Gov’t Spending In Recessions and Recoveries. We used to quip that “a Keynesian is a Republican in a recession.”
(I know, I know…where do I get such hilarious material!?) Some of Paul K’s recent work comparing gov’t spending under Presidents Reagan and Obama got me thinking, just how do these gov’t expenditure patterns stack up in recent years, drilling down a bit more into categories? The results are below, and they actually kinda show that R’s really do get their Keynes on in recession—and they keep it on relative to D’s.
I just averaged real growth rates of gov’t spending, both federal and state/local for four years out from a cyclical trough (i.e., the quarter when a recession started). The 80’s/now comparisons are plotted below and the table compares the last four recessions/recoveries. Source: NIPA President Reagan’s military Keynesianism shows up clearly in the early 1980s, with marginal fiscal drag from the states. John Lennon once said something to the effect of “everything you think you know is wrong.” V To L: A Simple, Interesting, and Important Picture. If you’re an observer of business cycle patterns, and who isn’t, this isn’t news to you.
But you still might find this to be a useful picture of the phenomenon of moving from V to L. It’s simply employment as a share of the population–so-called employment rates for people at least 16 years old, considered a good proxy for labor demand. As you can see, it’s highly cyclical. But it provides a useful picture of the changing nature of recessions and recoveries, or the morphing from V, through U, to L. Source: BLS. The Minimum Wage: Time to Start Working On the Next Increase.
I’ve always thought the national minimum wage is a lot more important than most people tend to think.
By definition, it sets a floor on the low end of the job market, though to their credit, many states now set their minimums above the federal level of $7.25 (Washington state clocks in at a cool $9.04). So it’s a floor, not a ceiling. Lots of low-wage workers and their families depend on it, and its long slide, as shown in the figure below, especially over the Reagan years, contributed to wage losses and working poverty for many who toil to this day in low-end services. Of course, when someone raises the idea of a raise, you hear a huge outcry from some in the business lobby. Their generic argument is that the increase will lead to job losses among those low-wage workers affected by the higher wage level. Yet, you hear the opposite from groups that represent low-wage workers’ interests, groups like the National Employment Law Project, or NELP (proud disclosure: I’m on their board).
Jared Bernstein: Inequality, the Middle Class, and Growth. The following puts together a bunch of stuff I've been posting over the past few months... it's time to start thinking about these ideas in terms of new economic models to replace the old, worn out ones...
The trickle-down, deregulatory agenda -- what I have called YOYO, or "you're on your own" economics -- presumes that the growth chain starts at the top of the wealth scale and "trickles down" to those at the middle and the bottom of that scale. Problem is, that hasn't worked. Here's a better model. In the midst of the 1990s boom, which lifted the earnings and incomes of middle and low-wage workers much more so than the 1980s or 2000s cycles, Larry Mishel and I started talking about "wage-led demand growth.
" We meant that a much better way to generate robust, lasting, and broadly shared growth is through an economically strengthened middle class. At the most basic level, this growth model is a function of customers interacting with employers, business owners, and producers.