Wednesday, March 28, 2012

Now is the Key Time to Invest in Infrastructure

From Now is the Key Time to Invest in Infrastructure,
"The report he referenced, published on Friday by the Treasury Department with the Council of Economic Advisers, found that right now is the key time to invest in infrastructure to create middle-class jobs, increase our long-term competiveness, and support a more secure energy future. Unemployment among construction workers stands at over 17 percent right now and has averaged 15.6 percent for the past twelve months. Overall, the unemployment rate among those expected to gain jobs from investment in infrastructure has averaged approximately 13 percent over the past twelve months.  These investments create middle-class jobs – 80 percent of the jobs created are in the construction sector, the manufacturing sector, and the retail and wholesale trade sectors – where nearly 90 percent of the jobs have middle-class wages."

Tuesday, March 20, 2012

How Many Must Lack An Employer-Sponsored Insurance Option Before We Can Get A Public Option?

According to the report "Great Recession Accelerated Long-Term Decline of Employer Health Coverage",
"Between 2007 and 2010, the share of children and working-age adults in the United States with employer-sponsored health insurance dropped 10 percentage points from 63.6 percent to 53.5 percent, according to a new national study by the Center for Studying Health System Change (HSC)."
This isn't a new trend ... just a spike in the trend.

And yet, while the employer-sponsored system declines, conservatives continue to stand against a public option. How much further will the employer-based system have to fall apart before we can have at least a public option if not a full single-payer system?

Thursday, March 15, 2012

How The Govt Differs From A Household

Another good quip from Krugman in "Losing the Belt",
"When a family tightens its belt it doesn’t put itself out of a job. When a government tightens its belt in a depressed economy, it puts lots of people out of jobs; and this is a negative even from the government’s own, narrowly fiscal point of view, since a shrinking economy means less revenue.

Now, you might argue that slashing government spending doesn’t actually cost jobs — that is, you might argue that if you spent the past few years in a cave or a conservative think tank, cut off from any information about how austerity is working in practice."
That really is a core difference. When a family tightens its belt, it doesn't lower its household income by making one or more family members quit their jobs. When the govt tightens its belt, it pushes people out of work, lowering its own income.

Wednesday, March 14, 2012

Among the reasons for low interest rates ...

This one came out a week back, but I didn't comment on the time and it bears retrospective anyway. Note that one should clearly read the text as irony. From "John Galt Wants Price Support":

"It must be artificial! Because hey, it’s not as if there has been a rise in saving and a fall in investment demand that might be causing low interest rates:"

Monday, March 12, 2012

Contraction Leads to Contraction. Go Figure.

Krugman on "What Greece Means": "But what Greek experience actually shows is that ... trying to eliminate deficits once you’re already in trouble is a recipe for depression. ... There is growing evidence that it is self-defeating even in purely fiscal terms ..."

The best way for a nation to pay off large debts is to invest in its future and increase revenue. We say it about businesses all the time, you have to spend money to make money. So why not apply to the gander that which we apply to the goose? Businesses have to spend money to make money. Households that want to increase their income have to spend money to make more money. While there are limits to how much one can reasonably compare a national economy to a household budget, some comparisons do hold: we can't increase our future earnings by slashing government investment in our future earnings.

Yet denying that truth remains popular among our conservatives. Krugman sums up the dangers of listening to them fairly well: "The truth is that if you want to know who is really trying to turn America into Greece ... it’s the people demanding that we emulate Greek-style austerity even though we don’t face Greek-style borrowing constraints, and thereby plunge ourselves into a Greek-style depression."

Thursday, March 8, 2012

Income and Education

"Figure A shows the percentage of people who have completed a college degree.  It groups them into quartiles (groups of 25%) based on their performance in 8th grade mathematics and their SES.  There are three test score groups—low score (kids scoring in the bottom quartile), middle score (kids scoring in the two middle quartiles), and high score (kids scoring in the top quartile).  In each test score group (low, middle, and high) there are three bars shown, one for those in the bottom quartile in terms of SES (low income), one for those in the two middle quartiles in SES (middle income), and one for those in the top quartile (high income)."

from "Low income hinders college attendance for even the highest achieving students"

The Tax Policy of a 12 Year Old Child

It's previously occurred to me that the Republican anti-tax policy seemed like the plan of a naive, young child. I hadn't realized it actually is.

"Norquist then explained that he thought up the ATR pledge when he was 12, prompting Bee to ask, “what other impossibly reductive gridlock inducing ideas did you have when you were 12?”"

from "Anti-Tax Crusader Grover Norquist Would Not Raise Taxes In Cases Of War, Natural Disaster, Or ‘Beard Flu’"
See also "The Daily Show's Samantha Bee Demolishes Grover Norquist"

Tuesday, March 6, 2012

Thoma on The Real Moral Problem

"If there's a moral issue here, it's the Republicans using misleading rhetoric about the effects of tax cuts on growth, trickle down economics, tax cuts paying for themselves, and so on to obscure what, at its essence, is a large transfer of income to those at the top of the income distribution." 
Mark Thoma from "The Real Moral Problem"

Sunday, March 4, 2012

Speculation Leads to Bubbles, Right? So ... Food and Oil?

Bubbles yield unqualified delight when you're a kid and bathing in them or chasing them around a yard. Sadly, bring them over to the dismal science, and they usually just reinforce the dismal reputation. On the other hand...

We know from bubble after bubble that they thrive on speculation. The peak of the housing bubble swelled on speculators buying houses with the assumption that the price would keep going up so they could flip them for a profit. The process was nothing new. It was the same old recipe. No govt involvement was required. All that was needed was for speculators to get a bit too exuberant from success after success and throw caution to the wind. Whatever the market, strong profits draws speculators to try their hand. Get enough speculators and they enter a feedback loop pushing the prices up further ... until the Minsky Moment when for whatever reason the buyers stop buying higher and the bubble pops on the weight of speculators who can't stay in without rising prices.

We also know there are quite a lot of speculators in food and oil futures. Some claim speculators in the food futures market outnumber hedgers 4 to 1. And it's been said the speculative part of the oil futures market dwarfs the producer/consumer part by about 5 to 1. Can there really be that much speculation in a market without a bubble in progress? I'm far from certain, but there's at least enough appearance of bubbles in these markets to start digging into that question further.

Pondering the idea of a bursting of food and oil bubbles almost makes one tempted to hope. Lower food and oil prices sure sound appealing to the vast majority of us. Of course, America produces a lot of food and reports say we've recently become a net oil exporter, but still most of us would see more good than harm from a massive drop in those prices.

Update 03/8/2012: from the March 7, 2012 article, "Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”: Sen. Bernie Sanders" by Morgan Korn:

"Blaming the speculators may seem like scapegoating to some (namely, oil traders) but speculators control more than 80 percent of the energy futures market, up from 30 percent a decade ago, and there is mounting evidence that speculation contributes to higher prices:
  • At a Senate hearing last June, Rex Tillerson, the CEO of ExxonMobil, said speculation was driving up the price of a barrel of oil by as much as 40 percent.
  • A study conducted by the nonpartisan consumer advocacy group Consumer Federation of America found that speculation caused the average American household to spend an additional $600 on gasoline expenditures in 2011. Moreover, the report concluded that excessive speculation (which the organization estimated added about $30 per barrel to the cost of oil in 2011) drained the U.S. economy of more than $200 billion in consumer spending in 2011.
  • The St. Louis Federal Reserve has also recommended that the CFTC do more to prevent oil speculators from driving up the price of oil. Fed officials studied the effect of oil traders on the price oil over five years and determined that "speculation contributed to around 15 percent to oil prices increases."
  • CFTC Chair Gary Gensler declared last year that "huge inflows of speculative money create a self-fulfilling prophecy that drives up commodity prices.""