Last week the Bureau Labor Statistics reported that the nation lost 11,000 jobs in November.
Most of the coverage was like the of the over the top Milwaukee Journal Sentinel headine which declared: "Optimism returns as unemployment rate dips to 10%."
Not so quick.
As Nobel Prize winning economist Paul Krugman points out:
I don’t think many people grasp just how much job creation we need to climb out of the hole we’re in. You can’t just look at the eight million jobs that America has lost since the recession began, because the nation needs to keep adding jobs — more than 100,000 a month — to keep up with a growing population. And that means that we need really big job gains, month after month, if we want to see America return to anything that feels like full employment.
...we need to add around 18 million jobs over the next five years, or 300,000 jobs a month. This puts last week’s employment report, which showed job losses of “only” 11,000 in November, in perspective. It was basically a terrible report, which was reported as good news only because we’ve been down so long that it looks like up to the financial press.
So if we’re going to have any real good news, someone has to take responsibility for creating a lot of additional jobs. And at this point, that someone almost has to be the Federal Reserve.
I don’t mean to absolve the Obama administration of all responsibility. Clearly, the administration proposed a stimulus package that was too small to begin with and was whittled down further by “centrists” in the Senate. And the measures President Obama proposed earlier this week, while they would create a significant number of additional jobs, fall far short of what the economy needs.
But while economic analysis says that we should have a large second stimulus, the political reality is that the president — faced with total obstruction from Republicans, while receiving only lukewarm support from some in his own party — probably can’t get enough votes in Congress to do more than tinker at the edges of the employment problem.
The Fed, however, can do more.
The entire column is linked.
Friday, December 11, 2009
Tuesday, December 8, 2009
U.S.troops out of sight and out of mind
We are sending another 30,000 troops into combat, young men and women who are our husbands, wives, sons and daughters.
New York Times columnist Bob Herbert notes:
The air is filled with obsessive self-satisfied rhetoric about supporting the troops, giving them everything they need and not letting them down. But that rhetoric is as hollow as a jazzman’s drum because the overwhelming majority of Americans have no desire at all to share in the sacrifices that the service members and their families are making. Most Americans do not want to serve in the wars, do not want to give up their precious time to do volunteer work that would aid the nation’s warriors and their families, do not even want to fork over the taxes that are needed to pay for the wars.
To say that this is a national disgrace is to wallow in the shallowest understatement. The nation will always give lip-service to support for the troops, but for the most part Americans do not really care about the men and women we so blithely ship off to war, and the families they leave behind. ..
The reason it is so easy for the U.S. to declare wars, and to continue fighting year after year after year, is because so few Americans feel the actual pain of those wars. We’ve been fighting in Iraq and Afghanistan longer than we fought in World Wars I and II combined. If voters had to choose right now between instituting a draft or exiting Afghanistan and Iraq, the troops would be out of those two countries in a heartbeat.
I don’t think our current way of waging war, which is pretty easy-breezy for most citizens, is what the architects of America had in mind. Here’s George Washington’s view, for example: “It must be laid down as a primary position and the basis of our system, that every citizen who enjoys the protection of a free government owes not only a proportion of his property, but even his personal service to the defense of it.”
What we are doing is indefensible and will ultimately exact a fearful price, and there will be absolutely no way for the U.S. to avoid paying it.
New York Times columnist Bob Herbert notes:
The air is filled with obsessive self-satisfied rhetoric about supporting the troops, giving them everything they need and not letting them down. But that rhetoric is as hollow as a jazzman’s drum because the overwhelming majority of Americans have no desire at all to share in the sacrifices that the service members and their families are making. Most Americans do not want to serve in the wars, do not want to give up their precious time to do volunteer work that would aid the nation’s warriors and their families, do not even want to fork over the taxes that are needed to pay for the wars.
To say that this is a national disgrace is to wallow in the shallowest understatement. The nation will always give lip-service to support for the troops, but for the most part Americans do not really care about the men and women we so blithely ship off to war, and the families they leave behind. ..
The reason it is so easy for the U.S. to declare wars, and to continue fighting year after year after year, is because so few Americans feel the actual pain of those wars. We’ve been fighting in Iraq and Afghanistan longer than we fought in World Wars I and II combined. If voters had to choose right now between instituting a draft or exiting Afghanistan and Iraq, the troops would be out of those two countries in a heartbeat.
I don’t think our current way of waging war, which is pretty easy-breezy for most citizens, is what the architects of America had in mind. Here’s George Washington’s view, for example: “It must be laid down as a primary position and the basis of our system, that every citizen who enjoys the protection of a free government owes not only a proportion of his property, but even his personal service to the defense of it.”
What we are doing is indefensible and will ultimately exact a fearful price, and there will be absolutely no way for the U.S. to avoid paying it.
The column is linked.
Monday, December 7, 2009
The Fugees: soccer, hope,redemption and the immigrant experience
Two years ago, Warren St John of the New York Times, wrote an article about a soccer club composed of refugees from some of the most violent nations in the world and their volunteer coach, a young woman, Luma Mufleh.
It is an inspiring story about how Ms Mufleh, an immigrant herself, used soccer as a vehicle to help her players adapt to their new lives in the United States.
While the experiences of these athletes are unique and in many cases horrifying, generations of immigrants have built soccer clubs in the US and used them as a supportive community to understand and adapt to their new circumstances.
Long before the soccer had established a foothold in Milwaukee's suburbs, immigrants had organized ethnic clubs like Verdi, the Bavarians, the Serbs, the Croatian Eagles, and Polonia. Many of Milwaukee's soccer legends like Bob Gansler and Mario Carini played for these clubs that were firmly rooted in the city's immigrant neighborhoods. One of the largest clubs in Milwaukee today, Club Latino, continues this tradition.
St John has now written a book, "Outcasts United," about the Fugees soccer club which is shorthand for Refugees. It's a great read. To learn more about the Fugees and how soccer serves as an effective vehicle for self expression and acculturation read the book or watch attached video.
It is an inspiring story about how Ms Mufleh, an immigrant herself, used soccer as a vehicle to help her players adapt to their new lives in the United States.
While the experiences of these athletes are unique and in many cases horrifying, generations of immigrants have built soccer clubs in the US and used them as a supportive community to understand and adapt to their new circumstances.
Long before the soccer had established a foothold in Milwaukee's suburbs, immigrants had organized ethnic clubs like Verdi, the Bavarians, the Serbs, the Croatian Eagles, and Polonia. Many of Milwaukee's soccer legends like Bob Gansler and Mario Carini played for these clubs that were firmly rooted in the city's immigrant neighborhoods. One of the largest clubs in Milwaukee today, Club Latino, continues this tradition.
St John has now written a book, "Outcasts United," about the Fugees soccer club which is shorthand for Refugees. It's a great read. To learn more about the Fugees and how soccer serves as an effective vehicle for self expression and acculturation read the book or watch attached video.
Tuesday, December 1, 2009
Wave district proposal is bad economics
Badger Meter CEO Richard Meeusen recently proposed that the city offer water free to firms that relocate to the area. The concept has been endorsed by the Milwaukee Journal Sentinel editorial board and Milwaukee Mayor Tom Barrett. According to the Wall Street Journal the city is preparing an application for the Wisconsin Public Service Commission that would offer reduced water rates for up to five years to businesses that bring in at least 25 jobs.
This is very bad idea based on a fundamental misunderstanding of economic principles.
Proponents of “wave districts” are right that Milwaukee has a competitive advantage in reliable water. It’s the result of the city’s location and years of public investment. Climate change is making Milwaukee’s water even more valuable as UWM economics professor and department chair, William L. Holahan, has documented in his paper, "Reliable Water Supply: Milwaukee's Comparative Advantage."
Milwaukee’s competitive advantage in water makes it attractive to businesses that need reliable sources of water such as bottling plants that are relocating from cities in the southeast and southwest that are plagued by water shortages.
But if Milwaukee truly has a competitive advantage in water reliability, there is no reason to reduce its price or give it away. No business firm would cut its price in response to increased competitive advantage. In fact, it is standard for business firms to raise their prices, not reduce them, when their competition is "drying up." Badger Meter certainly wouldn’t cut its prices if a major competitor went under. So why should the city of Milwaukee?
Rather than providing water hungry-firms with windfall profits by cutting the city’s nationally low water rates to zero, Milwaukee should use its competitive advantage in reliable water to attract water hungry-firms and invest the revenue generated through increased sales of water in other public goods that benefit all of the city’s citizens and businesses, like our schools, employment and training programs, parks, transportation and communications infrastructure, or in property tax relief.
The economic attractiveness of the city depends on its quality of life, its schools, parks, streets, public health, safety and tax rates among other things. Milwaukee badly needs revenue to invest in these attractors in no small part because shared revenue from the state has declined by almost 25% over the past decade.
The Milwaukee Water Works is an asset of the city, paid for by rate-payers, and its value must be maximized for the benefit of the city, its residents and employers. Proper pricing and investment of water revenue is a key to maximizing the value of the city’s competitive advantage in water reliability. Establishing “wave districts” will not contribute to this objective or enhance the city’s competitiveness.
This is very bad idea based on a fundamental misunderstanding of economic principles.
Proponents of “wave districts” are right that Milwaukee has a competitive advantage in reliable water. It’s the result of the city’s location and years of public investment. Climate change is making Milwaukee’s water even more valuable as UWM economics professor and department chair, William L. Holahan, has documented in his paper, "Reliable Water Supply: Milwaukee's Comparative Advantage."
Milwaukee’s competitive advantage in water makes it attractive to businesses that need reliable sources of water such as bottling plants that are relocating from cities in the southeast and southwest that are plagued by water shortages.
But if Milwaukee truly has a competitive advantage in water reliability, there is no reason to reduce its price or give it away. No business firm would cut its price in response to increased competitive advantage. In fact, it is standard for business firms to raise their prices, not reduce them, when their competition is "drying up." Badger Meter certainly wouldn’t cut its prices if a major competitor went under. So why should the city of Milwaukee?
Rather than providing water hungry-firms with windfall profits by cutting the city’s nationally low water rates to zero, Milwaukee should use its competitive advantage in reliable water to attract water hungry-firms and invest the revenue generated through increased sales of water in other public goods that benefit all of the city’s citizens and businesses, like our schools, employment and training programs, parks, transportation and communications infrastructure, or in property tax relief.
The economic attractiveness of the city depends on its quality of life, its schools, parks, streets, public health, safety and tax rates among other things. Milwaukee badly needs revenue to invest in these attractors in no small part because shared revenue from the state has declined by almost 25% over the past decade.
The Milwaukee Water Works is an asset of the city, paid for by rate-payers, and its value must be maximized for the benefit of the city, its residents and employers. Proper pricing and investment of water revenue is a key to maximizing the value of the city’s competitive advantage in water reliability. Establishing “wave districts” will not contribute to this objective or enhance the city’s competitiveness.
Wednesday, November 25, 2009
Tuesday, November 24, 2009
US debt a phantom menace
Yesterday the New York Times reported that the United States is borrowing trillions of dollars under terms that seem "too good to be true" just as a "spending explosion" on benefits programs like Medicare and Social Security is set to begin.
In a series titled "Payback Time: Debt Bomb," the Times details the magnitude of our nation's borrowing and warns of an impending and monumental reality check:
"The government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
With the national debt now topping $12 trillion, the White House estimates that the government's tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically."
Replete with charts and stupefying figures (Americans must pay off more than $1.6 trillion in debt by March 31, 2010), the piece states that there is "little doubt that the United States' long-term budget crisis is becoming too big to postpone."
Au contraire, says Times columnist and Nobel Prize-winning economist Paul Krugman, who warned about the very fear mongering about the deficit that the Times was engaged in:
"Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts: the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence."
Krugman cites a recent interview during which President Obama warned that "if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession."
Krugman's response: "What? Huh?"
"The concerns Mr. Obama expressed become comprehensible if you suppose that he's getting his views, directly or indirectly, from Wall Street.
Ever since the Great Recession began economic analysts at some (not all) major Wall Street firms have warned that efforts to fight the slump will produce even worse economic evils. In particular, they say, never mind the current ability of the U.S. government to borrow long term at remarkably low interest rates -- any day now, budget deficits will lead to a collapse in investor confidence, and rates will soar...
A better model [for our current economic plight], I'd argue, is Japan in the 1990s, which ran persistent large budget deficits, but also had a persistently depressed economy -- and saw long-term interest rates fall almost steadily. There's a good chance that officials are being terrorized by a phantom menace -- a threat that exists only in their minds.
Read Krugman's full piece here.
Likewise, economist Dean Baker, who was one of the first to recognize the housing bubble years before it burst, scoffs at the Times's over-hyped debt reporting. Baker's post -- titled, "In Just a Decade the U.S. Interest Burden Could Be as High as It Was in 1992!!!!!!!" -- notes that there is "no evidence presented in this article that the rise in interest rates will place the U.S. government in a situation where it will be unable to pay its bills and no one cited in this article makes such a claim."
Incidentally, today's Wall Street Journal features more evidence that the Obama administration is rejecting Krugman's advice. "The White House is lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit," the Journal reports, citing administration officials.
In a series titled "Payback Time: Debt Bomb," the Times details the magnitude of our nation's borrowing and warns of an impending and monumental reality check:
"The government faces a payment shock similar to those that sent legions of overstretched homeowners into default on their mortgages.
With the national debt now topping $12 trillion, the White House estimates that the government's tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically."
Replete with charts and stupefying figures (Americans must pay off more than $1.6 trillion in debt by March 31, 2010), the piece states that there is "little doubt that the United States' long-term budget crisis is becoming too big to postpone."
Au contraire, says Times columnist and Nobel Prize-winning economist Paul Krugman, who warned about the very fear mongering about the deficit that the Times was engaged in:
"Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts: the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence."
Krugman cites a recent interview during which President Obama warned that "if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession."
Krugman's response: "What? Huh?"
"The concerns Mr. Obama expressed become comprehensible if you suppose that he's getting his views, directly or indirectly, from Wall Street.
Ever since the Great Recession began economic analysts at some (not all) major Wall Street firms have warned that efforts to fight the slump will produce even worse economic evils. In particular, they say, never mind the current ability of the U.S. government to borrow long term at remarkably low interest rates -- any day now, budget deficits will lead to a collapse in investor confidence, and rates will soar...
A better model [for our current economic plight], I'd argue, is Japan in the 1990s, which ran persistent large budget deficits, but also had a persistently depressed economy -- and saw long-term interest rates fall almost steadily. There's a good chance that officials are being terrorized by a phantom menace -- a threat that exists only in their minds.
Read Krugman's full piece here.
Likewise, economist Dean Baker, who was one of the first to recognize the housing bubble years before it burst, scoffs at the Times's over-hyped debt reporting. Baker's post -- titled, "In Just a Decade the U.S. Interest Burden Could Be as High as It Was in 1992!!!!!!!" -- notes that there is "no evidence presented in this article that the rise in interest rates will place the U.S. government in a situation where it will be unable to pay its bills and no one cited in this article makes such a claim."
Incidentally, today's Wall Street Journal features more evidence that the Obama administration is rejecting Krugman's advice. "The White House is lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit," the Journal reports, citing administration officials.
Saturday, November 14, 2009
Jobs deficit requires bold action
Since the beginning of the Great Recession, unemployment has increased by 5.8%, the biggest increase since the Great Depression. The ranks of the long term unemployed (those laid off for more than six months) has soared to 5.6. million, also a post-depression peak. While Republicans like Congressman Paul Ryan, and Blue Dog Democrats hyperventilate about the threat of inflation and the federal deficit, America's working people are experiencing a real jobs deficit!
As the New York Times Bob Herbert notes:
Wall Street can boast about recovery all it wants, much of America remains trapped in economic hell.
It will take a monumental leadership effort by the administration and Congress to spark the kind of changes necessary to transform this wretched employment landscape. Ross Eisenbrey of the Economic Policy Institute has written: “By itself, the private sector is unable to create jobs in the numbers the United States needs to obtain a robust, full economic recovery.”
...we need to rethink our entire approach to employment. Conventional efforts to kick-start economic growth are dwarfed by the vast scale of the problem. Bold new efforts — creative efforts — are needed.
Herbert's piece is linked.
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