Tuesday, September 25, 2012
Trading Blows
Following up on Sean Gebhard's post about the Obama tire ad, have a look at this ad from the Romney campaign. I think you can bet on this part of IPE being the next big theme in the presidential campaign, perhaps up through the first debate.
Monday, September 24, 2012
Farm Bill
Here's an article that I bet Stiglitz and Wolf would agree upon. It's about the farm bill, a law passed by Congress with wide-reaching impacts on things like food (and gas) prices, farm incomes, and the social safety net, not to mention trade policy. The Washington Post editorial is arguing that no policy - or implicitly a more free market policy - might be preferable to the distortions and inefficiencies generated by the bill. The argument generally goes that farm bills "overprotect" farmers and end up as some form of subsidies (whether directly or indirectly) for large-scale businesses rather than small family farms.
Note that this is the Washington Post, a major national paper that is read primarily by urbanites and suburbanites. One might anticipate different reactions from the Topeka Capital-Journal, the Sacramento Bee, or for that matter the Roanoke Star, newspapers with lots of readers in farm country.
Note that this is the Washington Post, a major national paper that is read primarily by urbanites and suburbanites. One might anticipate different reactions from the Topeka Capital-Journal, the Sacramento Bee, or for that matter the Roanoke Star, newspapers with lots of readers in farm country.
Friday, September 21, 2012
Tuesday, September 18, 2012
"Free trade is...
... a substitute for people actually having to move." Stiglitz says this on p. 67. An intriguing sentence, and one we might discuss. Many of you have already expressed questions and concerns about rising inequality, and when we talk about this in the U.S. over the last 30 years or so, the potential role of globalization is often overlooked in the debate. The focus tends to be on domestic tax rates (for high- and low-income people) and the resulting returns to capital vs. labor. We should keep in mind this is an international story as well as a domestic one. Something our readings for Thursday will address.
Meanwhile, back in the international economy...
While all the political talk today is about Mitt Romney's statements regarding the 47% of Americans who do not pay income tax, there is some real international trade news going on. Obama and Romney are arguing about who is (or will be) tougher on China. Stiglitz would have a good time with this argument. More soon as this morning's NPR transcripts and podcasts come online, as these cover Obama speaking to a crowd in Ohio and saying that American makes the best products in the world, and that when the "playing field is level", "we always win". Standard stuff from a politician, to be sure, but as we talk about comparative advantage, we can pick apart what is true and what is not in these sorts of statements.
Sunday, September 16, 2012
QE3 because "Congress is Lame"?
In the previous post, I noted how George Will was arguing against further monetary expansion from the Federal Reserve. The day after Will's announcement, the Fed made its own announcement: that it would proceed with the increase in the money supply. The program is known as the third round of "quantitative easing", or QE3. All but one of the Federal Reserve governors voted in favor of monetary expansion, including those Will mentioned in his article.
One of Will's arguments was that the Fed was usurping roles that should be the domain of Congress. Here's the contrary perspective from an op-ed writer at CNN: that the Fed had to act because Congress is "lame".
To be sure, a long-standing belief has been that Ben Bernanke, head of the Fed, would argue for doing "whatever it takes" to avoid a depression (or deflation, which we can discuss later), and that this would include a relatively broad interpretation of the Fed's mandate.
Some may object to the Fed taking on a big role in trying to get the economy going in this way. In particular, many conservatives (including George Will) object to more Fed action to stimulate the economy, for a host of reasons we can discuss. But it is also true that - if we take to heart recent polling data on Congressional popularity - a large number of Americans (of various political persuasions) would probably agree with the sentiment about Congressional lameness...
One of Will's arguments was that the Fed was usurping roles that should be the domain of Congress. Here's the contrary perspective from an op-ed writer at CNN: that the Fed had to act because Congress is "lame".
To be sure, a long-standing belief has been that Ben Bernanke, head of the Fed, would argue for doing "whatever it takes" to avoid a depression (or deflation, which we can discuss later), and that this would include a relatively broad interpretation of the Fed's mandate.
Some may object to the Fed taking on a big role in trying to get the economy going in this way. In particular, many conservatives (including George Will) object to more Fed action to stimulate the economy, for a host of reasons we can discuss. But it is also true that - if we take to heart recent polling data on Congressional popularity - a large number of Americans (of various political persuasions) would probably agree with the sentiment about Congressional lameness...
Thursday, September 13, 2012
Will.he.is
I want to flag for a later conversation (once we have discussed central banks) George Will's op-ed today on the Federal Reserve. Will discusses the perspectives of the heads of three of the Federal Reserve regional banks. (As we will discuss, there are 12 of them around the U.S. Incidentally they are excellent sources for research papers and reports on the American economy and a range of economic issues - just click on the map in the previous links to go to the different sites.) From Will's perspective, these three voices have it right, being in opposition to the views of Fed Chairman Ben Bernanke and a majority of the Fed's governing board.
We will discuss this in a couple of weeks, so feel free to disregard for now, if this is new to you. But the first step in Will's argument is theoretical: that the Fed should in general focusing on avoiding the creation of too much money and its mandate should be to prevent inflation. This argument rests on the idea (what is often called a "monetarist" perspective) that the role of a central bank is to maintain a stable money supply and let the vacillations in the real economy work themselves out. Secondarily, he argues that the Fed's recent efforts to do otherwise - namely by creating lots of money in the hopes that it will stimulate spending in the economy - have not succeeded in their aim. And third, he suggests that the Fed's actions have arrogated to the central bank the responsibilities of Congress; he says monetary policy has usurped fiscal policy.
A couple of scattered thoughts, though I will save the debate for later.
1. For any Ron Paul fans in the room, this gets directly to what he considers the main economic challenge to our current system. We can discuss.
2. This also relates to Simone's post about the decisions of Europe's central bank, and the national institutions that have to endorse or approve of these.
We will discuss this in a couple of weeks, so feel free to disregard for now, if this is new to you. But the first step in Will's argument is theoretical: that the Fed should in general focusing on avoiding the creation of too much money and its mandate should be to prevent inflation. This argument rests on the idea (what is often called a "monetarist" perspective) that the role of a central bank is to maintain a stable money supply and let the vacillations in the real economy work themselves out. Secondarily, he argues that the Fed's recent efforts to do otherwise - namely by creating lots of money in the hopes that it will stimulate spending in the economy - have not succeeded in their aim. And third, he suggests that the Fed's actions have arrogated to the central bank the responsibilities of Congress; he says monetary policy has usurped fiscal policy.
A couple of scattered thoughts, though I will save the debate for later.
1. For any Ron Paul fans in the room, this gets directly to what he considers the main economic challenge to our current system. We can discuss.
2. This also relates to Simone's post about the decisions of Europe's central bank, and the national institutions that have to endorse or approve of these.
Tuesday, September 11, 2012
First Official Economist Reference of the Term
I will probably make relatively frequent reference to The Economist magazine, for several reasons.
1. It has, far and away, the most in-depth regular coverage of IPE of any major American (or in this case, American-British) news weekly. Far more than Newsweek or Time. The Wall Street Journal and New York Times also have a good bit, but The Economist writes investigative and analytical pieces on the issues, whereas the dailies focus on reactions to the day's business news. Some of the others with comparable coverage come out monthly or even as quarterly journals.
2. It has a clear editorial position. You may or may not agree with it, but you will know what it is. This transparency about their perspective I find welcome (whether I agree or not on any particular issue). As for what the perspective is, a big hint is the blurb on the cover of the Wolf book.
3. I get it in the mail every week. In sight, in mind.
In any event, a major article this week is about the emergence of the welfare state in emerging Asian economics such as South Korea, Singapore, and China. It will be interesting to see, as these countries become among the most developed in the world, whether they will follow the same path as the "western" countries in developing comprehensive welfare states. If they do, that may be because there is just something about the socio-economic "structure" of relatively rich countries that makes it so. If not, the inference may be that historical trajectories or even culture matter more for the political and economic systems a country develops. One note is that Mancur Olson - a name we will see later in the course - has argued in The Rise and Decline of Nations that the lack of persistent special interest groups over time is a reason that Japan did so well in terms of economic growth (relative to, say, Britain) after World War II. As welfare states develop in the emerging East Asian economies, it will be something to watch to see if growth slows down, and if so what conclusions people reach about whether the welfare state caused slow growth or vice versa.
1. It has, far and away, the most in-depth regular coverage of IPE of any major American (or in this case, American-British) news weekly. Far more than Newsweek or Time. The Wall Street Journal and New York Times also have a good bit, but The Economist writes investigative and analytical pieces on the issues, whereas the dailies focus on reactions to the day's business news. Some of the others with comparable coverage come out monthly or even as quarterly journals.
2. It has a clear editorial position. You may or may not agree with it, but you will know what it is. This transparency about their perspective I find welcome (whether I agree or not on any particular issue). As for what the perspective is, a big hint is the blurb on the cover of the Wolf book.
3. I get it in the mail every week. In sight, in mind.
In any event, a major article this week is about the emergence of the welfare state in emerging Asian economics such as South Korea, Singapore, and China. It will be interesting to see, as these countries become among the most developed in the world, whether they will follow the same path as the "western" countries in developing comprehensive welfare states. If they do, that may be because there is just something about the socio-economic "structure" of relatively rich countries that makes it so. If not, the inference may be that historical trajectories or even culture matter more for the political and economic systems a country develops. One note is that Mancur Olson - a name we will see later in the course - has argued in The Rise and Decline of Nations that the lack of persistent special interest groups over time is a reason that Japan did so well in terms of economic growth (relative to, say, Britain) after World War II. As welfare states develop in the emerging East Asian economies, it will be something to watch to see if growth slows down, and if so what conclusions people reach about whether the welfare state caused slow growth or vice versa.
Thursday, September 06, 2012
World's Most Boring Headline (Actual Winner)
I nominated "European Central Bank Leaves Rates Unchanged at 0.75%", but in a search I was reminded that there was actually a competition for the world's most boring headline. Paul Krugman had the details.
The winner: "Worthwhile Canadian Initiative".
The winner: "Worthwhile Canadian Initiative".
IPE 2012: May You Live in Uninteresting Times
Chalk this one up as a punchline to the old joke about the world's most boring news item:
European Central Bank Leaves Rates Unchanged at 0.75%.
Any sentence that includes the words "central bank" and "unchanged" generally has a doubly soporific effect on people. That said, we will discuss over the course of this term why some of these items are among those in current events that have the greatest effects on your lives.
Now some of you will not yet know what this headline means, and others of you will not understand the mechanics or perhaps its deeper implications. But by the end of the term, I hope you will be able to look at this sort of seemingly drab headline about something like a central bank decision (or a consumer confidence report, or news on growth of manufacturing output in China, or a policy proposal about a payroll tax cut) and have some understanding of it, and some intuition that it matters. When something like a central bank decision hits the news, I hope you will understand what it is, how it works, why it works the way it does, and what it all means.
In the case of this specific news item, the European Central Bank is trying to figure out what role it should play in getting the European economy jump-started, and it is concerned about the prospects that some European countries (especially Greece and Spain, but others as well) might go bust, and blow apart the common currency, the euro. That may sound like a problem for Greeks and Spaniards to sort out - along with Germans, Italians, and others - but let me put it another way. Whether the euro survives in the short-run and in the medium-run will likely have a huge impact on a few little issues, among others:
You don't need to be able to trace yet all the logic, but the implications of decisions by these sorts of actors (central banks, private businesses, individuals, international institutions, and governments) is one way of understanding what IPE is all about.
European Central Bank Leaves Rates Unchanged at 0.75%.
Any sentence that includes the words "central bank" and "unchanged" generally has a doubly soporific effect on people. That said, we will discuss over the course of this term why some of these items are among those in current events that have the greatest effects on your lives.
Now some of you will not yet know what this headline means, and others of you will not understand the mechanics or perhaps its deeper implications. But by the end of the term, I hope you will be able to look at this sort of seemingly drab headline about something like a central bank decision (or a consumer confidence report, or news on growth of manufacturing output in China, or a policy proposal about a payroll tax cut) and have some understanding of it, and some intuition that it matters. When something like a central bank decision hits the news, I hope you will understand what it is, how it works, why it works the way it does, and what it all means.
In the case of this specific news item, the European Central Bank is trying to figure out what role it should play in getting the European economy jump-started, and it is concerned about the prospects that some European countries (especially Greece and Spain, but others as well) might go bust, and blow apart the common currency, the euro. That may sound like a problem for Greeks and Spaniards to sort out - along with Germans, Italians, and others - but let me put it another way. Whether the euro survives in the short-run and in the medium-run will likely have a huge impact on a few little issues, among others:
- whether you have decent prospects for a job if you are graduating in 2013
- when your parents might be able to retire
- whether China can continue to bring millions of people out of poverty every year or not
- whether Barack Obama or Mitt Romney is elected in November
You don't need to be able to trace yet all the logic, but the implications of decisions by these sorts of actors (central banks, private businesses, individuals, international institutions, and governments) is one way of understanding what IPE is all about.
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