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June 12, 2014

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Links for 6-12-14

Posted: 12 Jun 2014 12:06 AM PDT

'Orphanides Points The Finger for Euro Woes At Politicians, Mainly German'

Posted: 11 Jun 2014 01:37 PM PDT

Via Real Time Economics at the WSJ:

Former ECB Official Orphanides Points The Finger for Euro Woes At Politicians, Mainly German, by David Wessel: Athanasios Orphanides has a theory on what went wrong in Europe: The governance of the euro-zone was incompatible with prudent management of a major crisis. Some big countries – notably Germany – exploited the flaws in the system to its advantage at the expense of others. The 2009 recession was triggered by the U.S., but the 2011 recession was made in Europe and was avoidable.
"Key decision makers exhibited neither political leadership nor political courage," he says in a lecture turned into an Massachusetts Institute of Technology working paper. ...

'What's the Penalty for Pundits Who Get It Wrong?'

Posted: 11 Jun 2014 07:07 AM PDT

Barry Ritholtz:

What's the Penalty for Pundits Who Get It Wrong?: Five years ago, Arthur Laffer ... wrote an op-ed article. It was a grab bag of his pet peeves: opposition to Federal Reserve policies ... and concern about the "unfunded liabilities of federal programs,'' including Social Security and Medicare. And, of course, he decried deficits, which in large part are the result of his thesis that tax cuts often increase revenue. As it turns out, for the most part, they don't.
The article he penned on June 11, 2009? "Get Ready for Inflation and Higher Interest Rates."  ...
Pretty much every single warning, every data point, every item Laffer complained about was wrong.
Why does this happen, and why are there no penalties for being so inaccurate? ... This isn't about economics, it's about politics. Unfortunately, the dismal science has become the vehicle of choice for those who seek to further their own political agenda. ...

I would separate those who are honestly wrong from those who take a misleading position (or one they know is wrong) for political purposes. There should be consequences in both cases, those who are honestly wrong again and again should come to be ignored, but those who intend to mislead and deceive should face much higher penalties. As it stands, there's hardly any penalty at all for telling people what they want to hear even if there is no basis for it, or misleading people to accomplish a political agenda.

Why Income Redistribution Doesn't Hurt Growth

Posted: 11 Jun 2014 06:01 AM PDT

Me, at MoneyWatch:

Why income redistribution doesn't hurt growth, by Mark Thoma: Thomas Piketty's book "Capital in the Twenty-First Century" documents the increase in inequality in recent decades, and it has rekindled an old debate about the effects of income redistribution on economic growth. Until recently, most economists believed there's a trade-off between equity and efficiency and that the redistribution of income would lower economic growth. ...
But as the recent paper "Redistribution, Inequality, and Growth" by Jonathan D. Ostry, Andrew Berg, and Charalambos G. Tsangarides of the International Monetary Fund explains, there are also reasons to believe the redistribution of income can enhance economic growth in some cases. ...

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