In his novel, The Jungle, the American muckraking author Upton Sinclair wrote about the horrendous work and sanitary conditions in the Chicago meat packing industry of the early 20th century. It is sometimes said Sinclair aimed for the heart but hit the stomach. That is because he aimed for progressive social and economic change but instead prompted the founding of the Food and Drug Administration. (more…)
Archive for the ‘Political Economy’ Category
The euro lacks a government banker, not a lender of last resort
Monday, December 19th, 2011A Global Minimum Wage System [1]
Monday, July 18th, 2011Published in the FT Economists’ Forum, July 18, 2011
The global economy is suffering from severe shortage of demand. In developed economies that shortfall is explicit in high unemployment rates and large output gaps. In emerging market economies it is implicit in their reliance on export-led growth. In part this shortfall reflects the lingering disruptive effects of the financial crisis and Great Recession, but it also reflects globalization’s undermining of the income generation process. One mechanism that can help rebuild this process is a global minimum wage system. That does not mean imposing U.S. or European minimum wages in developing countries. It does mean establishing a global set of rules for setting country minimum wages. (more…)
Deaf to History’s Rhyme: Why President Obama is Failing
Thursday, December 2nd, 2010The great American novelist Mark Twain observed “history does not repeat itself but it rhymes.” Today the rhyme is with the 1930s, and if you don’t hear it read FDR’s great Madison Square Garden speech of October 1936:
“For twelve years this nation was afflicted with hear-nothing, see-nothing, do-nothing government. The nation looked to government but the government looked away. Nine mocking years with the golden calf and three long years with the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that government is best which is most indifferent.”
Despite this clarity, the Obama administration insists on hearing a rhyme with the 1990s. That tone deafness has its roots in political choices made at the administration’s outset and explains why the administration has stumbled so badly in its first years. If continued, the economic and social consequences will be grave. (more…)
The Federal Reserve Should Raise Rates and Lower Them Too
Monday, August 30th, 2010There is much debate over whether the Federal Reserve should tighten or further ease monetary policy. This dichotomous framing overlooks another possibility, which is whether the Fed should change the mix of its stance, tightening in some areas and further easing in others. (more…)
A Better Way to Regulate Financial Markets: Asset Based Reserve Requirements
Monday, November 16th, 2009There is widespread recognition that the financial crisis which triggered the Great Recession was significantly due to financial excess, particularly regarding real estate lending. Now, policymakers are looking to reform the financial system in hope of avoiding future crises. But like the drunk who looks for his lost keys under the lamp post because that is where the light is, policymakers remain fixated on capital standards because that is what is already in place. (more…)
Death by Renminbi
Monday, November 9th, 2009Washington, DC – Over the last several weeks, the dollar’s depreciation against the euro and yen has grabbed global attention. In a normal world, the dollar’s weakening would be welcome, as it would help the United States come to grips with its unsustainable trade deficit. But, in a world where China links its currency to the dollar at an under-valued parity, the dollar’s depreciation risks major global economic damage that will further complicate recovery from the current worldwide recession. (more…)
A Second Great Depression Is Still Possible
Monday, October 12th, 2009Over the past year the global economy has experienced a massive contraction, the deepest since the Great Depression of the 1930s. But this spring, economists started talking of “green shoots” of recovery and that optimistic assessment quickly spread to Wall Street. More recently, on the anniversary of the Lehman Brothers crash, Federal Reserve Chairman Ben Bernanke officially blessed this consensus by declaring the recession is “very likely over”. (more…)
Letter to the Queen: Why No One Predicted the Crisis
Thursday, July 30th, 2009Her Majesty The Queen
Buckingham Palace
London
SW1A 1AA
29 July 2009
MADAM,
In response to your question why no one predicted the crisis you have recently received a letter from Professors Tim Besley and Peter Hennessy, sent on behalf of the British Academy. They claim economists’ failure to foresee the crisis was the result of a “failure of the collective imagination.” That claim is tendentious and will mislead you. (more…)
Social 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…)