Re: congressional research service
A few years ago I was trying to find a CRS report cited in a newpaper article and discovered that CRS reports are not publicly available. They are commissioned by individual legislators and when completed are given to the legislator who requested the research. Sometimes the legislators make the research public, sometimes they don't. Or so I was told. Ellen Frank PEN-L list [EMAIL PROTECTED] writes: Apparently even Penny Hill does not have a comprehensive listing. I found a number of sites that index various CRS reports. You might try here (http://docs.unh.edu/Links/crs.htm) or here (http://www.freepint.com/gary/crs.htm). You also might consult with a librarian specializing in government documents. Any university library worthy of the name ought to allow a competent G.D. librarian to track down the report quickly. Frederick Emrich, Editor commons-blog (http://info-commons.org/blog/) RSS Feed: http://www.info-commons.org/blog/index.rdf info-commons.org (http://info-commons.org/index.shtml) email: [EMAIL PROTECTED] - Original Message - From: Eubulides [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Thursday, October 23, 2003 10:42 PM Subject: Re: [PEN-L] congressional research service - Original Message - From: Michael Perelman [EMAIL PROTECTED] Does anyone have any idea why I might be having trouble locating the Congressional Research Service web site? -- = http://www.pennyhill.com/ The reports used to be up on the web, free. Now the f#$%#$%# er's double charge US citizens. How soon before they're 'privatized'? == Looks like you can still find some free stuff: http://www.freepint.com/gary/crs.htm
Re: California Dreaming
Liberal Massacusetts has had a Republican governor since Dukakis embarrassed himself in 1988. People vote for Republicans in part to rein in the corrupt Democratic machine that controls the state legislature. One thing worse than a two-party political system is a one-party system. Ellen Frank PEN-L list [EMAIL PROTECTED] writes: When Arnold finishes his term, California will have had Republican governors for 19 of 24 years. The state likes Republican governors. Gene
course readings
I am once again preparing to teach a one-semester international economics course and would welcome reading ideas or syllabae from others. Prereqs are intro courses only, so the readings can't be too high-level. Thanks. Ellen Frank
Susceptibility to Marx
Doug wrote: That's an outrageous policy, of course, but if I were on mainstream TV, I wouldn't use capitalist or capitalism either - I'd opt for more acceptable euphemisms. I've found over the years that lots of ordinary people are susceptible to Marxist analyses as long as they don't know that's what they're hearing. I recall reading some poll results where a majority identified the line from each according to his ability to each according to his need as coming from the US Constitution. I've always thought that an odd line, by the way. Are Marx and Engels suggesting that, in a capitalist economy, distribution is based on ability? Ellen
Empire and Current Account
This reminds me of a question I have long had to which one of you out there may have an answer. How did imperial Europe account for trade with colonies in the 1800s? Was Congolese rubber sent to Belgium counted as a Belgian import or was it treated as internal trade within Belgium? I would think the whole point of an empire is to extract resources and labor from one's colonies, not the other way round. Ellen PEN-L list [EMAIL PROTECTED] writes: John Gray (not the author of Men are from Mars) thinks that the really strange thing about the current situation is that the USA is the first empire to be running a structural current account deficit rather than a surplus. I rather think that I agree with him, although I have not checked his assertion that Britain, Spain, Rome etc all exported capital. dd
Re: Stiglitz on central banks
PEN-L list [EMAIL PROTECTED] writes: Ian Murray wrote: Is acceptance of the crowding out argument a litmus test for econowonks in DC now? Maybe, but Stiggy lives on the Upper West Side of Manhattan. I think he's motivated more by partisanship - Dems good, Reps bad. Dems raised taxes in '93, Reps cut taxes in 2001, 2002, and 2003. Doug We ll if the partisanship over tax policy always trumps fiscal strategies why was the crowding out argument even brought up during Clintonism? The Repugs. would never let fiscal policy/legislation get so far that there could even be a prolonged testing of the argument either way, no? The current debates over fiscal policy are truly weird and reflect partly positions taken for reasons of politcal expedience and partly the fact that the prevailing paradigm in macroeconomics these days is really supply-side economics. It's not really accepted to make Keynesian arguments anymore -- i.e, the paradox of thrift, fiscal stimulus. They can't be modelled within the general equilibrium, growth=capital accumulation=savings framework that dominates all mainstream macro, including Stiglitz's. Stiglitz and Krugman have been making these Keynesian arguments in public lately -- need to boost aggregate demand, liquidity traps and all that -- but they keep slipping back into the mainstream language. Ellen
Re: The Bush Folks, was Re: Clash of Currencies
[EMAIL PROTECTED] writes: Ellen Frank wrote: the Bush folks If this war was only the war of the Bush folks it would not be occurring. Attacks on Bush personally or on The Bush folks are, I think, mostly propaganda for a milataristic Democrat in the white house in 2004. The key question is not why the bush folks went to war. The key question is why the ruling class and the democratic party are lining up behind the war. You have a good point, but partly I think people line up behind the war because (1) war is popular with the public and wartime presidents always see a surge in their approval ratings; (2) those who openly oppose war risk being branded traitors and enemies of our troops and so risk losing elections or having their products boycotted (witness the Dixie Chicks; (3) principled anti-war opposition is associated with leftish, anti-authoritarian, anti-capitalist positions, so is suspect in the mind of conservatives in any case. This is not to say that there are no material interests at stake in this war for the ruling class, as Carrol suggests. I just have a hard time seeing what these are -- aside obviously from oil. Ellen
economics question
Can anyone point me to a good book, article or other source for data illustrating the extent/increase in economic globalization. I'm not looking for trade data (which is easy enough to find) but things like FDI, percent of MNC sales/revenues/profits earned abroad, etc. I figure someone has put together some figures like this! Thanks for any help. Ellen Frank
Re: Clash of Currencies and the Iraq War
[EMAIL PROTECTED] writes: Ellen Frank did a nice job of handling this question on KPFA about a week ago. Maybe she should chime in. I don't recall saying that much on KPFA, but I will chime in nonetheless. The idea that we are at war to force OPEC to keep pricing in dollars makes little sense. To the extent that they've thought about this at all, I suspect the Bush folks see the dollar's role as evidence of US power, see the war in Iraq as an assertion of US power and so imagine the war will help the dollar. I think they are correct that the international role of the dollar reflects US power, but I think they may be wrong about how investors perceive the Iraq venture. My research (some of which will appear in the RRPE) suggests that currency preeminence is built on global economic preeminence. The key currency country is the country whose committment to a liberal world economic order is absolute, is guaranteed by the size and exposure of its international corporations and is backed by its ability to coerce/persuade others to support that order. Military power is important but in a statistical study I did on international currency usage, it was less important than the assets/sales of MNCs. Military and diplomatic preeminence (like a veto in the UN and 20% of IMF votes) give some comfort to dollar-holders that in a crisis, the US will be able to coerce others to bail it out -- holding dollar reserves or buying dollars to support its value on world markets, for example. Where I think the Bush folks might be wrong is in thinking the the diplomatic imbroglio they created will not impact investor perceptions. Would you say the disdain and even contempt with which they treated allies reflects unwavering commitment to a liberal world economic order? Is this an administration that will keep its capital markets open even if there is short-term political gain to be had from closing them? Even if central banks in China and Japan will scream? This really is an issue for the dollar. I wouldn't be surprised if some of the dollar's recent decline signifies a real portfolio shift to euro and not just a transient speculative attack. So my take is that not only are we not at war to defend the dollar, but the war could prove very detrimental to the dollar's international role. Ellen On Sat, Mar 22, 2003 at 12:25:44PM -0800, Peter Dorman wrote: I'm both happy and a bit embarrassed at the way this dollar-euro story is being picked up by the antiwar movement. I'm happy because the extreme vulnerability of the US payments situation is crucial to any analysis of the geopolitics of the current moment. Talking about this represents an advance in sophistication and perhaps preparedness for what may come. I'm embarrassed because the analyses that are floating around are highly flawed in their particulars and make it look as though our side is not very together. I think the fault may lie with us lefty economists; we who have been studying this for years should be writing about it, but instead we are leaving it to folks who are trying to figure it out on the fly... Peter Carrol Cox wrote: This article by Geoffrey Heard is one of the better I've seen on the war. This URL takes you to the printer-friendly version. Carrol http://slash.autonomedia.org/print.pl?sid=03/03/20/1330253 -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: the nature of the war
The problem with trying to figure this out is that nobody can figure out why we want war so badly. What is the objective? To distract attention from the economy until Nov, 2004? To get control of Iraq's oil? To assert US power? To bring democracy to the Middle East? Certainly, the ruling classes in Europe can't figure out the objective and don't trust what Bush says. The damage we've done to our relations with Europe must worry any members of the US ruling class with interests abroad (which is to say most of them). I can't see how this new doctrine of preemptive strikes is going to help us get stronger international patent laws through the WTO. I mean if we can strike against Iraq, why not Venezuela to topple Chavez, or Brazil to get them to stop making ripoffs of our drugs?This might worry some people. I know it worries me. Ellen [EMAIL PROTECTED] writes: Yesterday, I had a conversation with a friend who's been on the left for about 55 years. He suggested that Bush's war may actually be against the collective interests of the ruling class, the product of a small clique within that class. I suggested instead that it was an example of playing high-stakes poker: if the Bushwackers win (e.g., Iraq doesn't turn into a major quagmire) it could be a big victory for them and for their class -- but that the odds against that result were quite steep. what do people think? Jim
job opening
Please circulate widely. Though the ad doesn't say so, ability to teach History of Economic Thought and to collaborate in interdisciplinary social science courses will be a big plus. Feel free to contact me with questions. Ellen Frank The Management and Economics Department invites applications for a full time faculty appointment in the field of Economics. The College offers a major in Management and a minor in Economics. Therefore, faculty in the department must demonstrate flexibility to serve both disciplines in some capacity, through teaching, advising or program assessment. The position requires ability to teach introductory macro and micro as well as selected upper level electives to management students. Experience in curriculum development for the undergraduate and graduate program is desirable. Ability to teach a course in introductory statistics and quantitative methods will be considered a plus. This position begins in the Fall 2003 semester. A Ph.D. is required. Interested candidates should send a current CV with names and addresses of three references (no letters, please), a list of college courses taught to date, as well as a brief letter stating teaching philosophy, and connection between research interest and courses taught to: Mail: Emmanuel College Human Resources 400 The Fenway Boston, MA 02115 fax: 617-735-9877 email: [EMAIL PROTECTED]
Re: Did you attend the ASSA?
Re the ASSA. I had to arrive late and leave early, so I missed quite a bit, but looking at the program I was struck by more or less complete lack of engagement with the real world. Nothing much on deflation, unemployment, corporate scandals, globalization, etc. No real big picture stuff at all. Of course, the profession has spent 25 years working with models that assume full employment and general equilibrium, so what is there to say except what the Bush administration says? Those who work with alternative models spend their time explaining their models to the others. The science isn't advanced enough to inform policy, and all that. The URPE sessions I attended were all quite good and reasonably well attended, though nowhere near the numbers that shows up for a set of papers on efficient pricing of futures contracts. Ellen What was the tone? (continuing triumphalism of the NeoLibs?; hedging bets by giving a bit more space to the long neglected Stiglitz\Solow wing?) What were the 'star' big sessions? Any rising themes (how to deal with deflation; financial crises; corporate 'agency')? Given that it was Wash D.C., how were the budget\tax issues handled; did any Bush admin figures show up (CEA, Treasury figures)? Did the Bretton Woods crowd give a good performance? Did they get a free ride? For URPE: How was attendance numbers? Age mix? Quality of sessions? Did non-URPE types show up? Any striking presentations? Many thanks for any thoughts. Paul
Re: Re: Death penalty and class
Scott Turow, the novelist and lawyer and a self-described death penalty agnostic, was a member of Ryan's commission. He had an excellent article in last week's New Yorker discussing the commission's findings and why he now opposes the death penalty. Ellen [EMAIL PROTECTED] writes: I was wondering about the lack of reference on this list to George Ryan's dramatic decision to pardon all Illinois prisoners on death row. I thought it was great news. Watched a former federal prosecutor on Fox News last night who was worried that the wholesale pardon violated due process (though she personally opposed the DP), and that other governors might be tempted to follow his example. We can only hope. There does seem to be some slight shift in public opinion, and maybe Ryan's move will accelerate it. But he was at the end of his term facing a corruption trial with nothing to lose. Doug
Question
I have to write a short piece on rent control and remember that the Journal of Economic Perspectives did an overview of the literature a few years (maybe even more than a few years) back. Does anyone happen to know when that was, so I can save myself some search time? Thanks in advance. Ellen
Re: Re: Bush Administration On The Poor: Pay More Taxes!
[EMAIL PROTECTED] writes: I loved your quote Ellen, that Doug brought up on his show on Thursday: The rich today don't just want to pay less taxes. They want to be paid tribute! Thanks, but I was slow on the uptake. I SHOULD have said, they are paid tribute and, having extracted their pound of flesh, don't want it taxed away from them. What are dividends, after all if not tribute to dead capital? Needless to say, I think the key to persuading students it to get out of this box. It rigs the debate. But it rests on the hegemonic idea that everything that people gain in the private sector is somehow theirs without the government's help. Which is nonsense. The society, never mind the economy, wouldn't exist in its present form without the government. And people who make more have hence profited more from the government's existence. I agree and I think Smith's argument -- that the rich, as the beneficiaries of the social order, by definition, should pay for the upkeep of the social order -- is a good one. But I don't see that flying in the US, circa 2003. The ideology says that the rich prosper despite the government and, thanks to their thrift and innovation, the rest of us prosper as well. By the way, Dick Cheney had a great quote in today's papers: The president and I understand thta the government does not create wealth and it does not create jobs, but government policies can and should create the enviroment in which firms and entreprenuers will take risk, innovate, invest and hire more people. Ellen
RE: taxing dividends
This idea of eliminating the tax on dividends is outrageous on so many levels, one hardly knows where to start. First. Any money that flows to the stock market in search of tax free dividends will almost certainly be coming from the bond market, driving up yields. Second. To the extent that this puts pressure on firms to actually increase dividend payout, this means less funds available internally for investment. Third. Bush was quoted yesterday saying that this will encourage people to buy stocks and thus will encourage investment. Which only makes sense if you don't know what investment means. Fourth. This double-taxation issue makes me want to scream. All income is double-taxed. Workers pay payroll taxes and then pay income taxes on the pre-payroll tax income. Everybody pays sales taxes out of income that has already been taxed. I pay income tax on my income, then my hairdresser pays income tax on my income when I transfer it to her. Fifth. Ari Fleischer said yesterday that the tax system shouldn't penalize people who save and plan for the future. This sums up the Bush philosophy. Rich people are simply thrifty and the poor, wanton. Finally, while I'm on this rant, the plan is also said to contain funds for re-employment rather than unemployment insurance. The idea is that the unemployed would receive a lump-sum payment which they could use to seek work or retrain. If they find work right away, they keep the money. This, supposedly, eliminates the incentive to remain unemployed of the current UI system. So much for involuntary unemployment. Ellen [EMAIL PROTECTED] writes: Nobody seems to have mentioned this -- even at a time that the municipalities are so crunched. On Tue, Jan 07, 2003 at 08:32:59AM -0800, Devine, James wrote: yup. Current equity prices (for stocks that pay dividends) are slightly depressed by the expectation that the owner has to tax on dividends. With greater expectation that the dividend tax will go away (so that after-tax dividend incomes rise), there will be a shift of funds away from non-dividend-paying stocks and bonds of all sorts. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine -Original Message- From: Michael Perelman [mailto:[EMAIL PROTECTED]] Sent: Tuesday, January 07, 2003 8:32 AM To: [EMAIL PROTECTED] Subject: [PEN-L:33611] taxing dividends Won't the end of the tax make municipal bonds less attractive, hurting municipalities? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED] -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
RE: taxing dividends
Nomi writes: So much for involuntary unemployment. Can you explain the details of this part a bit more? Sorry for my cryptic economics terminology. What I mean is that ultimately, though they won't really say it because it doesn't make sense when exposed to the light of reason, Repubs believe that most unemployment is voluntary -- that people would find work if only they would look harder, rely less of guvmint hand-outs, be less choosy about what jobs are acceptable. (Like maybe if your WorldCom friend didn't insist on health insurance) As some right- wing Chicago guy put it in an article I used to assign my students -- if I lose my $70,000/year job and, rather than take a job washing dishes for minimum wage, choose to continue searching, then I am really voluntarily unemployed. There are jobs, I could get one, but I choose to turn up my nose. The standard right-wing schtick is that the unemployed are encouraged by social programs, left-wing rhetoric, labor unions and (of course) unemployment compensation, to hold out for good-paying jobs when lower-paying jobs are available. This makes wages sticky downward and prolongs recessions. So according to this morning's NYT, Bush's plan will include a proposal to give unemployed workers $3000 (instead of simply extending their unemployment benefits) which they can either live on (yeah right) or they can keep after they get off their duffs and find a job. Ellen Finally, while I'm on this rant, the plan is also said to contain funds for re-employment rather than unemployment insurance. The idea is that the unemployed would receive a lump-sum payment which they could use to seek work or retrain. If they find work right away, they keep the money. This, supposedly, eliminates the incentive to remain unemployed of the current UI system. I just spoke with a laid off WorldCom worker. She hasn't found a job in 6 months and is supporting two kids and a husband who is on a donor list for a liver transplant, though they have no health insurance. Her car was repossessed and job interviews have not been forthcoming. Nothing voluntary about her unemployment. I can't imagine it's as hard for Bush to get up each day as it is for her. Nomi
Re: Unemployment Insurance
Interesting point. As for Bush's proposal: the idea that a benefit which replaces (at best) half the wage and only one third on average will dissuade people from looking for work -- unless they're pretty sure they'll be called back from a layoff -- is just ridiculous. I was listening to Jim Glassman (?) -- some libertarian creep -- on NPR gushing about how this was another example of the innovative, creative economic thinking from the Bush team. Give people a lump-sum they can keep if they do find work, and the people who DON'T find work get the same benefit as the people who do. In what moral or economic universe does this make sense? Ellen Jim writes: some labor economists argue that many businesses like UI because it prevents laid-off workers from taking jobs elsewhere. It keeps them around to be rehired later, so that the biz doesn't have to spend money on re-training and the like. But the trend has been away from temporary layoffs toward permanent layoffs (and the hiring of temps, who aren't counted as unemployed and don't get UI benefits when waiting for a call). This trend seems to have undermined biz support for UI, as has the fact that UI taxes make employment more expensive to them while businesses have had a hard time passing this cost onto consumers in recent decades. Jim
In Defense of Scrooge (not meant as a joke)
Thanks for the post Mat. You couldn't make this stuff up! Ellen [EMAIL PROTECTED] writes: http://www.mises.org/fullstory.asp?control=573titlenum=FS=title=Mont
Re: Bush Administration On The Poor: Pay More Taxes!
[EMAIL PROTECTED] writes: New Tax Plan May Bring Shift In Burden Poor Could Pay A Bigger Share The Republicans are definitely on to something here. The federal tax system is progressive, even counting Social Security. Highly progressive without Social Security. What is the argument for a progressive tax system? How does one even begin to contrive an argument for progressive taxes without first arguing that the rich get more and the working classes less than they deserve -- i.,e, that our economic system is exploitative. Can you hear the Democrats making this argument in public? I can't. It's hard to talk about redistribution without talking about exploitation. Ellen Frank
Re: Re: Re: Bush Administration On The Poor: Pay More Taxes!
But shouldn't living standards be determined by what people contribute? And shouldn't people who contribute more get more? Rather than being penalized for their hard work and success? Look, my students are mostly liberal-democrats in their political sympathies and mostly middle to lower-middle class in socio-economic status. And when I ask them to do a debate on progressive taxation they cannot defend it. The anti-side always wins, hands down. The idea that people who are more able to pay should pay is connected to the idea that those more able to pay have more than they should have anyway. And this is not an idea Americans have an easy time articulating or even formulating. What is a luxury but what everybody covets? And why should those who do get some have to give anything up to others? Ellen [EMAIL PROTECTED] writes: Taxes should be based on ability to pay, aside from the payroll tax, which is a contribution towards insurance benefits. The alternative is taxes NOT based on the ability to pay. Try defending that one. mbs I like talking about rocks and necessaries, decencies, and luxuries. Point out that if you had a load of rocks to carry up a mountain, and there were three people, say a small boy, a 115 pound woman, and a 265 pound linebacker, it would be wrong to force the boy to carry as much as the woman, and the woman as much as the linebacker. Each should carry what they can bear: in this case the boy might carry 10 pounds, the woman 50 and the man 150. Nassau Sr.'s categories added to this make you aware that there are gradations in goods and services that people buy. Some are things that people must buy --- necessaries. Decencies are things people should have. Luxuries are things it would be nice to have. We must to ensure that everyone has enough to buy necessaries, hence we give more of a break to the poor. We should ensure everyone has enough to buy decencies. And, if enough is left over, same for luxuries. Fair is fair, after all. Bill
Bush Administration On The Poor: Pay More Taxes!
Bill -- I haven't participated in pen-l in quite a while, so maybe, not knowing who I am, you misread my intent. (maybe this is why I stopped participating in pen-l!). I am playing devil's advocate here. My students are not dumb and I am a very good teacher, BUT.. The ideology of capitalism runs much deeper in the US public than the anti-capitalist ideology (I think Marx had something to say about this). Certainly I don't believe Ken Lay deserves his $100m or that the janitor deserves his $6.50/hr. (In fact I wrote a column for Dollars and Sense a couple of months back defending the progressive tax and using precisely that example). And my students don't believe it either. But how do you say that in US political discourse? Once you say it you imply the system is unjust, that there are social classes. Even very progressive Democrats get tongue-tied when these sorts of issues come up. What people deserve is exactly the issue the right wing will raise -- the rich deserve their luxuries and the poor have no right to take what others have earned fairly (I guess they'll want to leave Ken Lay out if it). How do supporters of a progressive tax respond unless they are willing to say the existing distribution of income is fundamentally unjust? Ellen [EMAIL PROTECTED] writes: On Thursday, December 19, 2002 at 09:32:34 (-0500) Ellen Frank writes: But shouldn't living standards be determined by what people contribute? And shouldn't people who contribute more get more? Rather than being penalized for their hard work and success? So you are saying Ken Lay deserves what he gets and the janitors that clean his office deserve what they get, even if the janitors work hard and don't succeed? How much of Ken Lay's success is due to structural factors that favor the dishonest and greedy, that promote those born with a silver spoon in their mouth? What percentage of the successful actually had to work their way up from the bottom? Are you saying nurses deserve what they get, and doctors, who have the political power to lobby to reduce competition and thus enhance their success by artificial means, also deserve what they get? Does Bill Gates deserve to have more money than a million people (or more) at the bottom combined because he happened to roll the dice and get a lucky break? How much of success is due to factors other than hard work? I think if you look into it, there are many other things --- among them dishonesty, greed, ruthlessness, and privilege --- which contribute greatly to success. If your students can't argue their way out of a paper bag, you need to help them. Leaving simplistic formulations that equate hard work with success is foolish. You have to get behind these very extreme abstractions and do the hard work of examining actual cases of success and failure. A very different picture emerges out of this effort than the one that makes a moral giant of Ken Lay and a runt of his janitors. Bill
Bush Administration On The Poor: Pay More Taxes
Actually I'm trying to write copy for the Heritage foundation and finally make some real money! The I might make it too someday element is pretty weak with my students. As I say, they tend to be left-liberal, but not politically engaged and lack confidence in their views. There's another psychological element. Once I said something to a neighbor of mine -- a day care provider married to a carpenter who really struggled to keep a foothold in the middle-class -- about people having too much money -- something like that, I can't recall exactly what was said. But I do recall her reaction. She was surprised that I would express such a view. She said that she often felt that way, but never said so because she assumed that others would then see her as envious. She said that she always worried that she was, in fact, just envious. All that stuff about not fomenting class conflict and class envy really impacts people. Ellen Doug wrote: Are you channelling your students, or your own inner thoughts here? I'm guessing the former, because I can't believe you think there's much relation between contribution and reward, or hard work and success. I'll bet lots of your students work their butts off, and come from families that do too. And what do they have to show for it? Though I suppose there's a psychological angle here - they're ambitious, want to join the upper ranks, and think that they'll be able to someday by virtue of their hard work, since virtue is rewarded. But it isn't. Most people die in the same income quintile they were born into, or very close to it. Doug
Housing Bubble?
Here in Boston, where prices have nearly tripled over the past 5 years, my impression is that housing demand is coming mostly from owner- occupiers. This is in contrast to the bubble of the late 1980s, when absentee-investors were buying, renting, then flipping condos like crazy. Owner-occupiers are far less likely than absentee-investors to walk away from a property if they have financial difficulties. Also, this boom -- again at least in Boston, often cited as the city most likely to be in a real estate bubble -- hasn't been accompanied by the massive condo developments that forced banks, in 1990 -1992, to dump tons of foreclosed properties onto an already weak market. So I'm not convinced the bubble will burst. On the other hand, I can't figure out where the incomes are coming from to support these $500,000 mortgages. Ellen [EMAIL PROTECTED] writes: Sabri Oncu wrote: Do you have any hard data supporting or refuting the bursting of a housing bubble in the area? Or do you thiink this is just a normal drop in a period of economic hardship? Most U.S. housing indicators have been strong. New house sales fell in Oct, but they'd been rising since February, and are still over 1m units at an annual rate. Existing house sales rose strongly in Oct, and are well above June levels. Builder indexes are strong, and so is mortgage demand. There's talk of saggy prices, like what you recount, but the normally cyclical housing market held up very well during the recession. This will either be vindicated by a broader recovery soon, or it could be a remaining unpopped bubble (like the dollar). Doug
Re: globalization text
Peter - I'm very interested in hearing others suggestions, but I'll tell you what I'm using in a course co-taught with polisci. The text is Spero and Hart, The Politics of International Economic Relations. Its not good on finance stuff -- I mean it has all the terms, but doesn't explain things well. It's very good on trade and development and MNCs. We also have students read the new Stiglitz book, The Lexus and the Olive Tree and Making Openness Work by Rodrik. Ellen [EMAIL PROTECTED] writes: Can anyone out there help me find a suitable book for an undergraduate course that covers, among other things, globalization?
Re: separated at birth?
And could it be just coincident that they BOTH bear a peculiar resemblance to Jim Devine? Ellen [EMAIL PROTECTED] writes: see the attached file. lk.jpg t would be hard to see them together if they weren't in the same place. But i don't know what Krugman looks like anyway. Gene Coyle Devine, James wrote: has anyone noticed how New York TIMES columnist Paul Krugman and Brazil's President, Lula, look the same? has anyone ever seen them together at the same place and the same time? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Polling Data
Thanks for all your responses on polling data. Harris and Roper used to have most of their reports on the web, but now they offer all but the most recent surveys to subscribers only. As it turns out however (once I took the time to surf the web) a website called pollingreport.com has reams of poll results, mostly commissioned by news and non-profit organizations. EPI has actually attempted to answer the exact question I asked and has a website www.epinet.org/pulse with links to many of the original polls. Ellen
question about polling data
Can anyone point me to a good source (book, article, internet) on polling data regarding American views on socio-economic policy? I often hear it said that Americans support Social Security and want drug coverage, for example, but I can't find any polls to confirm this (on the other hand, I haven't looked very hard). Thanks for any help. Ellen Frank
Trade Query
A colleague of mine said recently that world merchandise trade was only $20 billion in 1913 compared to $7 trillion today. Now obviously the 1913 figure could be increased by an order of magnitude simply by adjusting for inflation. But I also wondered whether the 1913 figure includes intra-empire trade. When the Dutch took rubber from the Congo or oil from Indonesia, did this count as trade? Does anyone know? Ellen Frank
Re: Re: Trade Query
[EMAIL PROTECTED] writes: On Wednesday, September 25, 2002 at 16:59:30 (-0700) Ellen Frank writes: Also, isn't about half or so (more??) of current trade intrafirm trade? Bill Good point. I think it's around 40%. Ellen
dead economists
Anybody have handy the famous Keynes quote about dead economists? Ellen
Re: Re: dead economists
Thanks Gil! [EMAIL PROTECTED] writes: Ellen, here you go: The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slave of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. Defunctionally yours, Gil
recent fortune
I just got done reading the most recent issue of Fortune, which features a scathing article on corporate greed (entitled You Bought. They Sold.), an eye-opening account of the sleazy role played by Chase and Citi in the Enron/WorldCom scandals, and a contempuous look at Bush's economic team (The Gang that Couldn't Shoot Straight). Really. Fortune Magazine. Ellen
Re: Re: Rodrik
Rodrik's book Making Openess Work is really excellent -- much better than his earlier book, which was kind of all over the place. Rodrik argues that (a) growth is growth and can be generated as well through domestic investment or government investment as through export demand; (b) there are many successful development models with many different strategies; (c) the characteristic common to countries that have succesfully reduced poverty is a responsive and democratic public sector. Ellen [EMAIL PROTECTED] writes: Rodrik goes farther than Stiglitz, whose recent public persona is associated with an attack on formal governance by the IMF and by emphasizing the problem of financial liberalization. Even Bhagwhati seems to be in that camp. Rodrik questions whether liberalization as such works. He was the first to credit Malaysia's strategy. You can read Rodrik's critique into Stiglitz. In fact, Stiglitz's formal academic work goes deeper, in a sense, critiquing the microfoundations of some market transactions. Stiglitz also compliments Malaysia for resisting the IMF. It is good that we have people working on the margins of high-academia, questioning parts of the global capitalist system, but I wonder what would happen to them if they strayed any further. As was just mentioned this morning, to take one more step they would be deemed to have moved out of economics and into sociology or something even worse.
RE: Dean Baker on the SM's redistributional effects.
I happen to be writing something on this very question, so while I can't speak for Dean, I do think his claim is essentially (though not necessarily) correct. To the extent that stock gains are realized, these realizations tend to generate an upward redistribution of income because: (1) insiders can cash out more freely and with better timing than small investors (e.g. Enron) (2) insiders get sweet deals on IPOs etc (e.g the NASD investigation of Salomon for spinning IPOs) (3) insiders have better information on the true value of a company (e.g Global Crossing, Qwest, WorldCom, etc, etc) (4) insiders are always richer than small investors to start with. Also, even if there were no middle-class investors with 401k accounts to steal from, it would still be true that stock gains would be realized at the expense of lower income folks. To the extent that an individual realizes gains and thus increases his income at a rate exceeding the growth of income generally, some redistribution must occur. Most likely, those flush with realized stock wealth will bid up the prices of scarce goods with few substitutes (housing, health care, education), making these less available those in the lower ends of the income distribution. After all, if Ken Lay's income increased by 300% in 2001, while GDP rose by 3%, then someone went without, right? Ellen those gains, when spent, will [EMAIL PROTECTED] writes: It seems like this would follow straight-fowardly: 1. redistributing wealth tends to concentrate 2. trades of stock concentrate wealth because beneficiaries of trades (recipients of capital gains) tend to have higher wealth on average 3. more trading = more concentration 4. variability, volatility == more trading 5. bubbles == greater volatility and variability 6. bubbles == greater concentration of wealth, more redistribution I'm not certain all of these points are true, but they seem to hang together, and they sound good. Ergo finance is inherently parasitic, entirely apart from the real assets to which financial assets are connected. mbs
question
Does anyone know of a (preferably on-line) source that compares social programs across countries -- like unemployment, pensions, health care? Ellen Frank
Re: RE: Re: B. Friedman on Stiglitz
Last night I was re-reading Friedman's book The Day of Reckoning. Every chapter starts with a quote from the Old Testament on the moral hazards of borrowing. He really does seem to be talking more about the international asset position of the US than about the public debt, but he never makes that clear. It's an odd book. [EMAIL PROTECTED] writes: The Friedman/Nell exchange in NYRB, linked from the BF on Stiglitz page, also has BF in the position of deficit hawk. Nell gets in some good points. Unfortunately, NYRB is charging for peeking at their archives now, is that right?
Re: Is Germany turning Japanese?
[EMAIL PROTECTED] writes: From the current BUSINESSWEEK -- But, like Japan, Germany is governed by consensus, which makes it difficult to enact controversial reforms. The consensus society is unlikely to provide the flexibility needed in today's rapidly changing business world, says Quitzau. Germany and its trading partners could be about to find that out the hard way. Great line - Such a drag that the public stupidly refuses to vote against it's own interest. If only countries were run like corporations. Ellen
RE: Baker and Kar on SS
Mat - Dean sometimes does this assuming mainstream arguments are right about x, then advising y contradicts x kind of argument, simply to score debate points. For example, when Dean and others were arguing against the Fed's use of NAIRU, they would say there's no evidence that lower unemployment rates are causing inflation, hence the Fed shouldn't raise interest rates, whereas I would have argued that the Fed shouldn't slow the economy, even if there were evidence of inflation. I think its a question of how hard you want to push the envelope of mainstream discourse and folks in DC tend to be more cautious. Dean is, however, on record as opposing the Democratic party's recent conversion to balanced-budgets. Salon did an piece on Wednesday interviewing a number of progressive economists on what should be done (including me) and Dean was very critical of the Democrats on this. Ellen Frank [EMAIL PROTECTED] writes: I assume he is opposed to IMF policy, Jim.. I usually find myself in agreement with most everything Dean Baker writes. But that is the point of my surprise to read his words: the increase in the government deficit, due to the loss of Social Security tax revenues during a transition period, can lead to serious financial problems. In the case of Argentina, the current budget crisis can be attributed largely to the decision to privatize its Social Security system. The lost tax revenue, plus the interest resulting from the additional incurred expenditure, exceeded its central government budget deficit in 2001. In other words, if Argentina had not privatized it Social Security system in 1994, and done everything else exactly the same, it would have run a budget surplus in 2001. Except for the fact that he is arguing against SS privatization, there is nothing there that I can support, and it doesn't even make an argument-it assumes we all know that and why deficits are bad and surpluses are good. Is this an end justifies the means thing? -
quick question
Can anyone tell me the maximum earnings subject to SS tax for 2002? I've searched the SSA website and can't seem to find it. Thanks. Ellen
Re: Re: quick question
There it is! Thanks, Eric. [EMAIL PROTECTED] writes: Check -- http://www.ssa.gov/pressoffice/colafacts2001.htm Eric Can anyone tell me the maximum earnings subject to SS tax for 2002? I've searched the SSA website and can't seem to find it. Thanks. Ellen
Re: Re: question
I was - it was a real last minute thing and I had to have my daughter apply make-up. If only people had wanted me on TV when I was young and beautiful! I usually turn down TV requests because I find the grief-to-content ratio too high. But Donahue is pretty good. He gives ample time to make points, doesn'tset up hopelessly polarized debates. I may actually start watching it. Ellen [EMAIL PROTECTED] writes: And Why did Ellen not tell us to watch the Donahue show? Ian told me she was on. Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
question
Does anybody know who coined the term supply-side economics (or who takes credit for it, anyway)? Thanks in advance. Ellen Frank
Inflation
This raises a question I have always wondered about. In calculating the CPI, the BLS uses fixed weights which are updated only every decade or so, right? Right-wingers claim that this overstates increases in the cost of living because, in reality, people switch from high-priced goods to low-priced substitutes. But isn't it equally likely that it understates inflation, because as prices of necessities rise (like housing and health care) they eat up a growing fraction of consumer income and play a bigger role in the cost of living? I mean this seems obvious to me, but during all that hullaballoo over the CPI a few years back, no one ever said this, so maybe there's an error in my logic? Ellen [EMAIL PROTECTED] writes: at some point, economists decided on a conventional definition of inflation as referring only to increasing prices of newly-produced goods and services. Given that convention, inflation in housing prices only counts when it affects apartment rents (or imputed rent on owner-occupied housing) and other expenses of using housing, rather than the hike in the price of housing as an asset. (The economists impute by trying to figure out how much it _would_ cost a home-owner to rent his or her home.) Equities are simply paper promises, rather than goods and services, so that equity inflation isn't counted. Health care is definitely counted, while only the part of education that isn't paid for via taxes is counted as part of the cost of living. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Simple question
Company is just a colloquial term for a business. Corporation is a legal term for a business owned by shareholders. [EMAIL PROTECTED] writes: One of my students asked me yesterday what is the difference between a company and a corporation? To my discomfort, I didn't know the answer. I'd be very grateful if someone could offer a simple definition. Cheers, Mark
: Greenspan's cooked book
Money is, of necessity, a public good. National governments print it and enforce its domestic use by, for example, mandating that the local currency be legal tender for paying taxes and discharging debts. The wealthy have always worried about this. So long as money is controlled by the state, there exists the potential that governments will overprint money, causing inflation and rendering accumulated wealth valueless. The wealthy have thus sought to remove the money-printing functions from sections of government most susceptible to popular pressure. Money-printing cant be privatized, but it can be quasi-privatized, relegated to semi-autonomous and undemocratic central banks, like the Federal Reserve, the Bundesbank, or the European Central Bank. Removing control over money from normal avenues of democratic accountability has been one of the primary achievements of neo-liberalism. Ellen Frank, Dollars and Dinars, New Internationalist, January 2000
Re: Re: RE: Hetero Depts
Max - I don't beleive Tufts has a heterodox department (though the university does house the global development and environment program). Dickinson also does not have a heterodox dept; Matt is probably thinking of Drew University in PA -- where Tom Dickins teaches. As long as you're considering undergrad programs, Simmons College in Boston has a nice mix of faculty as does Mount Holyoke. I personally hate the word heterodox. How about inclusive, open-minded, free-thinking? Ellen
Re: Re: RE: Re: Re: Nader
Really? Is that what leftistmeans? I'm not sure I would support such a platform, not given the realities of political corruption in the US and the experience of large-scale state ownership in Russia. How exactly would you sell this vision to the American public? Ellen [EMAIL PROTECTED] writes: Well, some, maybe, but virtually all? I mean Do you think he'd support nationalizing all corporations above a certain low level, treating the mines and the factories and fields and offices as belonging to the government and to be controlled by the workers and farmers? Which in some sense is what most of us here, including me, would advocate. jks _ Join the worlds largest e-mail service with MSN Hotmail. http://www.hotmail.com
RE: Double tax on savings
[EMAIL PROTECTED] writes: The observation that an ordinary income tax is not equivalent given different savings behavior is valid, as far as it goes. It raises fairness issues, for instance. Imagine two twin brothers with equal capacities, income, and luck in all respects. If one defers consumption more than the other, he pays more income tax in present value terms. Max - Isn't this ceding too much to the double-taxation position. I mean yes it' true that the thrifty brother will pay more income tax than his twin, but he will also earn more income (the interest on saving in addition to the original income) than his twin. Ellen
Re: Re: RE: Re: Review of Radical Political Economics state ment
[EMAIL PROTECTED] writes: Dues, library subs to the journal, and fundraising from the membership. For an organization to be on the verge of ruin after an expenditure of $15,000 is hardly a sign of robust finances, is it? Doug Petty point, but URPE, according to the latest newsletter, has some $65,000 in net worth. Which isn't much, but then URPE is a small organization that doesn't do very much. Compared with past years, URPE is doing quite well these days. Aging and getting plump, just like so many of us. Ellen
Re: What is profit?
Can you please tell me the source of this? Ellen Frank [EMAIL PROTECTED] writes: Friends, I cannot help but share this monumental work of political economy as well as history with my fellow Penners. Best, Sabri
Re: Budget follies
[EMAIL PROTECTED] writes: CB: Do supply-siders express an aim to lessen recessions' unemployment etc by their tax cuts for capital, or do they say recession is a necessary, good thing ? Real supply-siders believe either (1) that unemployment is mostly voluntary and the unemployed should get off their asses and start a business or something instead of whining and looking for a hand-out; or (2) that the unemployed are unemployed because well-meaning entreprenuers can't create jobs for them thanks to bureaucratic red-tape, high taxes that punish success, and government regulations that force businessmen to pay workers more than they're worth. or some combination of (1) and (2). Remember that back in September, Dick Armey publicly opposed extending unemployment and health benefits on the grounds that such hand-outs were not commensurate with the American spirit. Ellen
: Re: Budget follies
Doug writes: And there's (3) Excessively tight monetary policy, courtesy of central bankers who believe in the discredited notion of the Phillips Curve, when they really should set policy by the gold price and other market-based measures. If you're by a TV the morning of the next employment report (Feb 1), tune into CNBC and get an earful of Larry Kudlow. Doug Right. I had forgotten that one. Jude Wanniski has me on his mailing list ever since my one appearance on the appalling O'Reilly Factor -- so I get regular updates on this. I will say that these guys are way less mean-spirited than creeps like Armey.
Re: Budget follies
Absolutely right. That's the whole idea. In thier world-view, which I think is widely held in America, businessmen (and women!)are the heroes. Adversity -- like unemployment -- spurs the heroic to action -- to take risks, start businesses. In this way the heroes provide incomes and opportunity for their meeker brethren. Taxing the heroes reduces both their ability and their incentive to take risks. Charles writes: Would I be right in thinking that part of the supply-sider rationale would be that the rich will invest the taxcuts; that is the bone supply-siders throw to the unemployed, the indirect help in making more jobs for them to have ; that mean spirited Americanism ? Charles
Re: Budget follies
Actually, it was worse than that, as I recall. He said something like - if revenues declined in a recession, he would see it as an opportunity to cut fat out of the budget, just like a private businesses do. I don't have the exact quote handy at home, though I used it in an article for DS last year. Ellen Frank Doug wrote: Al Gore said during the campaign that if revenues declined in a recession, he'd cut spending to preserve the surplus. Doug [EMAIL PROTECTED] writes: Alan Cibils wrote: Democrats must be getting their economic wisdom from the IMF. Maybe they should look at Argentina's experience trying to balance its budget in a recession. Al Gore said during the campaign that if revenues declined in a recession, he'd cut spending to preserve the surplus. Doug
Re: a tale of two airports
I'm not sure how much the depressed condition of downtown Atlanta results from the current recession. My impression was that the downtown is mostly a stage-set for conventioneers. A couple of dozen high-rises, at least half of them hotels. A big Merchandise Mart for trade shows. A Macys department store. A mall with a few small shops and a food court that closes a 6. A Quincy Market wannabe in a converted train station that has been unable, apparently, to attract more than a few national chain stores (a Gap, a Payless, a Footlocker). A handful of restaurants. Several empty storefronts, lots of panhandlers and homeless folks. Last year, the NY Times did a series of articles on obesity and reported that the Atlanta region has registered the largest increase in obesity rates of any metropolitan area. They attributed this to the high-fat southern diet combined with an utter dependence on cars -- large sections of the city have no sidewalks. It seems all the action in Atlanta is outside of the city center. One thing I found interesting is that I heard very few southern accents during my four days there. Lots of transplants, very cosmopolitan. A great place to live, by all accounts, but you wouldn't want to visit there -- at least not without a car. Ellen Frank [EMAIL PROTECTED] writes: Looking at Atlanta the US is currently in a severe recession. At the economics meetings there, I stayed at a hotel that was several blocks from where the sessions were and was able to scan the economic scene. It's depressed. There were lots of stores that were closed, while two major _buildings_ looked abandoned. There were lots of homeless. Restaurants that normally cater to the convention crowd closed due to the weather (which wasn't _that_ bad). The downtown mall was closed on Sunday! However, we can't say anything big, since I don't know what Atlanta was like a few years ago. For a time-series analysis, I had to fly back to Los Angeles. What was amazing was that when I arrived at the airport there last night, there was a severe traffic problem! This is a sign of economic recovery, compared to my visits to LAX in recent weeks. So recovery is just around the corner. Maybe it has something to do with the aerospace industry having a big presence here. Also, Hollywood is pretty immune to the business cycle. In sum, it's possible that we're having a W-shaped recession (which is quite appropriate). There may be a mini-recovery before the economic imbalances that I (and Wynn Godley and Alex Izureta and a host of other dissenting economists) point to re-assert themselves and push the economy down again. (Of course, the idea of a W assumes that there will eventually be a recovery.) ;-) Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Doug Orr and Ellen Frank
Thanks, Michael. I will be happy to do so tomorrow, when I return to my office. I have a trundated version of my email software at home that makes it difficult to compose messages. I will say that it was a real pleasure to see so many friends and email buddies. Wish more of you lived nearby! Ellen Frank [EMAIL PROTECTED] writes: These penners conducted an excellent session at the Atlanta meetings. I wish that they could sumarize their talks for us. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Budget follies
On the flights to and from Atlanta, I began reading this new book by Rick Perlstein called Before the Storm -- about Barry Goldwater and the rise of the new right. It's a bit long-winded with sometimes tedious detail about this and that right-wing crank. But what's fascinating is the vehemence of their anti-government (and anti-deficit) views and their conviction that Keynesian policies are intended, ultimately, to make the US a socialist economy. Ellen Frank [EMAIL PROTECTED] writes: Right Rakesh. But we still have to ask whether working people and the poor will be better off with more spending and jobs and less taxes or not. In the long run we need to think about alternatives to a system that just doesn't make sense, but in the meantime we need to think about how we can have less homeless and hungry, less financial stress for working people, less unemployment, etc. Keynesian spending will not remove the contradictions of capitlaism, but it may make things less worse--if the spending (and tax cuts) are targeted right, etc. Of course, my idea of a decent spending program may be nearly as utopian as socialist revolution, so if you're going to dream (big), why not dream big(ger)? [EMAIL PROTECTED] writes: Right Rakesh. But we still have to ask whether working people and the poor will be better off with more spending and jobs and less taxes or not. In the long run we need to think about alternatives to a system that just doesn't make sense, but in the meantime we need to think about how we can have less homeless and hungry, less financial stress for working people, less unemployment, etc. Keynesian spending will not remove the contradictions of capitlaism, but it may make things less worse--if the spending (and tax cuts) are targeted right, etc. Of course, my idea of a decent spending program may be nearly as utopian as socialist revolution, so if you're going to dream (big), why not dream big(ger)?
Re: Wolf on share prices
I've always found this sort of reasoning, which permeates economics textbooks, amazingly ideological. According to Wolf, if I buy a bond with a coupon of 7% and I expect inflation to be 4% then I am only really earning 3%. If suddenly I alter my expectations -- I decide to think that inflation will be 6%, then I am only earning 1%. The fact that inflation proved to be lower than my expectations (in fact has been running around 2.5%) -- the fact that I am, in reality, walking away with a 4.5% return matters not at all. Thus does the creditor class explain away the reality of high real returns on financial assets. Ellen Frank [EMAIL PROTECTED] writes: [Financial Times] A poor defence for share prices Many depend on the relationships between bond yields and earnings yields to value equities. But they are wrong to do so, says Martin Wolf To simplify, consider an irredeemable bond issued with a coupon of $7 and a face value of $100, when the expected real rate of interest is 3 per cent and expected inflation is 4 per cent. Suppose expected inflation falls to 2 per cent. If one ignores rounding errors, the price of the bond rises to $140 and the yield falls to 5 per cent. The owner of the bond has made a $40 capital gain - but the yield for any new purchaser gives the same real return as before. Now what does the fall in inflation do to the earnings yield and price of an equity? To simplify, the answer is absolutely nothing. To see this, assume for simplicity that the real return demanded from equities is the same as the real interest rate - the equity risk premium is zero. Assume also that the pay-out ratio is 100 per cent. The price of an equity expected to give earnings this year of $3 is $100. If inflation were to be 4 per cent, next year's equity price would be $104. If inflation were 2 per cent, next year's price would be $102. If one purchased a share and sold it next year, the money return would be $7 and $5, respectively, with $3 from the earnings and $4 and $2, respectively, from the rise in the price. The nominal and real returns would be the same as on the bond, as required. If inflation falls, the ratio of the bond yield to the earnings yield will fall but there will be no effect on the price of equities now. The change in the yield ratio will also say nothing about the advisability of buying shares. All it does is indicate an alteration in the expected path of future nominal earnings and equity prices.
the almighty dollar
My major point about the dollar is that nation-state based Keynesian analysis -- US runs deficit on current account, needs to attract foreign capital to finance, economy now vulnerable to capital flight, financing crunch and speculative attack on currency -- doesn't apply in the case of the US and that US uniqueness is not simply a temporary condition nor an historical accident. My basic argument is as follows: (1) There exists a global ruling class. (2) Much of the wealth of this class is accumulated rather than consumed, so the state of residence of the wealth-holder is not at all relevant -- a British insurance mogul is not accumulating US stock with the hope of cashing in and settling down on the Isle of Wight for retirement, (3) The US is the hub of the global ruling class and the dollar is the currency in which most of them figure. This is becoming more, not less, true as production and accumulation become more global. All those individual currencies,with their endless transaction costs and threat of public control are nothing but a giant pain in the neck anyway. (4) The US current account deficit doesn't matter to these folks. It is not a sign gauge of US competitiveness to them. Corporate profits are the gauge of competitiveness and most of the world's most profitable corporations are dollar-based corporations. (5) The little accounting problem represented by the deficit -- the need for foreign nationals to hold dollars -- is not a problem in their eyes. As long as US corporations remain profitable and the US government remains pro-business, they are happy to hold US assets. Indeed, what else would they hold? Argentinian bonds? (6) Threats to the dollar and ability of the US to finance its deficit could arise from three sources: (a) the emergence of a new superpower whose global corporations do not rapidly become Americanized. Not so very long ago everyone thought Japan and the yen would take this role, but Japanese MNC's just merged and forged partnerships with US MNCs. This might be because the US provides Japan's national defense (b) foreign governments are somehow able to compel their wealthy to bring the wealth home. This could occur through left wing coups -- siezing assets; or right-wing coups -- fascistic alliances between national governments and domestic businesses to rebuild the nation-state. (c) a left wing political victory in the US. A Nader victory would have tumbled the dollar. All three of these seem pretty unlikely to me, at least in the next few years. Ellen The tag line spend it fast as you can was meant to allude to the line in the song, I don't give a damn about a greenback dollar, spend it fast as I can not to any conviction of mine that the demise of the dollar is imminent. If... IF... there is a mass dumping of dollars, the precipitating event will most likely NOT be the fundamentals of the dollar itself. My guess is it will probably not even be a financial event. The lack of correlation between current account deficit and value of the dollar has nothing to say about future events. In fact, the term correlation has no more scientific standing with regard to the issue than do the words to the song I cited. Tom Walker Bowen Island, BC 604 947 2213
Re: Ellen's dollar
Well, since we're arguing about hypothetical scenarios, I guess my thinking was that a Nader victory might send some wealth high-tailing it to the EU and Japan. On the other hand, a leftish government in the US would probably make international financial reform a top priority , so who knows? But particular governments and economic policies are only part of the issue. In my dissertation, I argued that there are real structural reasons that explain the pattern of currency usage. A lot of MNCs generates a deep global market for dollar assets. Holdings of both yen and d-marks rose in tandem with the growth of their MNC sectors. Once MNCs were accounted for statistically, I still found a strong US effect, part of which is probably historical inertia, as Tom suggested, but some of which was explained by military spending. The currency composition of developing country forex reserves, for example, correlates strongly with arms sales by issuing countries. Frankly, I doubt Japan could promise the same broad MNC base as the US does - not without the backing of the US military anyway. On the other hand, one could argue that global trade and investment treaties, to the extent that they protect MNC assets abroad, diminish the importance of the military. Dollarization gives the dollar a big boost in official reserves as well. Ecuadorans and Argentines can't even buy a loaf of bread without dollar reserves. One interesting finding of my thesis, by the way, was that international banking proved less important than I had thought. I had expected that the predominant currency would have the biggest global finance sector, to facilitate transactions abroad with some assurance that the issuing government would back deposits in the event of a financial crisis. But it turns out that countries like Switzerland and the UK domicile lots of global banks that do business in dollars. Well, I hadn't given much thought to that old dissertation of mine in a long time. Maybe I should dust it off and update it. Ellen [EMAIL PROTECTED] writes: Ellen, your possibility of a Nader victory tumbling the dollar seems inconsistent with the rest of your analysis. My understanding is that anything that created the possibility of a weakening of the US economy (relative to other major economies) could set off a panic. For example, if the financial world saw the new Japanese leader as a reincarnation of Reagan who would reinvigorate their economy, at the same time that the US economy faltered, then a panic could occur. One other factor in the US economy's favor is the synchronization of the world's major economy, which would support Ellen's thesis that the holders of $$$ would have nowhere to go. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
URPE and DS
Talking about left organizations going bankrupt, I think pen-lers should know that Dollars and Sense magazine, a 27-year old publication of solid progressive economic analysis written for a general audience, is having financial difficulties. Nobody is suing us. Its just the usual problems -- costs have risen, magazine sales don't cover the full costs of production and advertising revenue potential is limited. DS has covered its costs in the past by printing compilations of its articles as readers to accompany college-level economics courses. Our sales have declined slightly and not been matched by an increase in other supplementary revenues (like donations). If you are a college teacher, consider ordering the (excellent, if I say so myself) DS books for your courses -- micro, macro, international, money and banking, environmental and current economic issues. We also publish a lovely book by Charles Sackery and Geoff Schneider called Introduction to Political Economy that can be used in introductory or in history of thought courses. And we will be reissuing a book by Randy Albelda and Bob Drago on inequality beginning this fall (McGraw-Hill dropped the title). If you are not a college teacher, consider making a donation to DS (what better use for that $300 tax rebate?). For more info, go to www.dollarsandsense.org or call the office at 617-876-2434. Major credit cards accepted. And if you don't subscribe, why not take out a subscribtion? A bargain at $24.95 for six issues. Ellen [EMAIL PROTECTED] writes: How can we ever imagine succeeding in effecting large-scale social transformation if tiny factions of 'radical' and 'marxist' economists cannot work out their petty differences without bankrupting one of the only organizations and journals that provide an outlet for papers and presentations for left political economy? and where is the leadership that should have been able to step in and mediate some resolution? for all my differences with the late David Gordon, I don't think he would have sat around and watched urpe go bankrupt from something like this. it doesn't matter who is 'right'--we're all going to lose if this doesn't get settled. no wonder so many people give up on left politics.
RE: URPE and DS
The mailing address is Dollars and Sense, 740 Cambridge St., Cambridge, MA 02141. Thanks! [EMAIL PROTECTED] writes: I'll send $100 in the mail for a sub.
Re: Re: The US Dollar (spend it fast as you can)
[EMAIL PROTECTED] writes: Sounds like a great diss. Did you ever publish an article summarizing it? If not, what school did you do it at? Thanks, Michael. Unfortunately I did not. The official dollar role has been over since 1973. The US has run current account deficit in every single year since then, deficits that grow each year You're right. The balance of trade has been negative virtually every year, but current account has been up and down (mostly down though) since Reagan. I think the commerce dept has all the payments accounts up on the web. Best, Ellen I thought that we'd run a trade deficit every year since then, but that the current account didn't go into deficit until Reagan. Am I misremembering? Is there good URL to see a summary of these annual numbers for the last 30 years? Michael __ Michael PollakNew York [EMAIL PROTECTED]
jude wanniski
Penners - Thought some of you might be interested in an exchange I had this morning with Jude Wanniski, who emailed me in response to press release I did for the IPA. Jude Wanniski wrote: I agree with the assessment attributed to you by Institute for Public Accuracy. I have been arguing that we have been in a pure monetary deflation for more than four years, as evidenced by the steady decline in the dollar price of gold. It was at the $385 plateau in November 1996 and is now at $268. To a Mundellian supply-sider like me, gold signals monetary errors by the central bank in its management of the dollar, either in an inflationary direction or a deflationary direction. Have you considered this possibility? The answer, to me, would be a devaluation of the dollar against gold, to roughly $325, where it should then be stabilized by monetary policy that is now manipulating interest rates, to no great effect. My reply: Thanks for your comments. I would agree that monetary policy, both here, in Europe and - especially - in the developing countries, has been needlessly tight for a number of years and this signifies some deep problems in the international financial arena. I have never paid that much attention to gold prices, since so many factors can influence gold (competing assets, speculation, new supplies), but the evidence that policy is contractionary is clear from the level of interest rates most everywhere but Japan and (very recently) the US. I can understand your interest in overcoming the capriciousness and opaqueness that too often characterizes Fed policy decisions. I think there are two options to avoid this problem however. One is to establish an explicit and transparent rule -- like a gold standard. But this has its own problems: policy becomes inflexible and vulnerable to irrelevant fluctuations in the gold market, for example. A second option, which I favor, would subject monetary policy to greater public scrutiny and oversight. This makes policy more erratic and inflation-prone, but also more democratic. Best, Ellen Frank
US hegemony
The Vietnam fiasco and the decison to float the dollar in 1973 was certainly seen at the time as the twilight of US hegemony. But I agree with Yoshie that we have to start thinking of the ruling class as global rather than national, so the old nation-state measures may not apply. The world is different in ways that I think we don't fully understand. Has anybody read this new book Empire? If so, does it offer any insights? Ellen [EMAIL PROTECTED] writes: Tom says: The USA entered into the twilight of empire between 1968 and 1974. Any semblances of glory since then have been mirages sustained by the obsequiousness of USA's partners and the relentlessness of the public relations campaign. If the USA had really entered the twilight of empire, it would have by now suffered from the same indignity that the UK -- an imperial has-been -- had: When the ruling class is global, rather than national, an imperial state (= the state whose politico-military powers guarantee the reproduction of capitalism) doesn't have to be a mercantilist success. In fact, practicing mercantilism even after becoming a great economic power is likely to get you into deep economic trouble (= overinvestment), in the process dragging down others a bit. See Japan. Yoshie
Re: The US Dollar
I have to disagree with the proposition that the US current account deficit might presage flight from the greenback, capital outflows and financial collapse. Though the scenario is plausible on the surface, it overlooks one thing. Increasingly, the world's wealthy count their wealth in dollars. There is ample reason for this -- dollar-denominated financial markets are broad, deep and fully international; dollar-based multinationals represent the bulk of all MNC assets in which the rich hold their wealth; most of the developing world is starved for dollars, so extra-US dollar lending opportunities abound; etc... The significance of this is not simply that the demand for dollars will remain high (indeed the fact that the dollar is rising signifies that there is considerable excess demand for dollars). It also means that a sizable share of the world's wealth is held by people who figure in dollars -- they don't care about the dollar's value relative to the yen or euro or peso, because they've already written off the yen and euro and peso. This is why, despite occasional bouts of speculation and depreciation, the world's wealthy continue to hold dollars and the dollar share of international lending and reserves is increasing. Ellen Frank [EMAIL PROTECTED] writes: People would have to be confident that the fall would be very gradual. Jim Devine wrote: a weaker greenback would be a good thing, if it falls _slowly_.
Re: The US Dollar (spend it fast as you can)
Actually, I don't overlook this. In fact I wrote my dissertation on this and looked into the role of historical inertia quite closely and it doesn't hold up. The official dollar role has been over since 1973. The US has run current account deficitd in every single year since then, deficits that grow each year -- nearly three decades of rising deficits. Periodically economists warn that this is unsustainable, that the yen or deutschemark or pound or swiss franc or euro will replace the dollar, but not only has that not happened, the dollar's preeminence has increased, markedly in the past several years.Almost all mainstream explanations for this fail statistically - the dollar is more, not less, volatile than many other currencies. Dollar holdings bear no relation to inflation rates and little to interest rates. I found that the strongest and most consistent predictor of a currency's international use was the issuing country's share of MNC assets or sales. Military spending and arms sales also were important, though less so. [EMAIL PROTECTED] writes: Ellen is partly right but she overlooks the circular nature of her case. The wealthy count their wealth in dollars because of the historical role that the US dollar achieved over many decades. A US current account deficit doesn't change that historical role overnight. A few decades of current account deficits, though, create the conditions where that historical role could abruptly change. Things continue on as they have because there is no alternative. At some point things can stop continuing on as they have, with or without an alternative, simply because there is no foundation for the way things have been continuing on. Ellen Frank wrote, I have to disagree with the proposition that the US current account deficit might presage flight from the greenback, capital outflows and financial collapse. Though the scenario is plausible on the surface, it overlooks one thing. Increasingly, the world's wealthy count their wealth in dollars. There is ample reason for this -- dollar-denominated financial markets are broad, deep and fully international; dollar-based multinationals represent the bulk of all MNC assets in which the rich hold their wealth; most of the developing world is starved for dollars, so extra-US dollar lending opportunities abound; etc... The significance of this is not simply that the demand for dollars will remain high (indeed the fact that the dollar is rising signifies that there is considerable excess demand for dollars). It also means that a sizable share of the world's wealth is held by people who figure in dollars -- they don't care about the dollar's value relative to the yen or euro or peso, because they've already written off the yen and euro and peso. This is why, despite occasional bouts of speculation and depreciation, the world's wealthy continue to hold dollars and the dollar share of international lending and reserves is increasing. Tom Walker Bowen Island, BC 604 947 2213
Question about Microeconomics
Dear Penners - I have a question for any of you out there who keep up with academic microeconomic theory, which I do not. This past weekend, I read The Winner's Curse by Thaler. An interesting book. My main criticism is that Thaler failed to draw out even the most minimal implications of his discussion for policy AND he concluded the book with this mealy-mouthed expression of fealty to orthodoxy -- something like neo-classical economics is not perfect, but its the best we have. Thaler cites a ton of research being done by experimental economists which is published in mainstream journals and taught at elite grad programs. So my question is this. What effect (if any) does all this work have on mainstream economics? Has it made a dent in the rational consumer armor of undergrad intro texts (if so, I haven't seen it)? Are there respected mainstream economists who do follow through the policy implications and publish them and do they get disseminated beyond the rarified journals and NBER working papers? Thanks, Ellen Frank
question about capital gains
Dear Penners - Can anyone out there direct me to information on realized capital gains -- i.e, how much income was reported from realized gains in the last several years? Is this available from the IRS? Is there info aroung that specifies the source of reported gains -- i.e., real estate, stocks, etc.? Hoping someone out there can save me some time searching. Thanks in advance. Ellen Frank
Re: Query on Terminology, was ... textbook
Monopolistically competitive industries consist of small firms facing minimal entry barriers which compete by carving out distinct market niches (mini-monopolies). Because their products are - initially - unique, monopolistically competitive firms can charge higher prices than their perfectly competitive counterparts and avail themselves - temporarily - of monopoly rents. Of course low entry barriers ensure that such differentiated products will be emulated and the niche market eventually saturated. The restaurant industry is a good example of a monopolistically competitive industry. Ellen [EMAIL PROTECTED] writes: What, exactly, is monopolistically competitive markets with entry? It is partially but not wholly decipherable as ordinary language. Carrol
Re: Sweatshops and Krugman
To Peter's excellent post, I would add one other point. The standard development story (like John Henry's Puerto Rico tale) is all Adam Smith -- low wages mean high profits,captial accumulation, rising productivity, cheaper consumer goods and so -- if only the government will leave things alone -- an eventual rise in the standard of living. Historically though this tale doesn't quite hold up. Capitalist development generated extreme poverty and, in reaction to the poverty, social reformers, union organizers, utopian writers, political radicals. Through the efforts of these dissidents, all sorts of reforms were enacted - restrictions on work hours, workplace safety legislation, housing codes, public recreation, public education and child labor prohibitions, legalization of collective bargaining etc., etc. Thanks to these reforms, the standard of living of the working class rose... Ellen
Re: Adios to the T-Bill?
I just had a chance to read this exchange about T-Bills. The problem with retiring T-Bills is not that it complicates pricing problems in financial markets, but that it eliminates a riskless asset. Banks hold T-bills as "secondary reserves". Pension funds and annuities hold T-bills to cover outlays. Non-financial corporations and non-profits park cash in T-bills. And of course the Fed uses T-bills to conduct open market operations. T-bills (and T-bonds) are the ultimate "widows and orphans" financial vehicle. Without riskless assets, financial institutions will have to take on a higher level of risk. And that, I think, is a problem. Ellen [EMAIL PROTECTED] writes: Central banks - e.g., the Federal Reserve, the Bank of Japan, the European Central Bank - are extremely important. Without them, the system would periodically come flying apart, the way it did in the 19th century. The big diff between the German Anglo-American systems is in who owns the controlling stock in corporations - dispersed shareholders, in the A-A model, vs. big private banks, in the German. Doug
Re: Re: humor
Postscript: Q. How many graduate students does it take to screw in a light bulb? A. One, but it takes him eight years. Q: How many actors does it take to screw in a light bulb? A: 10.. One to screw in the lightbulb and 9 to stand below and shout "that should be me up there!"
: Re: ergonomics, etc.
though I don't want to get into this Nader/Gore debate, it must be said that Clinton handled these executive orders in his characteristically cute and opportunistic way. He waited until the election was over, so as not to upset donors, then rushed the ergonomics and forest protection rules through to protect his "legacy." Had he put them in place a year before, the Repugs couldn't easily have overturned them. You can't blame Nader for this. Ellen Brad DeLong wrote: Yet another blessing we have received from Ralph Nader... No, from Al Gore. If as many self-identified Democrats had voted for Gore as self-identified Republicans voted for Bush, W would still be governor of Texas. Doug
Re: Re: Re: Monetary deflation
Of course, the Fed could have tried to slow the bubble by raising margin requirements. It's not clear this would have worked, but then again, the Fed never tried it. Jim wrote: I didn't finish my thought here. The Fed had a hard job in this situation, which involved a private-sector-led speculative bubble which included not just financial and other asset markets but also "high tech" industries, all financed with inflows of foreign funds (corresponding to the current account deficit and increasing US indebtedness to the rest of the world). If it had kept interest rates low, it might have encouraged the bubble economy to keep on growing. It instead raised rates, encouraged the popping of the bubble, with possible Japan-type effects (a decade of stagnation) or worse. Ironically, raising US rates encouraged the inflow of funds (along with the safe-haven effect), fueling the bubble. In these terms, Greenspan's job is really difficult.
Re: Re: Japan
Doug wrote: j Japan has been unable to appropriate the serious sums n ecessary to socialize all that bad debt. Or, put another way, the Japanese ruling class has been unable to use the state to bail out Japanese capitalism. I think a betterr way to put it is that the Japanese ruling class has been unable to use the state to bail out Japanese capitalists while still retaining the status and wealth of said capitalists. A bailout like the US SL bailout would require the liquidation of large banks and with it the loss of status and institutional power of the banks owners. The government has chosen instead to maintain the current distribution of institutional power, but doing so violates international accounting norms, which limits the international power of the Japanese ruling class. Compare it with the SL/bank bailout in the U.S., in which something like $200 billion - no one can say exactly how much, really - was spent with almost no public debate (and little in the way of reforms). And what's with the Bank of Japan taking so long to ease in the early 1980s? And that VAT increase in 1996? What's with the Japanese state? I thought their bureaucrats were so clever. Doug
Re: Re: Re: Re: Japan
Sorry - I meant that an SL-style bailout in Japan would require the liquidation of large Japanese banks. That the SLs were small banks was precisely what made it possible to liquidate and merge them. The owners -- at least many of them - had operated the banks as personal cash machines and were quite happy, once the cash dried up, to give over the institution to the feds. Not so with large banks, where the entire class structure of the country is bound up in ownership. This is especially so in Japan, where the banks are major shareholders of non-bank corporations. Ellen [EMAIL PROTECTED] writes: Ellen Frank wrote: A bailout like the US SL bailout would require the liquidation of large banks and with it the loss of status and institutional power of the banks owners. Large banks? I remember a lot of little-to-medium SLs and banks being gobbled up by bigger ones, and also lots of mergers between institutions of roughly equal size. But the biggest failure, Citibank, was effectively nationalized and run as a ward of the state for several years, and then returned to private control once it was cured. I don't recall much of an impact on the U.S. class structure - except to the extent that some of the hotshots of the 1980s were denied admittance to the inner circle. Doug
Re: Re: Re: Re: Re: Re: Japan
The question isn't whether banks liquidating/merging banks disturbs the class structure, in general. The question is whether Japanese banks can be liquidated/merged without disturbing the Japanese class structure. The Japanese system is very different from the US. First, most of the Japanese banks are insolvent by US standards, so who are they going to be merged with? Second, japanese banks, quite unlike american banks, are major shareholders in Japanese corporations, so liquidating their holdings has far-reaching political and financial ramifications. Third, Japan has a bank-based financial system. Virtually all financial activity goes through the banking system, making banks the only game in town. The US and Britain are different in that the direct finance markets swamp the banks. I have no doubt there are people in Japan who would gladly cash out and sell bank assets at a discount to foreign investors. But to do so would require a fundamental restructuring of the Japanese financial system, which is being resisted. [EMAIL PROTECTED] writes: But Citibank was bailed out without liquidation. Continental Illinois was sold. Institutions, even large ones, could be combined and/or subsidized without seriously perturbing the class structure. There's hardly a Brit-owned bank left in the City of London, but has that materially affected the British class structure? Doug
Re: Japan
[EMAIL PROTECTED] writes: Ellen Frank wrote: First, most of the Japanese banks are insolvent by US standards So the government should buy their worst loans and hive off the less-bad stuff and sell it to vultures. They could do it without disturbing the class structure significantly. How can a capitalist class sustain itself over the long term if it's not accumulating any capital? That's the question. I don't claim to understand why the Japanese political system is stalemated, but apparently it is. They don't want the vultures in control, but they don't seem to know how to get out of this mess.
Re: Pirce discrimination
Is price discrimination really illegal? If so, why can airlines, hotels, car rental companies, etc. change their prices from hour to hour, even minute to minute? A couple of years back, Coca-Cola was looking into a soft-drink vending machine that monitored outdoor temperatures and adjusted prices accordingly. Ellen [EMAIL PROTECTED] writes: Nonsense. The higher price paid by and to scalpers reflects price discrimination. It is only the few hardcore fans or people who need to buy tickets on short notice that are willing pay the higher price. In theory, ticket agencies could also reap these extra profits by charging a different price to every consumer according to indvidual willingness-to-pay, but - 1] blatant price discrimination is illegal, 2] they lack the informational mechanisim to determine individual willingness to pay. Scalpers are able to determine the latter through the extra-legal channel of selling hot tickets at the venue where those with the highest willingness to pay are likely to show up. This is so Econ 1 it is hard to believe your professor is serious. But this probably only reflects the poverty of academic economics when it comes to even elementary considerations of real market behavior. By the way, I wouldn't be surprised is ticket agencies aren't trying to figure out ways to increase their ability to exercise price discrimination by collecting or purchasing information on individual performance tastes via internet consumer surveys. -Original Message- From: Andrew Hagen [mailto:[EMAIL PROTECTED]] Sent: Monday, March 19, 2001 7:34 PM To: [EMAIL PROTECTED] Subject: [PEN-L:9166] maximization? A professor of mine started class today with an interesting question: why don't ticketing companies raise prices to the level that the market will bear? Often these companies hold a monopoly in selling tickets to all events at a particular venue. Currently the event ticket market can bear higher prices, as evinced by the higher prices paid to scalpers, AKA the secondary market. It's apparent that raising prices would maximize profits in the primary ticket market. Why don't they do so? My professor's proposed answer was: companies do not want to maximize their profits; they only want what they perceive as a reasonable return on their investment. It seems to me like a plausible assertion. Could someone point me toward an article or book that questions the maximization assumption? Thanks, Andrew Hagen [EMAIL PROTECTED]
child labor query
Penners - Can anybody point me to some good historical and contemporary material on child labor laws? Thanks, Ellen
Re: Re: RE: Re: Monetary deflation
[EMAIL PROTECTED] writes:
At 11:56 AM 3/19/01 -0800, you wrote:
If you could explain to me how monetary deflation can arise from private
market relations and not the actions of a central bank(s), I would be
very
interested.
How could a monetary deflation not arise from "private market relations"
in the absence of a central bank? What exactly would a monetary system
founded
on "private market relations" look like? Presumably, without a central
bank
or other issuer of fiat money, private bank notes would circulate as money.
A few nasty bankruptcies and, bam, debt-deflation. This happened all the
time
in the US in the 1800s.
A fundamental fallacy of neo-classical economics and its poltical
corollary,
libertarianism, is that in a state of nature, markets and property
relations
would spring up, but governments would not. In fact, any reading of
history suggests the opposite. Governments of all types precede
markets. Further, the expansion of markets since the 1800s has been
accompanied every step of the way by the expansion of government
activity. Why do you think central banks were created anyway?
Ellen Frank
Re: farewell to academe
If you look at male/female ratios and average salaries
across all levels of education, its very clear that
the more a job entails actual teaching (as opposed to
lecturing about one's pet obsessions), the lower the pay
and status and the higher the percentage of women. Close
to 100% of kindergarten teachers are female. The percent
declines to 2/3 of middle-school teachers; 50 percent
of high-school teachers; 40 percent of community college
professors and about 25 percent of college professors.
Within the academy, status is completely determined
by how little one teaches and it judged on one's teaching.
Higest-in status is the so-called 'research university;"
followed by "selective" liberal arts colleges with light teaching loads.
Lowest of all are the "teaching colleges" where faculty
might be required to teach as many as NINE hours per week ;
where (gasp!) evidence of effective teaching (including student
evaluations!) count at tenure: where one can recieve
tenure for publishing articles about teaching (!) in journals
about pedagogy(!).
So, to answer Doug's question about preparing graduate
students to teach Any program that actually trained
TEACHERS would drop so low on the academic status
meter that no self-respecting professor would be associated with it
and no ambitious graduate student would attend.
To most academics there is no such thing as a bad professor.
There are only stupid, lazy students who, accustomed to
having their noses wiped by the teaching-centered
public schools, are ill-prepared to compete in the big leagues.
Ellen Frank
[EMAIL PROTECTED] writes:
Michael Yates wrote:
Two comments: Most teachers are not
very good at it and do not take the time to learn how to teach
effectively.
Do any graduate programs actually teach people how to teach? In my
brief career as a graduate TA - one semester of composition, one
semester of 20th century American literature - we were just thrown
into class with virtually no preparation. Since everyone had been a
student, it was simply assumed that everyone knew how to teach. Is it
any different elsewhere?
Doug
Bush's tax cut
Dear Penners - I'm supposed to do a television debate tomorrow with a corporate-libertarian type about Bush's tax cut. I wanted to point out that surplus projections assume continued low levels of spending on programs cut to reduce the deficit. I believe I am right about this, but if I'm not, please tell me. Medicare cuts seem one good example (especially for the local audience - half the hospitals in this area are broke). I would appreciate other examples people can give. Thanks, Ellen Frank
Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Implications of Surplus Tax
Ellen Frank wrote: I think we're using terms differently here. The term hoarding (in Keynes usage) means a preference for liquidity. This is usually broadly interpreted today to mean keeping wealth in near-cash assets like short-term bank deposits or commercial paper. Doug replies: Exactly - the individual is hoarding, or trying to. But a bank deposit or CP is likely to find its way into the real economy. Keynes also wrote as if the choice for investors was between securities and real investments, but in fact the purchase of securities and the purchase of stocks and bonds are activities undertaken by different groups of people. So while I get the theory, the practice is a little harder to figure out. But why should a bank deposit find its way into the real economy? What if the bank hoards it? Isn't this exactly what happens during credit crunches when banks try to raise their capital and reserve ratios? Also, finding its way into the real economy may not be enough to offset a decline in real investment. So a bank might make a six month loan to finance inventory but be unwilling to make a six year loan to finance office construction. I don't think Keynes assumed the same people were deciding between paper and real investments. Keynes was pretty clear in the General Theory on the distinction between what he called rentiers and entreprenuers. The problem, as he described it, is that rentiers want high returns and liquidity and control not only the flow of new savings into financial markets, but also the form in which existing wealth is held. If they become spooked and try to liquidate wealth -- as in a stock market crash -- this means that entreprenuers will be unable to obtain financing. At least this has always been my understanding of Keynes. Keynes ideas about hoarding seem to describe behavior during a financial crisis or in the wake of a business downturn that generates financial failures -- panicked selling, flights to quality, attempts to keep funds as liquid as possible -- not during good times. Ellen
Re: Implications of Surplus Tax Cut?
Barney Wagman wrote" When times gets tough, everybody becomes a Keynesian, apparently even GW, who's now selling his tax cut as means of stimulating the economy If the rationale for Bush's tax cut were demand-side Keynesian, then the plan would be vulnerable to the obvious critique that virtually all the benefits flow to the top 5%, who are more likely to save than to spend. But Dubya, coached by Lawrence Lindsey, is selling his tax cut as a supply-side stimulus - give money back to the rich, so it can be used for capital formation, the foundation of economic growth. This is what Lindsey has been saying and this is what came out of Bush's economic "summit." Bush aides have also argued, unabashedly, that a tax cut will force reductions in government spending and regulating, also good for rip-roaring free enterprise. This is Reaganomics, not Keynes. Since the surplus is currently being held as government bonds, I would expect a surplus-financed tax cut to raise interest rates. Why should this be so? Why is it all of a sudden conventional wisdom that interest rates are determined by the federal budget rather than by the Federal Reserve? Just remember that mortgage rates and the prime rate went up last year, even as Clinton's Treasury was retiring over $100b in debt.
Re: Re: Re: Re: Implications of Surplus Tax Cut?
[EMAIL PROTECTED] writes: Yeah, but where's it go? And how does an "investor" hoard money? Aside from burying it in the backyard, it means buying a T-bill or depositing it in a bank, which means that it either enters the stream of consumption or gets lent by the bank to a business for working capital, or something. I think Carrol's questions were pretty good, and JMK was never very clear on answering them. Doug Let's say I get a $50,000 tax refund thanks to Dubya, with which I buy shares in a bio-tech IPO. The $50,000 goes to a principle of the bio-tech start-up, who uses it to buy a classic 1970s Porsche roadster from a venture capitalist. The venture capitalist spends the $50,000 on an original Degas drawing, sold by an heiress. The heiress puts the $50,000 in a short term bank deposit, pending a safari trip to Kenya. The bank lends the $50,000 (plus several million more) to a hedge fund that uses the cash to buy futures in the Asian bond market. Remember (from intro to macro) that Consumption and Investment mean spending on GDP - goods and services produced in the country in that year. Classic cars, real estate, precious metals and collectibles don't count, nor do purchases of any financial assets (stocks, bonds, bank accounts), nor do purchases of foreign goods. Once current income starts whirling around in the speculative sector, it can stay there for a very long time. Even if the $50,000 (in the example above) eventually lands back in the real economy - someone uses it to remodel their kitchen - it might take months and months for this to happen. In the meantime, $50,000 in goods and services goes unsold, and the worker who produced them gets a pink slip. Such, anyhow, is my understanding of Keynesian economics. Ellen
Re: Re: Re: Implications of Surplus Tax Cut?
Jim writes: It seems to me that no matter what the rationale -- or rationalization -- of Bush2's proposed tax cut, it is Keynesian in practice (because Keynesian theory makes much more sense than supply-side theory does), just as Reagan's tax cut was supply-side in theory but was Keynesian in practice. Yeah, but Bush and his team would say that the only reason Keynesian policies worked was because they effected the long-run supply curve. Or rather, the guys at AEI who advise Bush would say that. Bush himself can barely put two sentences together. Ellen
Re: Re: Re: Re: Re: Re: Implications of Surplus Tax Cut?
[EMAIL PROTECTED] writes: B ut it's not easy to keep money in a pure hoard. Buy a T-bill, and the government may spend it. Buy a stock, and the grandma who sells it might use it to buy her Paxil. Put it in the bank and it may become working capital. Doug Point taken. The key word though, is "may." The grandma may buy Paxil, or she may buy real estate. The bank may lend it to a ball-bearing manufacturer, or they may lend it to a hedge fund, or a margin trader, or a real estate dealer, or a takeover artist. The government, on the other hand, will almost surely spend it. In fact, government spending is by definition GDP expenditure. That's why Keynes advocated fiscal deficit spending as a surefire way of converting savings to spending. On the other hand, government spending is not necessarily labor-intensive spending. Spending T-bill proceeds on star wars research may just lead to pumped up profits at Lockheed, which are spent on stock buy-backs, which shareholders use to bid up Manhattan real estate prices. Ellen
Re: Re: Re: Re: Re: Implications of Surplus Tax Cut?
I was being sort of facetious initially, but I do think there is an issue here. The supply-siders argue that investment will be high as long as government doesn't spook businesses with too much interference in the free-market. Now I understand the limitations of this and the critique of Say's Law and all that, BUT, don't you think there's some truth to this idea? Didn't Keynes himself say something to the effect that business confidence depended on the maintainence of a highly conservative political environment? Ellen [EMAIL PROTECTED] writes: I wrote: It seems to me that no matter what the rationale -- or rationalization -- of Bush2's proposed tax cut, it is Keynesian in practice (because Keynesian theory makes much more sense than supply-side theory does), just as Reagan's tax cut was supply-side in theory but was Keynesian in practice. Ellen writes: Yeah, but Bush and his team would say that the only reason Keynesian policies worked was because they effected the long-run supply curve. they would be wrong about that explanation. But they can be right (that tax cuts stimulate the economy) for the wrong reason. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: RE: Re: Implications of Surplus Tax Cut?
Was not the entire basis of the Clinton economic program, the entire basis of his taking credit for the growth during his term, the fact that he increased taxes in 1993, thereby reducing the budget deficit, thereby causing a decline in interest rates, thereby causing economic and employment growth? If crowding out is fallacious, and there is absolutely no link between budget deficits and interest rates, what is one to think of the efficacy of President Clinton's policies as a contributor to economic growth? David Shemano This is an excellent question. I'll give it a shot. After discovering early on in his administration that he was entrapped by deficit politics and the Fed, Clinton made a virtue of necessity and used the rhetoric of deficit reduction to stymie Republican efforts to cut upper inocme taxes and to restore some progressivity to the income tax . Clinton defended this in very conventional supply-side,crowding-out language. From a purely Keynesian perspective, Clinton's early tax bill (which raised the top rate to 39.6%) was an excellent way to conduct contractionary policy - taxes were raised, but on high-saving groups, so the multiplier impact of the deficit reduction was minimized. Clinton is an insider politics kind of guy. Not the type to use the presidency as a bully pulpit. Thus, Clinton last year announced that record surpluses and debt repayment would reduce interest rates and set off boundless growth, and politely overlooked the fact that, thanks to tightening at the Fed, interest rates were rising. Clinton has not wanted to rock the boat. Personally, I don't see that Clinton's policies contributed to economic growth. Globalization might have helped sustain the boom, as funds moved in from abroad. But I think Clinton was just lucky. I also think Alan Greenspan has had an amazing run of luck. But his luck might just be running out. Ellen Frank
Re: Re: Re: RE: Re: Implications of Surplus Tax Cut?
Doug writes: Ok, so what gave us the longest expansion in U.S. history, and a 42% rise in real GDP? Doug I really don't know. But the conventional wisdom really falls apart on close inspection. For example, real interest rates were high compared with earlier years (despite assertions that it was low interest rates due to the Fed and the disappearing defiicit.). I mean, sometimes the economy just booms, right? New technology, rapidly evolving so that businesses keep investing in it. Rising productivity for a variety of reasons (including weakened unions), so that consumption could be fueled without killing profitability. Funds moving in from the rest of the world to boost stocks and generate this wealth effect (which probably isn't that huge, but it fostered growth in some sectors like home building). I don't think there's nothing to this new economy stuff. I just don't think Clinton's policies had much to do with it. Ellen
Re: Re: Re: Re: Re: Re: Re: Re: Implications of Surplus Tax Cut?
I wrote: Point taken. The key word though, is "may." The grandma may buy Paxil, or she may buy real estate. The bank may lend it to a ball-bearing manufacturer, or they may lend it to a hedge fund, or a margin trader, or a real estate dealer, or a takeover artist. Doug wrote: Sure. But my point is that it's extremely difficult to "hoard" in a modern institutional environment - short of burying banknotes in bottles. From the individual's POV, it may be possible, but for an economy as a whole, it's kind of hard to imagine. I think we're using terms differently here. The term hoarding (in Keynes usage) means a preference for liquidity. This is usually broadly interpreted today to mean keeping wealth in near-cash assets like short-term bank deposits or commercial paper. From the perspective of a non-financial business, funds lent short-term are not really available to finance long-term capital expenditure. So one form of hoarding is when banks and other financiers cut back on their long-term lending. This generally happens in the aftermath of business downturn, when bankruptcies are mounting. Another issue is the issue of saving -- withholding income from the expenditure stream. This can be either facilitated or hampered by speculative finance. Keynes wrote something to the effect that the development of financial markets, to the extent that they spread risk and rendered positions liquid, facilitated capital formation. But periodically they become a drag when speculative financial activity replaces real spending. This is why Keynes wrote that the economy was in trouble when enterprise became a bubble on the speculative whirlpool (something like that). I see the 1980s as an example of this - one long speculative bubble that diverted income from the real economy, keeping unemployment rates high. Ellen
Re: global warming talks failure
I have hesitated to involve myself in this conversation,
because I was still uncertain about what went on at
the Hague. What I now understand from people who
were there, is that the US negotiators arrived with the
proposal that 60 percent of the US emission reduction
called for under the Kyoto protocol would be met
by naturally occuring increases in vegetation and
forestry that are already set by existing law - in other
words, we promise to continue not to chop down trees in
the White Mountains and Adirondacks, and get credit for
creating a carbon "sink." Eventually, in the bargaining
that went on, this credit was wittled down to about
15 percent of the US comittment. But US negotiators,
in opening with such an outrageous gambit, did not
appreciate how badly they had pissed off the Greens.
The thing that really galls me about this is that the
Clinton/Gore administration did this knowing full
well that this might be the last chance to reach a deal
for quite a while, if Bush takes the presidency. They
also did this despite a study from their own Department
of Energy, released just two weeks ago, showing that
the Kyoto Targets could easily be met, with little economic
disruption. Studies by the EPA and Tellus Institute have
said the same thing.
The economic disruption will not come from the Kyoto
reductions (which would amount to about 20% below
current emission levels), but from the reductions needed
to actually avert catastrophic warming by mid-century.
For this, CO2 concentrations must be stabilized below
500 parts per million (they are now at 370 ppm). Stabilizing
atmospheric carbon at this level will require cuts in emissions
of 70 percent or more by the Annex 1 countries. Kyoto is just
a small step along this road - one that Clinton/Gore have declined
to take.
Ellen Frank
Re: global warming talks failure
Barkley - It is, of course, depressing how awful the entire US political establishment has been on this issue. But there is one thing I think we need to be clear on. Emissions from highway transportation constitute less than 20% of US CO2 emissions - and much of that is from trucks, not passenger vehicles. SUVs are awful. They are a symbol of everything that is wrong with US environmental and transportation policy. But they are not the major problem. I disagree that soccer moms constitute the real opposiition to Kyoto. (Not that I'm accusing you of saying this!) I know lots of SUV drivers who really don't appreciate the environmental impact of SUVs because NOBODY EVER TALKS ABOUT IT. Nobody talks about it, because, until very recently, the Global Climate Coalition came down like a ton of bricks on any journalist who mentioned global warming, without giving equal time to the "skeptic" position. When the Kyoto protocol went before the Senate, who were the Senators hearing from? The oil, coal, auto, electicity industries. Not the public. Industry is changing its tune, but slowly, slowly. Most emissions are from electricity generation (half of which comes from burning coal) and industry. The Department of Energy study and other studies I have seen propose a mix of policies -- carbon trading permits for utilities and industry with progressively more stringent caps; miniimum content standards for renewable sources; efficiency requirements for buildings and appliances; auto fuel efficiency standards, etc. The DoE also presumed that subsidies and tax breaks now offered to fossil fuel development would be redeployed to renewables. These policies are opposed by the coal and oil lobbies, not by the public. In today's NYtimes, Krugman writes that the solution to GW is a carbon tax. In fact, nobody is seriously proposing this. Carbon taxes, besides being regressive, simply don't get the job done. Demand is not elastic and alternatives need to be made available. But alternatives will gradually take the profit out of owning a coal mine or an oil well. Ellen [EMAIL PROTECTED] writes: Ellen, But the US Senate by an unanimous resolution demands that non-Annex I countries must share in those reductions. Their absurd resolution also demanded that there be "no harm to the US economy." I agree that the pain of the initial reductions would not be as great as many think it would be. It may well be that the hidden ally here may yet be the emerging corporate supporters. I suspect that the positions of GM and Ford must reflect that they are about to come out with hybrid SUV's. A serious push without upsetting mall obsessions and soccer moms would involve replacing most of the current SUVs with hybrids. But Toyota has the edge on this with its Prius for now, although that is not an SUV. Barkley Rosser
Re: social security query
None whatsoever. In fact, because benefits are indexed to inflation rather than to wages, relative living standards of seniors tends to lag behind the general population. Many European countries do, however, index pension benefits to wages. Ellen [EMAIL PROTECTED] writes: I heard Rudolph Penner on US National Public Radio today saying that the social security benefits are indexed to wages. Is there any truth at all to this assertion? Isn't it the revenues that are indexed to wages, while the benefits are indexed to the CPI? Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: the debate
My 12 year old daughter had to watch the debate as part of her social studies homework. She said that, whereas Bush acted as if he thought Gore was an asshole; Gore acted as if he thought the public were assholes. Ellen Frank
RE: Debates
I didn't watch the debate myself. Didn't want to spoil the high I was riding on since Sunday when Ralph Nader, on a shoe-string budget and with virtually no advance publicity, filled the Boston Garden (he refuses to call it the Fleet Center). 12,000 people, mostly under 30, rousing speeches, real issues. This is what politics is supposed to be. Ellen Frank
Re: RE: Re: RE: saving and aggregate demand
[EMAIL PROTECTED] writes: I couldn't open this file. Please resend. And I'm not sure you're a liberal. You show some radical tendencies. Hey Max. Yeah, well I try to pass sometimes. Though I gotta say, liberals are a tough lot to fool. Generally they hate radicals more than they hate conservatives. Ellen Current conventional wisdom has it that business cycles are obsolete; pro-market policies have swept recessions into historys proverbial dustbin. The generation of policy-makers nurtured on notions of government economic management after World War II is retiring or dying off, replaced by new economy enthusiasts like Bill Clinton. Clinton famously declared in 1996 that the age of big government is over. But what happens if the economy slips? The old-fashioned big-government policies that pulled the US through many an economic downturn have, in the last decade, been mostly dismantled. Many presume that the government will pick its recession-fighting programs up again, should the economy falter -- cutting taxes, raising spending, priming the economic pump, as Reagan did in the 1980s and Bush in the 1991 recession. Indeed, Treasury Secretary Larry Summers defended the administrations plan to repay the federal debt by contending that Clinton is merely reloading the fiscal cannon; saving against the bad times when heavy federal spending and borrowing might really be needed. But the tools of macroeconomic managment are not so easily taken up and discarded; not, at least, in the US political environment. From the 1930s, efforts to push through programs to ameliorate recessions and relieve unemployment in the US have been fraught with controversy and fiercely contested. The 1930s are often cited as the beginning of the Keynesian Revolution, when the programs proposed by British economist J.M. Keynes to end depressions -- public works programs financed through deficit spending -- were realized in Roosevelts New Deal. Roosevelt, to be sure, pressed throughout the 1930s to expand federal jobs programs, but did not actually succeed until the second world war. After the war, it took years of careful and deliberate effort to craft the political and intellectual infrastructure for continued Keynesian policy in the US. That infrastructure is now largely gone. Putting it back together again will not be easy. The Keynesian Consensus When Richard Nixon declared in 1972 that we are all Keynesians now, it seemed the consensus for active, government management of the economy was unshakable. Just a few years after Nixons speech, Congress passed the Humphrey-Hawkins Act which committed the federal government to use its virtually unlimited taxing and spending powers to avert economic downturns and promote full employment. In fact though, the Keynesian consensus was already shattering. In 1967, the influential American Economic Association elected arch-conservative and Keynesian nemesis Milton Friedman president. The prestigious American Economic Review published in 1969 Robert Lucass paper outlining the new theory of rational expectations which purported to prove that government macroeconomic policy was useless. Keynes had taught that the cycle of economic boom and bust could be eliminated with judicious government spending to create demand for goods and workers. By running deficits, governments could fuel economic growth, borrowing (or printing) idle funds to pay the workers that private businesses were use. Known as fiscal stabilization policy or expansionary macroeconomic policy, these tools programs proved highly effective in combating business cycles. Even those initially hostile to Keynesian ideas in the 1930s could not deny the evidence of World War II when, thanks to massive government spending, the US economy went from deep depression to rapid boom virtually overnight. But support forged during the war for federal involvement in economic matters proved hard to sustain once the war ended. The American version of Keynesianism, though tepid and watered-down compared to European programs or to Keynes own proposals, was sufficiently left-wing to galvanize unending hostility in the deeply conservative pro-business arena of US politics. Continued government spending after the war faced determined opposition from businesses who decried swollen government budgets as creeping socialism and complained that government programs amounted to unfair competition with the private sector. In 1954, radical economist Harry Braverman pronounced Keynesianism in the US deader than the dodo. To be sure, business leaders supported the federal highway program, cold war military build-up, the Korean and Vietnam wars, but they did not support the deficit financing of these ventures, nor did they back using federal programs as tools of macroeconomic management. By the early 1960s, even moderate
