41–50 of 99 posts
A Solow-humper sees the error of his ways. It's the feel good hit of the new year.
elephant in the room alert : huffingtonpost.com is a click farmer with questionable content.
Argument fallacy alert: https://en.wikipedia.org/wiki/List_of_fallacies
Earlier quoted context omitted.
That's why reform has to start at a local level. Solutions that work brilliantly in Massachusetts have no guarantee of succeeding in Mississippi. Whatever ends up working broadly should be adopted by the federal government. Perhaps they could provide a block grant to each of the states to experiment with reforms and study the effects.
Lots of things probably won't work very well at the state level, but might nationally. Consider what could happen if just a single state offered universal basic income, for instance.
http://thf_media.s3.amazonaws.com/infographics/2014/12/CP-Fe...
The lowest quintile of households have a negative effective tax rate.http://krusekronicle.typepad.com/kruse_kronicle/images/2008/...
A UBI without preconditions would just compound existing spending.
In the course of selling his New Deal to the impoverished American public, president Franklin Delano Roosevelt pitched his reforms by stating: "It is common sense to take a method and try it. If it fails, admit it frankly and try another, but above all try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach." The most frustrating par…
Invoking the Trading with the Enemy Act of 1917, Roosevelt declared that "all banking transactions shall be suspended." Banks were permitted to reopen only after case-by-case inspection and approval by the government, a procedure that dragged on for months. This action heightened the public's sense of crisis and allowed him to ignore traditional restraints on the power of the central government.
In their understanding of the Depression, Roosevelt and his economic advisers had cause and effect reversed. They did not recognize that prices had fallen because of the Depression. They believed that the Depression prevailed because prices had fallen. The obvious remedy, then, was to raise prices, which they decided to do by creating artificial shortages. Hence arose a collection of crackpot policies designed to cure the Depression by cutting back on production. The scheme was so patently self-defeating that it's hard to believe anyone seriously believed it would work.
-- snip --
Yet after all this, the grand promise of an end to the suffering was never fulfilled. As the state sector drained the private sector, controlling it in alarming detail, the economy continued to wallow in depression. The combined impact of Herbert Hoover's and Roosevelt's interventions meant that the market was never allowed to correct itself. Far from having gotten us out of the Depression, FDR prolonged and deepened it, and brought unnecessary suffering to millions.
What will be the ultimate result of the interventions you propose? How are we examining the long-term effects of government intervention in the economy and cutting back the government where it is harmful to prosperity?
What about the acute depression of 1920[2]? Are we learning any lessons from that?
Earlier quoted context omitted.
The terms "depression" and "recession" aren't just catch alls, they have actual definitions. And "we" (depending on the country, i'm assuming USA) are not in either.
Depends. If you look at the bottom 90% and their economy - we are in depression. Or extremely deep recession. The top 10% are both capturing the lion's share of new growth and siphoning wealth from the rest.
In the course of selling his New Deal to the impoverished American public, president Franklin Delano Roosevelt pitched his reforms by stating: "It is common sense to take a method and try it. If it fails, admit it frankly and try another, but above all try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach." The most frustrating par…
In my opinion, the most frustrating part is that despite our hyperconnectedness, people still believe the propaganda that we're not in a depression or that our leaders got us out of the recession. Future economists will call the decade the "longest depression" not out of 20/20 hindsight, but simply because there will no longer be a need to make things seem rosy.
https://en.wikipedia.org/wiki/Long_Depression
unemployment stayed low, very slight deflation persisted, and over the 30 years GDP per capita and GDP of the US grew considerably.
The only new information presented here is the professor's (extremely late) admission that his strict adherence to a misguided school of theoretical economics that no longer applied in the face of structural changes and non-economic factors ("politics and ideology" as he repeats throughout the article) was wrong. Great - how much did they pay you to put your brand name behind this article in order to lend The World Post, the Huffington Post's new highbrow project, credence?
As for what the author says we should do:
What we need now is 1) debt relief to unwind the overhang and 2) much tighter financial regulation to prevent the growth of new fragilities. And if those prove inconsistent with full recovery, then we need massive government spending on infrastructure and other investments financed by money printing until full employment is reattained.
The second task will be one of political organization. For until politicians, finance ministry technocrats and central bankers feel under pressure to respond to and in fact internalize the diagnoses of Stiglitz, Eichengreen, Wolf and others, our problems will remain, as Stiglitz puts it, "not rooted in economics, but in politics and ideology."
And it is only after those ideological and political blockages have been removed that the tasks of economic policy -- and then of shifting policy to deal with the new problems that arise as consequences of fixing our current economic policies -- can be seriously begun.
1) debt relief to undwind the overhand
First of all, which debt is he referring to? Which overhang?
Bank mortgage debt caused by people taking out stupid loans on stupid housing projects, then walking away from that debt? That was already absolved and nationalized by in 2008.
Federal government debt? So we're going to ask everyone (including our own pension funds) who owns a treasury bond to forget that they have some claim that the US gov promised to repay? Or should we continue with QE and currency wars to try and devalue the dollar so that old debts become relatively less expensive, and long-term interest rates continue to fall?
Student loan debt that cannot be discharged through bankruptcy? This one is actually semi-reasonable, but would create a huge moral hazard for anyone looking to invest in education. We should probably stop creating that debt in the first place.
The debt that the captains of finance and industry owe to the average American for leading their companies and the country in an irresponsible and destructive fashion? Only one trader saw jail time post financial crisis - Kareem Serageldin, a senior trader at Credit Suisse who is serving 30 months. The rest have apparently absolved their debt through billions in fines paid out by the shareholders of the companies they managed. [1]
2) much tighter financial regulation
We established the Financial Stability Board, which adopted Basel III capital requirements, countercyclical capital buffers, surcharges for TBTF banks, stricter liquidity coverage ratios, minor decentralization of TBTF banks, enhancements to the terrible securitization model, etc. [2] What additional regulation is the author calling for, specifically?
Not to mention that financial regulation is causing the banks to be unable to lend out QE money! AKA restricting aggregate supply! So even if we were able to boost aggregate demand, it would be met with banks shrugging and saying - we need to keep more capital due to new regulation so we can't invest in your business or provide you with a loan, sorry.
3) massive government spending on infrastructure and other investments financed by money printing until full employment is reattained
Why would you return to Keynesian ideals when you've just admitted they were wrong?! We've already "printed" all the money we need through QE. We then gave it to the banks, who have subsequently parked it with the Federal Reserve, earning interest on it due to the LACK OF AGGREGATE DEMAND that the author describes in the first paragraph! It would make more sense for the Fed to enact a negative interest rate in order to spur the banks into loaning that money out!
As for spending on infrastructure - what budgets should we cut to get the funds? Social security and healthcare (~50% of budget [3])? Older voters would destroy any candidate who would even suggest such a thing, as they very well should. They contributed what the gov said was their fair share, they expect to be paid back in their old age.
Defense department (17%)? Good luck getting that past war lobbies and a public that's terrified of any mention of terrorism whether real or imagined. Other mandatory (12%)? It's mandatory. Interest (6%)? Can't change without renegging on bond contracts which would be terrifically destructive.
[1] http://www.theatlantic.com/magazine/archive/2015/09/how-wall...
[2] https://www.imf.org/external/pubs/ft/wp/2014/wp1446.pdf
[3] https://en.wikipedia.org/wiki/United_States_federal_budget#/...
In the course of selling his New Deal to the impoverished American public, president Franklin Delano Roosevelt pitched his reforms by stating: "It is common sense to take a method and try it. If it fails, admit it frankly and try another, but above all try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach." The most frustrating par…
FDR tried lots of thing that had the opposite of the intended effect. Invoking the Trading with the Enemy Act of 1917, Roosevelt declared that "all banking transactions shall be suspended." Banks were permitted to reopen only after case-by-case inspection and approval by the government, a procedure that dragged on for months. This action heightened the public's sense of crisis and allowed him to ignore traditional re…
My weasley counterpoint is to say that FDR ultimately made more right moves than wrong, and he did not become, as he feared, "the last president".
Economic manipulation aside, his public works initiatives like the Tennessee valley authority gave people good work when there was none, and strengthened our national infrastructure for the economy to use as it grew. The common conclusion is that the only real cure for the Great Depression was World War II, but from a Mars-eye view, wasn't that essentially an enormous public works program?
In the course of selling his New Deal to the impoverished American public, president Franklin Delano Roosevelt pitched his reforms by stating: "It is common sense to take a method and try it. If it fails, admit it frankly and try another, but above all try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach." The most frustrating par…
In my opinion, the most frustrating part is that despite our hyperconnectedness, people still believe the propaganda that we're not in a depression or that our leaders got us out of the recession. Future economists will call the decade the "longest depression" not out of 20/20 hindsight, but simply because there will no longer be a need to make things seem rosy.
More likely, they will look back and wonder why so many people thought things were bad when, by all objective measurements, things were actually quite good. Low inflation, low commodities prices, decent wage growth, cheap housing, strong stock growth, a huge surplus of investment capital.
