I’m feeling stuck, so I’m going to give myself a break for a bit. When I run into interesting articles, I’ll post them. But I’m not going to push myself to work on the framework/theory until I feel ready.
If you ever need to get your policy geek on but are having trouble finding the data to, say, smacked down some lying little pundit-weasel, a new project by Investigative Reporters and Editors and the Sunlight Foundation is just the ticket: Econocheck. It’s designed
to point reporters and the public to data sets that can help answer those questions and more. Econocheck provides quick links to statistics on employment, taxes, government spending, inflation, healthcare, housing, income and wealth, plus helpful advice on using and interpreting them.
Econocheck is not a fact checking site, but rather a resource for those who want to find out more about the statistics politicians rely on when seeking votes. But it has uses beyond that.… it can be used to provide statistical support for stories documenting the economic hardships Americans face.
It’s very nicely done, and I’m sure a lot of Econ policy geeks & reporters will get a lot of use out of it.
I am hoping and praying that Obama wins this election. But according to the Dave Robert’s write up of a new research paper, if we don’t start putting heroic efforts into stopping climate change none of this is going to matter.
The chances of avoiding catastrophic global temperature rise are not nil, exactly, but they are slim-to-nil, according to a new analysis prepared for the U.K. government.
Remember, climate change is simple. We’re trying to avoid temperature rise of more than 2 degrees Celsius above pre-industrial levels, because anything over that risks severe, irreversible, and overwhelmingly negative impacts. Currently we’re around 0.8 degrees above historical levels. If current trends continue, we could hit up to 6 degrees by 2100. That would likely exceed our ability to adapt, which is a polite way of saying it would lead to massive human die-off.
This new paper, put together by “a research consortium involving the U.K. Met Office, the Walker Institute, the Tyndall Centre, and the Grantham Institute,” tried to assess what it would take to keep the temperature from passing 2°C. Their basic model:
Three factors most influence the shape of a pathway to a given target: the year global climate emissions peak, the rate at which they subsequently decline, and the possibility of negative emissions in the latter half of the century. (Negative emissions would be achieved by burning biofuels and sequestering the carbon emissions, or “biosequestration.”) If emissions peak later, they have to decline faster; if negative emissions are possible, there is more room for a later peak; etc.…
What if you think, as many do, that biosequestration will never pan out and that negative emissions are a pipe dream? (Or what if you just don’t want to bet the future of the species on it?) Well, if you take biosequestration off the table, the lowest possible temperature rise we can feasibly hit is 2 degrees. And that still requires the rather heroic assumptions that global emissions will peak by 2016 and decline at 3.5 percent. (Note: No country has ever reduced its greenhouse gas emissions by 3.5 percent a year on a sustained basis. Even 1 to 2 percent is extraordinary, with little to no precedent.)
Long story short: This new round of comprehensive modeling shows that limiting temperature rise to 2 degrees is still within the realm of the possible, but only just barely. It would require a level of immediate, global, coordinated action never before seen in human history…
Just about the boldest that you hear from anyone in U.S. politics is a revenue-neutral carbon tax, but a carbon tax big enough to generate the reductions these researchers are talking about would be gargantuan, on the order of hundreds of dollars per ton, not to mention the massive tariffs that would have to be levied on carbon-intensive imports. The fact is, achieving these reductions would require rethinking and rebuilding most of the political and economic systems that govern the country. Nobody is talking about that, much less advocating for it in a serious way.
In other words, it’s looking really, really bad.
In my day job at a nonprofit, the team I manage is beginning to spend more time helping our organization become more “data-driven.” And I’m starting to wonder whether the work I’m doing in this blog is headed in a similar direction.
Although the title of my blog is Rethinking the Economy, I’m not trying to create a new version of, say, micro and macro. The subtle hint that this kind of economics isn’t what I want to do? Every time I try to freshen up my knowledge of macro, I get about three pages into a smartly written Econ textbook – e.g., Krugman’s – before I start daydreaming about what I should make for dinner or whether I should go to the hardware store on Saturday or Sunday.
So what am I really trying to accomplish? To help folks understand:
- How our society uses the government to set a lot of the economy’s rules– and how today these rules are designed to help big corporations and the wealthy win and the middle-class and the poor lose
- How we could change the system so everyone could have a real say in setting these rules
- How to figure out how much control we can have over the economy – to what extent can we use the rules to help create a dynamic, innovative economy that works for everyone without making the economy crash & burn
To me, this feels an awful lot like the world of data-driven decision-making.
Or to put it another way, a lot of the themes that come up in my day-to-day work are similar to the themes in my writing about the economy. To what extent does planning work? What’s the right mix of centralized and bottom-up planning? How do you build feedback loops so when things inevitably don’t go the way you expected, you can step in to fix them? How much control do we have – and how much do we deny the control we already exert?
I don’t yet have a good sense of how much overlap there really is. It’s more of a vague feeling that these two seemingly disparate parts of my life may have a lot more in common than I’d thought.
From a sobering Harold Meyerson article about the future of labor unions, a startling stat from J.P. Morgan about just how much corporations have been winning by taking it out of workers’ pockets:
Today, wages and benefits make up the lowest share of America’s gross domestic product since World War II. Wages have fallen from 53 percent of GDP in 1970 to 44 percent today. Profits have been growing at wages’ expense. Michael Cembalest, J.P. Morgan’s chief investment officer, has calculated that reductions in wages and benefits were responsible for about 75 percent of the increase in corporate profits between 2000 and 2007.
A useful reminder by Larry Mishel via Dean Baker about why Chicago teachers, who say that that the real issue is their students’ education, aren’t negotiating & striking over them:
I’ve heard many folks complain that Chicago’s teachers are only concerned about their wages and benefits and not over the education received by the children. As my friend Larry Mishel reminds me, there is an important reason that the teachers’ union is only talking about wages and benefits in the context of the strike: it’s the law.
These are mandatory topics for negotiation under U.S. labor law. Issues about how the schools are run fall under management prerogatives. While the union and management are free to discuss these issues, the union cannot legally strike over them. Therefore if the union were to explicitly put forward conditions that directly related to the quality of education as a reason for the strike, the city could pursue legal action against the union and its officers for conducting an illegal strike.
It’s not that Chicago teachers don’t have ideas about what could be done to improve the quality of education – check out this report for more details. But they have to be very careful about how they raise the issue of quality education if they don’t want to break the law. Mess up 20
“Stockholders, analysts, and industry veterans,” says Business Week, are calling on big banks to break up. Why aren’t they? Because if they sold off their investing arm, that new investment firm would lose all of that big, fat, juicy corporate welfare it’s depending on now.
A securities firm or investment bank that didn’t accept deposits and couldn’t turn to the government for help in a crisis would have to pay a premium to bondholders to reflect the lack of a safety net.… “If you divorce them from the mother ship, you’d also be divorcing them from the government at the same time, and that’s where the subsidy is,” says Cornelius Hurley, director of the Boston University Center for Finance, Law, & Policy.
Not only would they need to have more capital “as a cushion against losses,” they’d also need more capital to convince investors to invest in them. A major investor explains why:
Bank of America, JPMorgan Chase (JPM), and Goldman Sachs are safer to own than a “high-risk security” such as Jefferies, says William Larkin, a fixed-income money manager who helps oversee $500 million at Cabot Money Management. He says he doesn’t believe statements by government officials and regulators that no bank is too big to fail. “When I look at companies, I think, ‘What can kill the company?’ And right off the bat, I say the exact opposite of what the government says. I say, ‘That’s a company that’s too big to fail,’ ” he says of Bank of America. “So that protects me.”
And it would also mean losing the enormous subsidy of getting money cheaply – which is a really, really big deal when you’re in the money business.
As record-low interest rates limit returns on loans, banks have become more focused than ever on keeping their own borrowing costs down. That’s led them to lean more on the cheapest form of money available: federally insured deposits. Bank of America pays about $500 million a quarter in interest for its $1 trillion of deposits, compared with about $2.5 billion for $300 billion of long-term debt, CEO Brian Moynihan said on a July 18 investor call. Eric Aboaf, treasurer of Citigroup, told a similar story to investors on a July 20 call. “We have focused on reducing our borrowing costs by substituting maturing long-term debt in the bank, which is a more expensive source of funding, with deposits, our lowest cost of funds,” he said.
JPMorgan, led by Weill’s former deputy Jamie Dimon, finances its operations with $1.12 trillion of deposits and $982.7 billion of market borrowing. Goldman Sachs has more than doubled its deposit base to $57 billion since 2008 and wants to raise more because it is a cheaper way to borrow money than issuing debt: It pays 2 percentage points less on three-year deposits than it does on three-year bonds, Treasurer Elizabeth Beshel Robinson said on a July 24 call.
When folks talk about whether they are in favor of “big government” or “less government,” it’s important to remember that what government directly spends is only a small part of how it subsidizes players in the market. If somebody ever complains to you about “welfare queens” or the “culture of dependence,” just ask, “are you talking about Bank of America or Citi?”
Recently I’ve heard conservatives argue that all the subsidies for suburban growth in the US didn’t matter much – – after all, most of Europe also had a bunch of suburban growth after World War II. I was more than a little skeptical that the subsidies didn’t matter. An awful lot of businesses worked very hard to get FHA’s loan guarantees, highways, and all the other subsidies that were targeted at growing suburbs, and I have a hard time believing they would work that hard the subsidies if they didn’t think it would pay off. So I did a little digging into the history of European suburbs, and I found this interesting quote by Bruce Stutz in a 2009 article he wrote about new efforts to tackle European sprawl.
All of this troubles the European Union and it should, since much of it, the EU admits, is its own creation. Sprawl, the EU recognizes, has followed the money — its money. EU investments in transnational regional growth following the member states’ economic integration, while intended to level the playing field, in the end favored capital cities over smaller cities and towns. Improved transport links — highways designed to accommodate increased freight traffic — have led to American-style intercity corridors built up with new industrial and commercial developments. Auto-centric suburbs with low-density housing tracts and shopping malls have followed, and public transit has not been able to keep pace.
In short, Europe also had suburban growth – and the state also subsidized their growth.
Extreme conservatives have done a pretty good job of capturing the word freedom. In fact, they’ve done such a good job that a lot of liberal and progressive folks shy away from it. I think this is a mistake. I don’t think we want to claim just the “justice” part of “liberty and justice for all.”
Part of the reason why I think they shy away from the word freedom is that they’re afraid it leads us down a path of individualism. It can, but only if we forget how social so much of freedom is.
A lot of freedom takes place in shared spaces. The Tea Partiers out in Louden County who say the government is taking away their freedom? They’re the same folks who are driven nuts by the yuppie bicyclists in spandex who take full advantage of their freedom by clogging up smaller roads. At some point, we sometimes get down to a trade-off between whose freedom is going to prevail. And if you truly believe in freedom, then at some point this is a choice we have to make together.
Same thing for the owner of a small auto shop. If you ask them, odds are they’ll complain about the crazy quilt of regulations they have to live with. A conservative guy I used to work with said it was these regulations that drove his dad’s business into the ground.
But what would happen to the freedoms of other people if we didn’t have those regulations? If the owner of that small auto shop has the freedom to dispose of the toxic liquids his folks work with any way he wants, he can end up poisoning other people’s drinking water, or killing off the fish that other folks depend on for their livelihood.
These days you also don’t have the freedom to slaughter a pig inside your house and then throw the remains out the window into the street. Ditto with dirty baby diapers. Why? Because, as public health officials discovered in the 19th century, throwing your crap into the gutters is like throwing a block party for cholera – and the tens of thousands of people in the US who died from cholera epidemics didn’t have a whole lot of freedom left over.
At the same time, that conservative guy had a point. It’s easy to go from regulations that are absolutely essential to a bureaucracy that creates regulations because it can. Or regulations that are designed only with huge corporations in mind that don’t take into account the world of smaller businesses. There has to be a balance. And that balancing of competing freedoms is something that ultimately we can only do together.
And then there are all whole range of issues where freedom depends on your circumstances. If you’re really sick and you can’t afford good quality medical care, that doesn’t sound like freedom to me. Or having to own a car because no decent paying jobs are near mass transit or close enough to walk or bike to. Ditto for having to move into a nursing home and leave the home you’ve lived in for 30 years because you can’t afford the modest amount of assistance you would need to stay in your home.
Conservatives like to harp on the idea that raising taxes means the government decides what to do with your money, not you. But the fact is that many decisions we make that expand our freedom are decisions we have to make together.
In short, some of the most profound decisions we make about our personal freedom are not ones we can make by ourselves. As Ben Franklin said at the signing of the Declaration of Independence, “we must, indeed, all hang together, or assuredly we shall all hang separately.”