The renovated Town Hall is looking good. I think Bob Maxbauer has done a good job. We will enjoy the improved facilities for many years.
I'm really anxious to attend the first Town Board meeting in the new facilities.
Saturday, December 15, 2012
Europe Is In Trouble
It looks like Europe is going into recession again. Not only is Greece suffering from 25% unemployment, so is Spain. The austerity measures forced on those countries aren't working. Prime Minister Mario Monti of Italy, the technocrat appointed to that office at the behest of Eurocrats in Brussels, largely responding to Germany.
Last year, things were really looking bad, but Mario Draghi, the new president of the European Central Bank, has managed to slow the deterioration. But there is a growing perception that in the long run, in the absence of greater European political integration, prospects for the Euro and the Eurozone are not good.
A book by Harvard professor Dani Rodrik, published last year, explains the problem:
Last year, things were really looking bad, but Mario Draghi, the new president of the European Central Bank, has managed to slow the deterioration. But there is a growing perception that in the long run, in the absence of greater European political integration, prospects for the Euro and the Eurozone are not good.
A book by Harvard professor Dani Rodrik, published last year, explains the problem:
"The Globalization Paradox: Democracy and the Future of the World Economy, W.W. Norton, New York and London, 2011, forthcoming.
Surveying three centuries of economic history, a Harvard professor argues for a leaner global system that puts national democracies front and center.
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the "Washington Consensus"—brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets."
In summary, by creating a common currency before political integration, Europe has put the cart before the horse. Probably because the horse simply wasn't going to happen.
In a recent interview with the Swedish journal Respons, Rodrik explains his views in detail. This is the best and clearest explanation of the European dilemma I have read. For anyone interested in European affairs, I recommend reading it.
After reading the article, I conclude that the best solution is to do away with the Euro. There plainly is no risk-free approach to a viable future for the Euro. Better to do away with it sooner than later.
Why does this matter to Americans? We export a lot of goods and services to Europe. Another European recession is not good news for the US economy.
Surveying three centuries of economic history, a Harvard professor argues for a leaner global system that puts national democracies front and center.
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the "Washington Consensus"—brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets."
In summary, by creating a common currency before political integration, Europe has put the cart before the horse. Probably because the horse simply wasn't going to happen.
In a recent interview with the Swedish journal Respons, Rodrik explains his views in detail. This is the best and clearest explanation of the European dilemma I have read. For anyone interested in European affairs, I recommend reading it.
After reading the article, I conclude that the best solution is to do away with the Euro. There plainly is no risk-free approach to a viable future for the Euro. Better to do away with it sooner than later.
Why does this matter to Americans? We export a lot of goods and services to Europe. Another European recession is not good news for the US economy.
Friday, December 14, 2012
Laura Tyson's Advice
Today's Laura Tyson article in New York Times' Economix blog spells out in much more detail than my earlier post just why we don't have more jobs and what to do about it.
What's wrong?
Insufficient aggregate demand. In other words, not enough people have enough disposable income to buy stuff.
What to do about it?
Hire more people. Build more roads and bridges. Government spend more money.
What not to do about it right now?
Reduce spending.
What else not to do?
Don't raise taxes on poor and working people.
Can we raise taxes on anybody without crashing the economy?
Yes. Raise them on our richest people.
Why? They'll never notice. Won't reduce their spending at all.
Why else? The economy will work better.
What's wrong?
Insufficient aggregate demand. In other words, not enough people have enough disposable income to buy stuff.
What to do about it?
Hire more people. Build more roads and bridges. Government spend more money.
What not to do about it right now?
Reduce spending.
What else not to do?
Don't raise taxes on poor and working people.
Can we raise taxes on anybody without crashing the economy?
Yes. Raise them on our richest people.
Why? They'll never notice. Won't reduce their spending at all.
Why else? The economy will work better.
Top Priority: Jobs, Not Deficit
It's a mystery to me how, during the greatest sustained employment crisis since the Great Depression, our national political class remains focused on the deficit instead of putting people back to work. Robert Reich, former Secretary of Labor in the Clinton administration, takes a stab at explaining why the obsession should be with jobs.
Read Reich's article. Here's my take on it.
The deficit is caused by unemployment. When people are unemployed, all manner of safety net expenses go up. Unemployment insurance payments increase. Medicaid takes over more of the cost of medical care. Food stamp use increases. Revenue goes down as fewer people earn income. At the state level, people buy less and pay less sales tax.
All of these add to the deficit. With respect to the safety net, the deficit isn't a bug - it's a feature.
The safety net isn't just to help individual citizens. It helps businesses, by making it possible for the citizens to keep buying food, shelter and clothing. Wal-Mart thrives on the safety net.
The safety net also helps regions. Concealed by the fact that safety net programs are paid to individuals is the reality that these are enormous transfers from the more prosperous to less prosperous regions of the country. Without these transfers, Mississippi would be like Greece.
To get out of this fix, the federal government needs to spend more, not less.
Right now, the focus needs to be on putting people back to work.
The safety net is not a form of charity to individuals, though it does help keep people alive. More importantly, in a cold-hearted way, it keeps the economy alive. It keeps businesses going in bad times by sending customers through the door.
Without safety net programs, a major downturn would feed on itself and the economy would have no natural bottom to it.
Right now, only the federal government has the power to put people back to work. And there is clearly work that needs to be done. Fix our crumbling roads and bridges, for one. Bury our electrical distribution system, for another (to at least mitigate damage from future Sandys). Put teachers, firemen and policemen back to work. All of these measures would put money back in people's pockets and put people back in stores, increase orders to factories, reduce safety net expenditures, increase tax revenue and reduce the deficit.
Jobs first. The deficit will follow.
Read Reich's article. Here's my take on it.
The deficit is caused by unemployment. When people are unemployed, all manner of safety net expenses go up. Unemployment insurance payments increase. Medicaid takes over more of the cost of medical care. Food stamp use increases. Revenue goes down as fewer people earn income. At the state level, people buy less and pay less sales tax.
All of these add to the deficit. With respect to the safety net, the deficit isn't a bug - it's a feature.
The safety net isn't just to help individual citizens. It helps businesses, by making it possible for the citizens to keep buying food, shelter and clothing. Wal-Mart thrives on the safety net.
The safety net also helps regions. Concealed by the fact that safety net programs are paid to individuals is the reality that these are enormous transfers from the more prosperous to less prosperous regions of the country. Without these transfers, Mississippi would be like Greece.
To get out of this fix, the federal government needs to spend more, not less.
Right now, the focus needs to be on putting people back to work.
The safety net is not a form of charity to individuals, though it does help keep people alive. More importantly, in a cold-hearted way, it keeps the economy alive. It keeps businesses going in bad times by sending customers through the door.
Without safety net programs, a major downturn would feed on itself and the economy would have no natural bottom to it.
Right now, only the federal government has the power to put people back to work. And there is clearly work that needs to be done. Fix our crumbling roads and bridges, for one. Bury our electrical distribution system, for another (to at least mitigate damage from future Sandys). Put teachers, firemen and policemen back to work. All of these measures would put money back in people's pockets and put people back in stores, increase orders to factories, reduce safety net expenditures, increase tax revenue and reduce the deficit.
Jobs first. The deficit will follow.
Thursday, December 13, 2012
Right To Work For Less
Those of us who have studied 20th Century history, especially the history of authoritarian or fascist dictatorships have observed a pattern. Dictators seek to control the media, control the schools and control or destroy the labor unions.
I was reminded of this during the past week as the Republican government in Michigan pressed during a lame duck session to destroy unions in Michigan. Michigan is not alone. They are now one of twenty-four states with so-called "right to work" laws.
"Right to work" as many observers have noted, really means "right to work for less." The term itself is an example of Orwellian language which means the opposite of what it seems to mean. Harold Meyerson of the Washington Post does a very good job explaining the historical background. Meyerson shows the similarity in the aim of "right to work" and efforts by the Communist leadership in China to control and benefit from the profits of improved productivity.
In our country, it isn't the government, but those who control the finance system, who have stolen the lion's share of increased productivity for themselves.
I was reminded of this during the past week as the Republican government in Michigan pressed during a lame duck session to destroy unions in Michigan. Michigan is not alone. They are now one of twenty-four states with so-called "right to work" laws.
"Right to work" as many observers have noted, really means "right to work for less." The term itself is an example of Orwellian language which means the opposite of what it seems to mean. Harold Meyerson of the Washington Post does a very good job explaining the historical background. Meyerson shows the similarity in the aim of "right to work" and efforts by the Communist leadership in China to control and benefit from the profits of improved productivity.
In our country, it isn't the government, but those who control the finance system, who have stolen the lion's share of increased productivity for themselves.
Wednesday, December 12, 2012
Another Interesting Post On Technology, Jobs And Salaries
Here is an interesting post by economist Tim Taylor, reposted by Mark Thoma. It addresses issues of manufacturing productivity and suggests the only bright spot is computers. And that sector isn't doing much for jobs. Capital rather than labor scarfs up the profit.
I think this fits in with my previous post on technology, jobs and salaries. Taylor's post clarifies many of the issues involved in assessing manufacturing productivity. The picture may not be as rosy as government statistics indicate. Taylor explains: "Our statistical agencies try to measure price changes, but they miss them when the price drops because companies have shifted to a low-cost supplier. So because we don’t catch the price drop associated with offshoring, it looks like we can produce the same thing with fewer inputs—productivity growth. It also looks like we are creating more value here in the United States than we really are."
"Suppose," Taylor explains, "an auto manufacturer used to buy tires from a domestic tire manufacturer. Then it outsources the purchase of its tires to, say, Mexico, and the Mexicans sell the tires for half the price. That price drop—when the auto manufacturer switches to the low-cost Mexican supplier—isn’t caught in our statistics. And if you don’t capture that price drop, it’s going to look like, in some statistical sense, the manufacturer can make the same car but only needs two tires."
Figures don't lie....
I think this fits in with my previous post on technology, jobs and salaries. Taylor's post clarifies many of the issues involved in assessing manufacturing productivity. The picture may not be as rosy as government statistics indicate. Taylor explains: "Our statistical agencies try to measure price changes, but they miss them when the price drops because companies have shifted to a low-cost supplier. So because we don’t catch the price drop associated with offshoring, it looks like we can produce the same thing with fewer inputs—productivity growth. It also looks like we are creating more value here in the United States than we really are."
"Suppose," Taylor explains, "an auto manufacturer used to buy tires from a domestic tire manufacturer. Then it outsources the purchase of its tires to, say, Mexico, and the Mexicans sell the tires for half the price. That price drop—when the auto manufacturer switches to the low-cost Mexican supplier—isn’t caught in our statistics. And if you don’t capture that price drop, it’s going to look like, in some statistical sense, the manufacturer can make the same car but only needs two tires."
Figures don't lie....
Lobbyists And Why They Make The Big Bucks
Very interesting new report from economists at the University of Warwick in the UK.
The study, by economist Mirko Draca, confirms that pay is based not on "what" the lobbyist knows, but on "who" the lobbyist knows. This is not earth shattering news, but the study learned that lobbyists who were former congressional staffers receive on average a 24% cut in pay when the member of Congress for whom they served leave Congress.
The researchers were actually impressed that US law makes it possible to find out such information. It would not be possible in the UK.
I might add that in the UK, unlike in the US, lobbyists concentrate on the political parties more than individual members. Party discipline tends to make the lobbying of individual members relatively unproductive.
Even so, I believe this report lends support to my concept of improving responsiveness of the House of Representatives by tripling the number of members. To do so without increasing total number of staffers might reduce the market value of individual staffers' contacts.
The study, by economist Mirko Draca, confirms that pay is based not on "what" the lobbyist knows, but on "who" the lobbyist knows. This is not earth shattering news, but the study learned that lobbyists who were former congressional staffers receive on average a 24% cut in pay when the member of Congress for whom they served leave Congress.
The researchers were actually impressed that US law makes it possible to find out such information. It would not be possible in the UK.
I might add that in the UK, unlike in the US, lobbyists concentrate on the political parties more than individual members. Party discipline tends to make the lobbying of individual members relatively unproductive.
Even so, I believe this report lends support to my concept of improving responsiveness of the House of Representatives by tripling the number of members. To do so without increasing total number of staffers might reduce the market value of individual staffers' contacts.
Can Government Ever Do Things Better And Cheaper? Yes
Los Angeles Times business reporter Michael Hiltzik addresses the question of whether government can ever do things better than private enterprise. His answer: Yes.
"Here's a rule of thumb to consider," Hiltzik writes, "for when government should take a role in providing a service: When it's cheaper." He means, cheaper for the country as a whole.
He examines in particular the consequences of raising the age of eligibility for Medicare. It would save 5.7 billion in the federal budget this year alone. "Of course," he points out, "it does horrors for the budgets of everyone else."
Hiltzik summarizes: "Put it all together, as health economist Austin Frakt did, and you find that saving that $5.7 billion on the federal books would cost society as a whole $11.4 billion. To paraphrase Jerry Seinfeld, this is how you save money in the Bizarro world. It does nothing to improve Medicare. It does nothing to hold down healthcare costs. It does nothing to improve the health of the target population."
And "by the way, the higher costs would hit middle-class seniors especially hard."
As we used to say in the Pentagon: "that's dumb - let's do it!"
Speaking of the Pentagon, if the trend in recent decades of outsourcing military functions to private industry is cheaper and better than having the military do it, those results aren't apparent.
Hiltzik provides many examples of good, efficient government programs.
Worth reading.
"Here's a rule of thumb to consider," Hiltzik writes, "for when government should take a role in providing a service: When it's cheaper." He means, cheaper for the country as a whole.
He examines in particular the consequences of raising the age of eligibility for Medicare. It would save 5.7 billion in the federal budget this year alone. "Of course," he points out, "it does horrors for the budgets of everyone else."
Hiltzik summarizes: "Put it all together, as health economist Austin Frakt did, and you find that saving that $5.7 billion on the federal books would cost society as a whole $11.4 billion. To paraphrase Jerry Seinfeld, this is how you save money in the Bizarro world. It does nothing to improve Medicare. It does nothing to hold down healthcare costs. It does nothing to improve the health of the target population."
And "by the way, the higher costs would hit middle-class seniors especially hard."
As we used to say in the Pentagon: "that's dumb - let's do it!"
Speaking of the Pentagon, if the trend in recent decades of outsourcing military functions to private industry is cheaper and better than having the military do it, those results aren't apparent.
Hiltzik provides many examples of good, efficient government programs.
Worth reading.
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