Economics

Economics

Bubbles for the Rich, Welfare for the Poor

By From the November 2013 issue

WHEN GOVERNMENT ECONOMISTS, academics, and the talking heads on bubblevision speak of “modest price inflation,” they know full well that the effects of the quantitative easing policies that they have advocated and implemented have not been fully expressed in America’s consumer price index (CPI). Rather, the best evidence of runaway inflation can be found, among other areas, in the markets for commodities, foreign exchange, equities, bonds, farmland, real estate, and art. Savvy statisticians know this, of course, and many of them have impeached the U.S. government methodology used to compute the CPI. For example, using the methodology according to which CPI was computed in 1980, recent CPI inflation is estimated to have been close to 10 percent. Using the government’s methodology of 1990, CPI inflation for the same period is estimated to have been closer to 6 percent.

Another Perspective

The End of Jobs

By 10.25.13

In the early days of the Industrial Revolution a number of English textile workers saw their livelihoods replaced by automated machines. Faced with joblessness, poverty, and starvation the group, calling itself the Luddites, protested by writing ballads, broadsides and, most notoriously, by destroying a few automated textile looms.

Today, the Luddites are generally seen as wrong-headed and backward technophobes, when in fact they were not anti-technology, but, in the words of Ronnie Bray, “anti-starvation.” Suffice it to say, that had automation delivered on its promise to maintain or create jobs, at least in the short term, there would have been no Luddite backlash.

The Luddites are invoked each time some Cassandra questions the wisdom of the direction of our ongoing hi-tech revolution. Such revolutions, it is believed, are good for society and economies. The old jobs may be going away, but they will be replaced by new ones.

And, indeed, for decades, our leaders have been preaching new mostly minimum wage service sector openings, while we wait for something better to come along. 

Special Report

Permanently Degraded Detroit

By 10.14.13

DETROIT — Former Mayor Kwame Kilpatrick was sentenced to 28 years in federal prison last Thursday for graft, racketeering, extortion, and conspiracy to use city hall as what Judge Nancy Edmunds called “a criminal enterprise” to enrich himself, his family, and his cronies. This came two weeks after the Obama administration announced it would give the city $300 million to help bail it out of financial ruin. In July, Detroit filed the biggest municipal bankruptcy in history. Fixing this mess is about more than finances. There’s a saying that’s popular on the mean streets of Motown: If you can’t beat ’em, beat ’em up. This mindset has severe consequences for a city that has been in a death spiral for six decades. Much of the damage is self-inflicted.

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