Krugman on Buffet and Obama
Krugman is not happy that Obama is turning to businessmen (Warren Buffet and Alan Mulally) for economic advice - he seems to think it is in lieu of seeking the advice of academic macroeconomists. He is right to say that businessmen don’t know how to grow the macroeconomy - a completely different beast from a single corporation. Of course, this is Keynesianism 101: country economies act nothing like business economies. Krugman writes:
They know all about expanding individual businesses — often, indeed usually, at the expense of other individual businesses. That’s an important and very lucrative skill, but it has very little to with the problem of expanding a whole economy, whose main customer is … itself.
But I think the move to bring in businessmen, Buffet especially, is a pragmatic one with a signaling effect. If there is any time to ask for Buffet’s advice, it’s in the wake of his recent NY Times Op-ed where his business pedigree and acumen can be actually applied to pushing some policy that increases government revenues (raises taxes). A business leader will never be a macroeconomist. But I’m guessing they’re brought on board to fulfill completely different roles.
12:19 am |
August 24 2011
IMG_6703 on Flickr.
Rice High School 8/18/2011
10:56 am |
August 23 2011
IMG_6624 on Flickr.
Rice High School - 8/18/2011
10:55 am |
August 23 2011
I wish he chose a different title (we need to blame Wall Street a little), but this piece by John Judis for The New Republic is excellent - "Stop Blaming Wall Street." Not enough Americans understand that our economy and society has undergone incredible transformations that have caused the infrastructure of what we perceived to be American Capitalism, the American dream, and our economy to erode. Simply put, Judis argues that our current problems were not only born out of derivatives, over leveraged banks, financial deregulation, and a terrible housing system. While I still think all those things are to blame for some problems, Judis is right. The American economy has begun to fracture for years and Gordon Gecko is not the only person to blame. Instead, its a complicated tale of changes to the global economy, trade deficits (when you import more than export), changes in exchange rates and international monetary policy. Judis writes:
CRITICS OF FINANCIALIZATION usually blame the bank lobby and irresponsible federal officials who did its bidding—led by Greenspan, Clinton Treasury Secretaries Rubin and Lawrence Summers, and Bush Securities and Exchange Commission head Christopher Cox. These men do deserve some of the blame for the speculative excesses that resulted in the crash of 2007-2008. However, financialization was also a product of pressures created by post-Bretton Woods American capitalism—a dependent rather than an independent variable in the U.S. economic equation.
These pressures included the rise of foreign banks thanks to floating exchange rates (forcing American banks to grow to compete), and the undermining of American industry due to faulty policy and a flurry of political and economic realities American policy makers were unable to face. This all resulted in the following:
But the consequences of retaining the arrangement were profound. There was the erosion of middle-class living standards, for one thing. To defend against fierce competition from abroad, American firms that produced tradable goods and services attempted to hold down wages in part by going on the offensive against private-sector labor unions. (Other firms simply moved production overseas.) As a result, real wages failed to grow much at all in these industries. According to the Economic Policy Institute, average hourly wages for production workers fell 6.2 percent between 1979 and 1989 after having risen steadily for most of the previous three decades. Wages only rose slightly in the ’90s and even less in the 2000s.
Judis’ article is complicated and requires a thorough reading, but it is possible the best mainstream journalism piece I have seen in the past few months on the true problems the American economy and culture of American Capitalism is facing. It of course cannot cover anything, and I think the argument could use some explanation of the problems of the rise of “Free Market” ideals that accompanied the rise of Reagan. However, it’s a good place to start and casts aside petty politics to point out the massive problems our nation faces - thanks to policy makers of all inclinations.
The Wire: Season 2 (the most underrated season) first exposed me to the negative results of the decline in American manufacturing over two years ago. However, it was not until I started writing my undergraduate thesis on industry, urban growth, and federal defense spending in Los Angeles since the 1920s that I really began to probe this issue on a deep level. William Finneran’s “Cold New World” truly opened my eyes to how my questions about the military industrial complex and World War II were related to the crisis places like Palmdale and Lancaster, CA (dependent on Lockheed and Edwards AFB for jobs) faced in the 1990s. As is often the case, Southern California foreshadowed the next steps for American history. A great book that puts a human face on the problems Judis tackles in his piece.
2:43 pm |
August 16 2011
My best ideas come to me when I am unproductive. When I am running but not listening to my iPod. When I am sitting, doing nothing, waiting for someone. When I am lying in bed as my mind wanders before falling to sleep. These “wasted” moments, moments not filled with anything in particular, are vital.
They are the moments in which we, often unconsciously, organize our minds, make sense of our lives, and connect the dots. They’re the moments in which we talk to ourselves. And listen.
To lose those moments, to replace them with tasks and efficiency, is a mistake. What’s worse is that we don’t just lose them. We actively throw them away.
— Peter Bregman on “Why I returned my iPad”
6:15 pm |
August 15 2011
Love the color of these Rachel Comey boots and shoes.
9:13 pm |
August 11 2011