Why is the U.S. so awful at job creation? - How the World Works - Salon.com: "How about this? In comparison to the rest of the G-7, the U.S. boast higher levels of income inequality, does a poorer job of educating its workforce, enjoys the double jeopardy of weaker labor unions and a sketchier social welfare net, and, at the government policy level, appears relatively� more influenced by the financial sector than by Main Street."
Economist's View: When Moralities Collide: "We can now give a fairly simple explication of illiberal thinking as well. It is moral, religious, or political fundamentalism -- the idea that one's own moral convictions are so compelling that no democratic process could legitimately override them. It is the idea that the individual has a persistent right to oppose the state when the state's actions are inconsistent with one's own moral convictions. It is authoritarian -- it endorses the idea that one's own group or party has the right to override the majority's will when the state contradicts one's fundamental convictions. And it is, of course, a position that is fundamentally disrespectful of democracy and of the equal dignity and worth of one's fellow citizens."
4. Training of business managers. Managers schooled in perfect market theories and taught to view stock market reactions as the arbiter of success are likely to over-emphasize the gain to current earnings from quickly firing employees during recessions, and to under-estimate the difficulties (and lost profits) of having to institution build later on. It is the same dynamic that so consistently leads to losses for business acquisitions, where quick cuts get stock market plaudits and leave long lasting damage that managers have trouble seeing.
5. Ever faster turn-over among managers. Managers who won't be around to see the long term consequences of their actions have a very strong incentive to manage for current profits. Cutting temporarily redundant employees when demand is low, like cutting R&D, increasing leverage, or growing through acquisitions-and-accounting-gimmicks works splendidly in the short term. The problems are likely to become most visible under someone else's watch.
6. Increased profits from cutting employment are very visible. Lost profits from having to find and train and integrate new employees and rebuild lost expertise later are just opportunity costs, completely invisible to casual observers or managers who have no tools to measure them."
interfluidity � Endogenize ideology: "One side of American politics considers the modern welfare state — a private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net — morally superior to the capitalism red in tooth and claw we had before the New Deal. It’s only right, this side believes, for the affluent to help the less fortunate.
The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That’s what lies behind the modern right’s fondness for violent rhetoric: many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.
There’s no middle ground between these views. One side saw health reform, with its subsidized extension of coverage to the uninsured, as fulfilling a moral imperative: wealthy nations, it believed, have an obligation to provide all their citizens with essential care. The other side saw the same reform as a moral outrage, an assault on the right of Americans to spend their money as they choose.
This deep divide in American political morality — for that’s what it amounts to — is a relatively recent development."
So here are five things that I thought I knew three or four years ago that turned out not to be true:
I thought that the highly leveraged banks had control over their risks. With people like Stanley Fischer and Robert Rubin in the office of the president of Citigroup, with all of the industry's experience at quantitative analysis, with all the knowledge of economic history that the large investment and commercial banks of the United States had, that their bosses understood the importance of walking the trading floor, of understanding what their underlings were doing, of managing risk institution by institution. I thought that they were pretty good at doing that.
I thought that the Federal Reserve had the power and the will to stabilize the growth path of nominal GDP.
I thought, as a result, automatic stabilizers aside, fiscal policy no longer had a legitimate countercyclical role to play. The Federal Reserve and other Central Banks were mighty and powerful. They could act within Congress's decision loop. There was no no reason to confuse things by talking about discretionary fiscal policy--it just make Congress members confused about how to balance the short run off against the long run.
I thought that no advanced country government with as frayed a safety net as America would tolerate 10% unemployment. In Germany and France with their lavish safety nets it was possible to run an economy for 10 years with 10% unemployment without political crisis. But I did not think that was possible in the United States.
And I thought that economists had an effective consensus on macroeconomic policy. I thought everybody agreed that the important role of the government was to intervene strategically in asset markets to stabilize the growth path of nominal GDP. I thought that all of the disputes within economics were over what was the best way to accomplish this goal. I did not think that there were any economists who would look at a 10% shortfall of nominal GDP relative to its trend growth path and say that the government is being too stimulative.
I have five theories:
Perhaps the collapse of the union movement means that politicians nowadays tend not to see anybody who speaks for the people in the bottom half of the American income distribution.
Perhaps Washington is simply too disconnected: my brother-in-law observes that the only place in America where it is hard to get a table at dinner time in a good restaurant right now is within two miles of Capitol Hill.
Perhaps we are hobbled by general public scorn at the rescue of the bankers--our failure to communicate that, as Don Kohn said, it's better to let a couple thousand feckless financiers off scot-free than to destroy the jobs of millions, our failure to make that convincing.
I think about lack of trust in a split economics profession--where there are, I think, an extraordinarily large number of people engaging in open-mouth operations who have simply not done their homework. And at this point I think it important to call out Robert Lucas, Richard Posner, and Eugene Fama, and ask them in the future to please do at least some of their homework before they talk onsense.
I think about ressentment of a sort epitomized by Barack Obama's statements that the private sector has to tighten its belt and so it is only fair that the public sector should too. I had expected a president advised by Larry Summers and Christina Romer to say that when private sector spending sits down then public sector spending needs to stand up--that is is when the private sector stands up and begins spending again that the government sector should cut back its own spending and should sit down.
Rather than pointing fingers or assigning blame, let’s use this occasion to expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy and remind ourselves of all the ways that our hopes and dreams are bound together. (Applause.)
After all, that’s what most of us do when we lose somebody in our family -– especially if the loss is unexpected. We’re shaken out of our routines. We’re forced to look inward. We reflect on the past: Did we spend enough time with an aging parent, we wonder. Did we express our gratitude for all the sacrifices that they made for us? Did we tell a spouse just how desperately we loved them, not just once in a while but every single day?
So sudden loss causes us to look backward -– but it also forces us to look forward; to reflect on the present and the future, on the manner in which we live our lives and nurture our relationships with those who are still with us. (Applause.)
We may ask ourselves if we’ve shown enough kindness and generosity and compassion to the people in our lives. Perhaps we question whether we're doing right by our children, or our community, whether our priorities are in order.
We recognize our own mortality, and we are reminded that in the fleeting time we have on this Earth, what matters is not wealth, or status, or power, or fame -– but rather, how well we have loved -- (applause)-- and what small part we have played in making the lives of other people better. (Applause.)
And that process -- that process of reflection, of making sure we align our values with our actions –- that, I believe, is what a tragedy like this requires.
Even some of his detractors like it: "Read the whole thing. It appears to have come from Krugman in the mid-1990's, not the evil twin columnist. In the end, he lays out four scenarios. I prefer "debt restructuring" to "revived Europeanism." Otherwise, there is not much for me to disagree with here."
The Rise of the New Global Elite - Magazine - The Atlantic: "The lesson of history is that, in the long run, super-elites have two ways to survive: by suppressing dissent or by sharing their wealth. It is obvious which of these would be the better outcome for America, and the world. Let us hope the plutocrats aren’t already too isolated to recognize this. Because, in the end, there can never be a place like Galt’s Gulch."