Where we and Democrats can work together

By John Boehner (incoming House speaker) and Mitch McConnell (the Senate minority leader). Read the complete article in The Washington Post here.

The Blur Between Spending and Taxes

Should the government cut spending or raise taxes to deal with its long-term fiscal imbalance? As President Obama’s deficit commission rolls out its final report in the coming weeks, this issue will most likely divide the political right and left. But, in many ways, the question is the wrong one. The distinction between spending and taxation is often murky and sometimes meaningless. Read Mankiw's opinion article in The New York Times here.

What the Fed did and why: supporting the recovery and sustaining price stability

Read Ben Bernanke's opinion article in the Washington Post here.

Fed under fire

RARELY has a central bank been lambasted so loudly by so many. The Federal Reserve’s decision on November 3rd to start a second round of quantitative easing, or QE—printing money to buy government bonds—gave rise at first to loud protest abroad. A chorus of finance ministers accused America of wilfully pushing the dollar down. Now the Fed is under attack at home, as Republicans accuse it of fuelling asset bubbles and inflation (see article). Several want to narrow the Fed’s dual mandate to curb inflation and maintain full employment to a single goal of price stability. Read the complete article in The Economist here.

Think this economy is bad? Wait for 2012.

We're barely two years past the banking crisis, still weathering the mortgage crisis and nervously watching Europe struggle with its sovereign debt crisis. Yet every economic seer has a favorite prediction about what part of the economy the next crisis will come from: Municipal bonds? Hedge funds? Read the complete opinion piece in The Washington Post here.

The Economic Consequences of America’s Elections

America’s lurch toward a European-style social-welfare state in Obama’s first two years appears to have been delayed, if not permanently ended or reversed. That is good news for the US – and for the global economy... Read Stanford economics professor Michael Boskin's column on Project Syndicate here.

ECONOMIC DOWNTURN WIDESPREAD AMONG STATES IN 2009

Real GDP declined in 38 states in 2009, led by national downturns in durable–goods manufacturing and construction, according to new statistics that breakdown GDP by state released today by the U.S. Bureau of Economic Analysis. U.S. real GDP by state declined 2.1 percent in 2009 after increasing 0.1 percent in 2008.

The full text of the release of the Bureau of Economic Analysis' Web site can be found here.

Is the American political system broken?

Is the American political system broken? Join the discussion on The Economist here.

The Fed's policy explained

Why Have Lending Programs Targeting Disadvantaged Small-Business Borrowers Achieved So Little Success in the United States?

Small business lending programs designed to move disadvantaged low-income people into business ownership have been difficult to implement successfully in the U.S. context. Based in part on the premise that financing requirements are an entry barrier limiting the ability of aspiring entrepreneurs to create small businesses, these programs are designed to alleviate such barriers for low net-worth individuals with limited borrowing opportunities. Our analysis tracks through time nationally representative samples of adults to investigate the role of financial constraints and other factors delineating self-employment entrants from nonentrants. Paying particular attention to lines of business most accessible to adults lacking college credentials and substantial personal net worth, our analysis yields no evidence that financial capital constraints are a significant barrier to small-firm creation. If you're interested in reading more, you'll find the complete IZA working paper here.

Obamanomics Meets Incentives

AEI visiting scholar and Robert J. Barro (Harvard) evaluates how the Obama administration makes decisions about economic and fiscal policy. He argues that the current administration should shift away from programs based on Keynesian reasoning and toward policies that emphasize favorable economic incentives. Read the complete article on the American Entreprise Institute website here.

"Supercapitalism" by Robert Reich

I'm reading this very interesting book "Supercapitalism". In this compelling and important analysis of the triumph of capitalism and the decline of democracy, former labor secretary Reich urges us to rebalance the roles of business and government. Power, he writes, has shifted away from us in our capacities as citizens and toward us as consumers and investors. While praising the spread of global capitalism, he laments that supercapitalism has brought with it alienation from politics and community. The solution: to separate capitalism from democracy, and guard the border between them.

Plainspoken and forceful, if somewhat repetitious, the book urges new and strengthened laws and regulations to restore authority to the citizens of the US. Reich's proposals are anything but knee-jerk liberal: he calls for abolishing the corporate income tax and labels the corporate social responsibility movement distracting and even counterproductive. As in 2004's Reason, Reich exhibits perhaps too much confidence in Americans' ability to think and act in their own best interests. But he refuses to shift blame for corporations' dominance to the usual suspects, instead pointing a finger at consumers like you and me who want better deals, and from investors like us who want better returns, he writes. Provocatively argued, this book could help begin a necessary national conversation.

Watch an interview with Reich on his latest book here.

The Dionysian trap for young black men

SEVERAL recent studies have garnered wide attention for reconfirming the tragic disconnection of millions of black youths from the American mainstream. But they also highlighted another crisis: the failure of social scientists to adequately explain the problem, and their inability to come up with any effective strategy to deal with it. The main cause for this shortcoming is a deep-seated dogma that has prevailed in social science and policy circles since the mid-1960's: the rejection of any explanation that invokes a group's cultural attributes — its distinctive attitudes, values and predispositions, and the resulting behavior of its members — and the relentless preference for relying on structural factors like low incomes, joblessness, poor schools and bad housing. Read Harvard Sociologist Orlando Patterson's article in The New York Times here.

As in every country, the level of the political debate can really be pathetic in the US. This interview will exceed all your expectations.

To extend, or not to extend the Bush tax cuts?

Josheph Stiglitz, economics professor at Columbia and 2001 Nobel Prize Laureat says no:

Will GOP Win Impact Financial and Healthcare Reform?

Jerry Seib and Neal Lipschutz discuss whether the GOP's House victory will impact the implementation of financial reform and health care.

Beware of wounded lions

"According to a recent joint report by the International Monetary Fund and the International Labor Organization, fully 25% of the rise in unemployment since 2007, totaling 30 million people worldwide, has occurred in the US. If this situation persists, as I have long warned it might, it will lay the foundations for huge global trade frictions. The voter anger expressed in the US mid-term elections could prove to be only the tip of the iceberg." Read Harvard economist Kenneth Rogoff's column for project syndicate here.

The good, the bad, and the tea parties - A partial defence of the movement that has transformed the mid-term elections

In how many other countries would a powerful populist movement demand less of government, rather than endlessly and expensively more? Much of what is exceptional about America is its ideology of small government, free enterprise and self reliance. If that is what the tea-party movement is for, more power to its elbow. Read the complete article in The Economist here.

Political Economics: Why The Economy Is Doing Much Better Than It Seems

"But a surge in imports suggests U.S. consumers and businesses are spending. Subtracting these trade flows provides us with a measure of Gross Domestic Purchases--how much stuff we buy, not how much we produce. These purchases grew at a 3.9% annual rate in Q3 after a 5.1% growth rate in Q2. In the past year domestic purchases rose 4% at an annual rate vs. a 3.6% annual rate during the same time period in 1992. That's right: The spending side of the economy is even stronger today than it was when the Democrats were berating the economy in 1992."

Read the complete article on Forbes here.

It’s Not Just the Economy

When it comes to voter attitudes in this week’s congressional elections, it isn’t only about the economy. There are more competitive races in districts that have fared better during the recession. Read the complete article on the Wall Street Journal here.

This article from The Economist seems to go in the same direction:

Testing the rule: The link between jobs and seats is less clear than many suppose

1930, het jaar dat Obama een lesje kan leren

De economische crisis van 1930 betekende de voorbode voor een socialer Amerika, de huidige crisis dreigt te voeren naar een antisociaal Amerika. Dat schrijft Brieuc Van Damme aan de vooravond van halftijdse verkiezingen in de VS. Van Damme is gastdocent Amerikaanse Economie aan het Centre for American Studies - Universiteit Antwerpen. Lees mijn volledige opiniestuk in De Morgen hier.