How Washington Orthodoxy Fails the Middle Class - David Rohde - Business. Revitalizing the American middle class in a transformed global economy is a staggeringly complex task. And neither Democrats nor Republicans alone have the answer. Reuters On Tuesday, Barack Obama declared the debate over how to restore growth, balance, and fairness to the American economy the "defining issue of our time. " "This is a make-or-break moment for the middle class," he said in a Kansas speech, "and for all those who are fighting to get into the middle class. " The following day, Republican front-runner New Gingrich said Mr. The arrival of the middle class at the center of the American political debate is a long overdue step forward, but Obama and Gingrich steered clear of an ugly truth. The Republican right, oddly enough, has become more doctrinaire, utopian and out-of-touch with global realities than the "Marxist" Obama administration.
A recent study by MIT professors Frank Levy and Thomas Kochan lays out the staggering task that revitalizing the middle class represents. Chairman Bernanke Should Listen to Professor Bernanke. Bernanke was and is a fine economist. More than that, before joining the Fed, he wrote extensively, in academic studies of both the Great Depression and modern Japan, about the exact problems he would confront at the end of 2008. He argued forcefully for an aggressive response, castigating the Bank of Japan, the Fed’s counterpart, for its passivity. Presumably, the Fed under his leadership would be different. Instead, while the Fed went to great lengths to rescue the financial system, it has done far less to rescue workers. The U.S. economy remains deeply depressed, with long-term unemployment in particular still disastrously high, a point Bernanke himself has recently emphasized.
Yet the Fed isn’t taking strong action to rectify the situation. The Bernanke Conundrum — the divergence between what Professor Bernanke advocated and what Chairman Bernanke has actually done — can be reconciled in a few possible ways. What the Fed Can Do That doesn’t mean the Fed was out of options. How Shareholders Are Hurting America. Note: The Trade is not subject to our Creative Commons license. It's a bedrock principle of our era: Companies should be run for the sole purpose of increasing their stock prices, or returning "value" to shareholders, the ultimate "owners. " To Lynn A. Stout, however, it amounts to nothing more than a "shareholder dictatorship. " Ms. The blame lies with economists and business professors who have pushed the idea, with generous enabling from the corporate governance do-gooder movement, Ms.
Economists have promulgated the idea of shareholder über alles, based on what Ms. But the idea that shareholders "own" their companies isn't actually so set in the law, Ms. Instead, as Ms. The law gives shareholders special consideration only during takeovers and in bankruptcy. That concept has expanded to mean that a corporation should always be run to maximize the size of shareholders' claims. It's clear that something is deeply wrong with our capital markets. Here, Ms. Ms. Ms. Washington Mutual WaMu collapse: The Lost Bank by Kirsten Grind, reviewed. Illustration by Dan Zettwoch.
Barely 10 pages into the first chapter of Kirsten Grind's The Lost Bank comes the first of many elaborate musical interludes. The year is 1987, the theme is a modified Wizard of Oz, and the occasion is the 63rd birthday of the bank’s universally beloved, unbelievably benevolent and comprehensively folksy CEO Lou Pepper. "You'll want to go to the land of corporate values! All you have to do is follow the WaMu road! " Glenda the WaMu Witch cheerfully tells the anxious customer sales representative “Dorothy,” pointing the employee in Lou’s direction. A sea of (Wa)munchkins donning paper masks bearing Lou’s face emerge from the woodwork to join in a rousing chorus of “Louie Louie.” By ’87 Lou had two years to make up his mind whom to pick as his chosen successor, and he’d narrowed the candidates down to two.
For the vast preponderance of its perpetrators, the financial crisis seems to be something considerably less profound than a Katy Perry video. GDP Needs Help: Let's Build a Second Measure of Economic Strength - Umair Haque - Business. If the crowning achievement of 20th-century economics was constructing a national income statement, the crowning achievement of 21st-century economics should be a national balance sheet Reuters Here's a tale of two equations that represent human exchange.
The first is the standard macroeconomist's recipe for an economy: It says: output equals consumption, plus government expenditure, plus investment, plus net exports. It says: real human welfare equals natural capital, plus financial capital, plus intellectual capital, plus human capital, plus social, emotional, and organizational capital. The first equation might be said to neatly represent the industrial-age paradigm of business: the implicit question it answers is maximizing the volume of output or "product.
" The Bureau of Economic Analysis calls GDP "the crowning achievement of 20th century economics"--and it is not overstating the case. You might see social capital--the wealth of relationships--crashing. Why Innovation Can't Fix America's Classrooms - Marc Tucker - National. Forget charter schools and grade-by-grade testing. It's time to look at the best-performing countries and pragmatically adapt their solutions. Reuters Most Atlantic readers know that, although the U.S. spends more per student on K-12 education than any other nation except Luxembourg, students in a growing number of nations outperform our own. But think about this: Among the consistent top performers are not only developed nations (Japan, Finland, Canada), but developing countries and mega-cities such as South Korea, Hong Kong, and Shanghai.
Even if we find a way to educate our future work force to the same standards as this latter group -- and we are a very long way from that now -- wages in the United States will continue to decline unless we outperform those countries enough to justify our higher wages. You would think that, being far behind our competitors, we would be looking hard at how they are managing to outperform us. The apostles of exceptionalism say we need more innovation.
Joshua Cohen | Political Justice, Political Creativity - I Am Interested in Cool Ideas That Are Good | The European Magazine. Go Forth and Multiply - By Charles Kenny. There's been a lot of hand-wringing of late regarding the imminent demise of America's global economic dominance as China's gross domectic product (GDP) outstrips that of the United States. Those concerns are overwrought -- aggregate output and average quality of life in a country are two very different things. But if you really want to preserve America's top spot in the GDP rankings, there's only one way to do it. You've got to make more Americans. Depending on whom you ask and how you measure, the United States either already has a smaller economy than China, will have a smaller economy than China in the next few years, or will fall behind sometime in the next half-century.
What seems widely agreed upon is that American economic dominance will end. It would be nice to imagine keeping the top spot through rapid income growth. Does that mean it's all over for U.S. economic dominance? Meanwhile, migration might also help close a little of the per capita GDP growth gap with China as well. Supercomputers Can Save U.S. Manufacturing. The key to reviving manufacturing in the U.S. may lie in the nation's supercomputers By Donald Q. Lamb The U.S. used to be a powerhouse in manufacturing. In the past quarter of a century we have relinquished this leadership position, in large part because we made a decision—consciously or unconsciously—that the service and financial sectors are sufficient to sustain our economy.
But they are not. Service jobs pay little. The financial industry makes nothing of value and therefore cannot maintain, let alone raise, the nation’s standard of living. The fate of manufacturing is in some ways linked to our prowess in the physical sciences. Fortunately, the nation’s lead in high-performance computing still stands. On supporting science journalism If you're enjoying this article, consider supporting our award-winning journalism by subscribing.
We already know how useful HPC is for big firms. Recently NDEMC made HPC resources available to a handful of firms, including Jeco Plastic Products. Look South, Not East - By Parag Khanna. With Barack Obama's administration pivoting toward Asia and with the U.S. president now off to Hawaii for the Asia-Pacific Economic Cooperation summit (and then to Australia and Indonesia), let's remember that the most important trip of his time in office was not east but south.
In March, in the midst of the fallout from Japan's tsunami and nuclear meltdown and the brutal escalation in Libya, Obama made an international trip the Western media almost entirely ignored. His destination: Brazil, Chile, and El Salvador. There was pressure to cancel the visits, and photos and media reports revealed that Obama was accompanied by his military advisors and was getting constant updates on both crises from a secure camouflage tent. Of course, the date for the trip was not movable, especially as it was precisely the 50th anniversary of President John F. The United States certainly can't take Latin American loyalty for granted, if it ever could. VANDERLEI ALMEIDA/AFP/Getty Images. Business - David Rohde - How the Global Middle Class Can Save the American Middle Class. Here's the game plan: Hire over here, sell over there. More companies are creating jobs by taking advantage of rising global wealth -- and we should be cheering them on.
Reuters Last week, 41 American companies received awards at a little-noticed White House ceremony. Despite the recession, the companies -- most of them small and medium-size businesses -- have experienced rapid growth and handsome profits in recent years. How? Zippo Manufacturing Co, the maker of the iconic American cigarette lighter, has experienced 1,000 percent sales growth in China over the last 20 years and 900 percent growth in India over the last eight years. "It's tough to compete, but we're doing it," said Greg Booth, the company's president and CEO, referring to cheap lighters manufactured in Asia. DSC Dredge, a small, Louisiana-based builder of dredges, has increased its overseas sales by 1,300 percent over the last 10 years and nearly doubled in size from 80 to 140 employees. Unleash the Entrepreneurs by Edward L. Glaeser, City Journal Autumn 2011.
Edward L. Glaeser Bad policies are holding back the ultimate job creators. Albert Harlingue/Roger-Viollet/The Image Works The entrepreneurial Henry Ford helped create an industry in Detroit that employed hundreds of thousands. Three years have passed since the financial crisis of 2008, and unemployment rates remain painfully high. As of August 2011, America employed 6.6 million fewer workers than it did four years earlier. To try to fix the problem, the Obama administration has pursued a variety of Keynesian measures—above all, the huge stimulus package of 2009, which included not only direct government spending but also such features as tax credits for home buyers and temporary tax cuts for most Americans. Such policies ignore a simple but vital truth: job growth comes from entrepreneurs—and public spending projects are as likely to crowd out entrepreneurship as to encourage it.
The U.S. Or look at the period from 1996 to 2008. Charles B. So far, so good. Edward L. Technology in America. Why are Americans addicted to technology? The question has a distinctly contemporary ring, and we might be tempted to think it could only have been articulated within the last decade or two. Could we, after all, have known anything about technology addiction before the advent of the Blackberry? Well, as it turns out, Americans have a longstanding fascination and facility with technology, and the question of technology addiction was one of the many Alexis de Tocqueville thought to answer in his classic study of antebellum American society, Democracy in America. To be precise, Tocqueville titled the tenth chapter of volume two, “Why The Americans Are More Addicted To Practical Than To Theoretical Science.” In Tocqueville’s day, the word technology did not yet carry the expansive and inclusive sense it does today.
Tocqueville’s rough and ready quasi-sociological approach led him to conclude that Americans preferred technology to pure science for both political and economic reasons. 1. 2. The Book of Jobs | Politics. What this transition meant, however, is that jobs and livelihoods on the farm were being destroyed. Because of accelerating productivity, output was increasing faster than demand, and prices fell sharply. It was this, more than anything else, that led to rapidly declining incomes. Farmers then (like workers now) borrowed heavily to sustain living standards and production.
Because neither the farmers nor their bankers anticipated the steepness of the price declines, a credit crunch quickly ensued. Farmers simply couldn’t pay back what they owed. The cities weren’t spared—far from it. The value of assets (such as homes) often declines when incomes do. Given the magnitude of the decline in farm income, it’s no wonder that the New Deal itself could not bring the country out of crisis. The Agriculture Adjustment Act, F.D.R.’s farm program, which was designed to raise prices by cutting back on production, may have eased the situation somewhat, at the margins.
Adulthood, Delayed: What Has the Recession Done to Millennials? - Derek Thompson - Business. The Great Recession didn't just postpone financial independence for millions of young Americans. It also changed our attitudes about what it means to be an adult. Flickr image: Scarleth White Generations are social constructs. There is no chemical or biological difference between Gen-Xers and Millennials, but we talk about them as if they were different species. That Gen-Xers grew up "independent" and Millennials grew up "entitled" aren't anthropological observations.
Rather, they're marginally useful stereotypes. The circumstances surrounding the Millennial generation are particularly strange. With education comes opportunity. When adults wonder what's the matter with the Millennial generation that has increasingly chosen to live with their parents and put off marriage and homeownership, the first thing to say is that they're using the word "chosen" wrong. The good news is that more young adults are enrolled in school than ever. Some people liken a career path to a staircase.
United States' economy: Over-regulated America. American Airlines, Bankruptcy, and the Housing Bubble. We normally say that a company “went bankrupt,” implying that it had no choice. But when, recently, American Airlines filed for bankruptcy, it did so deliberately. The airline had four billion dollars in the bank and could have kept paying its bills. But it has been losing money for a while, and its board decided that it was foolish to keep throwing good money after bad. Declaring bankruptcy will trim American’s debt load and allow it to break its union contracts, so that it can slim down and cut costs. American wasn’t stigmatized for the move. Instead, analysts hailed it as “very smart.” These people have no hope of ever making a return on their investment in their homes. Part of the answer is practical. Paying your debts is, as a rule, a good thing. When it comes to debt, then, the corporate attitude is do as I say, not as I do.
Of course, many borrowers made bad decisions and acted irresponsibly. What If Lehman Happened Today? - Michael Hirsh and Stacy Kaper. The Age of Double Standards. How Blue America Subsidizes Red America. Ayn Rand: the Tea Party’s Miscast Matriarch. Business - Jack A. Goldstone - It's Worse Than You Think: Halftime Between Two Lost Decades. "The American Recovery" by Mohamed A El-Erian. A Nation of Spoiled Brats - Interview by David Rothkopf. Americans Suffered Record Decline In Wealth During Recession: Report. Punching Above their Weight - By James Manyika, Jaana Remes, and Javier Orellana. "Are US Multinationals Abandoning America?" by Laura Tyson.
If You Extend the Visa Waiver Program, They Will Come. The Corruption Law that Scares the Bejesus Out of Corporate America - Jordan Weissmann - Business. Gray Nation: The Very Real Economic Dangers of an Aging America - Derek Thompson - Business. Living the DREAM: Undocumented Youth Build Lives in America - Julia Lurie - National. Can Radical Efficiency Revive U.S. Manufacturing? "The Energy Deficit" by Michael Spence. What Export-Oriented America Means - Tyler Cowen. Food's Biggest Scam: The Great Kobe Beef Lie. Kobe Beef Scam, Part 3: Why the U.S. Government Wants You To Buy Fake Foods.
Food's Biggest Scam, Part 2: "Domestic" Kobe And Wagyu Beef. Food deserts, Alice Waters, and dietary class warfare. 50 Amazing Numbers About Today's Economy (AAPL, GOOG, MSFT, PFE, WMT) "That Old Tax Magic" by Simon Johnson. Income Inequality Is Killing the Economy, Obama Says—Is He Wrong? - Derek Thompson - Business. This Year's Fight Over Taxing the Middle Class—And the Rich - Linda Killian - Politics. "The Economy and the Presidency" by Martin Feldstein. Stephen King: Tax Me, for F@%&’s Sake! How We Pay Taxes: 11 Charts - Derek Thompson - Business. The Poor Are Getting Poorer. Is It Time to Raise the Minimum Wage? - Jordan Weissmann - Business.
The Sharp, Sudden Decline of America's Middle Class | Culture News. Business - Derek Thompson - Who Killed American Unions? The Surprising Truths About Income Inequality in America: Big Issues. Connecticut's Ribbon of Hardship. Grandmothers' Social Security Garnished for Student Loans? Time to Fix the Broken Student Debt System. Poverty rates: Most U.S. counties see increasing poverty rates. All the President's Central Bankers. Getting Away with It by Paul Krugman and Robin Wells. "The Great American Mirage" by Stephen S. Roach. "Tea Party: Vote Obama to Reduce the Federal Budget Deficit" by Steven Strauss. "Obama versus Romney on Jobs" by Laura Tyson.