By Jerry Epstein
CPE Staff Economist
Fed Chair Janet Yellen
The Federal Reserve (Fed), the central bank of the United States, is at the center of a big political fight, once again. Ron Paul, former libertarian congressman, says we should “End the Fed” and reinstitute a gold standard; Rick Perry, former governor of Texas, said the Fed policy of low interest rates is “treasonous” and Fed officials should be sent to Texas where they know how to “deal with” such people; Senator Rand Paul (Ron’s son) has put forward a bill to “Audit the Fed” and establish more Congressional control over monetary policy; and progressives from Senators Bernie Sanders and Elizabeth Warren to the Occupy Movement are highly critical of the revolving door between Fed officials and Wall Street, but oppose Paul, Paul and Perry’s “hard money” policies that would make life harder for debtors.
By Gerald Friedman
Can we finally move past the bizarre fight over the Patient Protection and Affordable Care Act (a.k.a. the ACA or Obamacare) of 2010? When congressional Democrats and the Obama Administration adopted a program originally proposed by the right-wing Heritage Foundation that had been enacted into law in Massachusetts under Republican governor Mitt Romney, they anticipated building a national consensus behind a program that would bring health coverage to millions of Americans largely within the established private health insurance system. One would have expected opposition from the Left by proponents of a government-funded universal program; but nearly 70 years after President Harry Truman first pushed for a universal health insurance system, pragmatic progressives anticipated that by accepting a conservative program built on individual responsibility and private health insurance they would attract enough bipartisan support to enact the ACA easily and to enact it smoothly.
By James K. Boyce
Poor farmworkers in Vietnam. How will they afford the cost of adapting to climate change?
At the latest round of international climate talks this month in Lima, Peru, melting glaciers in the Andes and recent droughts provided a fitting backdrop for the negotiators’ recognition that it is too late to prevent climate change, no matter how fast we ultimately act to limit it. They now confront an issue that many had hoped to avoid: adaptation.
Adapting to climate change will carry a high price tag. Sea walls are needed to protect coastal areas against floods, such as those in the New York area when Superstorm Sandy struck in 2012. We need early-warning and evacuation systems to protect against human tragedies, such as those caused by Typhoon Haiyan in the Philippines in 2013 and by Hurricane Katrina in New Orleans in 2005.
Cooling centers and emergency services must be created to cope with heat waves, such as the one that killed 70,000 in Europe in 2003. Water projects are needed to protect farmers and herders from extreme droughts, such as the one that gripped the Horn of Africa in 2011. Large-scale replanting of forests with new species will be needed to keep pace as temperature gradients shift toward the poles.
Because adaptation won’t come cheap, we must decide which investments are worth the cost.
By Susan Holmberg
This is a cross-post from The Next New Deal – the blog of the Roosevelt Institute.
Hillary Clinton surprised many progressives earlier this week with her remarks on a model populist issue. “There’s something wrong when CEOs make 300 times more than the typical worker. There’s something wrong when American workers keep getting more productive…but that productivity is not matched in their paychecks.”
Indeed. From 1978 to 2013, executive compensation at American firms rose 937 percent, compared with a sluggish 10.2 percent growth in worker compensation over the same period. In 2013, the average CEO pay package at S&P 500 Index companies was worth $11.7 million. Numbers for 2014 are just starting to be released, but Microsoft’s Satya Nadella is thus far topping the list at $84 million in mostly stock awards.
Too often the CEO pay debate, which tends to come into focus during our annual rite of corporate proxy season, hinges on a question of ethics. Is paying CEOs excessive amounts fair to workers? No, of course not, as so many fast food workers, whose CEOs make approximately 1,200 times more than they do, rightfully voiced yesterday.
By Jonathan Jenner
Worker-owners at the fast food chain and worker-cooperative, Indian Coffee House, in Trivandrum, India
Spend enough time discussing worker cooperatives around town, and you’ll encounter a frustratingly persistent idea: worker cooperatives are inefficient. It’s quite untrue, though, and for this reason you will not find an explicit statement of this idea as anyone’s talking point in the ever growing public discussion about worker cooperatives. Outside of public discussion, though, the idea finds refuge in two arenas: as a general, relatively unspoken attitude among people and as a derivation behind (some of) those high walls of economic theory. It’s time to put the idea to bed. So, here’s a quick look at where the idea comes from, and what empirical evidence has to say.
By Anders Fremstad
American capitalism generates an astounding amount of waste. Nowhere is this more clear than in our hugely inefficient transportation system. In the United States, the average private vehicle is driven only 1 hour a day and transports just 1.7 passengers. But the sharing economy is starting to change how Americans get around. A 2014 poll by the Center for a New American Dream reveals that 9% have used car-sharing services like Zipcar and RelayRides, and 8% have used peer-to-peer taxis like Uber and Lyft.
As these online platforms gain traction, criticism of the sharing economy is growing as well. Uber, which created a ride-sharing app that is now valued at $40 billion, attracts special attention. In a debate at Cato Unbound, Dean Baker argues that Uber competes unfairly with traditional taxi services, because it does not require its drivers meet safety standards, carry commercial insurance, or acquire a taxi medallion.
By Harry Konstantinidis
For the first time in modern history, a European country has a government formed around a leftist party. In Greece’s January 25th elections, the Coalition of the Radical Left, known around the world by its initials (SYRIZA), received the most votes (36%), and the mandate to form a government.
SYRIZA was elected promising to simultaneously stop the austerity policies that provoked a humanitarian crisis in Greece, and to keep Greece in the Eurozone. During the first few weeks of the new government’s tenure, the SYRIZA government faced the difficulty of this task. The new government engaged in aggressive diplomacy trying to revoke the austerity program (known in Greece as the “Memorandum”) and the commitments the previous Greek government made to the lenders before leaving office: Herculean primary surpluses of 3% in 2015 and 4.5% in 2016 (that is, surpluses in the balance between government revenues and expenditures, prior to interest payments), more layoffs in the Greek public sector and further deregulation of the labor market, and privatizations.
By Sue Holmberg (crosspost from The Next New Deal)
Taxpayers are subsidizing ever-larger executive pay packages while their own wages stagnate. For the middle class to prosper, that needs to change.
The intrepid economic proposals in Rep. Chris Van Hollen’s action plan “to grow the paychecks of all, not just the wealth of a few” may not win over a Republican Congress, but they will reinforce the progressive economic messaging championed by Senator Elizabeth Warren and conceivably embolden more Democrats to finally take command of our economic debate in advance of the 2016 presidential election. Though Van Hollen’s tax credits for working families and dilution of tax breaks for the rich have grabbed the most headlines, another controversial but important piece of his plan is the CEO-Employee Paycheck Fairness Act, which aims to address one of the key contributing factors to soaring inequality and economic volatility in the U.S.
By Brian Callaci
We depend on the research and development efforts of pharmaceutical companies to develop treatments for the most dangerous diseases on the planet, but the largest of those companies appear more interested in financial engineering than creating lifesaving drugs.
As the death toll from the Ebola outbreak approaches 5,000, public attention has turned to the failure of the pharmaceutical industry to develop effective vaccines or treatments for the disease. World Health Organization director-general Margaret Chan lambasted the pharmaceutical industry, blaming the for-profit nature of the industry for its failure to invest in treatments for life-saving illnesses. “The R&D incentive is virtually nonexistent,” she said. “A profit-driven industry does not invest in products for markets that cannot pay.”
What does the pharmaceutical industry invest in? For one thing, it is more profitable to treat chronic conditions that afflict the wealthy, such as erectile disfunction, than to cure life-threatening diseases that only need curing once. But there is also a deeper problem: pharmaceuticals are slashing their budgets for developing new drugs in favor of ramping up spending on financial engineering.
By Matson Boyd
It was an awesome sight this September in Manhattan: hundreds of thousands marched together, calling for climate action, as blue banners swirled through the streets to represent the rising waters. Sister marches echoed all the way around our globe, from Paris to Melbourne to Rio, 162 countries in all. If protest energy is all we need to fight climate change, then success is surely at hand. But the task is daunting: we need internationally coordinated policy to keep fossil-fuels in the ground, and we need it fast. And keeping those fossil-fuels in the ground means dispossessing the oil-rich of trillions of dollars of wealth. This will not come easy.
The good news is that we have a very simple policy to rally around: keep most of the fossil-fuels in the ground, regularly auction off the rights to the small amount that can be safely removed, and return the proceeds to the people so that everybody gets a dividend check of the same amount. According to Bill Mckibben, we can safely put approximately 565 gigatons of carbon into the atmosphere between now and 2050. Anything more than that puts us into very dangerous territory. You want to be one of those people who takes some of the 565 gigatons out of the ground? Then you have to pay the rest of us for the right to do so, because that carbon allowance belongs to all of us. This is the core idea behind cap and dividend.