Tag Archives: US/Global Economics

Paying for Health Care Over Time Simon Wren Lewis illustrates the long-run government budget constraint with this tale: There are many reasons why, outside of a recession, deficits that, if sustained, would steadily increase the debt to GDP ratio may be bad for the economy, but let me give the most obvious here. For a given level of government spending, interest on debt has to come out of taxes. The higher the debt, the higher the taxes. That is a...

Shorting China I just saw “The China Hustle” as part of the Portland International Film Festival.  It’s a very (very) slick documentary about the listing of fraudulent Chinese companies on US exchanges during the post-financial crisis era.  The companies were mostly real, but their financial data were fictitious, although given the stamp of approval by the SEC, investment banks, specialty law firms and the big four accounting firms.  The movie might be...

A Critical Review of Jeffrey Miron’s Call to Slash Entitlements I accused John Cochrane of incoherent babbling on the Federal deficit issue noting his update where he flip flopped: He went from fiscal policy being sober to we are in dire straights just like that! Oh my the sky is falling. We have to take away those Social Security benefits that my generation have been paying into for 35 years. We cannot afford Federal health care spending. After all...

Via Naked Capitalism and published orinially at Grist  Polar Ice Is Lost at Sea: Our planet reached another miserable milestone earlier this week: Sea ice fell to its lowest level since human civilization began more than 12,000 years ago. That worrying development is just the latest sign that rising temperatures are inflicting lasting changes on the coldest corners of the globe. The new record low comes as the planet’s climate system shifts further from...

The Wall St. Journal quoted Peter Thiel’s business plans. It is mostly behind a paywall. By Peter Thiel          Sept. 12, 2014 11:25 a.m. ET What valuable company is nobody building? This question is harder than it looks, because your company could create a lot of value without becoming very valuable itself. Creating value isn’t enough—you also need to capture some of the value you create. New Republic points us to the politics of Democrats...

Fiscal Stability or Dire Straights: John Cochrane’s Latest Rant At times John Cochrane babbles on incoherently on what should be a straight forward issue. This post is one example: Once you net out interest costs, it is interesting how sober US fiscal policy actually has been over the years. In economic good times, we run primary surpluses. The impression that the US is always running deficits is primarily because of interest costs. Even the notorious...

Why I’m worried about the decline in real wages This is a follow-up to my post yesterday concerning the decline in real average and aggregate wages. Why should the data from just one month cause me to warn that “This is Bad?” To show you, let’s decompose the data into CPI and nominal aggregate wages, shown in the below two graphs, the first of which covers the inflationary era of the 1960s and 1970s, and the second covers the disinflationary era since:...

This is bad: real wages *declined* in January; may be rolling over Consumer prices rose +0.5% in January. That in itself isn’t bad news, as they rose an equal +0.5% one year ago, so the YoY inflation rate remains at +2.1% (so if 2% really is a target rather than a ceiling, it should not give the Fed any cause for alarm). But that much vaunted wage hike in the January jobs report has entirely disappeared, and not just for non-managerial workers, but for...

Rumble on Wall St. — No Other Way of Keeping Profits Up! At Jacobin, Seth Ackerman did an interview with J.W. Mason about The Class Struggle on Wall Street that considers the trade-off between relative profit and wage shares of income. Whether you agree with his analysis or not, Josh teases out some of the implications of the relationship, both for profit expectations and for political prospects. One assertion I would question is “there is absolutely no...

Baumol Cost Disease and Relative Prices – Part 2 Many thanks to the Angrybear for reposting this as well as some excellent comments (save that absurd contention I’m a Luddite). If you check the comments over at Mark Perry’s place you will see that Paul Wynn made the same point I made and even linked to Timothy Lee: This became known as Baumol’s cost disease, and Baumol realized that it had implications far beyond the arts. It implies that in a world of...