Macroeconomics

Where’s William Jennings Bryan When You Need Him?

(AP Photo)

The Financial Times is reporting that the Republican platform to be unveiled in Tampa next week calls for establishing a commission to examine whether the United States should go back on the gold standard. The theory behind this antiquarian fantasy, much loved by Ron Paul and his cult, is that by de-linking the dollar from the value of gold—a move begun by President Franklin Roosevelt in 1933 and completed by President Richard Nixon in 1971—America’s leaders have debased our currency and loosed the genies of inflation, since the Federal Reserve can print as many dollars as it likes.

Four Things to Know About the July Jobs Report

(Wools/Flickr/Creative Commons)

Today is the first Friday of a new month (i.e., Christmas for wonks and political junkies), which means the Bureau of Labor Statistics (BLS) has released its monthly report on employment. The economy created 163,000 net jobs in July, an increase over projections—which hovered around 100,000—and a substantial increase over June, when the economy added a scant 80,000 jobs. The unemployment rate remains unchanged at 8.25 percent (up from 8.21), but was rounded up to 8.3 percent for the purposes of the report.

Out of Work, Out of Luck

MIT Press

Back to Full Employment, by Robert Pollin. A Boston Review Book. The M.I.T. Press. 187 pages. $14.95

Achieving full employment has been at the center of the progressive project for more than a century. If work is available at decent wages for everyone who wants it, then the rest of the agenda is a lot easier. Opportunity proliferates. People feel a sense of dignity and worth. Human potential is fully utilized. In a virtuous circle, adequate purchasing power has a rendez-vous with the economy’s productive capacity. Tight labor markets give workers the leverage to bargain for decent wages. Social-transfer programs can be reserved for special needs rather than being strained to make up for the fundamental lack of decent income.

What's Next for Economic Policy?

Today's Balance Sheet

It's three days after the dismal May jobs report, and now that politicians are done trying to frame those 69,000 jobs added in their favor, it's time for them to figure our how to get the economic ball rolling again.

Fear the Reaper

Today's Balance Sheet

Unless Congress and the White House work together to manage the budget sequestration and tax hikes scheduled for the end of the year, the economy could plummet into a mild recession—growth contracting by an estimated annual rate of 1.3 percent—according to the Congressional Budget Office.

We Won't Destroy Society If We Raise Taxes on the Rich

(401K/Flickr)

Over at the Center on Budget and Policy Priorities, Chye-Ching Huang has written a massive review of the evidence and literature on the relationship between taxes on high-income earners and their effects on economic growth. Her key findings are surprisingly straightforward, and important for how we approach current debates over tax reform and economic policy:

Spain's Fiscal Fanaticism

The country's newly elected conservative government is pursuing austerity with zeal.

(AP Photo/Daniel Ochoa de Olza)

It is a well-known maxim that to keep repeating the same action and expect a different result is a symptom of madness. It is hard to find a different way to account for the persistence of Eurozone leaders in inflicting punishing austerity on countries belonging to the common currency, a strategy that has proved both fiscally ineffective and socially destructive.

In recent days, the focus of the crisis has returned to Spain, and for good reason. The country suffers from the highest unemployment rate in Europe: 24 percent, and it’s more than 50 percent among those 15 to 24. Despite this catastrophic state of affairs, the relatively new, conservative Spanish government—elected last November with 46 percent of the vote on a platform of austerity and structural reform—recently unveiled a budget proposal that, in the words of Budget Minister Cristobal Montoro, is the strictest since the death of Franco in 1975. The total fiscal adjustment for 2012 is a massive 27 billion euros. The goal is to bring Spain’s budget deficit down from 8.5 percent of gross domestic product (GDP) to 5.3 percent.

Mission Accomplished for Top Corporations

Today's Balance Sheet

The New York Times

Although the economy is still improving at a glacial pace, as evidenced by this month's slowing job growth, companies and CEOs have returned to their pre-recession heights, with a stock market at a four-year high to match. In 2007, S&P 500 companies created an average of $378,000 in revenue for every employee. Last year, that number was $420,000. Top executives are doing okay too—the median income of the top 100 CEOs is $14.4 million.

U.S. Manufacturing, Just Gangbusters

Today's Balance Sheet

The Economist

A new report from the Institute for Supply Management shows that manufacturing employment reached a nine-month high in March, and that the manufacturing sector is on a 32-month growth streak. The steady growth in the United States is a marked contrast from Europe, where manufacturing hit a three-month low last month. The healthy manufacturing numbers released yesterday are further fueling economists' predictions that the March jobs numbers—scheduled to be released Friday—will again top 200,000. 

The Worst is Over?

Today's Balance Sheet: Is Europe finally on the way up?

The Wall Street Journal

Fears that the euro crisis will cross the Atlantic have started to ease after European leaders took precautions to stave off default in Greece and shore up other ailing economies. “In the past few months, financial stresses in Europe have lessened, which has contributed to an improved tone of financial markets around the world, including in the United States,” said Federal Reserve chair Ben Bernanke. Treasury Secretary Timothy Geithner agreed: “The European economies at the center of the crisis have made very significant progress.”

Hard Work Doesn't Pay for Home-Care Workers

Home-care workers aren't casual babysitters, and it's time to make sure they don't get paid like one.

(Flickr/Steve Rhodes)

Say you’ve got a booming industry, one that already employs 2 million workers in the U.S. and is poised to add 1.3 million additional jobs by 2020. Imagine that the jobs cannot be off-shored, that the work helps decrease federal deficits, and millions of Americans depend on the industry just to get through their daily lives.

Now ask yourself: Should it be legal to pay the workforce of this thriving and essential industry less than the minimum wage?

The Destruction of Black Wealth

Businesses owned by African Americans are suffering at higher rates than most during the downturn.

(Flickr/Josh Hawley)

Some youngsters want to grow up to become artists or athletes or firefighters. Some want to be doctors or dancers. Charles Walker wanted to own a supermarket.

“Ever since I can remember, I wanted my own grocery store,” he said over lunch on a quiet afternoon in snowbound Detroit last year. To Walker, “grocery store” meant a gleaming, well-run supermarket, not necessarily huge but well stocked and scrupulously clean, with fresh meats and produce and first-class customer service.

Bare Minimum Wage

Big business lobbyists work to prevent any rise in workers' paychecks.

(Flickr/wbeem)

The federal minimum for an hourly wage was $3.35 in 1982 and now it’s $7.25, up 120 percent. Inflation, meanwhile, has climbed during that period by 135 percent. Eight states, including New York, Connecticut, and New Jersey, are considering legislation to boost the base wage. Advocates say that such state measures are fair and make good economic sense: Putting more money in the hands of workers means more demand—good news for small businesses struggling to overcome poor sales. Then there’s politics. More than two-thirds of Americans favor raising the hourly wage to at least $10.

Greece's Baby Steps to Recovery

Today's Balance Sheet: Will Greece finally get the eurozone bailout it desperately needs?

The Greek Parliament passed austerity measures that were a crucial step to getting a €130 billion eurozone bailout yesterday. However, the country isn't out of the woods yet. Eurozone financial leaders will meet Wednesday to discuss the logistics of the bailout, which won't get approved—if it gets approved—until March. The austerity package, which includes wage and pension cuts and reduces the government payrolls by 150,000, passed by a 199-74 vote, but was accompanied by mass protests leaving forty buildings in Athens aflame. 

Bernanke Tries to Predict the Future

Today's Balance Sheet: The recovery is still moving at a snail's pace, but campaigns aren't doing too bad at raking in cash.

Ben Bernanke is second only to Barack Obama when it comes to being a Republican punching bag for the economic downturn, but the Federal Reserve chairman spent some time explaining his decisions and expectations for the coming months during a session with the Senate Budget Committee yesterday. Bernanke said that his biggest worry was the federal deficit, which he said is on pace to become unsustainable in the next 15 to 20 years.

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