Monday, November 30, 2015

A Great Guide To Understanding Climate Change

This article asks ten important questions about climate change and it provides answers that are well thought out and concise.  There are things individuals can do to fight climate change but governments will have to play a major role. Politicians don't think beyond the next election so one our biggest problems is the absence of pressure by well informed constituents on our politicians.  The best thing that you can do is to forward this article to 50 your friends and associates.

Paul Krugman Reviews Robert Reich's Book On Reversing US Plutocracy

Everyone knows that inequality in the US has been increasing since the early 1980's.  This raises two questions for those who worry about the prospect of plutocracy in the US:  It is important to understand the causes of rising inequality, and to make changes that might reverse our descent into plutocracy.  Robert Reich's new book provides his answers to both of those questions.  Paul Krugman argues that Reich's explanation for rising inequality is superior to explanations which focus on the role of technology in the labor market.  There is little evidence to support the idea that incomes are rising for workers with technical skills and falling for those who lack those skills.  Its also difficult to support the argument that machines are reducing the demand for human labor.  Reich argues that rising inequality has been coupled with growing political power within the economic elite.  The economic elite has been able to use government to reduce competition and produce monopolistic profits in many industries.  They have also been able to reduce the power of unions in the US.  In short, the growth in income inequality is a result of a rising imbalance in political power.

Krugman is generally sympathetic to Reich's explanation for rising inequality in the US. He also agrees with many of Reich's suggestions about what might be done to create a more equal society.  He is more pessimistic, however, about the political prospect for reversing a trend that has been well organized carefully managed over the last 40 years.  The plutocrats know what they want and how to get it.  All of the GOP candidates for the presidency are in general agreement about what they want.  They differ from each other primarily on style and personality. Its not easy to see this kind of agreement within the Democratic Party. 

Sunday, November 29, 2015

Remaking Politics In Illinois To Serve The Ultra Wealthy

The state of Illinois has a long history of poor government.  This article describes the new governor of Illinois, along with his policies and his unprecedented sources of campaign funding.  His campaign was funded by ultra wealthy supporters from Illinois and other states who share the same philosophy of government.  The upshot is that a handful of ultra wealthy families have an opportunity to reshape the state's agenda.  It turns out that their policies are quite different from the majority of voters in the state.  This is a strange form of democracy.  We might as well be governed by aristocrats and dispense with the corrupted electoral system that we have enabled by changing campaign finance laws which permit a minority to purchase the kind of government that serves their interests.

Saturday, November 28, 2015

What's Holding Back The US Economy?

The answer to the title question is simple: the Republican Party is holding back the economy.  The NY Times published an article that provides some suggestions on what we might do the improve the economy.  The suggestions were all pretty good but they are politically impossible because the Republican Party is no longer a political party that is concerned about the public welfare.  It has captured many Americans who have suffered from changes in the labor market by blaming their problems on government.  Consequently, the GOP will block any efforts to improve the welfare of those affected by changes in the labor market and claim that getting rid of government is the solution.  The GOP will also promote policies that benefit their financial backers at the expense of the right wing populists who follow them.  The right wing populists provide the votes and the super rich finances GOP campaigns.  It is a marriage made in hell. but it has helped the GOP to win elections.

Melting Glaciers And Global Cooling??

This article shows photos of rapidly eroding glaciers in the US.  It also shows how the loss of snow melt will impact states that depend upon snow melt for fresh water.  Of course, many Americans who learn much of what they know from Fox News and other misinformation sites, believe that we are in a period of global cooling and that global warming is a left wing conspiracy.  I have no idea how they can manage the cognitive dissonance that might occur to them when they can see photos of glaciers disappearing.  Unfortunately, not much can be done to save the glaciers.  Temperatures at their level in the atmosphere are warming faster than those at ground level.

Al Gore Reinvents Capitalism: He Calls It Sustainable Capitalism

Al Gore lost his opportunity to become President of the United States when the Supreme Court decided that he lost Florida to George Bush.  The world suffered enormously from that decision because Bush made one of the worse foreign policy decisions in history.  Al Gore has prospered since losing the election.  His net worth is in the hundreds of millions.  He started up an investment firm that has provided a 12% return to investors over the last decade.  This article describes the investment strategy (via Manan Shukla) that has proven to be so successful.  It invests in firms that will produce profits over the long term and also be good for the public welfare.  Capitalism needs to reinvent itself over time.  Things change and capitalism must adapt.  We are currently living in an era of short term greed.  Businesses are operated to increase short term profits and short term shareholder value.  The financial crisis provided us with an example of what can happen when short term greed governs corporate behavior.  Many firms failed and shareholders suffered along with millions around the world who were affected by the collapse of the financial system.  We have also seen how short term greed has caused one of the world's most successful automobile firms to destroy much of its equity and its reputation. Al Gore's investment firm is focused on long term greed.  It is totally different from the ways in which most investment firms operate.  Anyone who has watched one of the financial news stations, like CNBC,  can witness the maniacal focus on quarterly performance and short term movements in stock prices.  Gore believes that his success is being noticed by other investment firms and that some will follow his lead and help to develop a more sustainable version of capitalism.

Friday, November 27, 2015

Anarcho-Capitalism And Drug Advertising

The American Medical Association has asked Congress to ban direct to consumer drug ads.  The US along with New Zealand are the only nations that permit direct to consumer drug advertising.  It was banned in the US prior to 1962 for a good reason.  Consumers are not able to properly evaluate the effectiveness of newly released drugs for their specific medical needs.  Drug companies marketed prescription drugs by calling directly on doctors to inform them about newly released drugs.  Today the drug companies spend most of their marketing budgets on direct to consumer advertising.  The drug companies have decided that it is more effective to sell their products to poorly informed consumers than it is to trained physicians.  Anyone watching television in the US bears witness to this shift in the marketing of drugs.  They are inundated with drug ads which tell them how some new drug will alleviate one of their symptoms.  Following the good news they are quickly warned about possible side effects that often include death. The drug companies must have found that consumers are more interested in relieving their symptoms than they are in potential side effects.  Since they are primarily concerned with increasing their profits, they are less concerned with effectiveness of the drugs that they bring to the market. They are promoting consumer freedom and business freedom to increase their profits.

The Food and Drug Administration was created to protect consumers from products which may not be effective or harmful.  The FDA has decided that it lacks the power to limit direct to consumer marketing by the drug companies.  The US Supreme Court has ruled that corporations are individuals and that corporate advertising is a form of free speech which is protected by the US Constitution.  The powerlessness of the FDA is probably good news for so called libertarians who believe that governments should not interfere with the market.  They preach the virtues of consumer sovereignty.  Consumers are better judges of their needs than government agencies or medical professionals.

John Stuart Mill, who was an effective advocate for the expansion of human liberty, would turn over in his grave if he could witness the misuse of his concept of liberty by anarchists who call themselves libertarians.  Capitalism could not operate in absence of government rules, regulations and laws which have been designed to enable markets to serve the public interest.  Most business leaders understand this.  The so called libertarians abuse the concept of liberty an freedom when they are unable to capture government agencies to serve their purposes.  Unfortunately, they have been successful in the US.  The FDA feels powerless against drug company advertising and the US Treasury believes that it does not have the power to stop multinational corporations from using complex schemes like inversions to avoid paying US taxes.

The Koch brothers advocate a form of "Anarcho- Capitalism" as a form of libertarianism.  They oppose government subsidies, even though they benefit from some government subsidies.  They also object to the Federal Reserves bailout of the banking system.  Apparently, we should have let the banking system collapse along with the global economy.  A second Great Depression is simply the price we pay for freedom.  They probably forget that libertarian ideology led to the deregulation of banking industry which gave bankers the freedom produce toxic securities which they fraudulently sold to investors.  At a more practical level, the Koch brothers are more concerned about the potential for the Environmental Protection Agency to use the threat of global warming to limit the use of fossil fuels.  They are one on the largest coal producers in the US. 

Wednesday, November 25, 2015

Scientists Respond To Congressional Witch Hunt On Climate Science

Lamar Smith, is the Chair of House Committee on Science, Space, and Technology.  He represents a district in Texas where his position as a global warming skeptic has been well rewarded by energy firms which have contributed close to $700,000 to his campaigns.  The National Oceanic and Atmosphere Administration published a peer reviewed article in Science which concluded that we have not entered a period of global cooling.  Smith did not like that result and he has requested thousands of documents from the NOAA which he has accused doctoring the results.  The head of NOAA has refused to provide the documents and the Association for the Advancement of Science has condemned the congressional witch hunt.  It is concerned about the freedom of science and undue political influence on government research budgets.

The Pfizer Inversion And Corporate Citzenship

Pfizer's plan to merge with the Irish drug company Allergan is part of a corporate trend to reduce their tax payments to the US.  Ireland has a much lower tax rate than the US.  The CEO of Pfizer claims that one of its missions to be a better corporate citizen.  It would appear that Pfizer's real mission is to make its shareholders and its CEO richer by avoiding US taxes.  Pfizer gets a lot of assistance from basic research conducted by US agencies that help it develop new drugs.  The US government also protects their patents in many ways.  Perhaps the government should stop sharing its basic research with Pfizer and it should allow US citizens to purchase generic versions of blockbuster Pfizer drugs from overseas. At present the US government does not even allow US residents to purchase patent protected drugs from Canada where the same drugs are sold for lower prices.  The government is a good corporate citizen but multinational corporations are not good national citizens  They employ every means available to them to avoid US taxes.  Corporate inversions are simply the most recent tax evasion strategy.  They operate in a global economy and they have been unresponsive to requests from national governments to be more patriotic.

Monday, November 23, 2015

What Top Conservative Economists Predicted About QE Five Years Ago

The Manhattan Institute, which claims that it's policy positions are the right polices for the 21st Century, sent this open letter to Ben Bernanke which predicted that QE would debase the dollar and lead to inflation.  The letter was signed by prominent economists who populate other conservative think tanks.  Their predictions about the dollar and inflation could not have been more off target.  However, these economists are still eagerly sought out by journalists who write down everything they say without regard to their complete misunderstanding about the consequences of QE.  Brad DeLong argues that this tells us a lot about journalists and also a lot about prominent economists who seldom change their minds in response to contradictory evidence.  Their ideology is consistent with the ideology of the think tanks in which they work so there is no need to pay much attention to data.

Friday, November 20, 2015

Thomas Piketty Visits The Lion's Den

The success of Piketty's book on inequality has given him an opportunity to share his ideas in many parts of the world.  He is currently involved in a program at the University of Chicago.  He was asked to participate in a panel discussion on inequality at the Becker-Friedman Institute at the University of Chicago.  Its hard to imagine a worse place for anyone to talk about the issue of income inequality.  The University of Chicago Economics Department, and the Becker-Friedman Institute is the high church of neo-liberal ideology is America, and it has been successful in exporting its ideology to the rest of the world.  This video of the discussion illustrates some of the tactics that proponents of this ideology are using to defuse the debate that Piketty's book has accelerated.  The video is rather long and disjointed so I condensed the debate into a few issues.

Piketty's presentation focused on the US because it is #1 among western nations in the growth of inequality (Perhaps this is part of our cherished US "exceptionalism").  The most dramatic growth in inequality is within the top 10%.  The super rich have gotten much richer than highly educated individuals who are well off.  The percentage of Americans in poverty has not changed very much and wage growth has stagnated for the middle classes but that does not explain the rise in inequality within the top 10%.  Piketty argued that changes in our institutions are the source of inequality.  He signaled out corporate compensation policies, and US tax policies which have become much less progressive as factors which may be responsible for American Exceptionalism on income inequality.

The first respondent changed the subject.  He talked about the culture of those in poverty and some of the things that might be done to provide more social and emotional skills that would enable children in poverty to escape from their trap.  Everyone would like to improve opportunities for children who are caught in the poverty trap but that has little to do with the rise in income inequality within the top 10%.

The second respondent argued that inequality is best explained by a shortage in skilled labor.  He argued that the labor force has a shortage of skilled labor and that has increased their wages and depressed wages of unskilled labor.  Its certainly true that skilled worker earn more than unskilled workers.  On the other hand, this does little to explain the growth in income inequality within the top 10%.  He also argued that progressive income taxes would reduce the incentive for individuals to invest in growing their human capital.  He had no answer for Piketty's argument that economic growth and productivity were very strong during a period in which the US tax system was much more progressive than it is today.  He had no interest in addressing the issues that Piketty raised about corporate institutional change and the more rapid growth in income equality in the US.

It is apparent that places like the Becker-Friedman Institute have been funded by the super rich for a good reason.  It defends the existing system of inequality by blaming the victims, and by shifting attention away from the super rich.  Impoverished families do not do a good job developing essential skills which keep their children in poverty, and workers have not developed the skills that are required in the higher paid segments of the workforce.  They also choose to ignore the real growth in inequality within the top 10%.  Piketty has nothing against improving educational opportunity; however, the educational achievement of the super rich does not explain why they are much richer than other well educated Americans.


David Brooks Explains Why Hillary Has A Better Strategy For The Mid-East

Hillary Clinton's speech on Mid-East policy and ISIS was an order of magnitude better than anything that has come from the clowns in his favorite political party.  The GOP clowns flexed their muscles and growled at ISIS.  That convinced Brooks, who really understands the dynamics in the Mid-East, that none of the GOP candidates knows what they are talking about.  Clinton spent eight years in the White House during her husband's administration, and she has headed up foreign policy in the Obama Administration.  Its not surprising that she is better informed about world affairs, and that she has a perspective that is appropriate for the presidency.  David Brooks is smart enough to recognize the difference between Clinton and the pretenders running for the GOP nomination.  Hopefully, the American public will recognize the difference between ignorant bluster and informed analysis.

Wednesday, November 18, 2015

European and US Right Wing Populism And Donald Trump

This article describes the concerns of many European and American populists.  Donald Trump has tapped into those concerns more than the other GOP candidates.  Most of the populists in the US no longer believe that government is responsive to their needs.  That is one of the reasons why Trump and Ben Carson, who have no experience in politics, share almost 50% of the support among GOP primary voters in the most recent poll.  The remaining 14 candidates, most of whom are politicians, share the remaining 50% in the polls.  The terrorist attacks in Paris play into Trump's strong suit.  His anti-immigration stance goes well beyond the stance taken by the other candidates who hold anti-immigration views.  Trump also has many things in common with well known right wing populists in European history.  Populists respond well to leaders who appear strong and confident.  They detest weakness, perhaps because they demand significant change; they also sense their own weakness in public affairs.  Nativism is alive and well in the US and in Europe.

The Republican Strategy For Defeating ISIS

Dana Milbank covers the political scene for the Washington Post.  He provided examples of the strategic thinking that he uncovered in this article.  He found no strategic thinking but he found a lot of bromides which are a substitute for thought.  Republican political leaders plan to kill ISIS with words and criticisms of Obama.  Perhaps that is what they do best when they are on the campaign trail.  That may be understandable, but we should expect them to stop running for their next election and do something worthwhile after they have been elected to office.

Tuesday, November 17, 2015

Why We Should Get Rid Of Islam

Paul Krugman mocks GOP candidates who are trying to win points by being tough on Islam.  For example, Jeb Bush argues that we should admit Christians from Syria but not Muslims.  The implication is that all Muslims are terrorists.  The Donald argues that we should close down mosques.  The only thing that is clear about the GOP is that they know a lot more about winning the primary election than they do about foreign policy.  I doubt that they could pass a geography test in which they had to identify the countries on a map of the Mid-East.

Why Has Japan Been Unable To Increase Inflation?

This article explains why inflation would be good for Japan but that it has been unable to hit its 2% inflation target.  The Japanese central bank has done more than the Fed in the use of monetary policy to increase the inflation rate without success.  Japan has also been successful in reducing the unemployment rate.  Standard economic theory suggests that there is a link between the unemployment rate and inflation rate.  A low unemployment rate should cause wages to rise and accelerate demand.  Higher costs for firms and an increase in demand for products is typically associated with rising prices.  Standard economic theory can't explain the low inflation rate in Japan, and other theories are described which might increase inflation, but they are somewhat radical and have not been tried.  Macroeconomic theory falls apart if it cannot explain Japan's inability to increase its inflation rate.

GOP Candidates Compete For Being Toughest On Syrian Refugees

The terrible disaster in Paris has inspired the intellectual pygmies in the GOP in a fear mongering contest.  The Republican Party looks more like the fringe parties in Europe that prey on the fears of their citizens.  They are much better at that game than they are at dealing with the source of the problem in Syria and the rest of the Mid-East.  Many believe that Bush's decision to invade Iraq accelerated the rise of terrorism in the Mid-East.  He used the 9/11 attack to falsely justify his war.  The Sunnis who were driven out of power in Iraq have become ISIS and they occupy Western Iraq.  The ISIS strategy is recruit terrorists to defend Islam against its enemies.  The Republican Party's war against Islam  serves their purpose well.  The Republican Party is more interested in using the Paris attacks in the 2016 election cycle than they are in fixing the mess in the Mid-East.

Saturday, November 14, 2015

Chief Economist Of Bank Of England On The Labor Market

Andrew Haldane provides an excellent historical perspective on the relationship between labor's share of economic output in relation to structural changes in the economy.  He then moves to the situation in the current labour market and discusses how labor's share of output may change in response to structural changes that are underway.  Haldane covered a broad range of issues in his forty minute speech.  It is an excellent primer for anyone who would like to broaden their understanding of the labour market and social policies that moderate the effect of structural changes in the economy.  

Haldane concluded by arguing that it would premature for the Bank of England to raise interest rates in the face of a global economy that is growing below trend with no sign of inflation in the UK.  He also argued that public corporations should shift from a myopic focus on shareholder value which is not good for shareholders or for labor.

Friday, November 13, 2015

A Close Look At Ted Cruz's Tax Plan

James Kwak has not commented on the tax policies of GOP candidates until Ted Cruz's tax proposal went well over the top.  Everyone likes tax cuts so Cruz gave everyone a present.  His proposal reduces tax revenue by $3.6 trillion over 10 years.  That is more than US military spending over that period.  Cruz's plan is very generous to the top 1%.  His plan gives 60% the of $3.6 trillion tax cuts to the top 1%; the remaining 40% is split among 99% of taxpayers.  His plan also eliminates the inheritance tax so the super rich can pass on their wealth to future generations more easily.  This, of course, is what one would expect from politicians whose campaign contributions come from the top .001%.  Cruz's tax plan is just more generous than others that have been proposed by GOP candidates who also pay a tribute to their benefactors.

All of the GOP plans would cut tax revenues.  Cruz's plan cuts revenues more than the others but they all explain away the lost revenue by claiming that the tax cuts will stimulate economic growth and actually increase government tax revenue.  Cruz's plan will have to double the US growth rate to replace the $3.6 trillion in tax cuts that go primarily to the top 1%. 

Ted Cruz's plan, like those proposed by his GOP competitors, is laughable in another respect.  Cruz and the other candidates are packaging their tax policies as populist plans.  They give a few crumbs to their populist base and don't say much about the real beneficiaries from their tax plans.  This is a time tested tradition in the Republican Party.  It has been relatively easy for them to put a populist cloak on tax polices which are harmful to the bulk of the GOP base.  The top 1% understand the GOP plans much better than its populist base.

The Political Party For The 21st Century Or The 17th Century?

Deep thinkers like David Brooks claim that the Republican Party has the ideas that will make it the Party of the 21st Century.  His favorite candidate presented himself as a 21st Century presidential candidate in the last debate.  Brooks believes that conservative think tanks have developed the ideas that will propel the GOP into our current century which is already 15 years old.  If the conservative think tanks have 21st Century ideas they have not found a home among the current GOP candidates.  Their ideas about economic policy are not even relevant for the 20th Century.  The basic problem with the economic ideas proposed in the last debate is that they are wrong.  Most of the articles about the last debate focused on which candidate scored the most points with the likely voters in the GOP primary.  This article examined the economic policies proposed by the candidates and gave them a failing grade.  None of them would have received a passing grade in economics 101.  Hopefully, they were just preaching bad economics to voters who don't understand economics.  If not, and any of them get elected, we are in deep trouble.

Thursday, November 12, 2015

Why Republican Candidates Are Selling Fair Tax Policies

If there is anything that Republican candidates all hate it is progressive taxation.  They don't like progressive taxation because the tax rate increases with one's income.  Their wealthy supporters want to make the tax system less progressive but this raises a question of how to convince those with low incomes to vote for them.  The solution to this problem is to propose a tax system that is both fair and less complicated than our current system.  The flat tax offers a good solution to this problem.  If the tax rate were the same for everyone it would be a fair system.  This argument is also combined with the idea that everyone's income is determined by the value that they add to the goods and services that they provide.  Given that assumption, a progressive tax system is both unfair, and bad for the economy, because it discourages effort from our more productive citizens.  Ben Carson takes the argument for a flat tax to an even a higher level.  He argues that it is fair because God proposed a flat tax of 10% on everyone. “The reason I liken it to tithing is because I believe that God is the fairest individual there is, and if he thought it was fair then I believe it’s pretty fair.”

All of the current GOP candidates have been touting changes to tax policies which make the tax system less progressive.  They are telling their low income partisans that a flatter tax rate is more fair than the current system and less complex that our current policies.  Most of the changes that are being proposed would also reduce government tax revenues.  They have two ways of dealing with that outcome.  One approach is to claim that the economy will expand in response to lower tax rates on our more productive citizens.  The increase in the tax base will compensate for the lower tax rates on those with high incomes.  The other approach is to argue that a reduction in taxes will reduce the size of government.  This idea appeals to the anti-government sentiment that is on the rise in the GOP base.

Each of the candidates has a somewhat different version of less progressive tax policy.  Politics is essentially about two things: How much revenue do we send to the government , who pays for it, and what do we spend it on.  Republican politics are pretty easy to understand.  Make the tax system less progressive and spend our tax dollars in ways that redistribute government spending to those whose taxes have been reduced.

Monday, November 9, 2015

What Happens In China Is Critical To Everyone

Larry Summers just returned from a trip to China and he argues that China plays a central role in the economic order.  China accounts for a large share of economic growth and the reforms that it is undertaking will slow its growth in the short term and promote more sustainable growth in the future.  In both cases what happens in China affects all of us.  He then raises an important question.  The relationship between the US and China will have a major impact on our future.  On the one hand, the US has a legitimate right to protects its own interests but it must also find a way to deal with the new reality.  What happens in China, given its central role in the global economy, is important to everyone.  We have entered an era in which globalization has shaped a global economy that cannot easily be managed at the level of nation states that only recognize their own interests.

A New Defense Of EXXON's Campaign Against Global Warming

Robert Samuelson found a new way to defend EXXON against attacks by critics of its funding of global warming denial.  He argues that EXXON has a right to free speech which is protected by the Constitution.  This is an extension of the Citizens United decision by the Supreme Court.  The Court concluded that corporations are people and that their funding of political campaigns is protected by the Constitution which protects the free speech of citizens. 

Samuelson uses the platform given to him by the Washington Post to systematically mislead the public by his "free speech".  We value the freedom of the press but journalists are granted a privilege which they should not abuse.  Samuelson systematically exploits his privilege on a regular basis each Monday when his op-ed is published by the Post.  This article is no exception to that rule.

The first problem with Samuelson's opinion piece is that he does not mention the reason for the attention which is being focused on EXXON.  The Attorney General of New York has requested information from EXXON because it may not have properly informed investors about the risk to the value of its oil reserves from global warming.  The Securities Exchange Commission also has a duty to hold public corporations accountable for providing material information to investors.  The AG of NY has beaten the SEC to the punch.

EXXON has also been accused of withholding some of the findings of its own scientists about the risk of global warming.  Instead of providing this information to the public, it has spent millions funding a campaign to discredit the research conducted by the great majority of climate scientists about the threat of global warming. That is a serious charge against EXXON.  Samuelson answered this charge by providing one quote from an EXXON scientist, that EXXON was glad to share with Samuelson, which he used to proclaim EXXON innocent of withholding its own evidence about global warming from the public.  The tobacco industry had behaved similarly when it withheld evidence from its own scientists about relationship between smoking and cancer.  Samuelson seems to believe that EXXON and the tobacco industry have been unfairly attacked by critics who believe that this was wrong; he conflates this with their right to free speech.

In a more general sense EXXON and the tobacco industry may have misled the public under the mistaken belief that it was defending shareholder value.  The threat to the public from global warming and cancer is not as important as maintaining a revenue and profit stream for current shareholders.  Moreover, future investors do not have the right to be informed about the potential damage from these threats to future profits. Furthermore, the rights of investors are placed above the public interest in both cases.  The promotion of shareholder value is the only obligation of public corporations.  Samuelson seems to share that view.  He ignores the mission of journalists, to seek the truth, on behalf of corporations which are primarily interested in promoting shareholder value.

Thursday, November 5, 2015

US Mortatlity Rate For White Males Is Rising

Paul Krugman provides a graph of mortality rates for the US and comparison countries.  Mortality rates for white males in their forties and fifties has been rising while the mortality rates in comparison countries have been falling.  Suicides and drug abuse, including alcohol, are primarily responsible for the rising mortality rate.  This compares with a similar result in Russia after the fall of Communism.  There is no easy explanation for this change but it is a signal that some kind of social disruption has  affected white males in that age group.  This article offers an explanation which also explains the rise of right wing populism.  Many feel abandoned and their anger has been skillfully redirected.

Wednesday, November 4, 2015

Why Do US Students Underperform Students In Most Advanced Economies?

The facts are pretty simple.  US students do not do as well on OECD tests of math, science and reading as their counterparts in other OECD nations.  This article describes two explanations for these results.  One study used a measure of socioeconomic status in the US and corrected the results for low- achieving students with that measure.  This study concluded that the schools in US are doing well when the scores are corrected for socioeconomic status.  The head of the OECD testing program found faults with the US study.  OECD corrected for socioeconomic status, using a more sophisticated measure of socioeconomic status, and found that US students did less well that low status students in other OECD nations.  He pointed out that the US system of funding education with local property taxes is one reason for low test scores in the US.  Schools in low income districts receive less funding than schools in rich districts.  He also indicated that many countries do a better job of paying and attracting high performing teachers than the US.

I tend to come down on the side of the OECD explanation.  Public education is under attack from many directions in the US.  It has been more difficult to attract high performing students into teaching given the lack of respect for the teaching profession and the private sector has been successful in increasing its share of the revenues spent on education.  Consulting services of questionable value, along with a plethora of standardized testing programs, suck up resources and teacher time.  Charter schools, and the use of voucher programs to privatize the schools,  has not improved the performance of low achieving school districts.  The basic idea behind the privatization program is that government is unable to operate schools as effectively as profit seeking entities.  This leads to an erosion of public support for the schools and it polarizes the education system into warring camps.  What's happening in the education system is symptomatic of what is happening in the rest of society. 

Problems In The US Labor Market

Martin Wolf, writing the Financial Times, reported that the US labor market has a unique problem among the advanced economies.  It has a shrinking percentage of prime aged men and women in the labor market.  Wolf found a pretty good explanation for the decline in the participation rate of women; the high cost of child care in the US may decrease the incentive to seek employment.  The decline in the participation rate for men is not easily explained.  He concludes with the following paragraph:

Finally, does the declining participation of prime-aged adults matter? Yes, it must: it matters if many believe they cannot earn enough in the labour market to support a family; and it matters if mothers lose their connection to the labour market. The relentless decline in the proportion of prime-aged US adults in the labour market indicates a significant dysfunction. It deserves attention and analysis. But it also merits action.

Tuesday, November 3, 2015

Republican Tax Plans Under Analysis

Most of the GOP candidates have proposed changes to the federal tax system.  Their proposals are not covered well in the debates and they don't make for good television.  This article does what the TV debates have not done well.  It describes several of the tax proposals and finds that much is left unsaid.  Ben Carson has the most ridiculous proposal because he starts with the assumption that the tax base is equal to GDP.  That allows him to propose a low flat tax rate and not starve the government.  In fact, the actual tax base is well below GDP because so many sources of revenue are not taxed.  The other plans that are described are less egregious but they have their own problems.  None of the GOP candidates have a workable new tax proposal, but one can bet that any plan that surfaces if one of them is elected,  will focus on cutting taxes for the super rich.  The Republican Party has been at war with the progressive tax system since Ronald Reagan.

How To Improve The GOP Debates

The debates are supposed to sell the Republican Party to the electorate.  They are also supposed to find the candidate that has the best chance to win the national election.  The debates have not been working for the Party or for many of the candidates.  A lot of Republicans have been holding the noses during the debates and they can't believe that they belong to the same Party.  Moreover, the candidates that are doing best in the polls following the debates are not the ones who have the best chance of winning the national election.  Consequently, the Republican National Committee has be working with the TV networks and the candidates to improve the image of the Party and the candidates.   A Washington Post reporter applied for the moderator job in the next debate in this public letter (a joke of course).  The needed changes that he proposed help to illustrate the problems that the Party faces.  They also make fun of the changes requested by the RNC.  The RNC would be better off if the debates were cancelled.  The candidates are trying to sell themselves to the most likely primary voters who don't represent the bulk of the electorate.

The Complex Wars In Syria and Parts Of Mid-East

This article provides an interesting analysis of the conflict in Syria.  There is a civil war in Syria between the Assad government and rebel forces.  The US supports the rebels and Russia supports Assad.  The US also opposes ISIS along with Saudi Arabia and Sunni groups.  Russia is disinterested in ISIS except where they effect Assad.  Kurdish forces have been attempting to gain control over parts of the Mid-East and Turkey.  They have been the most effective force against ISIS but the US alliance with the Kurds is difficult because they are not on good terms with Turkey which is an important ally of the US.  This article provides graphs which help to clarify the complexity.  Its hard to see a good end game to the wars in Syria.  There is also a risk that some accident could occur which could bring the US and Russia into conflict.

Sunday, November 1, 2015

Why GOP Candidates Tell Big Lies

Most people expect politicians to be a little bit loose with the truth.  They are encouraged to make claims that they cannot satisfy and we forgive them.  Paul Krugman tells us that the lying game has changed in a big way.  The GOP candidates showed how the game has changed in their last debate.  Krugman provides several examples big lies in the last debate.  The candidates get away with lying because the candidates tell their base what they want to hear.  They have been misinformed by a well designed complex of media outlets which are nothing more than propaganda outlets.  Talk radio shows, Murdoch owned news outlets, and integrated Internet channels have done the job well.  When a candidate is challenged to defend a false claim they can simply change the subject and attack the mainstream media.  Fox News, in particular, claims that it can be depended upon to counter the misinformation provided by the mainstream media which, according to Fox News, has a liberal bias.

Ben Carson was asked to explain his relationship with supplemental drug company that had to pay a large fine for making false claims about one of its products.  Carson responded by saying that it was not true.  The audience applauded and that was the end of the discussion. 

Ben Carson has done well in the polls but he is not likely to end up with the GOP nomination.  David Brooks has determined that Marco Rubio is the likely winner.  He claims that Rubio is a 21st Century candidate and a member of a Conservative Reform movement that offers the right vision for our nation.  Krugman and a host of other economists have taken a careful look at Rubio's fiscal policy recommendations.  Rubio clams that he can cut taxes and reduce the federal budget deficit.  The only problem with Rubio's claim is that he must be using an unknown version of arithmetic.  His numbers don't add up.  Rubio, with a lot of help from right wing think tanks, and from David Brooks, is selling the public a faulty product.  Unfortunately,  Rubio does not have to worry about selling snake oil.  That is what his base wants to hear. Paul Ryan, who is another of David Brooks' 21st Century leaders, has been selling fiscal policy snake oil for several years.  He has been hailed as a very serious person by proposing fiscal policies that do not accomplish what he claims.  We live in a new era in which big lies have become common place.  The Democratic Party is not immune from this disease, but it is a distant second to the Republican Party which has perfected the big lie.