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April 10, 2015

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Latest Posts from Economist's View


Paul Krugman: Where Government Excels

Posted: 10 Apr 2015 02:38 AM PDT

Governments can and should step in when private markets fail to provide important goods and services:

Where Government Excels, by Paul Krugman, Commentary, NY Times: As Republican presidential hopefuls trot out their policy agendas — which always involve cutting taxes on the rich while slashing benefits for the poor and middle class — some real new thinking is happening on the other side of the aisle. Suddenly,... many Democrats have decided to break with Beltway orthodoxy, which always calls for cuts in "entitlements." Instead, they're proposing that Social Security benefits actually be expanded. ... Democrats finally seem to be standing up to antigovernment propaganda and recognizing ... there are some things the government does better than the private sector.
Like all advanced nations, America mainly relies on private markets ... to provide its citizens with the things they want and need, and hardly anyone ... would propose changing that. ...
Yet we also know that some things ... must be done by government. Every economics textbooks talks about "public goods" like national defense... But are public goods the only area where the government outperforms the private sector? By no means.
One classic example of government doing it better is health insurance. ... And there's another major example...: providing retirement security. ...
In an idealized world, 25-year-old workers would base their decisions about how much to save on a realistic assessment of what they will need ... in their 70s. They'd also be smart ... in how they invested those savings...
In the real world, however, many and arguably most working Americans are saving much too little for their retirement. They're also investing these savings badly. ...
And in the real world..., Social Security is a shining example of a system that works. ... It provides older Americans who worked hard all their lives with a chance of living decently in retirement... The only problem is that the decline of private pensions, and their replacement with inadequate 401(k)-type plans, has left a gap that Social Security isn't currently big enough to fill. So why not make it bigger?
Needless to say, suggestions along these lines are already provoking near-hysterical reactions, not just from the right, but from self-proclaimed centrists..., calling for cuts to Social Security has long been seen inside the Beltway as a "badge of seriousness, a way of showing how statesmanlike and tough-minded you are." ...
But true seriousness means looking at what works and what doesn't. Privatized retirement schemes work very badly; Social Security works very well. And we should build on that success.

'The Opportunity Dodge'

Posted: 10 Apr 2015 02:05 AM PDT

Larry Mishel of the EPI:

The Opportunity Dodge, The American Prospect: We think of America as the land of opportunity, but the United States actually has low rates of upward mobility relative to other advanced nations... Creating more opportunity is therefore a worthy goal. However, when the goal of more opportunity is offered instead of addressing income inequality, it's a dodge and an empty promise—because opportunity does not thrive amid great inequalities. ...
The opportunity dodgers .... ignore that income inequality and intergenerational mobility are closely linked..., one of the most robust and long-standing social science research findings is that ... the circumstances in which children grow up ... greatly shapes educational advancement. So, promoting education solutions to mobility without addressing income inequality is ultimately playing pretend. We can't substantially change opportunity without changing the actual lived circumstances of disadvantaged and working-class youth. ...
Acknowledging that income inequality and poverty greatly affect schooling success means we need to improve the circumstances of poor children's lives by providing stable, adequate housing and healthy, safe environments. Decent income for their parents is essential. ...
Last, it is important to recognize that some people are always going to end up on the bottom and middle rungs since ... somebody has to be below average. Economic policy must also be concerned that low- and moderate-income families have decent incomes, health care, and retirement. The opportunity dodgers are really saying they do not care how low- and middle-income families actually live.

Links for 04-10-15

Posted: 10 Apr 2015 12:06 AM PDT

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