As we trudge through the swamp of disappointment that characterizes Dodd-Frank implementation, the liberal commentariat has lately seized upon a new meme; Wall Street lobbyists are responsible for gutting Dodd-Frank behind closed doors. Big-pocketed firms deploy phalanxes of clever lawyers and influence peddlers that easily outpace reformers, ensuring that the regulations ultimately written are sufficiently de-fanged to allow the financial industry to conduct their business with few, if any, restrictions. The lobbyists, and mostly the lobbyists alone, bear responsibility.
If you’re looking for the personification of the Washington economic establishment, you could do a lot worse than Fred Bergsten. National Security Council economics deputy under Henry Kissinger (at age 27), then head of the international desk and the monetary portfolio in Jimmy Carter’s Treasury Department, and from 1981 through last year the founding director of the Peterson Institute for International Economics, Bergsten has been a forceful advocate for what used to be called the Washington Consensus: an unflagging belief in the virtues of free trade and fiscal discipline.
One aspect that defines our current economy is that things are happening that shouldn’t be happening. I don’t mean that things are happening that are illegal or immoral. (Well, some of them are immoral, but that’s not what I mean.) Rather, things are happening that defy economic logic—a slippery term that really means, the economic patterns of roughly the past half-century.
The first such logic-defying thing is that corporate profits are soaring even as corporate revenues limp along. The quarterly reports of S&P 500 corporations for the first three months of 2013 are almost entirely in now, and they show profits rising by more than 5 percent even while revenues have risen by less than 1 percent. Seventy percent of these companies—the largest publicly traded U.S. firms—exceeded the analysts’ profit projections. On the other hand, 60 percent came in under the projections for their sales.
In 2011, Jacob Hacker wrote a ground-breaking paper in which he coined the phrase predistribution. Under Hacker's definition, predistribution refers to measures governments take to reduce or eliminate inequality in market incomes. This differs from redistribution, which Hacker uses to mean measures states take to reduce or eliminate inequality after market incomes have been distributed, for instance through taxes and government benefit programs.
For years, even before Barack Obama was elected, one of the many complaints liberals (mostly) had about the current employer-based health insurance system was "job lock"—if you have insurance at your job, particularly if you or someone in your family has health issues, then you're going to be hesitant to leave that job. You won't start your own business, or join somebody else's struggling startup (unless they provide insurance), and this constrains people's opportunities and dampens the country's entrepreneurial spirit.
That this occurs is intuitively obvious—you probably know someone who has experienced it, or have experienced it yourself. And today there's an article in that pro-Democrat hippie rag The Wall Street Journal entitled "Will Health-Care Law Beget Entrepreneurs?" Amid the worrying about the implementation of Obamacare in January, and the quite reasonable concern that the news could be filled with stories of confusion, missteps, and dirtbags like that Papa John's guy cutting employees' hours rather than give them insurance, to avoid the horror of increasing the cost of a pizza by a dime, it's a reminder that there will probably be lots of stories like this one in the news too, stories about people whose lives have been changed for the better by the fact that Americans will have something they've never had before: health security.
It’s official: The spending cuts of 2011 and 2012, pushed by Republicans as necessary given our deficits, have damaged the recovery and kept more people out of work. According to Jackie Calmes and Jonathan Weisman of The New York Times, “The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011.”
My name is Roxanne Mimms and I work for a food service contractor at the National Zoo. I work full time but make barely minimum wage. I’m here because workers can’t live off what contractors pay us. I’m here because I don’t want my two children to grow up on public assistance. I’m here because I have dreams – My American Dream is a good job with fair wages to provide for my children, being able to pay my bills on time and save for the future. I’m here because I want to help all the workers at the National Zoo whose dreams are on hold.”
Rebecca Sandoval hasn't had a raise for six years.
She and other home-care workers who work for the state of Oregon and are represented by Local 503 of the Service Employees International Union (SEIU) make $10.20 an hour to assist people with disabilities and senior citizens, like the 99-year-old woman Sandoval cares for. The state froze wages at 2007 levels to help offset a yawning $855 million budget shortfall caused by the financial crisis. Almost every year since then, Sandoval says, it has further cut back hours, leaving workers with the choice to leave some of their clients' needs unmet or to work for free. “You can't rush a 99-year-old woman with any aspect of her daily living,” she says.
John Maynard Keynes was the sexiest economist who ever lived. This might seem like half-hearted praise since in our mind’s eye the typical economist appears as a dowdy and almost always balding man, full of prudential advice about thrift and the miracle of compound interest. Keynes, with his caterpillar moustache and mesmerizing bedroom eyes, cut a more dashing figure.
He had many lovers of both genders, and was married to one of the great beauties of the age, the ballerina Lydia Lopokova. His genius at playing the stock market allowed him to enjoy the life of bon vivant, socializing with the writers and artists of the Bloomsbury group such as Virginia Woolf and E.M. Forster rather than dull number crunchers he knew at Cambridge and in the British Treasury. While other economists focused on maximizing economic growth, Keynes wanted to go further and maximize the pleasures of life.
The government’s April jobs report produced some happy headlines and a big stock market rally. The dismal March jobs tally was revised upwards from under 100,000 new jobs to a still feeble 138,000. In April, the economy created 165,000 jobs. The nominal unemployment rate dropped all the way from 7.9 percent to 7.5 percent.
But look a little deeper and you’ll appreciate just how crummy these numbers are.
Here is the thing to remember about every jobs report from the Bureau of Labor Statistics:
You have to wait for the revisions.
Remember, the monthly jobs report is a scientific survey of households and employers. That doesn’t mean it’s inaccurate, but for any given survey, there are ways to improve the accuracy and reach a higher degree of precision. Month after month, this is what the BLS does—it tests and adjusts, in order to get the most accurate account of the where the economy stands.
In the election of 1952 my father voted for Dwight Eisenhower. When I asked him why he explained that “FDR’s debt” was still burdening the economy—and that I and my children and my grandchildren would be paying it down for as long as we lived.
I was only six years old and had no idea what a “debt” was, let alone FDR’s. But I had nightmares about it for weeks.
Yet as the years went by my father stopped talking about “FDR’s debt,” and since I was old enough to know something about economics I never worried about it. My children have never once mentioned FDR’s debt. My four-year-old grandchild hasn’t uttered a single word about it.
The financial services industry is second to none in dreaming up ways to rip off Americans. Show me a a financial product—credit cards, mortgages, checking accounts, 401(k)s, annuities—and I'll show you a stack of consumer complaints documenting how banks and other firms have sought to bleed dry the American public.