Showing posts from April, 2012

European Austerity vs. 'Growth' and the Real Problem

In the last few days, various economists and experts have been quoted declaring "Austerity in Europe has failed." For some examples of this see the following on CNBC:
Spain Downgrade Proof Austerity Not Working
Published: Friday, 27 Apr 2012

The problem with this argument is that neither "austerity" nor "stimulus" will help Europe recover until the real problem with the EU national economies can be addressed: they are anti-business, anti-innovation, and anti-growth.

You can spend all the money (stimulus) imaginable, but if national policies dissuade or punish private innovation and job creation, the stimulus cannot and will not create permanent growth. When the stimulus ends, job losses and declines will resume.

Likewise, you cannot cut (austerity) your way to prosperity if you do nothing to revitalize industry and job creation. Cutting government is good, but pointless if you aren't also encouraging business inves…

Europe Going Gray: Why Stimulus will Likely Fail

When Paul Krugman and other progressives talk about the risks of austerity in Europe, they are forgetting a basic fact: Europe and Japan are getting grayer and grayer. There are more retirees than young people, and that means lower and lower rates of productivity.

I often cite two authors willing to confront this truth: Megan McArdle and Robert Samuelson. In the April 2012 issue of The Atlantic, McArdle bluntly assesses the issue of a graying population in the Western nations. It is a problem the United States will soon experience, too.

First, a few paragraphs from the lengthy McArdle piece. You absolutely should read the entire article. (If you don't read The Atlantic, you should.)

Europe's Real Crisis
The Continent's problems are as much demographic as financial. They won't go away soon.
By MEGAN MACROCELL Italy's fertility rate has actually been inching up from its 1995 low of 1…

Not Dead… Moving Again

For those wondering, we have not stopped blogging and nothing horrible has happened to either me or my wife.

We're not dead… we're moving again.

Unlike last summer, when we moved from one state to another, this time we are moving about two miles from our temporary residence to a new home in the same little Pennsylvania township.

The move will give us plenty of material for our blogs. Moving is stressful and chaotic. Moving raises economic issues, especially in this housing market. Moving means shifting our beloved books again. Most of all, it cuts into our creative "me/us" time necessary to recharging and regrouping.

There will be new blog posts. This has been a hectic few years.

Of course, we're moving right as my students have finals, my wife has to take a business trip, and a cat is having health issues. The long list of things happening in our lives merely reminds us how overwhelmed we are until the end of May or June. Beyond May we will be renovatin…

Education and the Reproduction of Privilege

As a university professor, I obviously believe in the value of higher education. However, I also remind my students that education alone is only part of the equation when you seek entry into the elite circles of our nation or any culture.

In any system, the elites end up together. The problem for the United States is that we aren't supposed to be governed exclusively by Harvard or Yale graduates. We are supposed to reject the Cambridge and Oxford model of British leadership and definitely be "better" than the supposedly merit-based system of the French.

The French system openly resists the "lower classes" by refusing to consider personal backgrounds in admissions. While I don't embrace affirmative action quotas, trying to block qualified candidates from the middle and lower classes is absurd. The Conference of Grandes Ecoles, leaders of the 23 leading French universities, continues to resist orders from Pres. Sarkozy to admit at least 30 percent of studen…

April Fools? The Buffett Rule: Political Theatrics

For his Saturday address to the nation on March 31, the day before April Fools, Pres. Obama once again called of passage of the "Buffet Rule" guaranteeing a "minimum tax" of 30 percent on millionaires.

The problem with this? It's political theatrics and genuine foolishness if the administration hasn't considered what the Buffet Rule would actually do to the tax system. Believe it or not, if the Buffet Rule were to replace the Alternative Minimum Tax (AMT), the federal government could collect less revenue, not more! So, either this is a joke, foolishness, or blatant deception. Whichever of the three it is, the call for the Buffet Rule reveals how poorly Americans (and the media) understand our complicated and often stupid tax code.

Let us start by looking back a few months.

Buffett Rule's impact? W.H. won't say
By: Josh Boak
January 26, 2012 07:42 PM EST From Politico: President Barack Obama has lef…