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Article Artículo

Honduras

Latin America and the Caribbean

World

Honduras’ Special Commission on Police Reform: Genuine Cleanup Effort or Yet another PR Scheme?

In 2009, shortly after the coup d’état, the effects of which continue to be felt throughout Honduras, the country’s director of counternarcotics, retired General Julián Arístides González, was assassinated by unknown assailants. Then in 2011, a hit squad gunned down Aflredo Landaverde, another senior antidrug official. Despite much evidence of criminal activity by the Honduran police — including involvement in police brutality, extortion, rape, and sex trafficking and prostitution rings — investigative commissions made little headway. In fact, the Honduran government dismissed all advice from an independent police investigation commission created in 2012, before it was dissolved by the ruling National Party in 2014.

In August 2013, when current president Juan Orlando Hernández was president of Congress, he oversaw the creation of the Public Order Military Police (Policía Militar de Orden Público), a new branch of the Honduran Armed Forces. Since then, corruption scandals and allegations of abuses targeting civilians have continued unabated. The response from the government has been to further militarize law enforcement. In April 2016, news broke that high-level officials in the National Police had been involved in the assassinations of these antidrug officials and that evidence compiled in an internal report had passed through the hands of numerous police and Security Ministry officials without action.

These revelations came on the heels of massive public outcry over corruption scandals in other Honduran institutions, and the Honduran government was quick to create a new police reform commission. But there are reasons to suspect that the commission is really window-dressing aimed at ensuring continued international support.

CEPR and Laura Jung / July 08, 2016

Article Artículo

Trade and Jobs In Pennsylvania

Adam Davidson had an interesting NYT Magazine piece on Donald Trump and the central Pennsylvania economy. His basic point, that Trump's proposals for high tariffs will not revitalize the region is undoubtedly correct, but there are a few points that should be made.

First, productivity and technological change has been far more important for jobs in manufacturing than trade, but that doesn't mean trade has not still been a big deal. We have seen rapid productivity growth in manufacturing through the whole post-war period, but the number of jobs in the sector remained roughly constant, with cyclical fluctuations, from the late 1960s until the end of the 1990s. Since the labor force was growing over this period, it did mean that the manufacturing share of employment was falling.

However, the absolute number of jobs plummeted at the start of the last decade as the trade deficit exploded. The drop was more than 20 percent even before the 2008 recession.

Jobs in Manufacturing

manu jobs2Source: Bureau of Labor Statistics.

This sharp decline in manufacturing employment had negative effects in many regions of the country, although it's possible that the impact in central Pennsylvania was less than in other manufacturing regions. Also, the threat of job loss, often due to trade, is an important factor affecting workers' bargaining power and therefore their ability to secure pay increases.

CEPR / July 07, 2016

Article Artículo

Economic Growth

United States

Already Low Inflation Ticks Downward

Since the Fed first announced its 2 percent inflation target on January 25, 2012, inflation has consistently run too low. In fact, the Fed has undershot its target in 48 of the 51 months since its announcement. 

The most recent data from the Consumer Price Index (CPI) show that inflation over the past year has been just 1.0 percent. Part of this weakness is due to the volatile energy (down 10.1 percent from one year ago) and food (up 0.7 percent) aspects of the index. The Fed typically pulls out these components and looks at the “core” CPI. This measure shows a somewhat higher rate of inflation with a modest increase over the last year.

CEPR and Nicolas Buffie / July 05, 2016

Article Artículo

Paul Krugman on Trade and Jobs

Paul Krugman has again waded into trade and employment turf in his latest blog post. I agree completely with the post-Great Recession story where Krugman acknowledges that the trade deficit creates a demand gap that we have not been able to fill.

The problem is that fiscal policy is limited by a bizarre austerity cult that works to prevent larger budget deficits even though the economy clearly needs them to reach full employment levels of output. Monetary policy has been helpful, but with the Fed up against the zero lower bound there is not much more the Fed can do by way of traditional monetary policy to boost the economy. As a result, the trade deficit really does mean lost jobs.

Where I differ with Krugman is in his assessment that the trade deficit did not cost the economy jobs in the pre-recession period. He argues that we were pretty much at full employment in the period prior to the 2008 recession.

"Up through 2007 we basically had a Fed which raised rates whenever it thought the economy was overheating; in the absence of the China shock it would have raised rates sooner and faster..."

Just to refresh folks' memory, the unemployment rate was 4.0 percent as a year-round average in 2000. In the recovery, we bottomed out at 4.4 percent for several months in 2006 and 2007, although we didn't get back below 5.0 percent until the end of 2005. But the unemployment rate doesn't really tell the whole story.

The employment rate for prime age men (ages 25–54) peaked at 89.5 percent at the start of 2000. In the recovery, it never crossed 88.0 percent. When the recession hit at the end of 2007 it was at 87.2 percent, more than two full percentage points below its 2000 peak. This gap corresponds to a drop in employment among this group of more than 1 million.

CEPR / July 04, 2016