Economy

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...

It's All About the Tax Brackets

Google
Google More and higher tax brackets might have stopped the shiny suit era from happening. Conservatives might think otherwise, but the liberal focus on repealing the upper-income Bush tax cuts has less to do with higher taxes for their own sake, and more to do with revenue—we need it—and basic distributional concerns: The rich have been well-served by the broad economic trends of the last thirty years, taking a huge percentage of all income produced since 1979 . Higher taxes are a way of adding more progressivity into the system—funds raised by a large tax burden on the rich are then funneled into more and better public services for ordinary people. But progressives ought to have another concern on top of this. One of the great conservative wins of the last thirty years was flattening of tax brackets. In 1960, there were 17 brackets above $35,000—roughly $250,000 in today's dollars—going up to $400,000 in annual income, or $3 million, adjusted for inflation. The tax-reform package of...

This Is Not Wisconsin. It's Worse.

Sheldon Dick/Farm Security Administration
Sheldon Dick/Farm Security Administration Strikers guarding window entrance to Fisher body plant number three in Flint, Michigan (1937) L et’s clear one thing up. “Right to work” laws, which permit employees working at a unionized workplace to refuse to join the union or to pay the union the cost of representing the worker, are designed to weaken the economic and political power of organized labor and, by extension, wage workers. Full stop. They allow workers to “free ride” all the benefits of a collective-bargaining agreement (increased wages, benefits, rights to adjudicate a dispute with a supervisor, safety and health requirement beyond those mandated by the Occupational Safety and Health Administration, etc.) negotiated by the union without paying any of the union dues their fellow employees pay. The vaunted libertarian argument in support of right to work would be far more convincing if libertarians supported the rights of employees to reject at their discretion the countless...

Michigan: A Right-to-Work State?

AP Photo
AP Photo/Detroit News/Dale G. Young Pro-union demonstrators crowd the Rotunda at the Capitol in Lansing, Michigan after House and Senate Democrats said there was a possibility of "Right To Work" legislation coming up for a vote. L abor never ruled Michigan as such. It may have been home to the best and biggest American union, the United Auto Workers, but even at the height of their power, the UAW could seldom elect its candidates to Detroit city government. Still, the UAW dominated the state’s Democratic Party and much of state politics for decades—at least, until the auto industry radically downsized. Just how downsized union power has become is apparent from the decision of the state’s Republican governor, Rick Snyder, to support a right-to-work bill that began speeding its way through the state’s lame-duck GOP-controlled legislature on Thursday. Should the bill become law—and given Republican control of state government, it’s hard to envision how it won’t—Michigan would join...

Bobby Jindal Makes a Splash with Terrible Ideas

Derek Bridges / Flickr
Derek Bridges / Flickr Louisiana Governor Bobby Jindal. Does Louisiana Governor Bobby Jindal hate America? It sounds harsh, but when you consider the actual effects of the policies he endorses in this Politico op-ed , it's fair to wonder if he's trying to provoke a combination economic/constitutional crisis. The piece is centered on the nation's large debt obligations, and ways to address them using conservative ideas. He proposes four things: A federal balanced budget amendment. He says that in Washington, "When you mention the BBA as a solution, they roll their eyes and write you off as a non-serious person." It's true! The balanced budget amendment is an awful idea and you should be mocked for proposing it. "A cap on discretionary and mandatory federal spending by fixing a limit on it tied to a percentage of GDP." He suggests a cap of 18 percent, which—given the demographic changes of the next few decades—would severely limit the government's ability to respond to new conditions. A...

Forget the Fiscal Cliff—We've Got Other Problems

Flickr/DonkeyHotey
The “fiscal cliff” is a metaphor for a government that no longer responds to the biggest challenges we face because it’s paralyzed by intransigent Republicans, obsessed by the federal budget deficit, and overwhelmed by big money from corporations, Wall Street, and billionaires. If we had a functional government America would address three “cliffs” posing far larger dangers to us than the fiscal one: The child poverty cliff. Between 2007 and 2011, the percentage of American school-age children living in poor households grew from 17 to 21%. Last year, according to the Agriculture Department , nearly 1 in 4 young children lived in a family that had difficulty affording sufficient food at some point in the year. Yet federal programs to help children and lower-income families—food stamps, aid for poor school districts, Pell grants, child health care, child nutrition, pre- and post-natal care, and Medicaid – are being targeted by the Republican right. Over 60 percent of the cuts in the GOP’...

Folks Like Me

(Flickr / 401(K) 2012)
When President Obama calls for raising taxes on the top 2 percent, he has a habit of declaring that, “Folks like me” should pay higher taxes. He used the phrase dozens of time during the campaign, and just this week again in an interview on Bloomberg. Either someone on the president’s speechwriting staff has a tin ear, or Obama himself does. For starters, the comment puts unnecessary distance between the president and the citizenry. It signals: I am not like most of you. I am far wealthier. But the phrase, “folks like me,” is wildly misleading. The people whose taxes really need to rise are not folks from the professional class like Barack Obama. They are folks like Mitt Romney and Pete Peterson—people with net worth in the billions or hundreds of millions; people behind the corporate Fix the Debt campaign; people like the Koch brothers and Sheldon Adelson. These are people not at all like us, and they are not people like Barack Obama. As Obama used to remind audiences, he is a lot...

An End to Debt Ceiling Shenanigans?

Center for American Progress
Via Matthew Yglesias, Gene Sperling, director of the National Economic Council, explains one of the administration's key demands as deals with Republicans on the fiscal cliff—an end to the debt ceiling as a negotiation tool: Make no mistake about it: no budget agreement – however robust – will provide the economic certainty and confidence we aspire to if job creators, investors and working families believe that, after we reach that agreement, just months down the road, we will start the next round of debt limit debacles. As both economist and business leaders have told us, only the greatest national tragedies have competed with the debt limit debacle of 2011 in terms of damaging consumer confidence. So let’s be clear: if we want to see the economic benefit of a bipartisan budget agreement we need to agree that the era of threatening the default of the United States as a budget tactic is over. The full faith and credit of the United States of America is something we should cherish and...

News Flash: Americans Still Don't Understand Deficits

Business Insider
At Business Insider, Walter Hickey reports results from an online survey (commissioned by the website) that show a public muddled over the consequences of going over the fiscal cliff. Per the survey, 47.4 percent of Americans said that the deficit would increase if we went over the cliff, only 12.6 percent say that it would decrease. Here are the full results: Yes, this is an online poll, and you should take the results with a grain of salt. Still, this remarkable, given the fact that the whole reason to worry about the cliff is that it would put the United States on a path of large and (relatively) rapid austerity. With that said, I’m not too surprised; most Americans don’t actually understand what the deficit is—opinions of the deficit are essentially a proxy for opinions of the economy writ large. Voters associate high deficits with poor economic performance—the public might say that it wants more action to lower the deficit, but what it means is that it wants Washington to improve...

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