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Economic News, Data and Analysis

Growth and Inequaltiy

DeLong takes a first stab at squashing the myth that economic growth leads to inequality. (Or vice versa).

Brad DeLong’s Semi-Daily Journal
The relationship between growth and inequality in the U.S. in the twentieth century? None–neither positive nor negative: inequality is high in the fast-growing 1920s and low in the faster-growing late 1950s and 1960s; inequality is not low but high in the depressed 1930s.
[nice graphs]

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Filed under: Economics

Jared on Conservative/Progressive Economics

American Prospect Online – ViewWeb
This may seem like a weird time for progressives to feel optimistic, but a confluence of recent events suggests the faintest breeze of hope in the air.
Granted, the winds of corruption and shortsightedness still dominate. More so than at any time in recent memory, high-level officials are indistinguishable from right-wing lobbyists, gutting government’s ability to regulate corporate power. The Justice Department is throwing the fight against the tobacco companies; the White House is busy editing the science out of regulations that might restrain polluters.
Meanwhile, the administration and its congressional allies continue the fiscal recklessness that has been their hallmark since they got here. If they continue to have their way — and they recently added a new slew of regressive tax cuts to their 2006 budget — it will eventually be impossible for government to fulfill essential functions, from safety nets to investment in future technologies. (I know, that’s the point: Starve the beast.)
Given this gale force of business as usual, where’s this hopeful little breeze coming from? In fact, from a number of places:
[…]
A counter-theme is evolving. As these political phenomena are unfolding, leading newspapers have been providing a critically important “back story” regarding trends in economic inequality and mobility. A theme — moving away from risk shifting and back to risk sharing — is emerging.

In my mind, there seem to be three main issues to explore: mobility, risk, and opportunity.
Mobility is about being able to move up relative to others. Risk is about being secure in one’s economic condition (not having to face major hardship from, say falling ill or losing ones job). Opportunity is about allowing everyone to improve their economic condition.

Filed under: Economics

News flash… CNN to broadcast actual news…

It’s about time…

In Jacko’s Wake – Newsweek National News – MSNBC.com
Now Klein says he’s taking steps so that CNN doesn’t have to go wacko for Jacko, or someone like him, again. Seven months into his tenure, Klein is making revolutionary changes at the cable network—scrapping signature broadcasts like “Crossfire” and “Inside Politics,” shaking up his morning-show ensemble and his prime-time producing staff, and creating a new international news show at noon. These are only the first steps in a broad overhaul plan aimed at getting the pioneering and once dominant cable news network out of a seemingly perennial second-place finish, far behind Fox News. His unorthodox, even heretical game plan: serious news that doesn’t put viewers to sleep. “There’s a palpable thirst out there for the broad scope of stories if they’re told in a compelling way,” Klein says.
Klein has moved aggressively to make CNN’s prime-time producers shift their focus to longer, more-polished pieces, eventually creating a sort of “60 Minutes” every night. It’s an art he knows personally: for two decades he worked as producer at CBS and, as the network’s executive vice president, he oversaw its prime-time programming. Forever roaming the halls and popping in on —producers, he’s transformed CNN culture—news meetings are now singularly focused on finding characters and discussing storytelling technique. In the past, CNN was plagued by a bumbling media image. Klein has imposed strict message discipline and many staffers refused to talk on the record about the network for fear of losing their jobs. Privately, though, many staffers express discontent with the new regime, saying it’s not possible to make “60 Minutes”- style pieces on a limited budget and tight time constraints. The ratings have yet to pro-vide consolation: in May CNN averaged only 610,000 viewers in prime time, still well above third-place finisher (and NEWSWEEK strategic partner) MSNBC, but still far below Fox’s 1,401,000 viewers. CNN officials say they have numbers to be proud of, pointing to strong improvement in the key 25-to-54 demographic and a powerful performance by the brand name when CNN’s numbers are combined with those of its sister network, Headline News. That network has improved dramatically in the ratings thanks almost entirely to its legal-affairs program hosted by Nancy Grace. Last Thursday, Grace drew 804,000 viewers, more than any CNN prime-time program save for “Larry King Live.”

Filed under: Other

Framing Backlash

Has the Lakoff/Frameworks backlash begun? Will it spread to the “messaging” movement as well?
Inquiring progressives want to know!

The Decembrist
[…]
When Democratic politicians, even in California, are so immersed in this Lakoff stuff that they announce, “Okay, now I’m going to reframe the issue,” I think we can all agree that the medicine has been applied, and it’s time to move on.

Filed under: Politics

Budget Magic

Meant to post this a while ago…
Budget Magic – Center for American Progress
Budget Magic
Sometimes It’s What You Don’t See That Matters
by John Irons
May 18, 2005
Redirection is a favorite device for magicians. Your eye is drawn to the magician’s left hand that is waving a colorful scarf or a magic wand, while the right hand is sneaking into a hidden pocket to snatch the pigeon that will later appear as if from nowhere.
If you want to figure out what’s really going on, you need to look at the hand that is not frantically waving in the air.
The same has become true with our nation’s economic policy. While everyone is paying attention to proposals to change Social Security, other issues are either being ignored or are being hijacked by moneyed special interests. Some of the most egregious examples of bad policy choices are embodied in the recently passed 2006 federal budget.
Here’s some of what you might have missed in the budget and elsewhere:
More…

Filed under: Economics

Education, growth and taxes

I was at a panel last week sponsored by Tax Notes on the tax code and long-run growth. The panel featured interesting people and a lively discussion.
However, I was shocked to hear one of the panelists, Chris Edwards of the conservative Cato institute, present a baffling argument that there are already too many subsidies for education.
He claimed that a) you need a market failure to justify government intervention, and b) people already know that there is a high return to education, so there is no market failure, and so no reason for government intervention.
There are many reasons that (a) is untrue – but since this was a room full of economists, let’s let that go for now.
As for (b), this is where I nearly fell out of my chair (I was sitting right next to Chris, so it would have been very noticeable!)
First of all, this is a rather simplistic view of what a market-failure is – information asymmetries can cause market failures, but there are many other market failures that have nothing to do with information.
In particular, it is very easy to imagine a huge range of positive spillovers from education – everything from a more informed and educated electorate to higher quality, more productive co-workers, who thereby increase the productivity of those around them. Positive externality ==> market failure ==> efficiency justification for public investment in education. Not too hard.
Second, there are indeed very important information issues in education, especially higher education. The market for credit is known for having a range of information issues which can cause credit constraints and market failures. For many people, tuition and other college costs can be prohibitive, and the inability to access sufficient credit can limit their ability to attend college (or the college of their choice). These liquidity constrained students — and the rest of society — would clearly benefit from incentives (either direct subsidies or tax credits), and there is a clear role for public intervention.
So there are very clear reasons for public support for education on pure economic efficiency grounds. Throw into that moral and equity considerations, and I think there is more than ample theoretical and empirical reasons to support education.
In the context of long-run growth, more and higher quality education will almost certainly lead to more technological innovation and thus more productivity and growth in the long-run.
Seems pretty simple to me.

Filed under: Economics

Kash does Data

Kash over at angry bear looks at some wage data and explains it to himself and us…

Angry Bear
But let me reiterate the point that I have made several times now: just because real compensation is rising, that doesn’t mean that people are better off, particularly if nearly all of the gains are just going to paying higher health insurance premiums. This data persuasively illustrates that nearly all of our real compensation gains today (and I do think we’re seeing them) are being eaten up by the monster that we call a health care system in the US. Until we address the profound inadequacies of our health care system, this trend will only get worse.

Filed under: Economics

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