Recently, I was on my way to a friend's house to watch some Mixed Martial Arts (MMA) fights when a neighbor I had not met before joined me on the elevator. He looked to be in his mid to late 30s and he was wearing an audaciously douchey Xtreme Couture tee shirt. Xtreme Couture is an MMA themed apparel company owned by one of the legends of the sport, Randy Couture. MMA fans understand the douchey tee shirt all too well, and we've even become accustomed to differentiating between the various brands and their takes on how to look like a douche with skulls and other such imagery on your chest. So, naturally, I asked him who he thought would win the fights that night.
"Fights?" he said. "I have no idea. I just thought the shirt was cool so I bought it. I'm a banker; I can tell you how to solve the Irish debt crisis, but not who will win the fights tonight."
Immediately my mind started racing. First, I thought, what kind of guy sees that tee shirt on a rack and thinks it looks cool without the MMA context? A douche of epic proportions, I answered myself. Then, onto the Irish debt question. Are bankers what Ireland (and some of the other PIGS countries) really needs?
As Dean Baker has pointed out, the austerity package the ECB and the IMF have created for Ireland are likely to have disastrous results. One particular portion of the package that I find laughable is that the corporate tax rate will remain the same, but the minimum wage will decrease by about 11%. There's some justice for you: the banksters who blew up the economy make no sacrifice, but the hourly worker gets screwed. I'd also like to point to a paper by Reinhart and Rogoff (unfortunately not available for free) in which they take a long term view of defaults and find that, contrary to popular current opinion, nations have used default or restructuring of debt time after time without the world economy imploding. What Ireland needs is not more debt, but less; loaning them more Euros just exacerbates the problem. But surprise, surprise, the banksters just want more more more and they will gladly push Ireland, or any other nation, to the brink to get there.
Sunday, December 26, 2010
Friday, December 24, 2010
Yes, It Gets Worse
Krugman today points out how disingenuous conservatives claim that the government has exploded in size during Obama's presidency by ignoring data (or calendars for that matter). I'd like to briefly point out the thought process behind these attacks and the inhuman end game that would come in to play should even minded policymakers accede to extremism.
One of the basic conservative arguments in this regard is that public sector employment crowds out the private sector. But if that was true, why wouldn't the private sector be hiring people now that there is so much excess labor in the economy? With near 10% unemployment, private industry should be able to hire workers without having to compete too voraciously with the pesky government, right? Well, the answer the winking conservative will give you is that more of today's unemployment is structural; that, whereas the natural rate of unemployment just a few years ago was 4-5%, today's target unemployment rate should be around 7-8%. This is of course can be easily debunked by looking at the widespread depression in employment among other data. The natural rate of unemployment may have incrementally increased over the past few years, as it tends to do, but there is no evidence to suggest such a massive jump. I may revisit this in another post to be a little more clear here, but structural unemployment is not the point of this post.
So, what's the BFD? A little further thought into this line of reasoning exposes just how cynical it is. "If", the line of thought might continue, "we're near the natural rate of unemployment, then there's no reason to do anything to stimulate the economy and, instead, we should really be focusing on cutting the deficit and paying down debt." And we all know what cutting the deficit and paying down debt means: cutting any services that might help poor people or educate kids. It's really paradoxical: more unemployment means we should help less. But it gets worse once you think of the long term implications.
Two major drivers in any increase in structural unemployment in this country, recently and going forward, are high labor costs and the education gap between the US and our competitors, especially in math and science. Well, conservatives are doing their best to bring the former down (in doing so lowering the standard of living for the vast majority of Americans) with their union busting and demagoguing of government employment, but 30 years under conservative policies of underfunding public education have virtually ensured the downward trajectory of the latter. No single person embodies the relentless attacks on public education more than New Jersey Governor Chris Christie and if you look at the glowing reviews the (conservative) media gives him, it's not too hard to guess that more of this is coming. It is safe to assume that the countries flying by us in terms of quality of education are not embracing policies such as these.
So, even if conservatives would admit that the structural unemployment argument at this point is bunk, they're doing what they can to make it a self-fulfilling prophecy. Remember, the higher the natural rate of employment, the less support the unemployed need... or something.
Merry Christmas.
One of the basic conservative arguments in this regard is that public sector employment crowds out the private sector. But if that was true, why wouldn't the private sector be hiring people now that there is so much excess labor in the economy? With near 10% unemployment, private industry should be able to hire workers without having to compete too voraciously with the pesky government, right? Well, the answer the winking conservative will give you is that more of today's unemployment is structural; that, whereas the natural rate of unemployment just a few years ago was 4-5%, today's target unemployment rate should be around 7-8%. This is of course can be easily debunked by looking at the widespread depression in employment among other data. The natural rate of unemployment may have incrementally increased over the past few years, as it tends to do, but there is no evidence to suggest such a massive jump. I may revisit this in another post to be a little more clear here, but structural unemployment is not the point of this post.
So, what's the BFD? A little further thought into this line of reasoning exposes just how cynical it is. "If", the line of thought might continue, "we're near the natural rate of unemployment, then there's no reason to do anything to stimulate the economy and, instead, we should really be focusing on cutting the deficit and paying down debt." And we all know what cutting the deficit and paying down debt means: cutting any services that might help poor people or educate kids. It's really paradoxical: more unemployment means we should help less. But it gets worse once you think of the long term implications.
Two major drivers in any increase in structural unemployment in this country, recently and going forward, are high labor costs and the education gap between the US and our competitors, especially in math and science. Well, conservatives are doing their best to bring the former down (in doing so lowering the standard of living for the vast majority of Americans) with their union busting and demagoguing of government employment, but 30 years under conservative policies of underfunding public education have virtually ensured the downward trajectory of the latter. No single person embodies the relentless attacks on public education more than New Jersey Governor Chris Christie and if you look at the glowing reviews the (conservative) media gives him, it's not too hard to guess that more of this is coming. It is safe to assume that the countries flying by us in terms of quality of education are not embracing policies such as these.
So, even if conservatives would admit that the structural unemployment argument at this point is bunk, they're doing what they can to make it a self-fulfilling prophecy. Remember, the higher the natural rate of employment, the less support the unemployed need... or something.
Merry Christmas.
Thursday, December 23, 2010
Let's Christen This Bitch
Ah, yes, a blog. What a novel idea. "Why? Why another blog? Who are you?"
Great questions, dear reader! How bright you are, even before reading my blog! Well, let's face it: there's a lot of nonsense out there. A veritable cornucopia of bullshit through which we are expected to meddle to find some kernel of truth. And, one thing of which I can assure you, dear reader, is that, from time to time, there will be some bullshit here as well. But it is my goal to minimize the bullshit and even apologize when it gets too deep. But minimizing bullshit is no reason for you to take your valuable time to stroke my ego.
Really, the problem right now is that the bullshit is creeping out of the fringes into the mainstream and it's getting pretty scary out there. Right now, the scariest, mainstreamiest bullshit is that the US needs austerity to fix us. That the solution to unemployment is to fire government workers. That, while we're on the verge of a deflationary spiral, we need to stop supporting the economy to avoid imaginary inflation. That, instead of prosecuting those whose fraud led to the housing bubble, we should go after the people who were sold a bill of goods and entered into unrealistic mortgages. This is the immediate impetus for this blog, but I reserve the right to call out dumbfuckery as it happens.
And, in regards to the second question, the who? We barely know each other. Let's see where this thing goes before we go and tell each other these intimate details... pervert.
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