Economy

Chairman Summers? Let’s Hope Not

AP Photo/Shizuo Kambayashi
AP Photo/Shizuo Kambayashi Former U.S. Treasury Secretary Lawrence Summers addresses a press conference after attending the Group of Seven finance ministers in Fukuoka, Japan in July 2000. He’s back. Larry Summers is running hard to succeed Ben Bernanke as chairman of the Federal Reserve when Bernanke’s term expires in early 2014. This is not a great idea, for three main reasons. The first is Summers’ famous temperament. The problem is not just that he’s less than sensitive to women. It’s that he’s a bully in general, cocksure of himself, using others as foils and prevailing by controlling the agenda. Through several turns in a career marked by falling upwards, Summers’ chief patron and sponsor, Robert Rubin, keeps assuring people that “Larry has changed.” And Larry keeps not changing. It was the bullying more than the disrespect towards women that finally got him fired as president of Harvard. Justice Oliver Wendell Holmes, Jr. famously said of Franklin Roosevelt, “a second-rate...

Social Security: Will Obama Cave?

AP Photo/Charles Dharapak
AP Photo/Charles Dharapak President Barack Obama looks toward reporters shouting questions at him regarding the fiscal cliff as he walks to the White House after attending a holiday party for the National Security Council. O nce again, President Obama seems to be on the verge of folding a winning hand. Widely leaked reports indicate that the president and House Speaker John Boehner are making a fiscal deal that includes hiking tax rates back to the pre-Bush levels with a threshold of $400,000 rather than the original $250,000, and cutting present Social Security benefits. Obama, the reports say, will now settle for as little as $1.2 trillion in tax increases on the rich rather than the $1.6 trillion that he had originally sought. The difference, in effect, will come out of the pockets of workers, retirees, the young, and the poor. Especially foolish is the cut in Social Security benefits, disguised as a change in the cost-of-living adjustment formula. Before getting to the arcane...

Drinking the Deficit-Reduction Kool-Aid

It was the centerpiece of the president’s re-election campaign. Every time Republicans complained about trillion-dollar deficits, he and other Democrats would talk jobs. That’s what Americans care about—jobs with good wages. And that’s part of why Obama and the Democrats were victorious on Election Day. It seems forever ago, but it’s worth recalling that President Obama won re-election by more than 4 million votes, a million more than George W. Bush when he was re-elected—and an Electoral College majority of 332 to Romney’s 206, again larger than Bush’s electoral majority over Kerry in 2004 (286 to 251). The Democratic caucus in the Senate now has 55 members (up from 53), and Republicans have eight fewer seats in the House than before. So why, exactly, is Washington back to obsessing about budget deficits? Why is almost all the news coming out of our nation’s capital about whether the Democrats or Republicans have the best plan to reduce the budget deficit? Why are we back to...

For Women Executives, Still Lonely at the Top

(Flickr / Sheraton Hotels and Resorts)
On Monday, the research team at Catalyst released their 2012 Census of women board directors . They found women held just 16.6 percent of board seats in corporate America. As Bryce Covert notes , this is the seventh consecutive year without significant growth in the percentage of women on corporate boards. What can be done? We can look at Norway for one path forward. In 2002 only 7.1 percent of boards consisted of woman. Though up from 3 percent in 1993, progress was slow. This is in a country with significant gender equality, where over 80 percent of women work outside the home. In order to jumpstart gender equality in the boardroom, the Norwegian government decided to use the law to speed things up. In 2002 a trade minister proposed a law requiring 40 percent of company board members to be women by 2005, and in 2003 the Norwegian Government passed it. Compliance with this law was encouraged but voluntary, with no penalties in place. Few companies, only around 20 percent, were...

Full Employment is the Best Deficit Reduction Plan

Google
Despite the fact that Democrats have already agreed to large spending cuts, the Republican position continues to be that further reductions are needed, despite the fact that spending on social programs has already been cut to the bone. The problem, of course, is that there just isn’t much money left in social programs, absent major, unpopular cuts to programs like Social Security and Medicare. Those aside, the most ripe area for savings is the Pentagon, and Republicans have no interest in reducing military spending—indeed, Mitt Romney spent the past year campaigning on more military spending, regardless of actual needs. If deficit reduction is a priority, then more revenue is needed. This chart illustrates the problem: The Bush tax cuts and the Great Recession precipitated a massive drop in the revenue collected by the federal government. Until we return to at least pre-recession levels, deficit reduction will be a difficult enterprise. Which gets to a broader point: The best plan for...

The Federal Reserve Gets Down to Business

(AP Photo/David Goldman)
At a press conference in April 2012, New York Times reporter Binyamin Appelbaum asked Federal Reserve Chairman Ben Bernanke to respond to criticism that he wasn’t doing enough to bring down unemployment. Bernanke responded: “[T]he question is: Does it make sense to actively seek a higher inflation rate in order to achieve a slightly increased pace of reduction in the unemployment rate? The view of the committee is that that would be very reckless. We have … spent 30 years building up credibility for low and stable inflation." Bernanke was putting a limit on how much he would do to get the economy growing faster and unemployment down. Accepting inflation above the target rate of 2 percent, either directly through active policy or implicitly by temporarily tolerating higher inflation without raising rates, wasn’t worth it. By this point a serious critique of Federal Reserve policy had been developed by those who thought the Federal Reserve should be doing more. This held that the...

The Italian Job

The prime minister’s announcement that he will leave Italy’s top spot early could throw Europe into chaos.

(AP Photo/Geert Vanden Wijngaert)
Mario Monti’s announcement last Saturday that he plans to resign his post as Italy’s prime minister earlier than was previously expected has thrown Italian politics, and the whole Eurozone, into renewed turmoil. Monti, a Yale-educated technocrat and former EU commissioner, took over in November of last year after market pressure forced Silvio Berlusconi to quit in order to prevent the ignominy of Rome having to apply for an international bailout. The plan was for him to serve the rest of the parliamentary term, until elections scheduled for no later than April 2013. But last week, Berlusconi’s PdL (People of Freedom) party, which had been backing the Monti government, pulled its support, just as its exceedingly controversial 76-year old billionaire leader declared that he would make one more run for the premiership (he has been elected three times already in the span of nearly two decades). This led directly to Monti’s announcement that he will go as soon the 2013 budget is passed,...

Stop Blaming Single Mothers

Taking male pundits—liberal and conservative—to task for pushing marriage before motherhood.

Flickr / 50s Family
What magic power do single mothers possess that make them the target for so much blame for social ills? What witchery are they engaged in that can turn even liberal men—even those who pride themselves on supporting feminist causes!—into reactionaries breathlessly opining that the poor only have themselves to blame for their sexually incontinent ways? Whatever it is, the latest victim is Nicholas Kristof, once champion of ending sex slavery and improving maternity care, but most recently hitting The New York Times to accuse rural single mothers of turning down perfectly nice offers of marriage and forcing their kids to be illiterate in order to get disability checks from the government. Kristof is but the latest in a long line of mostly male pundits, both liberal and conservative, to argue that the best way to patch up women’s economic concerns is for the little ladies to settle down with one of their no doubt many eligible suitors. Indeed, The New York Times this past month alone has...

Magnificent Trespasser

Albert Hirschman, an economist who became one of the greatest of the 20 th century’s moral philosophers, died Tuesday at age 97. Hirschman’s intellectual odyssey took him from the study of eastern European economies under Hitler to work as a development economist for the Federal Reserve Board, then in Latin America in the 1950s and 1960s, as an adviser to the Colombian Planning Ministry, and then to engagement with the enduring questions of economy and society from the 1970s until illness suspended his active life. Along the way he taught at Yale, Columbia, Harvard, and the Institute for Advanced Study. To the extent that Hirschman is widely known today, it is mainly though a small book with a puzzling title, Exit, Voice, and Loyalty , written in 1970. The book has a huge following among social scientists, mainly outside of Hirschman’s own profession of economics. His basic insight is elegant, simple, and original. Citizens and consumers have two basic ways of responding when they...

The Republican Bait-and-Switch

Detroit Regional Chamber / Flickr
Detroit Regional Chamber / Flickr Michigan Governor Rick Snyder opens the Detroit Regional Chamber 2012 Mackinac Policy Conference. One striking thing about Governor Rick Snyder’s successful push for a right-to-work law in Michigan—and Scott Walker’s similar push against public employee unions in Wisconsin—is that they relied on bait-and-switch tactics. In their campaigns, neither governor announced their support for right-to-work laws, or more broadly, their opposition to labor unions. They both campaigned as moderate Republicans, interested in a straightforward agenda of job creation and deficit reduction. Snyder, in fact, categorically denied that he supported right-to-work laws at all, as Dave Weigel shows in a helpful post collecting various quotes from the last three years: The Detroit News, July 30, 2009 : Someone else asked if Snyder supported Michigan becoming a so-called right to work state, where individuals can opt out of joining a worker’s union. Snyder said the issue was...

Not Another Wall Street Puppet

AP Photo
AP Photo/Charles Dharapak President Barack Obama walks with Treasury Secretary Timothy Geithner to the Oval Office at the White House after speaking about the fiscal cliff at Business Roundtable, an association of chief executive officers. I n his first post-election press conference, President Barack Obama said voters had awarded him only one mandate: to help middle class families and those striving to reach the middle class. In line with fulfilling this charge, the administration’s top priority would be creating manufacturing jobs and rebuilding the nation’s schools and infrastructure. An early bellwether of the president’s commitment to this will be his selection of a replacement for Timothy Geithner, who is expected to step down as Treasury secretary early next year. The nomination presents an opportunity for a White House course correction, finally putting Main Street ahead of Wall Street. With Geithner’s appointment four years ago, Obama chose someone acceptable to the banking...

The Billionaires' Long Game

AP Photo
From left to right, the largest Republican donors: Sheldon Adelson, owner of the Las Vegas Sands casino empire; Harold Simmons, owner of Contran Corp.; Bob J. Perry, head of a Houston real estate empire; Robert T. Rowling, head of Dallas-based TRT Holdings; and William Koch, an industrialist. I keep hearing that the billionaires and big corporations that poured all that money into the 2012 election learned their lesson. They lost their shirts and won’t do it again. Don’t believe that for an instant. It’s true their political investments didn’t exactly pay off this time around. “Right now there is stunned disbelief that Republicans fared so poorly after all the money they invested,” said Brent Bozell, president of For America, an Alexandria, Maryland-based nonprofit that advocates for Christian values in politics. “Congrats to @KarlRove on blowing $400 million this cycle,” Donald Trump tweeted. “Every race @CrossroadsGPS ran ads in, the Republicans lost. What a waste of money.” Rove’s...

Yep, Washington Is Out-of-Touch

Kevin Burkett / Flickr
Like Mike Allen and Jim VandeHei at Politico, Charlie Cook does a nice job of unintentionally revealing the huge blindspots of our business elites: While the vast majority of major corporate leaders either backed Mitt Romney last year or stayed neutral, they don’t really see the Republican Party as the good guys and Democrats as the bad guys. They see the whole political and governing process as dysfunctional. They believe that even the smart, well-intentioned, and economically sophisticated policymakers on both sides of the aisle are rendered almost powerless by the extremists. This, too, contributes to the leaders’ reluctance to hire, expand, and invest. Instead, they are hoarding cash or borrowing cheap money to have plenty of cash reserves in case things get really bad. The whole “Fix the Debt” movement is a rather extraordinary interjection of corporate leaders in a process that most would prefer to avoid. When I talk to these leaders, they say they really do worry that...

The Fiscal Cliff Proxy War

Flickr/Talk Radio News Service
(AP Photo/Paul Sancya) President Barack Obama speaks to workers about the economy during a visit to Daimler Detroit Diesel in Redford, Michigan yesterday. W ashington has a way of focusing the nation’s attention on tactical games. We almost never get to debate or even discuss the big problems because the tactical games overwhelm everything else. The debate over the fiscal cliff, for example, is really about tactical maneuvers preceding a negotiation about how best to reduce the federal budget deficit. This, in turn, is a fragment of a bigger debate over whether we should be embracing austerity economics and reducing the budget deficit in the next few years or, alternatively, using public spending and investing to grow the economy and increase the number of jobs. Even this larger debate is just one part of what should be the central debate of our time—why median wages continue to drop and poverty to increase at the same time income and wealth are becoming ever more concentrated at the...

Labour’s Rise

The leader of the British Labour Party emerges as a true political leader

(Press Association via AP Images)
On that emotionally charged day in Manchester in late September 2010 when Ed Miliband narrowly beat his brother David to become the new leader of the British Labor Party—largely thanks to trade union votes, Conservatives rejoiced. The younger Miliband, they thought, was too woolly and too left-wing to lead a Labor resurgence; they considered David a much tougher opponent. In opposition since May 2010, after 13 years in government, Labor faced a twin struggle: to convince voters to take them seriously as stewards of the economy again and to make their new leader, only 40 and with relatively thin ministerial experience at the time of his election, plausible as the country’s next prime minister. It has not been an easy ride. Despite the fact that the Tories imposed harsh austerity measures with their Liberal Democrat coalition partners, their systematic campaign of blaming the economic mess on Labor’s mismanagement paid off for a while. People were unhappy about the cuts, but they didn’t...

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