Romney's first campaign ad

How high unemployment lingers

Increasingly long periods of high unemployment have followed the US recessions of the last two decades. From 1945 to the 1980s, employment rebounded roughly six months after GDP did. But in the wake of the 1990–91 and 2001 recessions, it recovered 15 and 39 months, respectively, after GDP had returned to the prerecession peak. At recent rates of job creation, the lag this time will be upward of 60 months. To learn more, read “The growing US jobs challenge” from the Mc Kinsey Quarterly.

The Rising Age Gap in Economic Well-Being

The older prosper relative to the young. Households headed by older adults have made dramatic gains relative to those headed by younger adults in their economic well-being over the past quarter of a century, according to a new Pew Research Center analysis of a wide array of government data. Read the complete analysis here.

The debt challenge explained by a 10-year old

Busting the budget myths

Opinion writer Samuelson tries to banish the budget fictions of left and right. Read the complete article in The Washington Post here.

U.S. students’ scores go up, but racial gaps persist

U.S. students are making progress in reading and math, but the advances continue to be clouded by stubbornly high gaps between scores for white children and their black and Hispanic counterparts, according to a major new survey Tuesday from the National Center for Education Statistics. Read the complete article in The Washington Times (not the post this time!) here.

Pendulum swings on American oil independence

China will become increasingly dependent on energy imports compared to the US that is witnessing a new oil boom. Will energy become the determining factor in America's globalo economic dominance? Read the article in the Financial Times here.

No big bazooka

Do we need a United States of Europe, or get real about the straddle between the EU's political project and its economic feasability? A very interesting overview of Europe's response to the sovereign debt crisis by The Economist.

Are Law Schools and Bar Exams Necessary?

The old college battle between lawyers and economists is also being fought on the opinion pages of the New York Times. Interesting article!

Moving From the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness

Notwithstanding repeated attempts at monetary and fiscal stimulus since 2009, the United States remains mired in what is by far its worst economic slump since that of the 1930s. This paper lays out a three-pillared recovery plan that Daniel Alpert (Westwood Capital), Robert Hockett, (Professor of Law, Cornell University) and Nouriel Roubini (Professor of Economics, New York University) have designed. Read the executive summary and the full paper here.

Lightness of being

Americans are not as gloomy as economic data may suggest, The Economist writes.

World competitiveness in 2011 and beyond with Stéphane Garelli (IMD)

The long-term unemployed: The ravages of time

One might expect unemployment to carry less stigma after a deep recession—bad times, rather than personal shortcoming, being the more likely reason for a sacking. Yet a worker’s lifetime earnings are hurt more by a job loss in a weak economy. An experienced worker laid off when unemployment is at 9% faces a reduction in lifetime earnings nearly twice that of someone sacked when the rate is 5%: a loss of 20% on average, writes The Economist.

Health insurance costs on the rise in the US

Read the complete Kaiser Family Foundation report here, or the article in the NYTimes here.

Whose baby is Solyndra?

The GOP is more responsible than it’ll admit, writes Dana Milbank from The Washington Post.

The Financial Crisis and the Well-Being of Americans

The Great Recession was associated with large changes in income, wealth, and unemployment, changes that affected many lives. Since January 2008, the Gallup Organization has been collecting daily data on 1,000 Americans each day, with a range of self-reported well-being (SWB) questions. Angus Deaton uses these data to examine how the recession affected the emotional and evaluative lives of the population, as well as of subgroups within it. Read the abstract or read the complete NBER report here.

Why Is the U.S. Losing the Green Race?

The world will need 50 percent more energy by 2035. To compete in the world economy and generate manufacturing jobs in the coming decades, the United States needs to both nurture a green economy and reduce our reliance on fossil fuels. Read the complete article on the New America Foundation website here.

America's economy: An uncertain outlook for Main Street, USA

Putting struggling small businesses back to work has been placed at the heart of the quest for growth - and for a president under pressure, the political stakes are as high as the economic ones, writes Financial Times correspondent Hal Weitzman in a long article.

Game theory in practice

Computing: Software that models human behaviour can make forecasts, outfox rivals and transform negotiations. Read the complete article in The Economist here.

How to Really Save the Economy?

Read Robert Barro's (Harvard and Hoover Institution) answer in The New York Times here.

Read Krugman's answer here.

China vs. America: Which Is the Developing Country?

From new roads to wise leadership, sound financials and five-year plans, Beijing has the winning approach, says Robert Herbold, the chief operating officer of Microsoft, in the WSJ.

America Reaches Its Demographic Tipping Point

Read the Brookings newsbrief here.

Event in Brussels: The making of America's debt crisis and the long recovery

The U.S. economy lost the first decade of the twenty-first century to an ill-conceived boom and subsequent bust. It is now in danger of losing another decade to the stagnation of an incomplete recovery. How did this happen? In their forthcoming book, which will be presented at this event, Jeffry A. Frieden (Harvard) and Menzie D. Chinn explain the political and economic roots of this crisis, as well as its long-term effects. They explore the political strategies behind the Bush administration’s policy of funding massive deficits with foreign borrowing. In addition, they show that the crisis was foreseen by many and was avoidable through appropriate policy measures. Finally, they examine the continuing impact of the huge U.S. public debt in the ongoing slow recovery from the recession.

Subscribe for this event in Brussels here.

Time for a double dip?

A lousy debt deal, rising fears of a recession, the danger of longer-term stagnation: America’s outlook is grim. Read the complete article in The Economist here.

Visualize the US debt

Visualize the US debt here.

Everything you need to know about the debt ceiling in one post

Read it in the Washington Post here.

Debt crises: Europe and America, increasingly alike?

Read the complete article in The Economist here.

Forecasting: Overcoming Our Aversion to Acknowledging Our Ignorance

Each December, The Economist forecasts the coming year in a special issue called The World in Whatever-The-Next-Year-Is. It’s avidly read around the world. But then, like most forecasts, it’s forgotten. The editors may regret that short shelf-life some years, but surely not this one. Even now, only halfway through the year, The World in 2011 bears little resemblance to the world in 2011. Read the complete article on the Cato website here.

'South California' for 51st state?

Fed up with Sacramento, a Riverside County politician seeks to break 13 counties away to form a state called South California. Sounds familiar? Read the complete article in the LA Times here.

Two think-tanks about the latest CBO report. Have they read the same thing?

The liberal Centre on Budget and Policy Priorities says "The Congressional Budget Office’s new long-term budget outlook contains few surprises. It reiterates the argument that it and others (including us) have made previously — that policymakers should get down to the business of gradual deficit reduction, but without jeopardizing the economic recovery." Read the complete press release here.

The conservative Centre on Economic Policy Research says "The new long-term budget projections from the Congressional Budget Office (CBO) show once again that the major problem facing the both the budget and the larger economy is out-of-control health care costs, not any inherent fiscal crisis. As was the case last year, the CBO baseline shows that the long-term debt to GDP ratio levels off in the baseline scenario. In the 2011 projections, the ratio of debt to GDP actually begins to decline after the early 2040s. The graph shows the sharp drop in future deficit projections following the passage of the Patient Protection and Affordable Care Act (PPACA) in March of 2010". Read the complete press release here.

How will history judge Obama’s economic policy?

When historians look back at how Barack Obama lost the 2012 election — or won it only because the Republicans nominated a certifiable space case — they will doubtless focus on his first few months in office and ponder why he didn’t do more to stanch the recession and arrest the downward mobility of the American people. Read the complete article in The Washington Post here.

All-pro, all-American

Mitt Romney makes his economic case against Obama. Read the complete article in The Economist here.

When Will China’s Economy Overtake America’s?

As China’s economy continues to grow and eventually matches US GDP, the demand that the Chinese assume greater responsibility for the global economy’s health will become stronger. By almost all recent estimates, they have little time to prepare. Read the complete opinion article from Yao Yang, the Director of the China Center for Economic Reform at Peking University, on Project Syndicate here.

Obama to Lose Top Economic Adviser

Austan Goolsbee, chairman of the White House Council of Economic Advisers, will leave his position by the end of the summer, marking the latest shake-up in President Barack Obama's economic team. Read the complete article in the WSJ here.

Has Economic Power Replaced Military Might?

Military power, which some call the ultimate form of power in world politics, requires a thriving economy. But whether economic or military resources produce more power in today’s world depends on the context, says Harvard professor Jospeh Nye on Project Syndicate.

Catholics, social justice, and Boehner

"If the headline is “Conservative Catholics Denounce Liberal Politician on Abortion,” all the boilerplate is at the ready. But when the headline is “Catholic Progressives Challenge Conservative Politician on Social Justice,” this is something new and complicated. It’s far easier to write the 10th story of the week about Newt Gingrich", writes opinion writer E.J. Dionne Jr in the Washington Post.

Gloom-onomics

Ever since the financial crisis, Americans have wallowed in fear and anxiety. Understandably. Although a recovery — as defined by academic economists — started about two years ago, it hasn’t felt like one. Of the 8.7 million payroll jobs lost in the recession, only 1.8 million have returned. The recovery rivals the slowest since World War II and faces continued threats. High oil prices. Europe’s debt crisis. Unexpected inflation. Washington’s bickering over the federal debt ceiling. All true. But it’s also true that the recovery seems increasingly self-propelled. Americans are shopping again, albeit with less fervor; exports are improving; companies are hiring. It may be time to move beyond pessimism, says opinion writer Robert Samuelson in the Washington Post.

Getting Smart on Aid

NYTimes columnist Nicholas D. Kristof: "When I was in college, I majored in political science. But if I were going through college today, I’d major in economics. It possesses a rigor that other fields in the social sciences don’t — and often greater relevance as well. That’s why economists are shaping national debates about everything from health care to poverty, while political scientists often seem increasingly theoretical and irrelevant."

The redistribution of rape

Jon Stewart makes fun of economists' invisible, but touchy, hands, and investigates whether DSK could become the first economist convicted of rape.

The Daily Show - La Cage Aux Fools
Tags: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Will The US Have A “Debt Crisis”?

John Boehner, Speaker of the US House of Representatives, is leading the Republican Party’s charge on fiscal policy, arguing that his side needs to see “trillions of dollars” in spending cuts in order for Congress to approve an increase in the US government’s debt ceiling. No one should believe him, says MIT professor Simon Johnson in a column for Project Syndicate.

Jump in Life Expectancy Assumptions Drives Latest Social Security Projections

The 2011 Social Security trustees report is far more optimistic about life expectancy than last year's report. It projects that men who turned age 65 in 2010 can expect to live another 18.6 years compared with the 18.1 figure projected in last year's report. Life expectancy for women at age 65 was projected at 20.7 years in the 2011 report, compared with 20.4 years in the 2010 report. This assumed increase in life expectancy is the largest factor in a projected deterioration in the program's finances. Read the complete Center for Economic and Policy Research byte here.

In the US, the elderly are better of than advertised

Read Robert Samuelson's column on intergenerational solidarity in the Washington Post here.

Fear the boom and bust: Keynes vs. Hayek, episode 1

Fight of the century: Keynes vs. Hayek, episode 2

What would Jezus cut? The original op-ed

A budget is a moral document, say a couple of American Christian organisations. Read the original article in Politico here.

Jeffrey Sachs from Columbia University discusses the US budget

Is It Immoral To Cut the Budget?

The Good Samaritan parable instructs us to attend to the afflicted voluntarily, not through coercive government programs. Read the complete article in the Wall Street Journal here.

What would Jezus cut?

As faith coalition for the poor grows, so does conservative opposition. Read the complete article on the CNN website here.

Democracy or Finance?

If you still wonder what speculation is and how it works, and if you're curious about the origins of Europe's recent nationalistic uprisings, this article from Robert Skidelsky on Project Syndicate is for you!

That ratings agency downgrade meeting

INT. DAYTIME: High above the capital city of a major country two credit rating executives, their sleeves rolled up, their Blackberries switched to silent, stare at each other over a desk:

"Hey boss we got another one o' those countries getting close to our proprietory benchmark for too much debt!"

"Bring it on! What's the deficit?"

"9.5% of GDP"

"Debt?"

"97%"

Read the rest of the dialogue on the BBC website here.

The grand compromise

The most serious charge against Rep. Paul Ryan’s budget is not the risible claim, made most prominently by President Obama in his George Washington University address, that it would “sacrifice the America we believe in.” The serious charge is that the Ryan plan fails by its own standards: Because it only cuts spending without raising taxes, it accumulates trillions in debt and doesn’t balance the budget until the 2030s. If the debt is such a national emergency, the critics say, Ryan never really gets you there from here. Read Krauthammer's column in The Washington Post here.

The Austerity Delusion

Paul Krugman Op-Ed column scores austerity advocates in Washington who profess allegiance to same doctrine of spending cuts that is failing so dismally in Europe; warns slashing budget deficits immediately will depress economy further, worsening unemployment. Read the complete column in the NYTimes here.

President Obama's Statement on Budget Negotiations

America Needs A Great Deal Less CLASS

Short for Community Living Assistance Services and Supports, the CLASS Act would establish a national long-term care insurance program. Republicans on the Committee wondered why the administration was seeking $120 million to implement CLASS if they knew it couldn't survive (even Kathleen Sebelius--acknowledges is "totally unsustainable") as currently structured. Read the complete article on Forbes here.

The Story of Spending

Stop Spending Our Future - The Crisis

The end of progressive government?

This week, Rep. Paul Ryan (R-Wis.) will announce the House Republicans’ budget plan, which is expected to include cuts in many programs for the neediest Americans. Read the complete column in The Washington Post here.

Growth and renewal in the US: retooling America's economic engine

More than ever, the United States needs productivity gains to drive growth and competitiveness. As baby boomers retire and the female participation rate plateaus, increases in the labor force will no longer provide the lift to US growth that they once did. New research by the McKinsey Global Institute finds that, to match the GDP growth of the past 20 years and the rising living standards of past generations, the United States needs to boost labor productivity growth from 1.7 to 2.3 percent a year. That’s an acceleration of 34 percent to a rate not seen since the 1960s. Read the complete report and executive summary on the Mc Kinsey website here.

Will next time be different?

Democracy tends to institutionalize moral hazard in sectors that are economically or politically important, such as finance or real estate, allowing them to privatize gains and socialize losses. But this does not mean that policymakers must repeat the same mistakes every time such sectors get into trouble. For example, the US Federal Reserve has essentially guaranteed the financial sector that if it gets into trouble, ultra-low interest rates will be maintained (at the expense of savers) until the sector recovers. In the early to mid-1990’s, rates were kept low because of banks’ real-estate problems. They were slashed again in 2001 and kept ultra-low after the dot-com bust. And they have been ultra-low since 2008. Senior Fed policymakers deny that their interest-rate policy bears any responsibility for risk taking, but there is much evidence to the contrary. Read the complete opinion piece of Raghuram Rajan (University of Chicago) for Project Syndicate here.

Interview with Robert Skidelsky: Is the US in decline?

Why America Will Stay on Top

"Until the 1960s public finance was run in all essentials on conventional lines—that is to say, with budgets more or less in balance outside of exceptional circumstances. The big change in principle came under Kennedy. In the autumn of 1962 the Administration committed itself to a new and radical principle of creating budgetary deficits even when there was no economic emergency. Removing this constraint on government spending allowed Kennedy to introduce a new concept of 'big government': the 'problem-eliminator.' Every area of human misery could be classified as a 'problem'; then the Federal government could be armed to 'eliminate' it."n Read the complete interview with the eminent historian Paul Johnson in the Wall Street Journal here.

America's grim budget outlook

"As countries get rich, you might assume that they focus greater attention on their children. Not in the United States. The federal government's expenditures on children have shrunk as a share of the budget over the past 30 years. In 1960, about 20 percent of the federal budget went to programs dedicated to the health, development and education of Americans under the age of 18. Today it's 10 percent and falling". Read Fareed Zackaria's article for the Washington Post here.

It’s Time to Face the Fiscal Illusion

"James M. Buchanan, a Nobel laureate in economics — and my former colleague and now professor emeritus at George Mason University — argued that deficit spending would evolve into a permanent disconnect between spending and revenue, precisely because it brings short-term gains. We end up institutionalizing irresponsibility in the federal government, the largest and most central institution in our society. As we fail to make progress on entitlement reform with each passing year, Professor Buchanan’s essentially moral critique of deficit spending looks more prophetic." Read Tyler Cowen's article in the New York Times here.

From Baghdad to Benghazi

Voices around the world, from Europe to America to Libya, are calling for U.S. intervention to help bring down Moammar Gaddafi. Yet for bringing down Saddam Hussein, the United States has been denounced variously for aggression, deception, arrogance and imperialism. Read Krauthammer's article in the Washington Post here.

America’s Ungovernable Budget

Politicians can make endless promises, but if the government's budget doesn’t add up, politics is little more than mere words. The US is now caught in such a bind, because taxes are too low to fund adequate government services, and to propose raising them would be political suicide. Read Jeffrey Sachs' (Columbia University) column for Project Syndicate here.

Where does the Laffer curve bend?

With the Bush tax cuts due to expire soon and debates about raising top rates further to cut the budget deficit soon to follow, the Laffer curve is bound to come up again. The idea, popularized by economist Arthur Laffer and writer Jude Wanninski in the 1970s and '80s, is simple. Tax rates of zero percent produce no revenue, for obvious reasons. Rates of 100 percent should produce no revenue either, as no one would bother making the money that falls into that bracket knowing it would all be taken away. Thus, presumably, there is some rate in between the two that maximizes revenue. Go above it and revenue would fall because people would avoid taxes or stop working; go below it and revenue would fall because less money would be taxed.

Dylan Matthews from the Washington Post decided to ask some tax experts and political activists where, in the current personal income tax, and particularly in the top tax bracket, they think that Laffer curve peaks - that is, what that revenue-maximizing rate is. The responses were varied, to say the least. Read everything about it here.

The Cato Institute's analysis of Obama's state of the Union

The 2011 State of the Union Address

State of the Union: The Word is 'Jobs'

As State of the Union addresses go, President Barack Obama’s speech Tuesday was notable for its economic vision. The question is likely to be whether the Congress is going to enact any of the policies and initiatives that Obama called for in his speech. Read the complete Brookings Institute commentary here.

Obama's economic proposals: Okay, as far as they go

America, President Obama emphasized in his State of the Union address, must really be open for business. It must create growing markets for the alternative energy industry. It must generate more scientists and engineers. It must build high-speed rail and Internet to compete with other nations'. It must adjust corporate taxes so they're more in line with our global competitors'. All of these proposals are well and good, and a distinct improvement over the Republicans' alternative program of disinvesting public funds in the nation's future in hopes that the private sector will take up the slack. But making America more open for business addresses just one part of our national economic decline. The other challenge is how to make our corporations more open to doing business in America. Read the complete article in the Washington Post here.

More confrontation predicted between US and China - The WSJ Big Interview

How to Improve the Financial-Reform Law?

"Now that the Dodd-Frank financial-reform bill has become law, the real battle begins. Despite the law’s 2,000 pages—or possibly because of them—there is much ambiguity about what its eventual impact will be. The Wall Street Reform and Consumer Protection Act, as the law is officially known, grants the Federal Reserve enormous regulatory power. The Fed can now unilaterally decide that any financial institution is “systemically important”—meaning that its failure could destabilize the financial system itself—and impose any sort of regulation on it, such as requiring that it hold more equity capital, limiting the amount of short-term debt it can issue, forcing it to write up a living will, and so on. [...] There is a better alternative. The Federal Reserve can announce what minimum conditions firms must meet to avoid being designated as systemically important. Each firm can then decide whether to meet those conditions or face federal regulation. And basic principles of economics can tell us what these minimum conditions should be". Read the complete article in the City Journal here.

China’s Currency Isn’t Our Problem

Says Marc Wu from Harvard in the NYTimes. Read the complete opinion article here.

Basic Questions, Elusive Answers on Health Law

"Mr. Ryan expressed one of the Republicans’ main complaints: that Democrats and independent Congressional budget analysts have underestimated the costs of the law, which Republicans say will ultimately add hundreds of billions of dollars to future federal deficits. The nonpartisan Congressional Budget Office disagrees. In its official analysis, the budget office estimated that the cost of new benefits in the health care law would be more than offset by revenues from new taxes and by cuts in projected Medicare spending, reducing future deficits. Repealing the law, the budget office has predicted, would add $230 billion to federal deficits from 2012 to 2021". Read the complete article in the NYTimes here.

The Invention of Money

Karien suggested this excellent podcast from the National Public Radio to me today. "It explains with great clarity and humour what the FED usually does - and what it has been doing since the beginning of the financial crisis", Karien commented. And she is right. A must-hear!

You have to love this cartoon...

How the West was lost

Dambisa Moyo is one of the rising economic stars. This Zambian Oxford scholar became famous with her first and very controversial book "Dead aid" in which she pleads for abolishing foreign development aid, especially in Africa. Her new book "How the West was lost" should be on the bookshelves this month. The book offers a bold account on the decline of the economic supremacy of the West over the past 50 years. In particular, Moyo examines how America's flawed decisions and blinkered policy choices around capital, labour and technology - key ingredients as you all know for economic growth and success - have resulted in an economic and geo-political seesaw that is now poised to tip in favour of the emerging world. I was very impressed by her first book and I'm looking forward to reading the second, especially because it seems quite relevant to this class.

Dambisa Moyo, who also studied at Harvard's Kennedy School of Government, also talks about the structural problems of the US economy. Have a look!

How to Reboot America

Judging Obama's economics

"He deserves more credit then his critics give but less than he claims", says Robert Samuelson in The Washington Post.