of the Public Good"

Posted: 05 Jan 2012 12:26 AM PST

Robert Reich discusses the reasons for the decline of public institutions (I tried to get at this same notion in a recent column -- the decline in support for public goods due to an increasingly divided society -- but the focus was narrower):

The Decline of the Public Good, by Robert Reich: ...Public institutions are supported by all taxpayers, and are available to all. If the tax system is progressive, those who better off (and who, presumably, have benefited from many of these same public institutions) help pay for everyone else. ...
Much of what's called "public" is increasingly a private good paid for by users — ever-higher tolls on public highways and public bridges, higher tuitions at so-called public universities, higher admission fees at public parks and public museums.  
Much of the rest of what's considered "public" has become so shoddy that those who can afford to find private alternatives. As public schools deteriorate, the upper-middle class and wealthy send their kids to private ones. As public pools and playgrounds decay, they buy memberships in private tennis and swimming clubs. As public hospitals decline, they pay premium rates for private care....
Why the decline of public institutions? The financial squeeze on government ... since 2008 explains only part of it. The slide really started more than three decades ago with so-called "tax revolts" by a middle class whose earnings had stopped advancing even though the economy continued to grow. ...
Beyond all this is the reality that America no longer values public goods as we did before. 
The great expansion of public institutions ... began in the early years of 20th century when progressive reformers championed the idea that we all benefit from public goods. Excellent schools, roads, parks, playgrounds, and transit systems would knit the new industrial society together, create better citizens, and generate widespread prosperity. Education, for example, was less a personal investment than a public good — improving the entire community and ultimately the nation. 
In subsequent decades ... this logic was expanded upon. Strong public institutions were seen as bulwarks against, in turn, mass poverty, fascism, and then communism. ...
But in a post-Cold War America distended by global capital, distorted by concentrated income and wealth, undermined by unlimited campaign donations, and rocked by a wave of new immigrants easily cast by demagogues as "them," the notion of the public good has faded. Not even Democrats any longer use the phrase "the public good." Public goods are now, at best, "public investments." Public institutions have morphed into "public-private partnerships;" or, for Republicans, simply "vouchers." ...
[T]otal public spending on education, infrastructure, and basic research has dropped from 12 percent of GDP in the 1970s to less than 3 percent by 2011. ... We're losing public goods available to all, supported by the tax payments of all and especially the better off. ...

Links for 2012-01-05

Posted: 05 Jan 2012 12:06 AM PST

"Forecasting with Internet Search Data"

Posted: 04 Jan 2012 04:42 PM PST

The blog at the NY Fed, Liberty Street Economics, takes a look at the ability of internet search data to forecast financial market data. The conclusion from Rebecca Hellerstein and Menno Middeldorp is that:

 We find that Internet search counts possess useful information, not available in other variables, to now-cast or forecast the trajectory of some financial market data. While this predictive power is by no means universal—as we observe above, for a number of markets, Internet search data do not provide explanatory power beyond that of more traditional forecasting methods—the basic message is of a useful addition to the economist's toolkit.

More here.

Recess Appointments: Why Now?

Posted: 04 Jan 2012 01:06 PM PST

On the news today that Obama will make a recess appointment to Richard Cordray to Head CFPB, Yves Smith says:

Obama to Make Recess Appointment of Richard Cordray to Head Consumer Financial Protection Bureau: ...This move raises the obvious question: why didn't Obama make a recess appointment of Elizabeth Warren...? ...

I'd guess the administration would argue that the GOP hadn't yet crossed over some threshold of intransigence, this was part of a more general reelection strategy (plans to make three recess appointments to the NLRB were also announced), the political opportunity wasn't right, or something like that. But it's a good question -- why now instead of then (a question that can also be asked about Peter Diamond's nomination to the Federal reserve Board of Governors)? What it says to me is all that matters is Obama's reelection (see, for example, the pivot to deficit reduction) -- when the timing's right for that, things will happen -- but don't keep your fingers crossed otherwise. If you are unemployed and struggling, the president will try to help if it also helps him get reelected, but helping because it's the right thing to do? Not likely.

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