Thursday, March 15, 2018

Larry Kudlow to NEC Chair... [feedly]

Larry Kudlow to NEC Chair...
http://www.bradford-delong.com/2018/03/larry-kudlow-to-nec-chair.html

Larry Kudlow has not been an economist in at least a generation. Rather, he plays an economist on TV. Whatever ability he once had to make or analyze or present coherent and data-based economic arguments is long gone—with a number of his old friends blaming long-term consequences of severe and prolonged drug addiction.

The right way to view this appointment is, I think, as if Donald Trump were to name William Shatner to command the Navy's 7th Fleet.

That said, probably little damage will be done. The major day-to-day job of the NEC Chair is to coordinate the presentation of economic policy options to the President, and to try to keep the agencies and departments on the same page as they implement policy. Kudlow has negative talents in either organizing and presenting alternative points of view or in controlling bureaucracies. Therefore the agencies will each continue marching to its different drummer, and there will be no coherent presentation of policy options to the President. But that will not be new.



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Wednesday, March 14, 2018

Webb: Trade, power grab, racism, and other loose ends


Trade, power grab, racism, and other loose ends


Sam Webb

1. Dan Rodrick, Harvard professor, has been studying the global economy and its unfairness for some time. Most of his academic life, in fact. In this analysishe comments on Trump's protectionist measures, announced last week. He doesn't suggest that the sky is going to fall in as these measures wend their way through the global economy, but he does argue that they are no way to address the undeniable inequities in the current global trade regime. If anything, they will, he avers, make that urgent task more, not less, difficult.

At about the same time, I read an interview of Leo Gerard, the president of the United Steel Workers Union. What bothered me wasn't Gerard's defense of Trump's tariffs. I expected that. What I found bothersome is that he had nothing — not a word — to say about the potential negative impacts on other sections of the working class here and elsewhere, resulting from Trump's actions.

Nor did he offer a comment on the peculiar situation of the union's alignment with a president that is authoritarian and backward in every way. We should expect more from a leader of the labor movement in these difficult times.

2. What we saw last week is the usurpation of power and decision making by a lone individual in the White House. Worse still, this individual is narcissistic and impulsive to the extreme, authoritarian to the core, and singularly bereft of any humanity. Meanwhile, the Republican majority in Congress act as enablers of this rogue president. This danger, unprecedented in my experience, is the ground floor of authoritarian rule. This would be discouraging to any sane person if it were not for a whole array of state institutions, social constituencies, and the media that are resisting Trump's power grab. Still, it's fair to ask: are we doing enough?

3. Trump's said a lot of ugly things in his speech at a rally in W.PA. over the weekend, but the ugliest, but not necessarily the one receiving the most coverage, was his dismissal of Representative Maxine Waters, Democrat of California, as a "low-I.Q. individual." Bear in mind that this was delivered in a predominantly white region, where such racist rhetorical volleys resonate among a considerable section of white voters. No one should think that Trump's base is strictly animated by its economic discontent. Trump, obviously, doesn't believe so. And yet, the notion persists that it is enough for Democrats to present an economic alternative that addresses wage and income inequality to turn the tables in November.

4. Any analysis that occludes the rise of right wing extremism in the mid-1970s and its persistence into this century doesn't help us understand either the past or the present, including the Trump phenomenon. Moreover, it leaves its proponents (and those they influence) flatfooted strategically and tactically. And yet, this blind spot continues to inform the thinking of some progressives and radicals.

5. I hope Mueller does his job – and it appears that he is — and the rest of us do ours in the voting booth in November. Both are necessary to escape this extraordinarily poisonous, perilous, and unprecedented situation in which we — and the world's people — find ourselves in. If we had any doubts about this, Trump's behavior and the newest revelations over the past two weeks should have dissipated them.

6. I just finished watching, "7 Seconds," on Netflix. What a compelling story and performance! The production and its actors deserve an award of some kind.


--
John Case
Harpers Ferry, WV

The Winners and Losers Radio Show
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Tuesday, March 13, 2018

Steel tariffs: Playing Trump’s protectionist game

Good summary, but does not actually take a position

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Steel tariffs: Playing Trump's protectionist game // Article – People's World
http://www.peoplesworld.org/article/steel-tariffs-playing-trumps-protectionist-game/

President Donald Trump's imposition of steel and aluminum tariffs has sparked debate among labor leaders, union activists, and progressives. Questions about the effectiveness of the tariffs as a policy and about Trump's political motivations have resulted in a variety of opinions. The article below is one of several analyses and commentaries that People's World will publish on the topic. The views represented here are those of the author.

Just like the retailers and manufactures who dutifully awarded one-time bonuses to employees immediately after the passage of the GOP tax cut bill, Republic Steel lined up to play its part last week following Trump's imposition of new tariffs on imported steel and aluminum. In a move so smooth it could have been scripted by a public relations wizard, within hours of Trump signing off on the hefty new import taxes, the Canton, Ohio-based company announced it would again fire up its plant in Lorraine and create 1,000 new jobs.

Republic fulfilled its role in Trump's political PR game, but it wasn't the only one. Some critics argue there are a few in the labor movement, as well as some Democratic politicians, who have also been a little too eager to join the chorus.

They point to figures like United Steelworkers (USW) International President Leo Gerard, who said that Trump's tariff decision "aligns with what every citizen knows: these products are vital to our national security." He was echoing Trump's official rationale for the new duties: that U.S. steel is vital to production of U.S. war machines.

Noting another aspect of the pro-tariff argument, Sen. Sherrod Brown of Ohio praised Trump, saying, "This welcome action is long overdue for shuttered steel plants across Ohio and steelworkers who live in fear that their jobs will be the next victims of Chinese cheating."

For the Steelworkers and the Democrats that they have long backed, the embrace of the White House's latest move is being spun as a sort of "getting what we can out of Trump" tactic. To be sure, there is substance to the claim; it's not like the USW is enlisting in the Trump army lock, stock, and barrel. Gerard says the tariffs are "only one of the many issues" his members care about, and, indeed, at the same time that the union is lauding Trump's tariffs, it is also working hard to block his guy, right-to-work Republican Rick Saccone, from winning a Congressional seat in Pennsylvania's steel country.

Gerrard, Brown, and others have been put into a tough spot, and that's exactly where Trump wants them. He has signaled he's willing to adopt portions of their agenda on trade—an agenda which for so long has been spurned by the free trade mantra that dominates the leadership of both of the mainline political parties. How could they not express some satisfaction and even grudging acknowledgement of Trump's efforts?

When Leo Gerard says, "For too long, our political leaders have talked about the problem but have largely left enforcement of our trade laws up to the private sector," he's absolutely right.  For decades, workers (and not just those in the U.S.) have been hung out to dry as globalization proceeded apace with only minimal efforts made to help them navigate the transition of industrial and technological change.

Shareholder interests alone have dominated the economic conversation and shaped trade agreements. The need for a not just fairer trade, but for a smarter and more cooperative international regulatory regime has been apparent to unions and progressive economists for a long time.

However, can protectionism—which is really what these tariffs amount to—save the day for steel? And even if tariffs were a part of the solution to the woes of unfair trade and abusive labor practices overseas, is what Trump's proposing actually going to help?

It is estimated that a maximum of 140,000 people are directly employed in the steel industry in the United States, though some estimates put the number closer to 90,000. It is these workers—and even more so their bosses in the Steel Manufacturers Association—who are the supposed beneficiaries of any ramping-up of U.S. steel production. They'll have greater job security, and new jobs will be created as plants like the one in Lorraine come back on-line.

But citing figures from the Commerce Department, automakers and major industrial equipment manufacturers claim that 6.5 million Americans are employed in downstream manufacturing industries that consume steel and aluminum—including cars, aircraft, aluminum cans and other products, pipe manufacturers, and building materials. As tariffs bump up the price of the metals their industries rely on, they argue that the country may actually end up losing jobs.

It's a bit of whom do you believe: this capitalist or that one? But there are reports suggesting that when George W. Bush implemented steel tariffs in 2002, as many as 200,000 jobs were lost in downstream industries—a number greater than the size of the entire U.S. steel-producing workforce at the time.

All that to say, it is not at all clear that Trump's tariffs will be a net gain for U.S. workers. They may arguably be a boon to steel workers, but whether the total job impact will be positive is debatable. And even for steel workers, the long-term outlook is not assured; Bush's tariffs slowed the decline in the number of U.S. steel jobs, but only temporarily.

As for the national security argument? Totally bogus.

Under a 1933 law, the Pentagon is required to give preferential treatment to domestic suppliers of steel and aluminum construction materials UNLESS the country's producers cannot meet demand. Even with the most massive military machine on Earth, the Pentagon currently only consumes 3 percent of U.S.-made steel and aluminum. Over two-thirds of all steel used in the United States is still domestically-produced, so there is absolutely zero chance that America would be unable to meet its metal needs in case of a war. But national defense is always a go-to argument when you want to stop a policy debate.

So how about the dumping claim—the oft-repeated desire to stop China from flooding the U.S. market with cheap steel? China now accounts for nearly half of global steel production, and without doubt that country's production has pushed down the international price for the metal. But the China-bashing that Trump and his entourage (and some union leaders) engage in just doesn't hold up when you look at the numbers.

Producing a tiny 2.4 percent of the raw steel consumed in the U.S., China doesn't even make the top-ten list of foreign importers. All the talk of stopping Chinese dumping is a political show staged by Trump. He is pitting worker against worker, both domestically and internationally. Chinese workers are not the problem. Chinese steel is not the problem. Policies that force workers to compete on wages and investment decisions made for private economic interests rather than social benefit are the problem.

Trump is already looking ahead to the midterm elections and, even further, to 2020. The tariffs are not just a manifestation of the economic nationalist outlook that he has spouted for decades; they are also a part of a strategy to hold onto and expand upon the 43 percent of union households who voted for him in 2016.

If he is to maintain his advance into former Democratic strongholds like Michigan, Pennsylvania, Ohio, and Wisconsin, he knows that driving a wedge into organized labor is a necessity. And tariffs may be just the thing that will do the trick. As for the rest of the Republican Party, the ideological blinders of free trade (and campaign contribution checks) are forcing many to keep their distance from Trump, even though there could be some electoral gain for them.

President Donald Trump, posing with workers, signs the proclamation on steel imports. | Susan Walsh / AP

Trump is hoping that Leo Gerard is correct when he says it will be "very hard" for union steelworkers to forget what Trump has done for them when it comes time to head to the voting booth. That is precisely the calculation that Trump is making with these tariffs. It is a dangerous game for unions and liberal politicians, but given their constituencies' demands and the fact that a president is finally calling for some of the things they've been demanding for a generation, their options are limited.

Labor and progressives should be cautious of anything Trump puts on the table; he's not thinking of their interests with any of his proposals—these tariffs included.

As for the long-term way out, the dilemma brings to mind the words of Frederick Engels from some 130 years ago: "Protection is at best an endless screw, and you never know when you have done with it. By protecting one industry, you directly or indirectly hurt all others, and have therefore to protect them too. By so doing, you again damage the industry that you first protected, and have to compensate it; but this compensation reacts, as before, on all other trades, and entitles them to redress, and so on ad infinitum."

There is no easy answer to the problems of unfair trade, but knee-jerk protectionism is not likely to be part of it.


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Immigration: the wrong battle



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Immigration: the wrong battle // Stumbling and Mumbling
http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2018/03/immigration-the-wrong-battle.html

Jeremy Corbyn is being criticized for claiming that immigration cuts wages. I suspect his critics are right, if not quite for the reasons some of them might think.

Corbyn said he wanted to

prevent] employers being able to import cheap agency labour to undercut existing pay and conditions in the name of free market orthodoxy.

One can read this not as a call for immigration controls but for restrictions on employment agencies.

Such a reading, however, doesn't exonerate Corbyn.

For one thing, social pressure and market forces have already reined in bad agencies. Transline – the supplier of labour to Amazon and Sports Direct memorably described by James Bloodworth in Hired – lost those contracts and went into administration last year.

And for another, he must have known that statement would be read as a claim about immigration.

And it's here that he's wrong.

It is the case that immigration does reduce the wages of some unskilled workers. But the effect is puny. As Jonathan Portes has said:

Immigration may have some, small, negative impact on wages for some low-paid workers.  But the idea that immigration is the main or even a moderately important driver of low pay is simply not supported by the available evidence.

And this small downwards pressure on the lower end of wages is offset by upward effects upon higher wages. Net, immigration is not bad for the economy.

Now, Corbyn's centrist critics will stop here. But they shouldn't. It's here that my complaint with him begins.

In one sense, politicians are like generals; one of their great skills is to choose the terrain on which to fight their battles. And in these words, Corbyn is shifting the battle to the wrong field. He is, in Gramsci's words, taking a wrong move in the war of position.

What he should be doing is to argue that wages are being depressed not by immigration but by fiscal austerity and by dysfunctional capitalism: stagnant productivity; financialization (pdf), power-biased technical change; deunionization and so on*.

Even the slightest talk of immigration shifts the agenda against this. It moves the political battle onto the terrain that capitalists and Tories want it to be on. They want to distract us from the failures and injustices of austerity and (neoliberal?) capitalism by scapegoating immigrants.

The more we talk about immigration, the less we talk about capitalism. Labour cannot win a battle on this terrain. Once you concede that immigration depresses wages, you are allowing the right to offer tougher and more credible policies to combat it than you can. And you are distracting people from the real reasons why wages are low - reasons that Labour has some policies to combat.

Labour's attitude to immigration should be much the same as its attitude to government borrowing: it should be silent about it because it doesn't matter. In fairness to Corbyn, one of his great achievements in last year's general election was to do just this.  

The right, of course, already has a massive advantage in choosing the terrain; the right-wing press sets the agenda and the BBC follows. Labour therefore needs to be very careful not to add to this advantage. In this sense, Corbyn has failed.

* I'm not saying Corbyn should use these exact words. Another of the great skills of a successful politician is to translate technical economic language into words that resonate more with people.


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Addressing the Dark Side of the Crypto World



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Addressing the Dark Side of the Crypto World // IMF Blog
https://blogs.imf.org/2018/03/13/addressing-the-dark-side-of-the-crypto-world/

By Christine Lagarde

March 13, 2018

Versions in  عربي (Arabic),  中文 (Chinese), Français (French), 日本語 (Japanese), Português (Portuguese), Русский (Russian)

The same reason crypto-assets like Bitcoin are so appealing is also what makes them dangerous (iStock by GettyImages).

Whether Bitcoin's value goes up or Bitcoin's value goes down, people around the world are asking the same question: What exactly is the potential of crypto-assets?

The technology behind these assets—including blockchain—is an exciting advancement that could help revolutionize fields beyond finance. It could, for example, power financial inclusion by providing new, low-cost payment methods to those who lack bank accounts and in the process empower millions in low-income countries.

The possible benefits have even led some central banks to consider the idea of issuing central bank digital currencies.

Before we get there, however, we should take a step back and understand the peril that comes along with the promise.

The peril of crypto-assets

The same reason crypto-assets—or what some people call crypto-currencies—are so appealing is also what makes them dangerous. These digital offerings are typically built in a decentralized way and without the need for a central bank. This gives crypto-asset transactions an element of anonymity, much like cash transactions.

The result is a potentially major new vehicle for money laundering and the financing of terrorism.

One recent example reveals the scope of the problem.

In July 2017, an international operation led by the United States shut down AlphaBay, the largest online criminal marketplace on the internet. For more than two years, illegal drugs, hacking tools, firearms, and toxic chemicals were sold all over the world through AlphaBay. Before the site was taken offline, more than $1 billion had been exchanged through crypto-assets.

Of course, money laundering and terrorist financing is only one dimension of the threat. Financial stability is another. The rapid growth of crypto-assets, the extreme volatility in their traded prices, and their ill-defined connections to the traditional financial world could easily create new vulnerabilities.    

So, we need to develop regulatory frameworks to meet an evolving challenge. Many organizations have already started.

One positive example is the Financial Stability Board (FSB), which is looking at what new rules might be needed to meet the advancements in fintech. Another is the Financial Action Task Force (FATF)—the body that sets standards for the fight against money laundering and terrorist financing. The task force has already provided useful guidance to countries on how to deal with cryptocurrencies and other electronic assets.

The IMF is also working on these issues. Stopping money laundering and combatting terrorist financing has been part of our work for the last 20 years. Based on the standards set by FATF, we have conducted 65 assessments of countries' regulatory frameworks and provided capacity development assistance to 120 countries. Our efforts have focused on helping our member countries grapple with the specter of illicit financial flows.

But we recognize more needs to be done to get a handle on the emerging threat posed by crypto-assets and to secure a stable financial system. Where can we start?

Fighting fire with fire

We can begin by focusing on policies that ensure financial integrity and protect consumers in the crypto world just as we have for the traditional financial sector.

Indeed, the same innovations that power crypto-assets can also help us regulate them. 

To put it another way, we can fight fire with fire.

Regulatory technology and supervisory technology can help shut criminals out of the crypto world.  More broadly, we are seeing crypto-asset exchanges in some countries that are subject to know-your-customer requirements.

These advances will take years to refine and implement. Two examples highlight the promise of this approach over the long term:

Distributed ledger technology (DLT) can be used to speed up information-sharing between market participants and regulators. Those who have a shared interest in maintaining safe online transactions need to be able to communicate seamlessly. The technology that enables instant global transactions could be used to create registries of standard, verified, customer information along with digital signatures. Better use of data by governments can also help free up resources for priority needs and reduce tax evasion, including evasion related to cross-border transactions.Biometrics, artificial intelligence, and cryptography can enhance digital security and identify suspicious transactions in close to real time. This would give law enforcement a leg up in acting fast to stop illegal transactions. This is one way to help us remove the "pollution" from the crypto-assets ecosystem.

We also need to ensure that the same rules apply to protect consumers in both digital and non-digital transactions. The U.S. Securities and Exchange Commission and other regulators around the world now apply the same laws to some initial coin offerings (ICOs) as they do to offerings of standard securities. This helps to increase transparency and alert buyers to potential risks.

But no country can handle this challenge alone.

Indispensable international cooperation

To be truly effective, all these efforts require close international cooperation. Since crypto-assets know no borders, the framework to regulate them must be global as well.

The successful closure of AlphaBay, for example, involved the cooperation of Europol and law enforcement agencies in the United States, Thailand, the Netherlands, Lithuania, Canada, the United Kingdom, and France.

Countries will have to decide collectively that this path is worth pursuing. Promisingly, the Group of Twenty (G-20) has agreed to put crypto-assets on the agenda of its November 2018 summit in Argentina.

The IMF will play its part in this effort. With our near-universal membership and expertise, including in battling money-laundering and terrorist financing, we are uniquely situated to be a forum for helping develop answers in the evolving crypto-asset space.

What comes next for crypto

The volatility of crypto-assets has prompted an intense debate about whether they are a bubble, just another fad, or a revolution equivalent to the advent of the internet that will disrupt the financial sector and eventually replace fiat currencies.

The truth is obviously somewhere in between these extremes.

As I have said before, it would not be wise to dismiss crypto-assets; we must welcome their potential but also recognize their risks.

By working together, and leveraging technology for the public good, we can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.

Other readables:
Central Banking and Fintech—A Brave New World?
Fintech and the IMF

Recent IMFBlogs:

Fintech—A Brave New World for the Financial Sector?

Virtual Currencies: The Public Impact of Private Money
Fintech: Capturing the Benefits, Avoiding the Risks
Democratizing the Money Market
Banking On the Go

Stepping up the Fight Against Money Laundering and Terrorist Financing

 


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Motherhood penalties in the U.S., 1986-2014



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Motherhood penalties in the U.S., 1986-2014 // Equitablog – Equitable Growth
http://equitablegrowth.org/working-papers/motherhood-penalties/



Download File

0313018-WP-motherhood-penalties

Read the full PDF in your browser

Authors:

Eunjung Jee, PhD Candidate, University of Massachusetts, Amherst
Joya Misra, Professor of Sociology, University of Massachusetts, Amherst
Marta Murray-Close, Research Economist, U.S. Census Bureau

Abstract:

Previous research has found that mothers earn less than childless women; this parenthood effect helps explain gender inequality as well. Although U.S. women's educational levels and engagement in the labor market have changed over the last several decades, most studies do not analyze variation in the motherhood penalty over time. We know surprisingly little about how the labormarket status of mothers has evolved or whether the role of motherhood in shaping labor-market outcomes for women has changed over the last few decades. This paper uses data from the U.S. Panel Study of Income Dynamics (PSID), one of the only nationally representative datasets that contains a measure of actual labor-market experience, to examine the evolution of the motherhood penalty in recent years. We estimate the wage gap between mothers and childless women for three time periods: 1986-95, 1996-2004, and 2006-14. We find that the motherhood penalty remains quite stable over time, and may have worsened for mothers with one child. While the gross gap in pay between childless women and mothers of two or more children has narrowed, it has only done so because mothers' have increased their investments in human capital, such as education and workforce experience. Differential selection into motherhood does not explain these findings, as fixed effects models provide similar results. Our findings may thus confirm that changes mothers can make – in their human capital investment, as well as in their employment patterns – may not be enough to create real change. Policies aimed at supporting mothers' employment may be a necessary next step, if we hope to lower the motherhood wage penalty in the United States.

Source


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Links for 02-12-18



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Links for 02-12-18 // Economist's View
http://economistsview.typepad.com/economistsview/2018/02/links-for-02-12-18.html

How Big a Bang for Trump's Buck? (Wonkish) - Paul Krugman Kaldor and Piketty's facts: The rise of monopoly power - Equitable GrowthThe rise of market power explains macroeconomic puzzles - Equitable Growth Economics and politics of monetary policymaking: A new eBook - VoxEU Weber's proof of Gittins Index Theorem - The Leisure of the Theory Class Metrics Monday: Causal Inference with Observational Data - Marc Bellemare Does More "Skin in the Game" Mitigate Bank Risk-Taking? - Liberty Street The Impact of Tax Arbitrage on the U.S. Balance of Payments - Brad Setser A Multicointegration Model of Global Climate Change - Stochastic Trend Understanding Bank Capital: A Primer - Cecchetti & Schoenholtz Notes on European Recovery (Wonkish) - Paul Krugman Nobody Knows Anything - Economic Principals Global trade and the dollar - VoxEU Economic Goodness-of-Fit - Dave Giles
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