What happened to the global economy and what we can do about it
Month: September 2010
By James Kwak
On my way to and from New Haven, I listen to podcasts, including a lot of TED Talks. Today I listened to a talk by Esther Duflo, the recent winner of the Clark Medal (top economist under forty), from earlier this year. The topic was using randomized experiments to test alternative social policies and determine what measures of fighting poverty are more effective than others. It was probably the best and most inspiring economics talk I’ve heard in a long time.
By James Kwak
When last we left our hero, he had just (with some difficulty) placed an order with Comcast because of Verizon’s many system and customer service failures. A friend of mine said that he couldn’t want to see the post I would write about Comcast, which he had found to be terrible as well. This post is probably coming sooner than even he expected.
So . . . a week after placing that order, I showed up at the installation time, and no one came. I asked my wife to call Comcast, and they told her that our order had almost vanished; after much digging they found some record of it (this is a new service order, so if they had our name and address at all, it could only have come from my order), but no further information. Again, just like with Verizon, the phone people said they have no visibility into the online system (is it really possible that the phone and online front ends go into two completely separate back-end systems? yes), and also said cheerfully that many online orders go into unfulfilled limbo.
By James Kwak
Probably the most important and intractable economic problem we face is not restarting the economy after the financial crisis, but the decades-old problem of stagnant wages for the lower and middle classes and the consequent massive increase in income inequality. This is something that Raghuram Rajan brings up in the first chapter of Fault Lines, and, like many people, he points the finger at education. Citing (like everyone else) Claudia Goldin and Lawrence Katz, he writes (pp. 22-23),
“As agriculture gave way to manufacturing in the mid-1800s, the elementary school movement in the United States created the most highly educated population in the world. . . . The high school movement took off in the early part of the twentieth century and provided the flexible, trained workers who would staff America’s factories and offices. . . .
“Recent technological advances now require many workers to have a college degree to carry out their tasks. But the supply of college-educated workers has not kept pace with demand–indeed, the fraction of high school graduates in every age cohort has stopped rising, having fallen slightly since the 1970s.”
By James Kwak
As loyal readers know, I spent the summer working and mainly not-blogging. I’m back in school now, but this semester will be busier than previous ones. I’m taking two clinics, and I have to make up for phoning it in last fall when I was writing 13 Bankers. (Simon and I wrote it in four months while I was in school and he was teaching three classes.) Also, I only have one more year of school left in my life, I’m paying more than $45,000 for it, and I’d like to take it seriously.
So the blog is going to be a somewhat lower priority in the past.* I’m hoping to post a few times a week this semester, if I have enough original ideas. I hope you will keep reading; I assume most people get the blog via email or an RSS reader, so frequency shouldn’t be an issue for you.
It’s possible that after school I will go back to more serious blogging; I do think it’s a valuable and potentially powerful medium, and certainly a lot more gratifying than writing academic papers.
Thanks again for reading.
* In my defense, most of the high-volume economics bloggers are either tenured professors (Cowen, Thoma, DeLong, Krugman) or people whose job is to blog (Salmon, Klein). (Yves Smith is an exception; how she finds the time I don’t know.)
By Peter Boone and Simon Johnson
Is the global economic recovery still on track? The mainstream view is: yes, without a doubt. But increasingly, there are reasons to fear another financial disruption – particularly given the latest developments in Ireland.
The consensus among officials and most of the international banking community is that the global economy has stabilized and is now well down the road to recovery. The speed of this recovery is proving disappointing – as seen in the revised second-quarter growth estimate for gross domestic product in the United States, with annualized growth down to 1.6 percent. But, according to this view, easy monetary policy and still-loose fiscal policy around the world will keep sufficient momentum going.
Never mind that Japan, the United States and most of Europe are running unsustainable fiscal policies, while the Federal Reserve chairman Ben Bernanke is fretting over how to prevent deflation with a limited toolbox, and Jean-Claude Trichet, president of the European Central Bank, is calling for more fiscal tightening. To enjoy this rosy global picture, we are also told to ignore the plight of heavily indebted peripheral euro-zone nations still suffering from uncompetitive wages and prices, and concerns over default, that strangle their credit markets and growth. Continue reading “Irish Worries For The Global Economy”
The Baseline Scenario 