Jun 22, 2020

Racism: missing in action in Econ 101

Tim Koechlin writes:

Why are white people in the US richer than African Americans? If an ECON 100 student (or an economics major) has a rich answer to this question, it is unlikely that they learned it from their intro to economics textbook.

With this yawning silence, mainstream economics leaves a profoundly important economic question unanswered. But more than this, the mainstream narrative obscures, ignores and erases many of the essential ways in which the long history of racism in the US has produced and reproduced enduring racial inequality. And more still, it celebrates the power of markets to “punish” and minimize “discriminatory behavior.”

Read more here.

Jun 12, 2020

Rethinking work

Half of the world’s work isn’t paid – and therefore isn’t counted in the usual measures of income and economic growth. Nancy Folbre breaks it down this neat video:

Source: Institute for New Economic Thinking. Read more about why definitions of family income can mislead here.

May 24, 2020

From bean count to body count

Siddhartha Mukherjee reflects on what the pandemic can tell us about the state of American medicine – and the role of flawed economics in the nation’s vulnerability:

To what extent did the market-driven, efficiency-obsessed culture of hospital administration contribute to the crisis? Questions about “best practices” in management have become questions about best practices in public health. The numbers in the bean counter’s ledger are now body counts in a morgue.

For decades, consultants had taught the virtues of taut business practices. “Slack”—underutilized resources, inventory waiting to be put to use—was shunned. I spoke to David Simchi-Levi, an M.I.T. professor who studies supply-chain economics and how enterprises respond to disasters. “Cost is easy to measure,” he told me. “But resilience is much harder.” So we reward managers for efficiencies—and overlook any attendant fragilities. His view can be summarized simply: we’ve been overtaught to be overtaut.

“We’ve been teaching these finance guys how to squeeze,” Willy Shih, an operations expert at Harvard Business School, told me, emphasizing the word. “Squeeze more efficiency, squeeze cost, squeeze more products out at the same cost, squeeze out storage costs, squeeze out inventory. We really need to educate them about the value of slack.”

Read more here.

May 19, 2020

What would Keynes do?

Reviewing two fine new books on Keynes, Jeffrey Sachs asks what the great economist would have advocated in response to today’s pandemic:

For the first time in modern economic history, we have deliberately shut down much of the economy to break the transmission of COVID-19. We display the intellectual confusion of the moment by labeling as “stimulus” the legislation to pay workers and firms during this shutdown period. This is not stimulus, but income maintenance during a temporary society-wide quarantine.

What would Keynes recommend? He would surely advocate a strong role of government to deploy the tools of public health, including testing, tracing, and isolating infected individuals. He would have ingenious schemes for restarting the economy once the virus itself is defeated. Public investments would be a large part of the response. Most importantly, he would urge that we act as an “organized community for common purposes.” The COVID-19 pandemic should rouse us, Keynes would insist, from the depths of our neoliberal fantasies. With tens of thousands of tragically and unnecessarily lost lives, with a for-profit health system that does not ensure basic public health, Keynes would bid us to launch a new era of economic and social justice, using the powers of government for our health, well-being, and economic needs, while respecting and protecting the individual. In this, Keynes would speak directly to both our hearts and heads, as he did to his own generation with such abiding and lasting wisdom, decency, and insight.

Read more here.

May 15, 2020

Pandemic in the food system

Michael Pollan on the sickness in our food supply:

A momentous question awaits us on the far side of the current crisis: Are we willing to address the many vulnerabilities that the novel coronavirus has so dramatically exposed? It’s not hard to imagine a coherent and powerful new politics organized around precisely that principle. It would address the mistreatment of essential workers and gaping holes in the social safety net, including access to health care and sick leave—which we now understand, if we didn’t before, would be a benefit to all of us. It would treat public health as a matter of national security, giving it the kind of resources that threats to national security warrant.

But to be comprehensive, this post-pandemic politics would also need to confront the glaring deficiencies of a food system that has grown so concentrated that it is exquisitely vulnerable to the risks and disruptions now facing us. In addition to protecting the men and women we depend on to feed us, it would also seek to reorganize our agricultural policies to promote health rather than mere production, by paying attention to the quality as well as the quantity of the calories it produces. For even when our food system is functioning “normally,” reliably supplying the supermarket shelves and drive-thrus with cheap and abundant calories, it is killing us—slowly in normal times, swiftly in times like these. The food system we have is not the result of the free market. (There hasn’t been a free market in food since at least the Great Depression.) No, our food system is the product of agricultural and antitrust policies—political choices—that, as has suddenly become plain, stand in urgent need of reform.

Read more here.

May 14, 2020

After the pandemic

James K. Galbraith muses on the shape of the future economy:

The contradiction between normality and public health is on people’s minds; the impossibility of returning to the previous abnormal-normal has not yet settled in. It will, in due course. At that point, the question of alternatives will have to be faced.

Read more here.

May 10, 2020

Burning while Rome fiddles

While fiddling about the pandemic, the Trump regime is deadly serious when it comes to trashing environmental protection:

In all, a New York Times analysis, based on research from Harvard Law School, Columbia Law School and other sources, counts more than 60 environmental rules and regulations officially reversed, revoked or otherwise rolled back under Mr. Trump. An additional 34 rollbacks are still in progress.

For the sorry details, read more here.

Apr 24, 2020

Common sense in uncommon times

The French have a good idea: corporations that duck tax obligations can’t get financial support from the state they fail to support:

French finance minister Bruno Le Maire has said companies registered in tax havens, or with subsidiaries in such places, cannot benefit from the billions of euros of support being provided by the government to limit the economic damage of the coronavirus pandemic.

France has abandoned its budget deficit and public debt targets since the start of the Covid-19 crisis, announcing €110bn in emergency funding in order to stave off business bankruptcies and prevent a surge in mass unemployment of the sort that has hit the US.

“It goes without saying that if a business has its tax base or subsidiaries in a tax haven — and I want to say this with a lot of force — it cannot benefit from the state’s financial help,” Mr Le Maire told Franceinfo radio on Thursday. He also confirmed that companies that received state aid could not pay dividends or buy back their own shares.

Read more here.

Apr 22, 2020

Building a resilient economy

Who said this: “With a sensible industrial policy, workers will take precedence over short-term corporate gain.” And this?

Why didn’t we have enough N95 masks or ventilators on hand for a pandemic? Because buffer stocks don’t maximize financial return, and there was no shareholder reward for protecting against risk. Even in government, we became infatuated with the “just in time” acquisition model, as opposed to “just in case” contingency acquisitions.

Today, we see the consequences of this short-term, hyperindividualistic ethos. Americans cannot leave their homes. Neighbors are unable to shake hands. Places of worship are closed. The labor market, especially for working-class Americans in those service industries, is in free-fall….

A sensible industrial policy will mean creating federal incentives for productive investment in workers and equipment through tax policy and robust federal guarantees, while discouraging unproductive corporate behavior like stock buybacks. Where foreign subsidies draw away investment outside our own borders, the federal government should introduce cooperatives to spur the creation of domestic supply chains.

Though rebuilding a more productive and pro-worker economy will take time, we can achieve it and ensure that America’s next economic chapter will owe its character to the same spirit of resiliency, solidarity and collective pursuit of the common good that our people are now displaying to the world.

Hint: A welcome sign of intelligent life on the other side of the political aisle. Read more (and find out whose words these are) here.

Apr 20, 2020

Bernie breaks it down

The pandemic lays bare a broken system, writes the Senator:

If there is any silver lining in the horrible pandemic and economic collapse we’re experiencing, it is that many in our country are now beginning to rethink the basic assumptions underlying the American value system.

Should we really continue along the path of greed and unfettered capitalism, in which three people own more wealth than the bottom half of the nation, and tens of millions live in economic desperation — struggling to put food on the table, pay for housing and education and put a few dollars aside for retirement? Or should we go forward in a very new direction?

Read more here.