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February 4, 2013

Latest Posts from Economist's View


Latest Posts from Economist's View


Posted: 07 Dec 2012 12:15 AM PST
Why have we forgotten about the unemployed?:
The Forgotten Millions, by Paul Krugman, Commentary, NY Times: Let's get one thing straight: America is not facing a fiscal crisis. It is, however, still very much experiencing a job crisis.
It's easy to get confused about the ... "fiscal cliff." Indeed, one recent poll suggests that a large plurality of the public believes that the budget deficit will go up if we go off that cliff.
In fact, of course, it's just the opposite: The danger is that the deficit will come down too much, too fast. ... Yet there is a whole industry built around the promotion of deficit panic. Lavishly funded corporate groups keep hyping the danger of government debt and the urgency of deficit reduction now now now — except that these same groups are suddenly warning against too much deficit reduction. No wonder the public is confused.
Meanwhile, there is almost no organized pressure to deal with the terrible thing that is actually happening right now — namely, mass unemployment. Yes, we've made progress... But long-term unemployment remains at levels not seen since the Great Depression: as of October, 4.9 million Americans had been unemployed for more than six months, and 3.6 million had been out of work for more than a year. ...
So what can be done? The panic over the fiscal cliff ... shows that even the deficit scolds are closet Keynesians. That is, they believe that right now spending cuts and tax hikes would destroy jobs; it's impossible to make that claim while denying that temporary spending increases and tax cuts would create jobs. Yes, our still-depressed economy needs more fiscal stimulus.
And, to his credit, President Obama did include a modest amount of stimulus in his initial budget offer... Unfortunately, almost nobody expects those stimulus plans to be included in whatever deal is eventually reached.
So why aren't we helping the unemployed? It's not because we can't afford it. ... Nor, I think, is it really ideology. Even Republicans, when opposing cuts in defense spending, immediately start talking about how such cuts would destroy jobs...
No, in the end it's hard to avoid concluding that it's about class. Influential people in Washington aren't worried about losing their jobs; by and large they don't even know anyone who's unemployed... — and, of course, the unemployed don't hire lobbyists or make big campaign contributions.
So the unemployment crisis goes on and on, even though we have both the knowledge and the means to solve it. It's a vast tragedy — and it's also an outrage.
Posted: 07 Dec 2012 12:09 AM PST
Darwin argued "Those communities which included the greatest number of the most sympathetic members would flourish best":
The Gospel of Wealth Fails the Inequity Test in Primates, by Eric Michael Johnson. Scientific American: Fairness is the basis of the social contract..., we expect that when we contribute our fair share we should receive our just reward. When social benefits are handed out unequally or when prior agreements are not honored it represents a breach of trust. ... But isn't that the way the world works? Isn't it true, as we were so often told as children, that life is unfair?
The American financial tycoon Andrew Carnegie certainly thought so and today's economic elite have followed his example. In 1889 he used a perverted form of Darwinism to argue for a "law of competition" that became the cornerstone of his economic vision. ... In his "Gospel of Wealth", Carnegie wrote that this natural law might be hard for the least among us but "it ensures the survival of the fittest in every department." ...
While this perspective may be common among those primates who live in the concrete jungle of Wall Street, it doesn't hold true for the natural world more generally. Darwin understood that competition was an important factor in evolution, but it wasn't the only factor. Cooperation, sympathy, and fairness were equally important... In The Descent of Man he wrote, "Those communities which included the greatest number of the most sympathetic members would flourish best, and rear the greatest number of offspring." By working cooperatively, by sharing resources fairly, and by ensuring that all members of society benefited, Darwin argued that early human societies would be more "fit" than those societies where members only cared about themselves. ...
According to research published in the journal Animal Behaviour (pdf here),... chimpanzees have an expectation of fairness and will protest ... both in cases where rewards were handed out unequally and when a prior agreement was not honored. However, chimpanzees in this study went beyond the basic tenets of the social contract and demonstrated what could be considered the foundation of social solidarity. ...
What this also suggests is that we've been swindled. The Andrew Carnegies of the world have led us to believe that they are an exception to the social contract; fairness and equality may be fine for the little people, but for masters of industry it is best to leave such quaint ideas by the wayside. But he was as wrong... By emphasizing cooperation and sympathy with other members of our society we stand a better chance of success than each of us working alone. But if the situation is unfair we should refuse to perpetuate it, even if that means giving up a larger share of the pie for ourselves.
Posted: 07 Dec 2012 12:06 AM PST
Posted: 06 Dec 2012 12:31 PM PST
Paul Krugman notes another ill-informed Republican politician:
The Fiscal Ignoramus Factor, by Paul Krugman: Some of us had fun with the Business Insider poll finding that by a large margin, people who thought they knew something about the fiscal cliff believed that it would increase, not reduce, the deficit. Ha ha ha — although I actually have a lot of sympathy for ordinary voters, who don't follow these things closely...
I have less sympathy for major political figures who also can't get it straight.
As Jonathan Chait points out, Bobby Jindal — who is supposed to be one of the intellectual leaders of his party — has just published an op-ed on the cliff that sure looks as if he has no idea whatsoever what the cliff is about. ...
You really have to wonder how someone who's a major political figure could be this uninformed — but you have to wonder even more about the state of mind that induces you to write an op-ed about a subject you don't comprehend at all.
But this isn't the first time something like this has happened to a supposed GOP star. ...
I think it comes back to the epistemic closure issue. Even supposedly well-informed people on the right get their "facts" from the likes of the Heritage Foundation. Probably Jindal never talks to anyone who will quietly explain that the fiscal cliff is a problem because, well, Keynesian economics is basically right, and you really don't want austerity in a depressed economy. So he has some vague notion that it's about the wages of fiscal irresponsibility, which it isn't, and apparently believes that he knows enough to pontificate.
It's pretty amazing, actually...
The people the right trusts have mislead them, and those who know better (certain Republican economists come to mind) have not stepped up to set the record straight.
Posted: 06 Dec 2012 12:03 PM PST
Don't say you weren't warned about the risks of climate change, though you might be able to say you weren't adequately warned:
Climate Science Predictions Prove Too Conservative, by Glenn Scherer and DailyClimate.org: Across two decades and thousands of pages of reports, the world's most authoritative voice on climate science has consistently understated the rate and intensity of climate change and the danger those impacts represent, say a growing number of studies on the topic. 
This conservative bias, say some scientists, could have significant political implications, as reports from the group – the U.N. Intergovernmental Panel on Climate Change – influence policy and planning decisions worldwide, from national governments down to local town councils.
As the latest round of United Nations climate talks in Doha wrap up this week, climate experts warn that the IPCC's failure to adequately project the threats that rising global carbon emissions represent has serious consequences: The IPCC's overly conservative reading of the science, they say, means governments and the public could be blindsided by the rapid onset of the flooding, extreme storms, drought, and other impacts associated with catastrophic global warming. ...
Posted: 06 Dec 2012 09:39 AM PST
Joe Stiglitz lists things we should hope for (though not necessarily expect) in Obama's second term:
America's Hope Against Hope, by Joseph Stiglitz, Commentary, Project Syndicate: After a hard-fought election campaign,... it seems ... that not much has changed... With America facing a "fiscal cliff"..., could there be anything worse than continued political gridlock?
In fact, the election had several salutary effects – beyond showing that unbridled corporate spending could not buy an election, and that demographic changes ... may doom Republican extremism. The Republicans' explicit campaign of disenfranchisement in some states..., where they tried to make it more difficult for African-Americans and Latinos to register to vote – backfired... In Massachusetts, Elizabeth Warren, a ... tireless warrior ... to protect ordinary citizens from banks' abusive practices, won a seat in the Senate.
Some of Mitt Romney's advisers seemed taken aback by Obama's victory: Wasn't the election supposed to be about economics? They were confident that Americans would forget how the Republicans' deregulatory zeal had brought the economy to the brink of ruin, and that voters had not noticed how their intransigence in Congress had prevented more effective policies ... in the wake of the 2008 crisis. Voters, they assumed, would focus only on the current economic malaise.
The Republicans should not have been caught off-guard by Americans' interest in issues like disenfranchisement and gender equality..., much of the rise in US economic inequality is attributable to a government in which the rich have disproportionate influence... Obviously, issues like reproductive rights and gay marriage have large economic consequences as well.
In terms of economic policy for the next four years, the main cause for post-election celebration is that the US has avoided measures that would have pushed it closer to recession, increased inequality, imposed further hardship on the elderly, and impeded access to health care for millions of Americans.
Beyond that, here is what Americans should hope for...[list/discussion]..., though I am not sanguine that they will get much of it. More likely, America will muddle through – here another little program for struggling students and homeowners, there the end of the Bush tax cuts for millionaires, but no wholesale tax reform, serious cutbacks in defense spending, or significant progress on global warming. ...

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