Climate Realities: ...It is true that, in theory, we can avoid the worst consequences of climate change with an intensive global effort over the next several decades. But given real-world economic and, in particular, political realities, that seems unlikely..., let’s look at the sobering reality.
The world is now on track to more than double current greenhouse gas concentrations in the atmosphere by the end of the century. This would push up average global temperatures by three to eight degrees Celsius and could mean the disappearance of glaciers, droughts in the mid-to-low latitudes, decreased crop productivity, increased sea levels and flooding, vanishing islands and coastal wetlands, greater storm frequency and intensity, the risk of species extinction and a significant spread of infectious disease.
The United Nations has set a goal of keeping global temperatures from rising by no more than two degrees Celsius above preindustrial levels. ... Meeting this goal would require a worldwide reduction in greenhouse gas emissions of 40 to 70 percent by midcentury, according to the Intergovernmental Panel on Climate Change. That’s an immense challenge. ...
Of course, the political climate in the United States presents its own challenges. It will require immense effort — and profound good fortune — to find political openings that can resolve the debilitating partisan divide on climate change. But if destructive politics have been at the heart of the problem, the best hope may be that creative politics and leadership can help provide a solution.
He also talks about the cost of climate change (saying it will be large), as do Peter Dorman (in response to Paul Krugman) and John Quiggin. See also Scientists Report Global Rise in Greenhouse Gas Emissions.
Posted by Mark Thoma on Sunday, September 21, 2014 at 10:17 AM in Economics, Environment, Market Failure, Politics |
Capitalism & the low-paid: Is capitalism compatible with decent living standards for the worst off*? This old Marxian question is outside the Overton window, but it's the one raised by Ed Miliband's promise to raise the minimum wage to £8 by 2020. ...
* Note for rightists: As Adam Smith said, the notion of what's decent rises as incomes rise. And the fact that capitalism has massively improved workers' living standards in the past does not guarantee it will do so in future. As Marx said, a mode of production which increases productive powers can eventually restrain them. And as Bertrand Russell pointed out, inductive reasoning can go badly wrong. ...
Posted by Mark Thoma on Sunday, September 21, 2014 at 10:16 AM in Economics, Income Distribution |
Posted by Mark Thoma on Sunday, September 21, 2014 at 12:06 AM in Economics, Links |
Joanne Lindley and Steven McIntosh:
Finance sector wages: explaining their high level and growth, by Joanne Lindley and Steven, Vox EU: Individuals who work in the finance sector enjoy a significant wage advantage. This column considers three explanations: rent sharing, skill intensity, and task-biased technological change. The UK evidence suggests that rent sharing is the key. The rising premium could then be due to changes in regulation and the increasing complexity of financial products creating more asymmetric information. ...
Posted by Mark Thoma on Saturday, September 20, 2014 at 08:18 PM in Economics, Financial System, Income Distribution |
Posted by Mark Thoma on Saturday, September 20, 2014 at 12:06 AM in Economics, Links |
Since I posted the original, it's only fair to post the response:
The political economy of a universal basic income, by Steve Waldman, Interfluidity: So you should read these two posts by Max Sawicky on proposals for a universal basic income, because you should read everything Max Sawicky writes. (Oh wait. Two more!) Sawicky is a guy I often agree with, but he is my mirror Spock on this issue. I think he is 180° wrong on almost every point. ...
Posted by Mark Thoma on Friday, September 19, 2014 at 07:39 AM in Economics, Politics, Social Insurance |
Home Free?, by James Surowiecki: In 2005, Utah set out to fix a problem that’s often thought of as unfixable: chronic homelessness. The state had almost two thousand chronically homeless people. Most of them had mental-health or substance-abuse issues, or both. At the time, the standard approach was to try to make homeless people “housing ready”: first, you got people into shelters or halfway houses and put them into treatment; only when they made progress could they get a chance at permanent housing. Utah, though, embraced a different strategy, called Housing First: it started by just giving the homeless homes.
Handing mentally ill substance abusers the keys to a new place may sound like an example of wasteful government spending. But it turned out to be the opposite: over time, Housing First has saved the government money. ...
Posted by Mark Thoma on Friday, September 19, 2014 at 07:39 AM in Economics, Housing, Social Insurance |
Don't pay any attention to "the prophets of climate despair":
Errors and Emissions, by Paul Krugman, Commentary, NY Times: This just in: Saving the planet would be cheap; it might even be free. But will anyone believe the good news?
I’ve just been reading two new reports on the economics of fighting climate change: a big study by a blue-ribbon international group, the New Climate Economy Project, and a working paper from the International Monetary Fund. Both claim that strong measures to limit carbon emissions would have hardly any negative effect on economic growth, and might actually lead to faster growth. This may sound too good to be true, but it isn’t. These are serious, careful analyses. ...
Enter the prophets of climate despair, who wave away all this analysis and declare that the only way to limit carbon emissions is to bring an end to economic growth.
You mostly hear this from people on the right, who normally say that free-market economies are endlessly flexible and creative. But when you propose putting a price on carbon, suddenly they insist that industry will be completely incapable of adapting to changed incentives. Why, it’s almost as if they’re looking for excuses to avoid confronting climate change, and, in particular, to avoid anything that hurts fossil-fuel interests, no matter how beneficial to everyone else.
But climate despair produces some odd bedfellows: Koch-fueled insistence that emission limits would kill economic growth is echoed by some who see this as an argument not against climate action, but against growth. ... To be fair, anti-growth environmentalism is a marginal position even on the left, but it’s widespread enough to call out nonetheless.
And you sometimes see hard scientists making arguments along the same lines, largely (I think) because they don’t understand what economic growth means. They think of it as a crude, physical thing, a matter simply of producing more stuff, and don’t take into account the many choices — about what to consume, about which technologies to use — that go into producing a dollar’s worth of G.D.P.
So here’s what you need to know: Climate despair is all wrong. The idea that economic growth and climate action are incompatible may sound hardheaded and realistic, but it’s actually a fuzzy-minded misconception. If we ever get past the special interests and ideology that have blocked action to save the planet, we’ll find that it’s cheaper and easier than almost anyone imagines.
Posted by Mark Thoma on Friday, September 19, 2014 at 12:24 AM in Economics, Environment, Politics |
Posted by Mark Thoma on Friday, September 19, 2014 at 12:06 AM in Economics, Links |
[Travel day -- heading south for the winter -- so just a few quick ones before hitting the road.]
National Attitudes on International Trade: Americans, who are sometimes caricatured as being especially supportive of free trade, are actually among those most opposed. People from the low-income countries of the world, far from feeling oppressed by international trade, are often among its stronger supporters. The Pew Research Center has a new survey out--"Faith and Skepticism about Trade, Foreign Investment"--on the responses of people in 44 nations to questions about the effects and consequences of international trade. Here is a sampling of the evidence...
Posted by Mark Thoma on Thursday, September 18, 2014 at 09:40 AM in Economics, International Trade |
What's so bad about monopoly power?: Google (GOOG) has been negotiating with European regulatory authorities since 2010 in an attempt to settle an antitrust case concerning its search engine, and its third attempt to settle the case has been rejected. Google may also face new antitrust problems over its Android mobile operating system, and it's not alone in facing tough antitrust scrutiny in Europe. Microsoft (MSFT) has also been the subject of a long-running battle in Europe over market dominance issues. But what's motivating this scrutiny from European regulators? What's so bad about a company amassing monopoly power? ....
[Also, from yesterday, What do economists mean by "slack"?]
Posted by Mark Thoma on Thursday, September 18, 2014 at 09:39 AM in Economics, Market Failure, Regulation |
More on the new work from William Gale and Andrew Samwick (I've posted on this before, but given the strength of beliefs about tax cuts, it seems worthwhile to highlight it again):
Tax Cuts Can Do More Harm Than Good: Tax cuts are the one guaranteed path to prosperity. Or so politicians have told Americans for so long that the claim has become a secular dogma.
But tax cuts can do more harm than good, a new report shows. It draws on decades of empirical evidence analyzed with standard economic principles used in business, academia and government.
What ultimately matters is the way a tax cut is structured and how it affects behavior. A well-designed tax cut can help increase future prosperity, but a poorly structured one can result in a meaner future with fewer jobs, less compensation and higher costs to society.
William G. Gale of the Brookings Institution, a nonprofit Washington policy research house, and Andrew Samwick, a Dartmouth College professor, last week issued the report, “Effects of Income Tax Changes on Economic Growth.”
Gale said he expects emailed brickbats from those who have incorporated the tax cut dogma into their views without really understanding the issue. ...
Posted by Mark Thoma on Thursday, September 18, 2014 at 09:39 AM in Economics, Taxes |
From the Minneapolis Fed:
Interview with Michael Woodford: Columbia University economist on Fed mandates, effective forward guidance and cognitive limits in human decision making.
Posted by Mark Thoma on Thursday, September 18, 2014 at 09:39 AM in Economics, Monetary Policy |
Posted by Mark Thoma on Thursday, September 18, 2014 at 12:06 AM in Economics, Links |
Empathy for the Poor: A Meditation: The U.S. Census Bureau has just published its annual report with estimates of the U.S. poverty rate, which was 14.5% in 2013, down a touch from 15.0% in 2012. It's easy to have sympathy for those with low incomes. But for many of us, myself included, true empathy with the one-seventh or so of Americans who are below the poverty line is more difficult. It can be difficult to avoid falling into easy and ill-informed moralizing that if those with low incomes just managed their food budget a little better, or saved a little bit of money, worked a few more hours, or avoided taking out that high-interest loan, then their economic lives could be more stable and their longer-term prospects improved.
When I find myself sucked into a discussion of how the poor live their lives, I think of the comments of George Orwell in his underappreciated 1937 book, The Road to Wigan Pier, which details the lives of the poor and working poor in northern industrial areas of Britain like Lancashire and Yorkshire during the Depression. Orwell, of course, was writing from a leftist and socialist perspective, deeply sympathetic to the poor. Bur Orwell is also painfully honest about his reactions and views. At one point Orwell laments that the poor make such rotten choices about food--but then he also points out how unsatisfactory it feels to patronizingly tell those with low incomes how to spend what little they have. Here's Orwell...
Posted by Mark Thoma on Wednesday, September 17, 2014 at 11:32 AM in Economics, Income Distribution |
Posted by Mark Thoma on Wednesday, September 17, 2014 at 12:06 AM in Economics, Links |
I have a new column:
Rethinking New Economic Thinking: Efforts such as Rethinking Economics and The Institute for New Economic Thinking are noteworthy attempts to, as INET says, “broaden and accelerate the development of new economic thinking that can lead to solutions for the great challenges of the 21st century. The havoc wrought by our recent global financial crisis has vividly demonstrated the deficiencies in our outdated current economic theories, and shown the need for new economic thinking – right now.
It is certainly true that mainstream, modern macroeconomic models failed us prior to and during the Great Recession. The models failed to give any warning at all about the crisis that was about to hit – if anything those using modern macro models resisted the idea that a bubble was inflating in housing markets – and the models failed to give us the guidance we needed to implement effective monetary and fiscal policy responses to our economic problems.
But amid the calls for change in macroeconomics there is far too much attention on the tools and techniques that macroeconomists use to answer questions, and far too little attention on what really matters... ...[continue reading]...
Posted by Mark Thoma on Tuesday, September 16, 2014 at 08:19 AM in Economics, Fiscal Times, Macroeconomics |
Peter Temin and David Vines have a new book:
Making the case for Keynes, by Peter Dizikes, MIT News Office: In 1919, when the victors of World War I were concluding their settlement against Germany — in the form of the Treaty of Versailles — one of the leading British representatives at the negotiations angrily resigned his position, believing the debt imposed on the losers would be too harsh. The official, John Maynard Keynes, argued that because Britain had benefitted from export-driven growth, forcing the Germans to spend their money paying back debt rather than buying British products would be counterproductive for everyone, and slow global growth.
Keynes’ argument, outlined in his popular 1919 book, “The Economic Consequences of the Peace,” proved prescient. But Keynes is not primarily regarded as a theorist of international economics: His most influential work, “The General Theory of Employment, Interest, and Money,” published in 1936, uses the framework of a single country with a closed economy. From that model, Keynes arrived at his famous conclusion that government spending can reduce unemployment by boosting aggregate demand.
But in reality, says Peter Temin, an MIT economic historian, Keynes’ conclusions about demand and employment were long intertwined with his examination of international trade; Keynes was thinking globally, even when modeling locally.
“Keynes was interested in the world economy, not just in a single national economy,” Temin says. Now he is co-author of a new book on the subject, “Keynes: Useful Economics for the World Economy,” written with David Vines, a professor of economics at Oxford University, published this month by MIT Press.
In their book, Temin and Vines make the case that Keynesian deficit spending by governments is necessary to reignite the levels of growth that Europe and the world had come to expect prior to the economic downturn of 2008. But in a historical reversal, they believe that today’s Germany is being unduly harsh toward the debtor states of Europe, forcing other countries to pay off debts made worse by the 2008 crash — and, in turn, preventing them from spending productively, slowing growth and inhibiting a larger continental recovery.
“If you have secular [long-term] stagnation, what you need is expansionary fiscal policy,” says Temin, who is the Elisha Gray II Professor Emeritus of Economics at MIT.
Additional government spending is distinctly not the approach that Europe (and, to a lesser extent, the U.S.) has pursued over the last six years, as political leaders have imposed a wide range of spending cuts — the pursuit of “austerity” as a response to hard times. But Temin thinks it is time for the terms of the spending debate to shift.
“The hope David and I have is that our simple little book might change people’s minds,” Temin says.
“Sticky” wages were the sticking point
In an effort to do so, the authors outline an intellectual trajectory for Keynes in which he was highly concerned with international, trade-based growth from the early stages of his career until his death in 1946, and in which the single-country policy framework of his “General Theory” was a necessary simplification that actually fits neatly with this global vision.
As Temin and Vines see it, Keynes, from early in his career, and certainly by 1919, had developed an explanation of growth in which technical progress leads to greater productive capacity. This leads businesses in advanced countries to search for international markets in which to sell products; encourages foreign lending of capital; and, eventually, produces greater growth by other countries as well.
“Clearly, Keynes knew that domestic prosperity was critically determined by external conditions,” Temin and Vines write.
Yet as they see it, Keynes had to overcome a crucial sticking point in his thought: As late as 1930, when Keynes served on a major British commission investigating the economy, he was still using an older, neoclassical idea in which all markets reached a sort of equilibrium.
This notion implies that when jobs were relatively scarce, wages would decline to the point where more people would be employed. Yet this doesn’t quite seem to happen: As economists now recognize, and as Keynes came to realize, wages could be “sticky,” and remain at set levels, for various psychological or political reasons. In order to arrive at the conclusions of the “General Theory,” then, Keynes had to drop the assumption that wages would fluctuate greatly.
“The issue for Keynes was that he knew that if prices were flexible, then if all prices [including wages] could change, then you eventually get back to full employment,” Temin says. “So in order to avoid that, he assumed away all price changes.”
But if wages will not drop, how can we increase employment? For Keynes, the answer was that the whole economy had to grow: There needed to be an increase in aggregate demand, one of the famous conclusions of the “General Theory.” And if private employers cannot or will not spend more money on workers, Keynes thought, then the government should step in and spend.
“Keynes is very common-sense,” Temin says, in “that if you put people to work building roads and bridges, then those people spend money, and that promotes aggregate demand.”
Today, opponents of Keynes argue that such public spending will offset private-sector spending without changing overall demand. But Temin contends that private-sector spending “won’t be offset if those people were going to be unemployed, and would not be spending anything. Given jobs, he notes, “They would spend money, because now they would have money.”
Keynes’ interest in international trade and international economics never vanished, as Temin and Vines see it. Indeed, in the late stages of World War II, Keynes was busy working out proposals that could spur postwar growth within this same intellectual framework — and the International Monetary Fund is one outgrowth of this effort.
“Keynes: Useful Economics for the World Economy” has received advance praise from some prominent scholars. ... Nonetheless, Temin is guarded about the prospect of changing the contemporary austerity paradigm.
“I can’t predict what policy is going to do in the next couple of years,” Temin says. And in the meantime, he thinks, history may be repeating itself, as debtor countries are unable to make capital investments while paying off debt.
Germany has “decided that they are not willing to take any of the capital loss that happened during the crisis,” Temin adds. “The [other] European countries don’t have the resources to pay off these bonds. They’ve had to cut their spending to get the resources to pay off the bonds. If you read the press, you know this hasn’t been working very well.”
Posted by Mark Thoma on Tuesday, September 16, 2014 at 08:10 AM in Economics, History of Thought, International Finance, Macroeconomics |
Posted by Mark Thoma on Tuesday, September 16, 2014 at 12:06 AM in Economics, Links |
"A key observation of the paper is that journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities":
Polanyi's Paradox and the Shape of Employment Growth, by David Autor, NBER Working Paper No. 20485, September 2014 [open link]: In 1966, the philosopher Michael Polanyi observed, “We can know more than we can tell... The skill of a driver cannot be replaced by a thorough schooling in the theory of the motorcar; the knowledge I have of my own body differs altogether from the knowledge of its physiology.” Polanyi’s observation largely predates the computer era, but the paradox he identified—that our tacit knowledge of how the world works often exceeds our explicit understanding—foretells much of the history of computerization over the past five decades. This paper offers a conceptual and empirical overview of this evolution. I begin by sketching the historical thinking about machine displacement of human labor, and then consider the contemporary incarnation of this displacement—labor market polarization, meaning the simultaneous growth of high-education, high-wage and low-education, low-wages jobs—a manifestation of Polanyi’s paradox. I discuss both the explanatory power of the polarization phenomenon and some key puzzles that confront it. I then reflect on how recent advances in artificial intelligence and robotics should shape our thinking about the likely trajectory of occupational change and employment growth. A key observation of the paper is that journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities. The challenges to substituting machines for workers in tasks requiring adaptability, common sense, and creativity remain immense. Contemporary computer science seeks to overcome Polanyi’s paradox by building machines that learn from human examples, thus inferring the rules that we tacitly apply but do not explicitly understand.
Posted by Mark Thoma on Monday, September 15, 2014 at 09:09 AM in Economics, Income Distribution, Unemployment |
What "accounts for the terrible performance of Western economies since 200"?:
How to Get It Wrong, by Paul Krugman, Commentary, NY Times: Last week I participated in a conference organized by Rethinking Economics... And Mammon knows that economics needs rethinking...
It seems to me, however, that it’s important to realize that the enormous intellectual failure of recent years took place at several levels. Clearly, economics as a discipline went badly astray... But the failings of economics were greatly aggravated by the sins of economists, who far too often let partisanship or personal self-aggrandizement trump their professionalism. Last but not least, economic policy makers systematically chose to hear only what they wanted to hear. And it is this multilevel failure — not the inadequacy of economics alone — that accounts for the terrible performance of Western economies since 2008.
In what sense did economics go astray? Hardly anyone predicted the 2008 crisis... More damning was the widespread conviction among economists that such a crisis couldn’t happen. Underlying this complacency was the dominance of an idealized vision of capitalism, in which individuals are always rational and markets always function perfectly. ...
Still, many applied economists retained a more realistic vision of the world, and textbook macroeconomics, while it didn’t predict the crisis, did a pretty good job of predicting how things would play out in the aftermath. ...
But while economic models didn’t perform all that badly..., all too many influential economists did — refusing to acknowledge error, letting naked partisanship trump analysis, or both. ...
But would it have mattered if economists had behaved better? Or would people in power have done the same thing regardless?
If you imagine that policy makers have spent the past five or six years in thrall to economic orthodoxy, you’ve been misled. On the contrary, key decision makers have been highly receptive to innovative, unorthodox economic ideas — ideas that also happen to be wrong but which offered excuses to do what these decision makers wanted to do anyway. ...
I’m not saying either that economics is in good shape or that its flaws don’t matter. It isn’t, they do, and I’m all for rethinking and reforming a field.
The big problem with economic policy is not, however, that conventional economics doesn’t tell us what to do. In fact, the world would be in much better shape than it is if real-world policy had reflected the lessons of Econ 101. If we’ve made a hash of things — and we have — the fault lies not in our textbooks, but in ourselves.
Posted by Mark Thoma on Monday, September 15, 2014 at 12:24 AM
Posted by Mark Thoma on Monday, September 15, 2014 at 12:06 AM in Economics, Links |
Via email, I was asked if this is the "stupidest article ever published?":
The Inflation-Debt Scam
If not, it's certainly in the running.
Posted by Mark Thoma on Sunday, September 14, 2014 at 09:23 AM in Budget Deficit, Econometrics, Inflation |
Posted by Mark Thoma on Sunday, September 14, 2014 at 12:06 AM in Economics, Links |
Taxes and Growth, The Growth Economics blog: William Gale and Andy Samwick have a new Brookings paper out on the relationship of tax rates and economic growth in the U.S. ... Short answer, there is no relationship. They do not identify any change in the trend growth rate of real GDP per capita with changes in marginal income tax rates, capital gains tax rates, or any changes in federal tax rules. ...
One of the first pieces of evidence they show is from a paper by Stokey and Rebelo (1995). ... You can see that the introduction of very high tax rates during WWII, which effectively became permanent features of the economy after that, did not change the trend growth rate of GDP per capita in the slightest. ...
The next piece of evidence is from a paper by Hungerford (2012), who basically looks only at the post-war period, and looks at whether the fluctuations in top marginal tax rates (on either income or capital gains) are related to growth rates. You can see ... that they are not. If anything, higher capital gains rates are associated with faster growth.
The upshot is that there is no evidence that you can change the growth rate of the economy – up or down – by changing tax rates – up or down. Their conclusion is more coherent than anything I could gin up, so here goes:
The argument that income tax cuts raise growth is repeated so often that it is sometimes taken as gospel. However, theory, evidence, and simulation studies tell a different and more complicated story. Tax cuts offer the potential to raise economic growth by improving incentives to work, save, and invest. But they also create income effects that reduce the need to engage in productive economic activity, and they may subsidize old capital, which provides windfall gains to asset holders that undermine incentives for new activity.
The effects of tax cuts on growth are completely uncertain.
Posted by Mark Thoma on Saturday, September 13, 2014 at 09:22 AM in Economics, Taxes |
Posted by Mark Thoma on Saturday, September 13, 2014 at 12:06 AM in Economics, Links |
In defense of social insurance: On Twitter I said: “The basic income movement is an attack on the strongest political pillar of social-democracy: social insurance.” I’ve inveighed against the Universal Basic Income in the past, so here I go again. Another edition of old man yelling at clouds.
Throughout history, in certain communal settings some variant of the Marxian “From each according to his abilities, to each according to his needs,” has applied. In a naive sense, the UBI is not far off from that ideal. What economists call a demogrant* — a fixed, unrestricted, unconditional transfer payment to every individual (to each according to his needs**) — would presumably be financed by some kind of progressive tax (from each according to his abilities). I have no quarrel with the ideal. The problem is that it’s an utter fantasy that beclouds thinking about more plausible social policies. It’s a distraction from the need to defend really-existing social insurance and to attack the devolution of the safety net (about which a bit more below). ...
Posted by Mark Thoma on Friday, September 12, 2014 at 08:54 AM in Economics, Social Insurance |
What accounts for the survival of the inflationistas?:
The Inflation Cult, by Paul Krugman, Commentary, NY Times: Wish I’d said that! Earlier this week, Jesse Eisinger..., writing on The Times’s DealBook blog, compared people who keep predicting runaway inflation to “true believers whose faith in a predicted apocalypse persists even after it fails to materialize.” Indeed. ... And the remarkable thing is that these always-wrong, never-in-doubt pundits continue to have large public and political influence.
There’s something happening here. What it is ain’t exactly clear. ... I’ve written before about how the wealthy tend to oppose easy money, perceiving it as being against their interests. But that doesn’t explain the broad appeal of prophets whose prophecies keep failing.
Part of that appeal is clearly political; there’s a reason why ... Mr. Ryan warns about both a debased currency and a government that redistributes from “makers” to “takers.” Inflation cultists almost always link the Fed’s policies to complaints about government spending. They’re completely wrong about the details — no, the Fed isn’t printing money to cover the budget deficit — but it’s true that governments whose debt is denominated in a currency they can issue have more fiscal flexibility, and hence more ability to maintain aid to those in need...
And anger against “takers” — anger that is very much tied up with ethnic and cultural divisions — runs deep. Many people, therefore, feel an affinity with those who rant about looming inflation... I’d argue, the persistence of the inflation cult is an example of the “affinity fraud” crucial to many swindles, in which investors trust a con man because he seems to be part of their tribe. In this case, the con men may be conning themselves as well as their followers, but that hardly matters.
This tribal interpretation of the inflation cult helps explain the sheer rage you encounter when pointing out that the promised hyperinflation is nowhere to be seen. It’s comparable to the reaction you get when pointing out that Obamacare seems to be working, and probably has the same roots.
But what about the economists who go along with the cult? They’re all conservatives, but aren’t they also professionals who put evidence above political convenience? Apparently not.
The persistence of the inflation cult is, therefore, an indicator of just how polarized our society has become, of how everything is political, even among those who are supposed to rise above such things. And that reality, unlike the supposed risk of runaway inflation, is something that should scare you.
Posted by Mark Thoma on Friday, September 12, 2014 at 12:24 AM in Economics, Inflation |
Posted by Mark Thoma on Friday, September 12, 2014 at 12:06 AM in Economics, Links |
I've been looking for the perfect anti-war screed, but so far haven't found it.
So let me just say, I hate war, and I don't care if it's Bush or Obama giving the orders.
That is all.
Posted by Mark Thoma on Thursday, September 11, 2014 at 04:01 PM in Economics, Iraq and Afghanistan |
The Bank of England examines bitcoin:
Overview Digital currencies represent both innovations in payment systems and a new form of currency. This article examines the economics of digital currencies and presents an initial assessment of the risks that they may, in time, pose to the Bank of England’s objectives for monetary and financial stability. A companion piece provides an introduction to digital currency schemes, including some historical context for their development and an outline of how they work.
From the perspective of economic theory, whether a digital currency may be considered to be money depends on the extent to which it acts as a store of value, a medium of exchange and a unit of account. How far an asset serves these roles can differ, both from person to person and over time. And meeting these economic definitions does not necessarily imply that an asset will be regarded as money for legal or regulatory purposes. At present, digital currencies are used by relatively few people. For these people, data suggest that digital currencies are primarily viewed as stores of value — albeit with significant volatility in their valuations (see summary chart) — and are not typically used as media of exchange. At present, there is little evidence of digital currencies being used as units of account.
This article argues that the incentives embedded in the current design of digital currencies pose impediments to their widespread usage. A key attraction of such schemes at present is their low transaction fees. But these fees may need to rise as usage grows and may eventually be higher than those charged by incumbent payment systems.
Most digital currencies incorporate a pre-determined path towards a fixed eventual supply. In addition to making it extremely unlikely that a digital currency, as currently designed, will achieve widespread usage in the long run, a fixed money supply may also harm the macroeconomy: it could contribute to deflation in the prices of goods and services, and in wages. And importantly, the inability of the money supply to vary in response to demand would likely cause greater volatility in prices and real activity. It is important to note, however, that a fixed eventual supply is not an inherent requirement of digital currency schemes.
Digital currencies do not currently pose a material risk to monetary or financial stability in the United Kingdom, given the small size of such schemes. This could conceivably change, but only if they were to grow significantly. The Bank continues to monitor digital currencies and the risks they pose to its mission.
Posted by Mark Thoma on Thursday, September 11, 2014 at 09:42 AM in Economics, Monetary Policy |
Simon Wren-Lewis on Scottish independence:
Scotland and the SNP: Fooling yourselves and deceiving others: There are many laudable reasons to campaign for Scottish independence. But how far should those who passionately want independence be prepared to go to achieve that goal? Should they, for example, deceive the Scottish people about the basic economics involved? That seems to be what is happening right now. The more I look at the numbers, the clearer it becomes that over the next five or ten years there would more, not less, fiscal austerity under independence. ...
Scotland’s fiscal position would be worse as a result of leaving the UK for two main reasons. First, demographic trends are less favourable. Second, revenues from the North Sea are expected to decline. ...
The SNP do not agree with this analysis. The main reason in the near term is that they have more optimistic projections for North Sea Oil. ... So how do the Scottish government get more optimistic numbers? John McDermott examines the detail here, but perhaps I can paraphrase his findings: whenever there is room for doubt, assume whatever gives you a higher number. ... It is basically fiddling the analysis to get the answer you want. Either wishful thinking or deception. ...
Is this deception deliberate? I suspect it is more the delusions of people who want something so much they cast aside all doubts and problems. This is certainly the impression I get from reading a lot of literature...
When I was reading this literature, I kept thinking I had seen this kind of thing before: being in denial about macroeconomic fundamentals because they interfered with a major institutional change that was driven by politics. Then I realised what it was: the formation of the Euro in 2000. Once again economists were clear and pretty united about what the key macroeconomic problem was (‘asymmetric shocks’), and just like now this was met with wishful thinking that somehow it just wouldn’t happen. It did, and the Eurozone is still living with the consequences.
So maybe that also explains why I feel so strongly this time around. I have no political skin in this game: a certain affection for the concept of the union, but nothing strong enough to make me even tempted to distort my macroeconomics in its favour. If Scotland wants to make a short term economic sacrifice in the hope of longer term gains and political freedom that is their choice. But they should make that choice knowing what it is, and not be deceived into believing that these costs do not exist.
Posted by Mark Thoma on Thursday, September 11, 2014 at 09:04 AM in Economics |
A small part of Brad DeLong's response to Olivier Blanchard. I posted a shortened version of Blanchard's argument a week or two ago:
Where Danger Lurks: Until the 2008 global financial crisis, mainstream U.S. macroeconomics had taken an increasingly benign view of economic fluctuations in output and employment. The crisis has made it clear that this view was wrong and that there is a need for a deep reassessment. ...
That small shocks could sometimes have large effects and, as a result, that things could turn really bad, was not completely ignored by economists. But such an outcome was thought to be a thing of the past that would not happen again, or at least not in advanced economies thanks to their sound economic policies. ... We all knew that there were “dark corners”—situations in which the economy could badly malfunction. But we thought we were far away from those corners, and could for the most part ignore them. ...
The main lesson of the crisis is that we were much closer to those dark corners than we thought—and the corners were even darker than we had thought too. ...
How should we modify our benchmark models—the so-called dynamic stochastic general equilibrium (DSGE) models...? The easy and uncontroversial part of the answer is that the DSGE models should be expanded to better recognize the role of the financial system—and this is happening. But should these models be able to describe how the economy behaves in the dark corners?
Let me offer a pragmatic answer. If macroeconomic policy and financial regulation are set in such a way as to maintain a healthy distance from dark corners, then our models that portray normal times may still be largely appropriate. Another class of economic models, aimed at measuring systemic risk, can be used to give warning signals that we are getting too close to dark corners, and that steps must be taken to reduce risk and increase distance. Trying to create a model that integrates normal times and systemic risks may be beyond the profession’s conceptual and technical reach at this stage.
The crisis has been immensely painful. But one of its silver linings has been to jolt macroeconomics and macroeconomic policy. The main policy lesson is a simple one: Stay away from dark corners.
And I responded:
That may be the best we can do for now (have separate models for normal times and "dark corners"), but an integrated model would be preferable. An integrated model would, for example, be better for conducting "policy and financial regulation ... to maintain a healthy distance from dark corners," and our aspirations ought to include models that can explain both normal and abnormal times. That may mean moving beyond the DSGE class of models, or perhaps the technical reach of DSGE models can be extended to incorporate the kinds of problems that can lead to Great Recessions, but we shouldn't be satisfied with models of normal times that cannot explain and anticipate major economic problems.
Here's part of Brad's response:
But… but… but… Macroeconomic policy and financial regulation are not set in such a way as to maintain a healthy distance from dark corners. We are still in a dark corner now. There is no sign of the 4% per year inflation target, the commitments to do what it takes via quantitative easing and rate guidance to attain it, or a fiscal policy that recognizes how the rules of the game are different for reserve currency printing sovereigns when r < n+g. Thus not only are we still in a dark corner, but there is every reason to believe that should we get out the sub-2% per year effective inflation targets of North Atlantic central banks and the inappropriate rhetoric and groupthink surrounding fiscal policy makes it highly likely that we will soon get back into yet another dark corner. Blanchard’s pragmatic answer is thus the most unpragmatic thing imaginable: the “if” test fails, and so the “then” part of the argument seems to me to be simply inoperative. Perhaps on another planet in which North Atlantic central banks and governments aggressively pursued 6% per year nominal GDP growth targets Blanchard’s answer would be “pragmatic”. But we are not on that planet, are we?
Moreover, even were we on Planet Pragmatic, it still seems to be wrong. Using current or any visible future DSGE models for forecasting and mainstream scenario planning makes no sense: the DSGE framework imposes restrictions on the allowable emergent properties of the aggregate time series that are routinely rejected at whatever level of frequentist statistical confidence that one cares to specify. The right road is that of Christopher Sims: that of forecasting and scenario planning using relatively instructured time-series methods that use rather than ignore the correlations in the recent historical data. And for policy evaluation? One should take the historical correlations and argue why reverse-causation and errors-in-variables lead them to underestimate or overestimate policy effects, and possibly get it right. One should not impose a structural DSGE model that identifies the effects of policies but certainly gets it wrong. Sims won that argument. Why do so few people recognize his victory?
Another class of economic models, aimed at measuring systemic risk, can be used to give warning signals that we are getting too close to dark corners, and that steps must be taken to reduce risk and increase distance. Trying to create a model that integrates normal times and systemic risks may be beyond the profession’s conceptual and technical reach at this stage…
For the second task, the question is: whose models of tail risk based on what traditions get to count in the tail risks discussion?
And missing is the third task: understanding what Paul Krugman calls the “Dark Age of macroeconomics”, that jahiliyyah that descended on so much of the economic research, economic policy analysis, and economic policymaking communities starting in the fall of 2007, and in which the center of gravity of our economic policymakers still dwell.
Posted by Mark Thoma on Thursday, September 11, 2014 at 08:50 AM in Economics, Macroeconomics, Methodology |
Posted by Mark Thoma on Thursday, September 11, 2014 at 12:06 AM in Economics, Links |
Pro-Growth Liberal (pgl):
Durbin-Schumer Inversion Proposal: Bernie Becker reports on an interesting proposal in the Senate:
Schumer’s bill takes aim at a maneuver known as earnings stripping, a process by which U.S. subsidiaries can take tax deductions on interest stemming from loans from a foreign parent. The measure comes as Democrats continue to criticize companies, like Burger King, that have sought to shift their legal address abroad … Schumer’s bill would cut in half the amount of interest deduction that companies can claim, from 50 percent to 25 percent. It also seeks to limit companies that have already inverted from claiming the deduction in future years, requiring IRS on certain transactions between a foreign parent and U.S. company for a decade.
Had Walgreen decided to move its tax domicile to Switzerland, this proposal would limit the amount of income shifting that might take place after the inversion. But consider companies like Burger King and AbbVie. They are already sourcing the vast majority of their profits overseas. The reason that the effective tax rates are about 20 percent and not in the teens is that they have to pay taxes on repatriated earnings. An inversion would still eliminate the repatriation taxes and alas the horse has left the barn as far these two companies and their aggressive transfer pricing. The proposal is a very good one but Congress should still encourage the IRS to conduct transfer pricing reviews of what companies such as these have done in the past.
Posted by Mark Thoma on Wednesday, September 10, 2014 at 09:46 AM in Economics, Taxes |
A Simple Equation: More Education = More Income, by Eduardo Porter, NY Times: ...the gap between the wages of a family of two college graduates and a family of high school graduates..., between 1979 and 2012...,grew by some $30,000, after inflation. This ... amounts to a powerful counterargument to anybody who doubts the importance of education in the battle against the nation’s entrenched inequality.
But in the American education system, inequality is winning, gumming up the mobility that broad-based prosperity requires. ... Only one in 20 Americans aged 25 to 34 whose parents didn’t finish high school has a college degree. The average across 20 rich countries in the O.E.C.D. analysis is almost one in four. ...
Given the payoff, the fact that many of those who would benefit most are not investing in a college education suggests an epic failure. And the growing cadre of countries that outperform the United States suggests failure is hardly inevitable. ...
Mr. Schleicher told me that, while places like Japan, Singapore and Canada have learned how to educate socially disadvantaged children, in the United States social background plays an outsize role in the educational outcomes. ... “But a lot depends on policy. There is a lot we can do.”
Decimating public education is not to anyone’s advantage...
Posted by Mark Thoma on Wednesday, September 10, 2014 at 09:36 AM in Economics, Income Distribution, Universities |
The Biggest Lie of the New Century: Yesterday, we looked at why bankers weren't busted for crimes committed during the financial crisis. Political corruption, prosecutorial malfeasance, rewritten legislation and cowardice on the part of government officials were among the many reasons.
But I saved the biggest reason so many financial felons escaped justice for today: They dumped the cost of their criminal activities on you, the shareholder (never mind the taxpayer). ... Many of these executives committed crimes; got big bonuses for doing so; and paid huge fines using shareholder assets (i.e., company cash), helping them avoid prosecution.
As for claims, like those of white-collar crime defense attorney Mark F. Pomerantz, that “the executives running companies like Bank of America, Citigroup and JP Morgan were not committing criminal acts,” they simply implausible if not laughable. Consider a brief survey of some of the more egregious acts of wrongdoing: ...
Posted by Mark Thoma on Wednesday, September 10, 2014 at 08:02 AM in Economics, Financial System, Regulation |
Posted by Mark Thoma on Wednesday, September 10, 2014 at 12:06 AM in Economics, Links |
From the St. Louis Fed:
The Great Recession Casts a Long Shadow on Family Finances, by Ray Boshara, William Emmons, and Bryan Noeth,St. Louis Fed’s Center for Household Financial Stability: The income and wealth of the typical American family declined between 2010 and 2013, according to the Federal Reserve’s latest Survey of Consumer Finances.1 ... These declines reduced the median real (inflation-adjusted) family income and net worth in the U.S. in 2013 to $46,668 (from $49,022 in 2010) and to $81,400 (from $82,521 in 2010), respectively. ...
Combined with significant declines between 2007 and 2010 on both measures, the cumulative decline in median real family income between 2007 and 2013 was 12.1 percent, while median real net worth declined 40.1 percent. The financial impact of the Great Recession was so severe that all the gains achieved during the 1990s and 2000s were wiped out. Median real family income was 1.0 percent lower in 2013 than in 1989, while median real net worth in 2013 was 4.3 percent below its 1989 level.
As discouraging as these declines are, several economically vulnerable groups have fared even worse..., the median real income among families headed by someone under 40 has fallen from 96 percent of the overall median income in 1989 to only 87 percent in 2013. The median income of families headed by an African-American or someone of Hispanic origin (of any race) reached only 67 percent of the overall median in 2013, down from 70 percent in 2007. Among families headed by someone without a high-school degree, the median real income in 2013 was only 48 percent of the overall median, down from 51 percent three years earlier. ...
Those groups typically classified as economically vulnerable have experienced severe balance-sheet stress, too..., the median real net worth of a family headed by someone under 40 declined from 23 percent of the overall median in 1989 to only 18 percent in 2013. The progress made by African-American and Hispanic families in closing the wealth gap with the overall population through 2010 was largely reversed by 2013, leaving the median wealth of these groups at only 16 percent of the overall median. And the median wealth of families headed by someone with less than a high-school education plunged from 51 percent of the overall median wealth in 1989 to just 21 percent in 2013. Reflecting recent research conducted by the St. Louis Fed’s Center for Household Financial Stability, age, race and education continue to be among the strongest predictors of who gained and lost wealth during and after the Great Recession.2
Even in the sixth year of economic recovery, the Great Recession’s impact on American families’ income and wealth continues to be felt widely.3 The most economically vulnerable groups of families generally have suffered even larger setbacks than the typical family in the overall population.
The data now affirm what most Americans have been feeling since the recession ended—that their own recovery is not yet complete. And as many families continue to accumulate new debt at a slower pace or actually “delever” their balance sheets, shedding the debts accumulated in the run-up to the financial crisis, we believe less than robust economic growth will continue. ...
Posted by Mark Thoma on Tuesday, September 9, 2014 at 10:29 AM in Economics |
Posted by Mark Thoma on Tuesday, September 9, 2014 at 12:06 AM in Economics, Links |
Forward Guidance Heading for a Change, by Tim Duy: The lackluster August employment report clearly defied expectations (including my own) for a strong number to round out the generally positive pattern of recent data. That said, one number does not make a trend, and the monthly change in nonfarm payrolls is notoriously volatile. The underlying pattern of improvement remains in tact, and thus the employment report did not alleviate the need to adjust the Fed's forward guidance, allow there is a less pressing need to do so at the next meeting. In any event, the days of the "considerable time" language are numbered.
Nonfarm payrolls gained just 142k in August while the unemployment rate ticked back down to 6.1%. In general, the employment report is consistent with steady progress in the context of data that Fed Chair Janet Yellen has identified in the past:
Arguably the only trend that is markedly different is the more rapid decline in long-term unemployment, a positive cyclical indicator. Labor force participation remains subdued, although the Fed increasing views that as a structural issue. Average wage growth remained flat while wages for production workers accelerated slightly to 2.53% over the past year. A postive development to be sure, but too early to declare a sustained trend.
The notable absence of any bad news in the labor report leaves the door open to changing the forward guidance at the next FOMC meeting. As Robin Harding at the Financial Times notes, many Fed officials, including both doves and hawks, have taken issue with the current language, particularly the seemingly calendar dependent "considerable time" phrase. Officials would like to move toward guidance that is more clearly data dependent.
Is a shift in the language likely at the next meeting? Harding is mixed:
Their remarks could mean a move at the September FOMC meeting in 10 days, although there is little consensus yet on new wording, so a shift might have to wait until next month.
The trick is to change the language without suggesting the timing of the first rate hike is necessarily moving forward. The benefit of the next meeting is that it includes updated projections and a press conference. Stable policy expectations in those projections would create a nice opportunity to change the language. Moreover, Yellen would be able to to further explain any changes at that time. This also helps set the stage for the end of asset purchases in October. A shift in the guidance next week has a lot to offer.
A change in the language would also throw some additional light on Yellen's comments at Jackson Hole. Her typically unabashed defense of labor market slack was missing from her speech, replaced by a much more even-handed evaluation of the data. Was she simply setting the stage for an academic conference, or was she signalling a shift in her convictions? A change in the language at the next meeting would suggest the latter.
Bottom Line: The US economy is moving to a point in the cycle in which monetary policymakers have less certainty about the path of rates. Perhaps they need to be pulled forward, perhaps pushed back. Policymakers will need to be increasingly pragmatic, to use Yellen's term, when assessing the data. The "considerable time" language is inconsistent with such a pragmatic approach. It is hard to see that such language survives more than another FOMC statement. Seems to be data and policy objections are not the impediments preventing a change in the guidance, but instead the roadblock is the ability to reach agreement on new language in the next ten days.
Posted by Mark Thoma on Monday, September 8, 2014 at 09:25 AM in Economics, Fed Watch, Monetary Policy |
At Vox EU:
What were they thinking? The Federal Reserve in the run-up to the 2008 financial crisis, by Stephen Golub, Ayse Kaya, Michael Reay: Since the Global Crisis, critics have questioned why regulatory agencies failed to prevent it. This column argues that the US Federal Reserve was aware of potential problems brewing in the financial system, but was largely unconcerned by them. Both Greenspan and Bernanke subscribed to the view that identifying bubbles is very difficult, pre-emptive bursting may be harmful, and that central banks could limit the damage ex post. The scripted nature of FOMC meetings, the focus on the Greenbook, and a ‘silo’ mentality reduced the impact of dissenting views.
Posted by Mark Thoma on Monday, September 8, 2014 at 09:15 AM in Economics, Financial System, Monetary Policy, Regulation |
Have Economists Been Captured by Business Interests?: To be an economist, you kind of have to believe that people respond to economic incentives. But when anyone suggests that an economist’s views might be shaped by the economic incentives he or she faces,... it’s actually pretty common to hear economists saying things like — this is from the usually no-nonsense John Cochrane of the University of Chicago — “the idea that any of us do what we do because we’re paid off by fancy Wall Street salaries or cushy sabbaticals at Hoover is just ridiculous.” ...
Happily, Luigi Zingales, a colleague of Cochrane’s at Chicago’s Booth School of Business, is trying to correct his discipline’s blind spot by examining the economics of economists’ opinions. ...
Zingales ... subjects his notions to an empirical test: Are there discernible patterns in what kinds of economists think corporate executives are overpaid and what kinds think they’re paid fairly? ... The answer turns out to be yes. ...
What Zingales doesn’t call for is any kind of blanket retreat by economists from consulting and expert witnessing and board memberships. Which is a good thing, I think. One of the reasons why economics rocketed past the other social sciences in influence and prestige over the past 75 years was because so many economists involved themselves in the worlds they studied. That has surely led to some amount of capture by outside interests, but it also seems to have counteracted the natural academic tendency toward insularity and obscurity. Lots of economists study things of direct relevance to business leaders and government policy-makers. We wouldn’t really want to take away their incentive to do that, would we?
Posted by Mark Thoma on Monday, September 8, 2014 at 09:14 AM in Economics, Regulation |
Bold reform is the only answer to secular stagnation, by Lawrence H. Summers: The economy continues to operate way below any estimate of its potential made before the onset of financial crisis in 2007, with a shortfall of gross domestic product relative to previous trend in excess of $1.5tn, or $20,000 per family of four. As disturbing, the average growth rate of the economy of less than 2 per cent since that time has caused output to fall ... further below previous estimates of its potential.
Almost a year ago I invoked the concept of secular stagnation... Secular stagnation in my version ... has emphasised the difficulty of maintaining sufficient demand to permit normal levels of output. ...
To achieve growth of even 2 per cent over the next decade, active support for demand will be necessary but not sufficient. Structural reform is essential to increase the productivity of both workers and capital, and to increase growth in the number of people able and willing to work productively. Infrastructure investment, immigration reform, policies to promote family-friendly work, support for exploitation of energy resources, and business tax reform become ever more important policy imperatives.
Posted by Mark Thoma on Monday, September 8, 2014 at 09:14 AM in Economics |
Summer Institute 2014 Theory and Application of Network Models, July 22, 2014 Daron Acemoglu and Matthew O. Jackson, Organizers:
Matthew O. Jackson, Stanford University Social and Economic Networks: Backgound
Daron Acemoglu, MIT Networks: Games over Networks and Peer Effects
Matthew O. Jackson, Stanford University Diffusion, Identification, Network Formation
Daron Acemoglu, MIT Networks: Propagation of Shocks over Economic Networks
Posted by Mark Thoma on Monday, September 8, 2014 at 08:46 AM in Econometrics, Economics, Video |
Spain provides a "cautionary tale" for the Scots:
Scots, What the Heck?, by Paul Krugman, Commentary, NY Times: Next week Scotland will hold a referendum on whether to leave the United Kingdom. And polling suggests that support for independence has surged..., largely because pro-independence campaigners have managed to reduce the “fear factor” — that is, concern about the economic risks of going it alone. At this point the outcome looks like a tossup.
Well, I have a message for the Scots: Be afraid, be very afraid. The risks of going it alone are huge. You may think that Scotland can become another Canada, but it’s all too likely that it would end up becoming Spain without the sunshine.
Comparing Scotland with Canada seems, at first, pretty reasonable. After all, Canada, like Scotland, is a relatively small economy that does most of its trade with a much larger neighbor. ... And what the Canadian example shows is that this can work. ...
But Canada has its own currency... An independent Scotland wouldn’t. ..: The Scottish independence movement has been very clear that it intends to keep the pound as the national currency. And the combination of political independence with a shared currency is a recipe for disaster. Which is where the cautionary tale of Spain comes in.
If Spain and the other countries that gave up their own currencies to adopt the euro were part of a true federal system..., the recent economic history of Spain would have looked a lot like that of Florida. Both economies experienced a huge housing boom between 2000 and 2007. Both saw that boom turn into a spectacular bust. Both suffered a sharp downturn...
Then, however, the paths diverged. In Florida’s case, most of the fiscal burden of the slump fell not on the local government but on Washington... In effect, Florida received large-scale aid in its time of distress.
Spain, by contrast, bore all the costs of the housing bust on its own. The result ... was a horrific depression... And it wasn’t just Spain, it was all of southern Europe and more. ...
In short, everything that has happened in Europe since 2009 or so has demonstrated that sharing a currency without sharing a government is very dangerous...
I find it mind-boggling that Scotland would consider going down this path after all that has happened in the last few years. If Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled.
Posted by Mark Thoma on Monday, September 8, 2014 at 12:24 AM in Economics, International Finance |
Posted by Mark Thoma on Monday, September 8, 2014 at 12:06 AM in Economics, Links |
What they say is not necessarily the same as what they do:
Few US ‘reshorings’ go ahead, study finds, by Robert Wrigh, FT: “Relatively few” of companies’ announced “reshorings” of manufacturing to the US have actually gone ahead and the trend’s effect on employment has been a “drop in the bucket,” research by a Massachusetts Institute of Technology academic suggests.
The work, by Jim Rice, deputy director of MIT’s Center for Transportation and Logistics, throws into doubt expectations that the US economy might enjoy significant growth in manufacturing employment through job repatriation. ...
Posted by Mark Thoma on Sunday, September 7, 2014 at 12:03 PM in Economics, Unemployment |