Merkel’s Eurausterity
Outgoing German chancellor Angela Merkel’s record as a champion of Europe has a nasty stain:
Like many national leaders, Ms. Merkel, time and again, catered to domestic political interests at the expense of broader European concerns, dismissing calls that Germany’s prodigious savings be put on the line to rescue debt-saturated members of the bloc…. She adamantly opposed debt forgiveness to Greece, even as it teetered toward insolvency, and even as joblessness exceeded 27 percent — a special source of outrage given that German banks were primary lenders in Greece’s catastrophic explosion of borrowing.
“She was at the heart of the design of the flawed Greek program, which not only imposed austerity, but most importantly resisted restructuring the debt in order to save the German and French banks,” said Joseph E. Stiglitz, a Nobel laureate economist at Columbia University in New York. “The rhetoric that she used suggested that the crisis was caused by irresponsible behavior by Greece, rather than irresponsibility on the part of the lender.”
Read more here.
Economics and morality
Economists cannot avoid grappling with moral questions, says … The Economist:
To be useful, economists need to learn to understand and evaluate moral arguments rather than dismiss them.
Many economists will find that a dismal prospect. Calculations of social utility are tidier, and the profession has fallen out of the habit of moral reasoning. But those who wish to say what society should be doing cannot dodge questions of values.
Read more here.
See also The Economist’s Oath by Econ4’s George DeMartino.
An economic Bill of Rights
It’s time to revive an idea floated by Franklin D. Roosevelt, write Mark Paul, Sandy Darity and Darrick Hamilton in the American Prospect:
Many may question in this time of “resistance,” if this is the right time to fight for an expansion of economics rights, but no one wins anything of consequence by simply playing defense.
Read more here.
The fossil-free future
The clean energy transition has turned a corner, writes Bill McKibben:
The fossil-fuel industry is no longer minting money. It’s been underperforming the rest of the economy—and no wonder. Sun and wind are ultimately free, and that puts remarkable price pressure on the stuff you have to dig up and burn. Every single day, the electric car moves further along the path from novelty to normal… The question now is not whether big oil is going down; the question is how fast—and how we make sure the transition is a just one.
Read more here.
Why equity-minded foundations are losing the war
In a thought-provoking analysis of the failure of equity-oriented foundations to reverse widening inequality, David Callahan of Inside Philanthropy writes:
Over the past few years, many foundations have put equity front and center in their work….
But guess what? Here in early 2018, economic stratification only seems to be getting worse in America. A new tax law just went into effect that economists say will increase inequality and likely lead to cuts in government safety net programs down the line. And around the U.S., governors and state legislatures are engaged in their own efforts to shift wealth upwards and cut social programs. Meanwhile, even as unemployment drops to near-record lows, millions of working Americans still can’t make ends meet, while the top 1 percent—which owns half of all stocks and mutual funds—grow ever richer from a historic bull market. In many gentrifying cities, boom times have made it harder for low-income households to get by, not easier, by driving up housing prices. And the only thing rising faster than housing prices, it seems, are healthcare premiums and college tuition.
In short, those funders working for equity and against inequality are getting their butts kicked. Why is that?
… here, in a nutshell, is why grantmaker efforts tend to yield so little success: Because equity-minded foundations keep failing to zero in on the all-important sphere of political economy. Inequality mainly stems from how the U.S. economy works and, critically, the range of public policies and power arrangements that govern economic life. Yet, instead of focusing laser-like on this fundamental reality, funders embrace overly diffuse, often localized strategies that yield few larger systemic gains. They win battles here and there, while losing the war.
Read more here.
Economic theory of relativity
Writing in the New Yorker, Elizabeth Kolbert describes recent research on the human aversion to inequality:
As any parent knows, children watch carefully when goodies are divvied up. A few years ago, a team of psychologists set out to study how kids too young to wield the word “unfair” would respond to unfairness. They recruited a bunch of preschoolers and grouped them in pairs. The children were offered some blocks to play with and then, after a while, were asked to put them away. As a reward for tidying up, the kids were given stickers. No matter how much each child had contributed to the cleanup effort, one received four stickers and the other two. According to the Centers for Disease Control and Prevention, children shouldn’t be expected to grasp the idea of counting before the age of four. But even three-year-olds seemed to understand when they’d been screwed. Most of the two-sticker recipients looked enviously at the holdings of their partners. Some said they wanted more. A number of the four-sticker recipients also seemed dismayed by the distribution, or perhaps by their partners’ protests, and handed over some of their winnings. “We can . . . be confident that these actions were guided by an understanding of equality, because in all cases they offered one and only one sticker, which made the outcomes equal,” the researchers reported. The results, they concluded, show that “the emotional response to unfairness emerges very early.”
Read more here.
Trickle up
From the new World Inequality Report:
Income shares of the top 1% versus bottom 50% in the United States
Read all about it here.
Connect these dots
Act 1: Let’s cut taxes!
Act 2: Look at that terrible deficit!
Act 3: Let’s cut Medicare and Social Security!
Now playing at a circus near you:
House Speaker Paul Ryan, R-Wis., said Wednesday that congressional Republicans will aim next year to reduce spending on both federal health care and anti-poverty programs, citing the need to reduce America’s deficit. “We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said…
Ryan’s remarks add to the growing signs that top Republicans aim to cut government spending next year. Republicans are close to passing a tax bill nonpartisan analysts say would increase the deficit by at least $1 trillion over a decade. Trump recently called on Congress to move to cut welfare spending after the tax bill, and Senate Republicans have cited the need to reduce the national deficit while growing the economy.
“You also have to bring spending under control. And not discretionary spending. That isn’t the driver of our debt. The driver of our debt is the structure of Social Security and Medicare for future beneficiaries,” Sen. Marco Rubio, R-Fla., said last week.
Read more here.
Land of opportunity?
From a new report on wealth inequality in America:
The three wealthiest people in the United States — Bill Gates, Jeff Bezos, and Warren Buffett — now own more wealth than the entire bottom half of the American population combined, a total of 160 million people or 63 million households.
Read it here.
