Economics

People-Ready Projects vs. Shovel-Ready Projects

Note: this is a cross-post from The Realignment Project.

Introduction:

Despite public cynicism, it's pretty clear now that the American Recovery and Reconstruction Act (aka the stimulus bill) is working to boost economic growth and save and/or create jobs. However, it could have been much, much better - even aside from the effect that professional "moderates" had by stripping money for aid to states (to keep teachers employed, for example) from the bill. I think the limitations of the ARRA came from the decision to divide the bill into roughly one-third tax cuts, one-third aid to states, and one third public investments.

The Stimulus Dissected:

“Rough Equality of Means” – Reversing Economic Inequality

Note: this is a cross-post from The Realignment Project. In order to not clog up the front page with lots of re-posts, I'll just mention that I have additional posts out this week that are on a similar topic - one on the abolition of poverty (a similar, but different object from ending inequality), and the other on the establishment of a Fisc - that might interest people here at Economic Populist.

Introduction:

A recent paper by Professor Emmanuel Saez of U.C Berkeley provides further evidence for something that we've sensed already - economic inequality has never been greater in American history. We have finally succeeded in accomplishing that most dubious of accomplishments: we are now officially more unequal, more elitist, and more disproportionally in-egalitarian than the benighted America of 1929.

In 2007, the top 10% of Americans received 50% of the nation's wages. That number, the sheer unreality of the idea that a tiny fraction of the population should have the sheer unmitigated selfishness to claim every other dollar in wages paid out, pales before an even more troubling figure. The top 1% of Americans captured 2/3rds of income growth and 1/2 of economic growth from 2002-2007. At the same time that the rich have gotten even richer, the rest of us have not fared as well - indeed, even before the recession, the average working-age household lost $2000/year of income since the year 2000.

Can this state of affairs continue? And how can we stop it?

Fifty-State Keynesianism - Part Deux

 NOTE: this is a cross-post from The Realignment Project.

Introduction: In this post, I'm returning to a theme I initially explored in June, back when California was grappling with its budget crisis. Now, after nearly two months of additional struggle, we finally passed a bill that cut $26 billion and raised no new revenue, and now we learn that the governor has possibly illegally cut a further $500 million, taking the axe to children's welfare ($80 million), health care ($400 million), Cal Grants (cut in half), HIV/AIDS Prevention and Treatment ($52 million), and domestic violence shelters (cut by 80%) . In addition to the moral insanity of attacking the most vulnerable of our citizens at a time when they are most in need of support one must add the economic insanity of believing that you can reduce government spending by $31 billion in the course of a single year (including both the February and July cuts) and not effect the state's economic recovery.

Lest this be seen as merely a California problem, a recent report by the National Governors Association notes that the collective budget shortfalls of the fifty states comes to a collective $200 billion shortfall. Given that the total Federal economic stimulus for this year only comes to about $400 billion, we are forced to recognize that our system of state government budgeting and finance is creating a massive economic undertow, weakening the impact of Keynesian stimulus by cutting spending and raising taxes (although they've been doing a lot more of the former than the latter).

"Front Line of Defense" - UI Reform and Job Insurance

Cross-post - original posted on The Realignment Project

"Unemployment compensation, as we conceive it, is a front line of defense, especially valuable for those who are ordinarily steadily employed, but very beneficial also in maintaining purchasing power. While it will not directly benefit those now unemployed until they are reabsorbed in industry, it should be instituted at the earliest possible date to increase the security of all who are employed..."

23.4% Unemployment in Michigan?

Unemployment is a malleable thing. The official unemployment rate released by the BLS (Bureau of Labor Statistics) excludes those individuals who have not looked for work in the last month and those forced to work part time for economic reasons. In short the official rate (U-3) tends to vastly understate the unemployment rate, creating the impression that things are better than they actually are. For many, years the BLS has released what it calls alternative measures of labor underutilization that provide details of the percentage of workers who would like to work (but haven't actively sought it in the last month) and those working part time for economic reasons at the national level.

However, until very recently, the BLS has not released this data at the state level. That has changed. When we look at this broader unemployment rate at the state level, the picture isn't pretty.

This isn't a conspiracy. The problem is small sample size. The BLS uses surveys with a very large number of participants to drive down the marign of error. So the number that we get at the national level is basically the same that you'd get if you called everyone in the US. But, when you go to the states, the number of participants shrink, and when you include a large number of categories, the margin of error goes up. It's still quite low, just not the gold standard that the BLS has set for national unemployment figures.

The Populist Pub is Open. Let's Talk Worst Case Scenarios!

 

Petit Julien welcomes you back to the Populist Pub.  

Nearly 18 months into this recession, skepticism is growing about what "recovery" might look like. We hear talk of "green shoots" in an economy that is being remade into another bubble economy, this time based on "government finance". Is it really "stimulating" to the real economy to inject massive amounts of liquidity into the financial system? This unprecedented intervention includes Federal Reserve Credit, Treasury borrowings, agency debt, mortgage-backed securities issued by GSEs, as well as increased involvement of the FDIC. The latest estimates of the size of this bubble is around $14 Trillion which, amazingly, dwarfs the mortgage finance bubble it replaces. The question many analysts ask is whether the FED will be able to withdraw liquidity from the system in the proper amounts and at the right time in order to avert the inevitable inflation when it begins. Ironically, the FED will then find itself in the familiar position of being trapped by the risk of bursting another historic bubble!

The Populist Pub is now open.

 

Petit Julien welcomes you back to the Populist Pub.  

Earlier this week, we passed a milestone of sorts. The Obama administration marked its first 100 days in office. In 1933, FDR, facing a full blown depression, made numerous and transformative changes in his first 100 days. Since then, the accomplishments of the first 100 days of every new administration have been symbolically compared. That is, until this year.

On Thursday, Day #101 of the Obama administration, Steve Lendman, author, blogger, radio co-host and activist, who lives in Chicago, wrote an excellent article contrasting the first 100 days of FDR to BHO. This was effectively a follow up to a scathing article he wrote two weeks earlier. In that article, published on April 18th, Steve Lendman was highly critical of the Obama economic team especially. It was provocatively titled Barack Obama: Crime Boss.

The Populist Pub is Now Open

Submitted by on

 

Petit Julien welcomes you back to the Populist Pub.  

As a nation, we are groping for some sense of hope that we are emerging from the economic morass. The ranks of the unemployed continue to swell and millions of working Americans and retirees worry that the economic tsunami may engulf them next. The government has enacted a dizzying array of bailouts and assistance plans aimed at stabilizing the banking industry, thereby clearing a path to recovery in the real economy.

There is plenty of criticism for the government's actions to date, much of which is centered on understanding what brought on the crisis in the first place. Many critics attribute the 1999 repeal of the Glass-Steagall Act of 1933 and the 2000 enactment of the Commodities Futures Modernization Act as the impetus for the wreckless financial gambling of the last 8 years. For sure, this is not wrong and various measures of reform are now working their way through the Congressional process.

However, in an excellent article published in the April edition of Harper's Magazine, Thomas Geoghegan argues that we have not focused enough on the big deregulation that precedes all other deregulation. For him it was the day that America changed. His essay is titled: Infinite Debt; How Unlimited Interest Rates Destroyed The Economy.

The Populist Pub is Now Open

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Petit Julien welcomes you to the first gathering at the Populist Pub.   As an introduction, let me refer to this comment I made the other night. You can scroll up and down in that thread to get more context.

One of the things I like most about Naked Capitalism is the daily links that Yves provides. They are wide ranging, only sometimes graphical or analytical, but always apropros to the bigger picture.

So I was thinking if there is a way of doing something similar here at EP. Provide links to other reports, essays, analyses without paraphrasing and just invite general discussion or further original blog posts.

What do we want from an economy?

Submitted by on

(This was originally posted on DailyKos, where it was suggested that I post this here. It has been slightly edited.)

Unless you've been living under a rock you know that we are in an economic death spiral and that things will get worse before they get better. All things will pass, however, and unless things crater for good, we will eventually pull out and begin economic recovery, in one year or three or ten, and we will be ... well, where will we be? What are our economic goals? What do we want from an economy?

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