To consider the life story of development economist turned moral philosopher Albert Hirschman is to appreciate that no other generation is likely to accumulate the experience of the European émigrés to America who came of age just before World War II, survived it, and went on to contribute to the political and scholarly foundations of postwar civilization. Of that generation, nobody did so with more range and grace than Hirschman.
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.
Kathleen Knauth has had a rough school year. The principal of Hillview elementary, near Buffalo, New York, has spent so much time typing teacher evaluations, entering data, and preparing for standardized testing, she barely had a minute to do what she used to do in her first 12 years of being a principal—drop in on classes, address parents’ concerns, or get to know students. When a school social worker stopped by her office a few months back to get Knauth’s take on which children might need her help, she realized she had hit a new low.
“Normally I’d say, ‘This one’s grandma is seriously ill. This child is going through a huge custody battle. This one has clothes that are too small. I could reel off six to eight things,” says Knauth. “But this year, I had nothing.”
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.
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.”
American University’s Washington College of Law (WCL) is in crisis. Situated in the toughest job market for lawyers in the United States, the Washington, D.C. school has fallen 11 spots in the U.S. News rankings since the class of 2013 applied. This is in part due to the release of detailed employment statistics that show the schools’ full-time, long-term legal employment rate of 39 percent ranks 5th out of 7 area law schools. A group of students have started a petition to fire Dean Claudio Grossman and a WCL theatrical troupe staged a play, “Grossman’s Eleven,” alluding to the 2001 heist movie starring George Clooney.
As we contemplate the possibly bright future of pre-K laid out in Obama’s state of the union address this year, in which the feds work together “with states to make high-quality preschool available to every single child in America,” along comes a sobering glimpse of what public preschool looks like now. It’s not quite as rosy.
Rather than charting progress toward getting all four-year-olds ready for kindergarten, the National Institute for Early Education Research’s annual survey of programs, just issued last week, shows a system in disrepair—or perhaps even retreat. Even as recognition of the benefits of preschool for four-year-olds has grown, the actual implementation of it has stalled – and, in places, lost ground. Meanwhile state funding for pre-K has gone down by more than half a billion dollars in the last year, according to NIEER. In 2012, state spending per child fell to well below what it was ten years ago.
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.
New York Attorney General Eric Schneiderman, who headed a group of state attorneys general that won homeowners and former homeowners a $26 billion settlement from five mega-banks over their foreclosure abuses, announced yesterday that he’d sue two of the banks—Wells Fargo and Bank of America—for allegedly violating the terms of the settlement.
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.
Say you’re an employer with an employee who works 30 hours a week. If you have 50 employees or more come next year, you’ll be required either to provide her with health-care coverage, which the Affordable Care Act will by then mandate for all employees who work at least 30 hours a week, or you’ll have to pay a $2,000 penalty for failing to cover her.
Or, you could just cut her weekly hours to 29. That way, you won’t have to pay a dime, in either insurance costs or penalties.
In 1984, CompuServe launched the first “Electronic Mall,” a Pleistocene-era Amazon with which owners of a TRS-80 personal computer could browse and buy goods over the Internet. Such modern retailers as “The Record Emporium” and “The Book Bazaar” were given prominent virtual storefronts. A full page ad in the May 1984 issue of Online Today boasted, “By the year 2000, the world may catch up with the way CompuServe’s new Electronic Mall lets you shop today.” The world took less time to catch up than that: By 1995, eBay and Amazon had been incorporated; in Amazon’s first two months as an online bookstore, it averaged $20,000 per week in sales. Americans would go on to spend around $700 million online in 1996, and by 1999 sales had grown to $20 billion. Figures released earlier this year by the Commerce Department revealed that Americans spent $225 billion online in 2012—a 400 percent increase in only a decade.
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.
The decision by Senate Democrats last week to restore funding to the Federal Aviation Administration (FAA)—which was cut when the “sequester” took effect in March and led to flight delays that angered a wide swath of Americans—was a clear loss for Democrats in the ongoing budget wars. Rather than cave and reverse the cuts, Democrats should have used the public discontent about budget cuts as leverage to pressure Republicans. They squandered this opportunity.
Hillary Clinton is making all the early moves of someone preparing to run for president, though she has given herself plenty of time to rest, rejuvenate, and review a final decision. How, however, President Obama’s ill-conceived plan to cut Social Security benefits via a “technical” change in the inflation index will force Clinton to make an awkward choice.
Most Democrats in both houses of Congress are not happy with this backdoor cut in Social Security. It is both fiscally unnecessary and spectacularly bad politics. Republican leaders are already bashing Obama for selling out retirees. After Obama released his budget, Republican Congressional Committee Chairman Greg Walden of Oregon went on CNN to accuse the president of “a shocking attack on seniors. Resolutely defeneding Social Security in the face of periodic Republican forays at cutting or privatizing America’s most popular program has always been one of the Democrats’ great appeals. Obama gave that away.
