EppsNet Archive: Economics

You Can Make It If You Try

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“It’s becoming conventional wisdom that the U.S. does not have as much [economic] mobility as most other advanced countries,” said Isabel V. Sawhill, an economist at the Brookings Institution. “I don’t think you’ll find too many people who will argue with that.” — Harder for Americans to Rise From Lower Rungs – NYTimes.com I’ll argue with it . . . the fact that people are not doing something doesn’t necessarily mean it’s a hard thing to do. Maybe people aren’t trying to do it. Maybe people don’t want to do it. From Daniel Kahneman‘s Thinking, Fast and Slow: A large-scale study of the impact of higher education . . . revealed striking evidence of the lifelong effects of the goals that young people set for themselves. The relevant data were drawn from questionnaires collected in 1995-1997 from approximately 12,000 people who had started their higher education in elite schools in… Read more →

Educating Oligarchs

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Education not only increases the average income a person will earn, but it also changes the entire distribution of possible life outcomes. It does not guarantee that a person will end up in the top 1 percent, but it increases the likelihood. I have not seen any data on this, but I am willing to bet that the top 1 percent are more educated than the average American; while their education did not ensure their economic success, it played a role. Let me give you a couple examples. I am comfortably in the top 1 percent. I believe that Paul [Krugman], with his Princeton professorship, regular Times column, speaking fees, and moderately successful textbook, is there as well. I suspect (although cannot prove) that if he and I had stopped our educations after finishing high school, we would not have been anywhere near where we are in the income distribution.… Read more →

The Rich Get Poorer

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Here is a fact that you might not have heard from the Occupy Wall Street crowd: The incomes at the top of the income distribution have fallen substantially over the past few years. According to the most recent IRS data, between 2007 and 2009, the 99th percentile income (AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879 to $32,396. These recent numbers illustrate the broader phenomenon, discussed in this paper, that high-income households have riskier-than-average incomes. — Greg Mankiw’s Blog: The Rich Get Poorer Read more →

The Rising Burden of Government Debt

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Our analysis paints a sobering picture of worsening public debt dynamics and a sharply rising debt burden in advanced economies (AEs). But perhaps the worst is yet to come. First, AEs as a group are experiencing little population growth. Second, they are facing rapidly aging populations. Third, their economies are likely to register slow growth . . . Fourth, entitlement spending on health care and pensions is likely to explode due to unfavorable demographics. — The Rising Burden of Government Debt – Brookings Institution Read more →

All of Them?

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Bill Clinton: “Do you know how many political and economic decisions are made in this world by people who dont know what in the living daylights they are talking about?” Read more →

Other Than That . . .

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The social fabric is fraying. Human capital is being squandered. Society is segmenting. The labor markets are ill. Wages are lagging. Inequality is increasing. The nation is overconsuming and underinnovating. China and India are surging. —David Brooks, New York Times Point taken. But other than that, things are going okay, right? Read more →

This Sounds Familiar

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Bias is particularly an issue on cross-boundary initiatives, where multiple groups of stakeholders work together on a project. Each stakeholder group has particular goals and is judged against metrics that may be unique to that group. Bias tends to be a substantial driver of project disruption in organizations where goals or metrics across groups are in conflict. — “Behavioral economics: The IT failure domino effect” Read more →

Will Financial Regulation Make a Difference?

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Banks are expected to find ways to offset the impact of the new financial regulations on their earnings, though they face a potentially complex process of adapting to the new requirements, analysts said on Friday. The share prices of some of the biggest United States banks, including Citigroup, JPMorgan Chase and Bank of America, were higher in afternoon trading, hours after a House-Senate conference committee completed work on a bill that would toughen financial regulations. Analysts pored over the specifics of the deal as they emerged on Friday and expressed a wide array of views about the impact it would have. Some saw the bill as more of a political statement than a practical measure that could prevent another financial meltdown. Others said banks’ costs would increase, but banks would pass the increased costs along to consumers. — NYTimes.com Read more →

No One Listened

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Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board. . . . Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. — Ron Paul, 2003 [HT: Steven Landsburg] Read more →

President Nero

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Last weeks jobs report tanked the stock market; the president took weeks to assert control of the oil spill that threatens doom on the Gulf Coast — but at the White House the Gatsby-like parties roll on as if happy days were here again. — John Gibson – NYPOST.com Read more →

Payback Time

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PARIS — Across Western Europe, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II. — Payback Time – Deficit Crisis Threatens Ample Benefits of European Life – NYTimes.com Read more →

Thomas Jefferson on the Health Care Bill

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Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny. — TJ My fellow Americans — This is a glorious day in our great nation! No, I’m not referring to that tragedy of a health care bill, which I’ll get to in a moment. I’m talking about Free Pastry Day at Starbucks! Who doesn’t enjoy a tasty scone with his morning coffee? Now, on a more somber note . . . Goodbye, representative democracy! Farewell, consent of the governed! President Obama today signed into law a far-reaching measure that will affect everyone living in these United States, now and in the future. It is opposed by most of the country and it is now law. I would never have believed that the government I helped to establish would one day engage in this kind… Read more →

Twitter: 2009-10-12

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Obama fails to win Nobel prize in economics – MarketWatch – http://bit.ly/ARd8m # Read more →

Obama Fails to Win Nobel Prize in Economics

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LONDON (MarketWatch) — In a decision as shocking as Friday’s surprise peace prize win, President Obama failed to win the Nobel Memorial Prize in Economic Sciences Monday. While few observers think Obama has done anything for world peace in the nearly nine months he’s been in office, the same clearly can’t be said for economics. The president has worked tirelessly since even before his inauguration to wrest control of the U.S. economy from failed free markets, and the evil CEOs who profit from them, and to turn it over to wise, fair and benevolent bureaucrats. From his $787 billion stimulus package, to the cap-and-trade bill, to the seizures of General Motors and Chrysler, to the undead health-care “reform” act, Obama has dominated the U.S., and therefore the global, economy as few figures have in recent years. Yet the Nobel panel chose instead to award the prize to two obscure academics… Read more →

White House Adds $2 Trillion to Deficit Forecasts

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The nation would be forced to borrow more than $9 trillion over the next decade under President Obama’s policies, the White House acknowledged late Friday, bringing their long-term budget forecast in line with independent estimates. The new projections add approximately $2 trillion to budget deficits through 2019. Earlier this year, the administration had predicted that Obama’s policies would require the government to spend $7.108 trillion more than it collects in tax revenue over the next decade. An administration official, speaking on the condition of anonymity because the report will not be formally released until Tuesday, said the change is due primarily to updated projections of economic growth that are far less rosy than data used when the White House released its first long-term budget outlook in February. — washingtonpost.com I think I’d be way more upset about this if the numbers weren’t beyond human comprehension . . . Read more →

The Capitalists Failed Us

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There are some things that one just didn’t do. That’s the way I was brought up. It’s not gray; it was black and white. Now the ethical standard seems to be if everybody else is doing it, I can do it too. Carry that over into the banking. Everybody else is doing these funny loans and having earnings grow faster, building up their margins, leveraging those margins. The more leverage A gets, the more leverage B feels inclined to get. So the system fed on itself and drove bankers to making decisions that they, presumably, should have known better than to make. I don’t blame government for this. I was at a meeting of CEOs, even though I haven’t been to one for quite a while, and someone asked me to sum up the morning. This was a bunch of bankers and other CEOs. They said, what do you think… Read more →

Silicon Valley Jobless Quit Tech

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SUNNYVALE, Calif. — Jobless workers in Silicon Valley are giving up on the region’s dominant technology industry and trying to switch to other fields, as the area’s unemployment rate spikes above the national and state average. Silicon Valley’s unemployment rate — which was below California’s average and largely tracked the national average last year — has soared, surpassing the state average in May. By June, the area’s unadjusted unemployment rate was 11.8%, worse than California’s 11.6% and the national rate of 9.7%, according to the latest figures from California’s Employment Development Department. Many of the jobless techies are targeting new gigs in the clean-energy or health-care industries . . . Some are shifting even further afield, looking for jobs in teaching or financial consulting. People are leaving tech as “more tech companies are offshoring and some are shrinking, plus people are burned out and tired from having been there and… Read more →

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