Economy

Patty Murray in 19 Takes

Steve Moors
AP Photo/Carolyn Kaster No. 1: The Fixer Patty Murray may be the dullest, most unremarkable member of the United States Senate. Two decades in, she lacks any major legislation to her name, isn’t associated with an issue, rarely appears on television, almost always speaks in gray generalities, and seems to have spent the bulk of her time focused on sending earmarks back to Washington state. As one staffer puts it, the most interesting thing about Murray is how uninteresting she is. She’s also the most important politician you’ve never heard of. As conference secretary, she’s the fourth-ranking Democrat in the Senate, which makes her the highest-ranking woman in the chamber. Last year, she chaired the Democratic Senatorial Campaign Committee (DSCC), spearheading the party’s surprising string of victories in the November elections. Thanks to her efforts, the Senate now has 20 women, the most ever. And as chair of the powerful Budget Committee, she is going up against Paul Ryan, the...

Rediscovering Albert Hirschman

Resistance fighter. Development economist. Philosopher. A new biography of the thinker who redeemed political economy for liberals. 

Flickr/ecce.lomo
T o 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. There was a time in the 1970s and 1980s when Hirschman, who died last December at 97, enjoyed a wide general audience. But outside of academia, his works connecting economics and policies to core human values haven’t made it into the canon of writings that educated people feel they need to read. The results of my informal survey suggest that even among teachers who admire him, Hirschman’s work is invoked but not routinely assigned. This is a loss to our collective wisdom. We can hope that the publication of Jeremy Adelman’s new biography, Worldly...

No More Playing With Money

AP Images/Peter Dejong
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. This Thursday, he delivers what looks to be at least a semi-valedictory at the Peterson Institute, the annual Stavros Niarchos lecture. Rather than celebrate the virtues of free trade—a topic he says (in an advanced text of his speech) that he considered and then rejected—he devotes his talk instead to an analysis of the devastating effect that currency manipulation has had on the American and other economies, and...

Teachers Left Behind

Press Association via AP Images
AP Photo/Randy Snyder K athleen 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.” Two weeks ago, after she was asked to raise the standards her students would be expected to meet for a fifth time this year, Knauth decided to resign and sent a public letter explaining that the...

The Upside Down Economy

AP Images/Scott Sady
AP Photo/Richard Drew O ne 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. Were this disjuncture just a one-time epiphenomenon, we could pass it off...

Deficit Reduction Is Ruining America

Flickr/Talk Radio News Service
Flickr/Talk Radio News Service 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.” That period, the Times notes, “coincides with the time that Mr. Obama and Congressional Republicans have shared governance since Republicans took control of the House in 2011, promising an immediate $100 billion in spending cuts.” And while we didn’t see that level of austerity at the time, the budget compromises of the last year will lower annual discretionary spending to its lowest levels in fifty years. To put that it slightly different terms, if not for two years of deficit reduction, 1.5 million...

LLM: Lawyers Losing Money

AP Images/Chitose Suzuki
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. The school is undergoing a $130 million expansion and has moderately grown its LLM program—a once rare post-graduate degree whose recent proliferation is becoming to critics a symbol of unscrupulous law school practices. American is not alone in growing its LLM program. From the early 1970s to the late 1990s, the LLM was a marginal degree aimed primarily at foreign...

Underfunded and Under Five

AP Photo/The Hawk Eye, John Lovretta
AP Photo/The Winchester Star, Jeff Taylor A s 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. The backsliding, which can...

Sex, Economics, and Austerity

AP Photo
AP Photo J ohn 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. Given all this, it’s perhaps not surprising that a much-publicized recent attack on the...

Schneiderman Strikes Back

AP Photo/Carolyn Kaster
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 February 2012 settlement with those two banks, as well as JP Morgan Chase, Citibank, and Ally Financial (formerly GMAC), had required the banks to adhere to a set of standards that would end the kind of abuses that had led to wholesale foreclosures of homes when they could have worked out alternative arrangements with the homeowners. Some of those standards—such as requiring the banks to notify struggling homeowners within five days that they had received the documents required to modify mortgages—sound so obvious they shouldn’t have needed to be codified, yet it was precisely such practices that the banks had repeatedly shunned. Homeowner...

Jobs: The Bigger Picture

flickr/woodleywonderworks
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. The typical new job pays far less than the jobs that have been lost. We are still down a net 2.8 million jobs from the number of people who were employed in 2007 before the recession started. All told, there are 22 million Americans either unemployed or under-employed—looking for full-time work and not finding it. One telling indicator is the very low percentage of people who are in the labor force. Before the recession, in 2007, the employment-to-population ratio was above 63 percent, down slightly from its peak of over 64 percent in 2000. Since the great collapse, the ratio has been...

How Low Can Part-Timers' Hours Go?

AP Images/Adam Richard
flick/ Carol Green S ay 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. This thought, not surprisingly, has crossed the minds of quite a number of employers. Right now, the average number of hours an employee in a retail establishment works each week is 31.4 . And a whole lot of Americans work in retail—just slightly over 15 million, according to the latest employment report , out Friday, from the Bureau of Labor Statistics (BLS). Not all of them work hours that hover just over 30, of course, but the UC Berkeley Labor Center has calculated that 10.6 percent of...

You've Got Sales Tax

flickr/Chris_Hancock
flickr/ Mr. Boger I n 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. That number represents about 5 percent of the $4 trillion in...

A Roaring Jobs Report

Barack Obama/Flickr
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. With all of that said, this month was a solid one for jobs; April employment grew by 165,000 jobs, a decent number, though not as good as it should be given population growth and the still-sluggish economy. The number of long-term unemployed declined 258,000 to 4.4 million (around 37 percent of all unemployed Americans). Joblessness dropped to a four-year-low of 7.5 percent. But more important than this is the revisions. As it turns out, February was the biggest month for job growth in years—the BLS...

Bad Flight Plan

Flickr/vmarta, Kent Wein
Flickr/vmarta T he decision by Senate Democrats last week to restore funding to the Federal Aviation Administration (FAA)—money that 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 as leverage to pressure Republicans. They squandered this opportunity. Unlike cuts from sequestration that affect the poor or will be felt down the line—cuts to Head Start or infrastructure, for example—the FAA cuts were both highly visible and affected wealthier and middle-class voters whom members of Congress tend to listen to. Sequestration was designed to slash programs important to both Democrats (broadly speaking, social programs) and Republicans (mainly, defense spending). By cutting bluntly, sequestration would force cuts to high and low-priority programs even if everyone agreed on which...

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