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Steven Pearlstein Wants You to Lose Your JobThat's right, he's upset that the Federal Reserve Board didn't raise interest rates this week. He tells readers:
"Until a year or two ago, there was good reason for the Fed to continue with its extraordinary monetary policy. But with the U.S. economy nearly back to full employment, and incomes rising, and core inflation running close to 2 percent, it’s well past the time to start easing back on the stimulus by raising rates."
The idea here is that we need to start raising rates or the labor market will get so tight that we will have problems with rising inflation. Or so it seems. But then we get:
"This isn’t about preventing future inflation — right now, all the signals are that that risk is pretty low. But it is about weaning the U.S. and global economy off an addiction to zero interest rates that have badly distorted the price of financial assets relative to the price of everything else."
Okay, so we don't actually have a problem with inflation, we have a problem with the price of financial assets being distorted. Pearlstein never quite fills in the details, but implicitly he is saying that we have problems with asset bubbles.
CEPR / June 17, 2016
report informe
The Price We Pay: Economic Costs of Barriers to Employment for Former Prisoners and People Convicted of FeloniesAlan Barber and Cherrie Bucknor / June 16, 2016
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Robert Samuelson Resumes the Attack on Social SecurityIt undoubtedly was very disappointing for Robert Samuelson, the Washington Post, and the rest of the Very Serious People (VSP) to see President Obama's call for increasing Social Security. For the time being, their plans to attack Social Security and Medicare seem completely dead in the water. After all, President Obama had earlier been a grand bargainer, willing to put both Social Security and Medicare on the table, now he actually wants to increase benefits. And even Donald Trump, the presumptive Republican presidential nominee, says he is opposed to cuts, at least for the moment.
But it is important to remember that in our nation’s capital, no bad idea stays dead for long. For that reason, no one should view Robert Samuelson’s latest column as an admission of defeat. It is a call for resurrection. So let’s get out that stake and see if we can nail this vampire once and for all.
The basic theme is the standard one: it is an effort to divert class warfare into generational warfare. Over the last four decades we have seen the greatest upward redistribution of income in the history of the world. Rather than have the losers blame the gainers, Robert Samuelson wants them to be angry at their parents.
Samuelson’s basic story is that the elderly are actually doing quite well; therefore, we should be looking to take money away from them rather than give them more. His main piece of evidence is a subjective question on well-being which shows the over age 65 age group consistently answers that they are most satisfied with their financial situation.
There are many points that can be made about this sort of subjective assessment. The most obvious is that the sense of satisfaction depends on expectations. People who are in retirement or the last years of their working career have little hope of substantial improvements in their living standard, so it may not be surprising that most would answer they are satisfied with what they have. Younger people can of course hope for, and in fact expect, better times ahead as they advance in their career.
In fact, there is useful information in this survey and it goes in the opposite direction of Samuelson’s complaints. If we look at recent and near retirees, the group between the ages of 50 to 64, we see a sharp decline in their sense of satisfaction over the period since the survey began in 1972. In 2014, the most recent year in the survey, just 25.2 percent of those in this age group expressed satisfaction with their financial situation. This is down from 38.4 percent in 1972 and a peak of 41.4 percent in 1978.
CEPR / June 14, 2016
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Jobs Gap Is Most Significant for Younger Workers, Non-Existent for Older WorkersCEPR recently released a blog post titled “Maximum Potential Employment and the Jobs Gap.” The post asked two simple questions:
1. How high could the employment rate go given the current age composition of the population?
2. How large is the gap between this potential employment rate and the actual employment rate?
The post concluded that although the gap between actual and potential employment has declined since the end of the recession, it is nonetheless larger than it was before the recession.
The “maximum potential employment rate” used in the post was calculated by asking what the overall employment rate would be if each age group were to achieve its highest calendar-year employment rate at the same time. It is notable that the current jobs gap is due purely to low employment rates among younger workers. With the exceptions of the 45–49 and 70+ age groups, there is a consistent rule to be had in terms of job loss: employment has declined more significantly for younger workers than for older workers.
CEPR and / June 13, 2016
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Is There Such a Thing as the Great Millionaire Migration?Legislators in the United States have been reluctant to tax the highest income tax-payers at higher rates. “Millionaire taxes,” through the addition of higher marginal income tax rates on income over $1 million, exist only in one state, California. Connecticut taxes married couples with combined incomes over $1 million at a higher rate as well. At the federal level, the top income tax bracket starts at $415,051 for individuals and at $466,950 for couples. Despite growing income inequality and calls for the rich to pay more, there has been little to no political will to increase tax rates on incomes over $1 million.
One rationale often used to explain this reluctance is the belief that higher tax rates on the rich would lead to an exodus of high-income tax payers. When President François Hollande proposed a 75% tax rate on incomes over 1 million euros, commentators around the world predicted mass out migration of high income French citizens. The mass emigration failed to occur during the two year duration of the higher rate, but the higher tax bracket was quietly allowed to expire at the end of 2014.
CEPR and / June 09, 2016
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Cutting Australia’s Corporate Income Tax: A Gift to the U.S. Treasury DepartmentDean Baker
Crikey, June 7, 2016
Dean Baker / June 08, 2016
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Latin America and the Caribbean
The US Spent $33 Million on Haiti’s Scrapped Elections — Here is Where it WentHaiti’s electoral council announced yesterday that new first-round presidential elections would be held in October after a commission found widespread fraud and irregularities in the previous vote. The prospect of the new vote — to be held alongside dozens of parliamentary seats still up for grabs, has raised questions about how it could be funded. The previous elections — determined to be too marred by fraud and violence to count — cost upward of $100 million, with the bulk of the funding coming from international donors.
But now, donors are balking. Last week the State Department’s Haiti Special Coordinator Ken Merten said that if elections are redone “from scratch” than it would put U.S. assistance in jeopardy. It “could also call into question whether the U.S. will be able to continue to support financially Haiti’s electoral process,” Merten added. In a separate interview, Merten explained:
We still do not know what position we will adopt regarding our financial support. U.S. taxpayers have already spent more than $33 million and that is a lot. We can ask ourselves what was done with the money or what guarantees there are that the same thing will not happen again.
So, what was done with the money? Could the same thing happen again?
To begin with, that figure seems to include money allocated in 2012 – years before the electoral process began. Local and legislative elections, which former president Michel Martelly was constitutionally required to organize, failed to happen. A significant share of this early funding likely went to staffing and overhead costs as international organizations or grantees kept their Haiti programs running, despite the absence of elections. It’s also worth pointing out that many millions of that money never went to electoral authorities, but rather to U.S. programs in support of elections.
In April 2013, USAID awarded a grant to the DC-based Consortium for Elections and Political Processes. In total, $7.23 million went to the consortium before the electoral process even began. An additional $4.95 million was awarded in July 2015, a month before legislative elections. The consortium consists of two DC-based organizations, the International Foundation for Electoral Systems (IFES) and the National Democratic Institute (NDI). In a January report to Congress, the State Department explained further what some this money went towards:
1. “the creation and implementation of twenty-six Electoral Information Centers (EICs) … to provide information to the general public on the electoral process”
2. “training more than 100 journalists in several departments on topics such as the international standards for elections …”
3. “Funding through INL supported election security.”
4. “USAID also supported the creation of a new domestic election observation platform that helped build greater transparency into the electoral process by establishing a grassroots coalition of reputable and well-trained domestic observers …”
Some funding also went to increasing women’s participation in the electoral process. But it’s questionable what the return on that $12.18 million really was. Not a single woman was elected to parliament — though it now appears as though at least one was elected, only to have her seat stolen through the bribing of an electoral judge. In terms of providing information to the public about the elections, participation in both the legislative and presidential elections was only about a fifth of the population. The money spent on local observers may have been more successful, but not for U.S. interests. The local observer group, the Citizen Observatory for the Institutionalization of Democracy, led by Rosny Desroches, agreed with other local observation missions that a verification commission (opposed by the U.S.) was needed to restore confidence in the elections. The U.S. spent millions training local observers, only to later ignore their analysis. Instead, the U.S. has consistently pointed to the observation work of international organizations such as the Organization of American States (OAS) and the EU. The U.S. also provided $1 million to the OAS for their observation work.
Jake Johnston / June 07, 2016
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Have You Seen Mark's New Blog?That’s right, CEPR Co-director Mark Weisbrot is now blogging at CEPR.net!
His new blog on economic and political trends in a multi-polar world debuted this past month. “The World in Transition: Economics and Politics” has featured several posts already, including this one on the Democratic primary, this one on political judiciary in Argentina, and this analysis of the IMF’s estimates of potential GDP and Nouriel Roubini’s forecasts for the global economy. Mark also wrote posts on Brazil, including this one on leaked conversations that reveal major players colluded to carry out the coup, and this one on the coup and Washington’s “rollback” of the left in Latin America.
CEPR / June 07, 2016
Article Artículo
Latin America and the Caribbean
El golpe de estado en Brasil y el ‘retroceso’ de Washington en América LatinaMark Weisbrot / June 06, 2016
Article Artículo
Weak Job Numbers Will Delay Fed Rate HikesDean Baker
Truthout, June 6, 2016
Dean Baker / June 06, 2016
Article Artículo
Quits Rate Shows the Job Market Remains WeakThe data in the Job Openings and Labor Turnover Survey (JOLTS) provide evidence of continuing weakness in the labor market in spite of the relatively low unemployment rate.
Through the first three months of 2016, the unemployment rate averaged 4.95 percent. While this is a reasonably low unemployment rate, by many other measures the labor market is far from recovering from the recession. One of these measures is the quits rate.
When workers feel that there are few job opportunities, they are less likely to quit their jobs, because they see few better opportunities. Through the first three months of the year, the quits rate has averaged just 2.04 percent, an unusually low rate.
CEPR and / June 06, 2016
Article Artículo
Shorter Workweeks Will Defeat the RobotsDean Baker
Inside Sources, June 4, 2016
Dean Baker / June 06, 2016
Article Artículo
How Bad Was the May Jobs Report?The May jobs report was worse than most analysts (including me) had expected. We are now seeing a lot of columns asking how bad was it? My answer is pretty bad.
First, to get an obvious source of overstated weakness out of the way, we lost 35,000 jobs in the communications sector due to the Verizon strike. Those jobs will come back in the June report. If we add that number in we get 73,000. That’s better, but hardly a great report.
Furthermore, this bad report wasn’t hugely out of the line with the reports from the prior two months, both of which were revised down with the May release. The average for these two months was 154,500. Taken together, the three reports provide solid evidence that the rate of job growth has slowed sharply from the 200,000 plus rate of the prior two years.
We get a similar story if we look at total hours. Since December, the index of average weekly hours has risen at less than a 0.7 percent annual rate. This compares to a 2.0 percent rate over the prior year. (The index has actually been slightly negative if we use January, 2016 as the start point.)
We can also look to other items in the report that are to some extent independent of the establishment jobs numbers. For example, we can look to the employment diffusion indexes, which show the percentage of industries in which employers expect to add workers over a given period. All of these have fallen sharply in recent months.
CEPR / June 04, 2016
