Until a few weeks ago, while oil prices were surging, debate raged about the relative roles of economic fundamentals and speculation in boosting oil prices. Although oil prices have now fallen back from their peak, that debate must not be forgotten, for it has profound policy implications that government officials would be derelict to ignore. (more…)
Archive for the ‘U.S. Policy’ Category
Speculators at the Pumps
Tuesday, August 26th, 2008Social Origins of the American Corporate Predator State
Wednesday, August 13th, 2008Jamie Galbraith’s recent book describes modern (Bush-Cheney) Republicanism as creating a “predator state”. Its predatory aspects are starkly visible in the gangs of corporate lobbyists who roam Washington DC, the Halliburton Iraq war procurement scandal, and the corruption and incompetence that surrounded the Hurricane Katrina relief effort. (more…)
Scapegoating Regulation
Friday, August 8th, 2008Many progressives now believe the age of Milton Friedman may be drawing to a close. Their hope is the current financial crisis has shown the costs and dangers of inadequate market regulation, thereby discrediting the anti- regulation philosophy of Milton Friedman and his Chicago School colleagues. (more…)
Iron Grip
Thursday, July 3rd, 2008Iron ore prices have recently been in the headlines, having jumped eighty-five percent. This news is troubling as such price increases threaten to raise steel prices, which will add to cost inflation and further undermine economic activity. (more…)
Beating the Oil Barons
Tuesday, June 24th, 2008Over the past eighteen months, oil prices have more than doubled, inflicting huge costs on the global economy. Strong global demand, owing to emerging economies like China, has undoubtedly fueled some of the price increase. But the scale of the price spike exceeds normal demand and supply factors, pointing to the role of speculation – and underscoring the need for policy action to clean up the oil market. (more…)
Re-thinking That ‘70’s Inflation Show
Monday, June 16th, 2008The Federal Reserve has recently received much criticism from economic conservatives who claim it has ignored inflation, thereby risking a rerun of the 1970’s inflation show. In response, renowned Princeton economist Paul Krugman has come to the Fed’s defense arguing today’s inflation is fundamentally different from that of the 1970s. (more…)
Defending the Bernanke Fed
Friday, June 6th, 2008Federal Reserve Chairman Ben Bernanke has recently been on the receiving end of significant criticism for recent monetary policy. One critique can be labeled the American conservative critique, and is associated with the Wall Street Journal. The other can be termed the European critique, and is associated with prominent European Economist and Financial Times contributor, Willem Buiter. (more…)
Tax Policy and the House Price Bubble
Tuesday, May 6th, 2008The bursting of the recent house price bubble has focused attention on the failures of monetary and regulatory policy. However, tax policy also likely played a role by providing tax subsidies that contribute to a cult of home ownership. This policy is flawed. However, it is politically difficult to change because households see the benefits of tax subsidies and higher house prices but do not recognize the accompanying costs. By showing the downside of high prices, the housing bust provides an opportunity to escape this political trap. (more…)
Curse of the Clintons
Monday, April 28th, 2008Speaking the truth is discouraged in Washington DC. For journalists there is the fear that truth telling will mean not being invited back for the next press conference or another exclusive interview. For political insiders the fear is that speaking up will injure their careers by costing them political appointment. This dynamic has helped keep the lid on the curse of the Clintons. (more…)
The Capture of Keynesianism
Monday, April 14th, 2008Communist revolutionary Che Guevara rapidly became an inspirational figure for revolutionary socialist change after his execution in Bolivia in 1967. Forty years later, Che lives on but his image now adorns t-shirts that have become popular fashion statements. This transformation reflects the extraordinary power of markets to capture and transform, turning an avowed enemy of the market system into a profit opportunity. (more…)