Dec. 28, 2012
The triumph and hope of the American economic experience
Four years ago, the housing market collapsed, the financial system imploded, and the country plunged into a recession the likes of which had not been seen since the 1930s. The magnitude of the decline, and the speed with which it occurred, was terrifying. Jobs were lost by the hundreds of thousands, households found themselves buried under mountains of debt, and the stock market went into free fall. On Wall Street and in little towns across America, banks and insurance companies were failing, while over in Detroit, the auto industry teetered on the brink of bankruptcy. Capitalism itself, the quintessential American economic system, lay imperiled. ...
Sept. 4, 2012
Budget austerity isn't best path for our country
Both parties are concerned about the looming fiscal catastrophe facing the country.
In December, if no agreement is reached between the GOP and Democrats, taxes will rise and defense spending will fall, both substantially.
Falling off the “fiscal cliff” will thus have the immediate effect of sharply lowering the budget deficit.
The Congressional Budget Office, which supplies nonpartisan reports on economic and budget outlooks, estimates the budget deficit in fiscal 2013 will be $400 billion less under this scenario than under the case where the draconian tax increases and spending cuts are avoided altogether. ...
June 17, 2012
America's free-market capitalism myth
Politicians of all stripes routinely genuflect at the altar of free-market capitalism. The alternatives to the system are not appealing.
There is socialism, of course, whose machinery of state intervention makes it immediately suspect as an inevitable harbinger of its more sinister cousin, communism. North Korea (or even Old Europe) are not shining examples.
There is state-directed capitalism, the kind you see in China, which has produced rapid economic growth through the last three decades, raised hundreds of millions of its peasants out of poverty and produced an increasingly affluent middle class.
Jan. 11, 2012
The various liberties of Ron Paul
At a recent GOP debate, the presidential candidates were asked what they would be doing on a Saturday night if they weren’t running for president. The responses were typically safe and predictable, mostly having to do with watching sports, but one brave soul said he would be reading an economics textbook. ...
Aug. 20, 2011
Rick Perry's prayer and politics
In the fifth century, St. Genevieve's prayers were credited with diverting Attila's Huns from attacking Paris. Appeals to a higher power saved the city (although carping voices would note that the Huns chose to attack Orleans instead.)
Rick Perry Prayer.jpgRick Perry at his recent prayer event.
More recently, with Harrisburg facing a threat of its own, Mayor Linda Thompson called for prayer. The massive incinerator debt, the mismanagement of the city’s finances, the crushing terms of Act 47, unhelpful state legislators restricting the options available to the city — surely, only divine inspiration could offer a way out of the morass. ...
July 21, 2011
Weak dollar, trade deals help bolster economy
Last year, I led a group of students to Geneva, Switzerland. The exchange rate then was about $1 per Swiss franc. I took another group this year, but the exchange rate now stood at about $1.20 per Swiss franc.
The 20 percent appreciation of the Swiss franc over the year meant that the study tour to Geneva had become much more expensive. The costs of lodging, meals, train fares to Zurich, tickets for the United Nations tour and the Red Cross Museum — all denominated in Swiss francs — had risen sharply in dollar terms. ...
Mar. 8, 2011
Policies have helped the economy recover
The rise of the stock market in recent months might have dulled investors’ memories about the devastating period that began in September 2008 and lasted till March 2009.
On Sept. 15, 2008, Lehman Brothers declared bankruptcy. The Dow lost 500 points that day. In the weeks that followed, the market continued to take punishing losses. Daily losses of 200 or 300 points became routine as wave upon wave of panic coursed through the financial markets. ...
Nov. 19, 2010
India was one of President Obama's few friends on Asia tour
President Obama went to Asia recently. He said this was a “jobs tour” and that he was going to drum up business for American companies. He began with a stop in India.
Soon there was talk of India buying several aircraft from Boeing. Obama pleased his hosts by stating that he would support India’s bid for permanent membership on the U.N. Security Council. ...
Oct. 3, 2010
Religious intolerance makes progress difficult
We live in an age where religious sensibilities are easily offended. And, depressingly, some religious leaders appear to be doing their best to offend.
An obscure Christian pastor in Florida with a congregation of 50 — 50! — creates a worldwide furor with a threat to burn the Quran. Military officers are alarmed — they fear their already difficult task to win minds and hearts in Afghanistan and Iraq will become more daunting still. ...
Aug. 3, 2010
Are unemployed receiving too sweet a deal? -- Not this time
When Tom Corbett, the Republican candidate for governor, suggested that extending unemployment benefits would discourage unemployed workers from looking for work — “people are just going to sit there” — he was roundly attacked for disparaging the work ethic of Pennsylvania workers.
Eventually, perhaps realizing that some of those people “sitting there” might briefly cast off their lethargy in November to go to the polling booth, Corbett conceded that he “misspoke” and that he knew that most unemployed people really wanted to work. ...
Apr. 27, 2010
Economic turnaround? This economist says yes
When, after the latest unemployment report came out, I mentioned to a colleague that things were finally starting to look up, he wondered whether I was being Panglossian. ...
Nov. 29, 2009
Fiscal restraint could prolong our recession (PDF)
In the last several months, the federal government has implemented far- reaching policies to address the country’s economic woes.
And the list of woes is long.
Unemployment is at 10.2 percent, a rate not seen in a quarter-century. ...
July 5, 2009
Reforms signal end of 'free market' era (PDF)
The 1980s marked the golden era of free markets. Under President Ronald Reagan and Britain's Prime Minister Margaret Thatcher, the gospel of deregulation, limited government and the primacy of the private sector took firm root in the U.S. and U.K. before spreading inexorably around the world. Developing countries threw off decades of shackles of government intervention and some, like China and India, were rewarded by years of sustained economic growth. ...
Jan. 27, 2009
Balanced-budget provision hurts state in tough times
The U.S. economy has been in a recession for just over a year. The contraction began in December 2007, and shows no sign of abating. Unemployment, at 7.2 percent, is rising inexorably, as vast swathes of the economy -- automobiles, construction, finance -- shed jobs by the tens of thousands, and spending by the private sector falls rapidly.
The recession also exposes a problem with a principle embraced in the name of fiscal rectitude: balanced budgets. ...
Sept. 24, 2007
Amid worries, economy shows upbeat signs
The data on new jobs are not reassuring.
According to the Bureau of Labor Statistics, the employment level in the country fell by 4,000 in August. In an economy which employs 146 million people, this may not seem to be an alarming number, and in fact the BLS noted that the August level was essentially unchanged from that of the previous month. Yet, the data have generated deep disquiet among analysts. Why? ...
Feb. 26, 2007
Students Have a New Target: Coca-Cola
Nike must be heaving a sigh of relief.
For years Nike had served as the whipping boy for socially conscious students on American college campuses. The multinational corporation sold its Air Jordans for prices in excess of $100, and the wages it was paying its workers at its factories in developing Asian countries appeared inordinately, if not unconscionably, low. This prompted aggrieved students to mount vociferous protests against alleged exploitation of Third World workers by greedy multinationals. ...
Nov. 1, 2006
Why a Bangladeshan won the Nobel Peace Prize, The Patriot-News
In 1979, Mother Teresa was awarded the Nobel Peace Prize for her humanitarian work in Calcutta, India. Her Missionaries of Charity provided succor to the destitute, the marginalized and the diseased, and in selecting Mother Teresa for the award, the Nobel committee recognized her "for work undertaken in the struggle to overcome poverty and distress, which also constitute a threat to peace." ...
Sept. 24, 2006
Despite ranking, Asia attracts business, The Patriot-News
The World Bank's "Doing Business" report contains some surprising findings. The report ranks 157 countries by the ease of doing business, a composite measure that takes into account indicators ranging from the tax burden to the ability of firms to fire workers. ...
Mar. 5, 2006
Stopping Sale of Ports Would Risk U.S. Image, The Patriot-News
An Arab company is poised to take over operations at six major U.S. ports -- and this is causing alarm in Congress.
National security will be compromised, critics say. The ports are currently under the control of British-based P&O, which is in the process of being bought by Dubai Ports World. Based in the United Arab Emirates, DPW would gain control of ports in New York, New Jersey, Baltimore, New Orleans, Miami and Philadelphia. ...
Oct. 24, 2005
Pity, Rather Than Envy, Felt for Rich, The Patriot-News
The baker bakes bread, said Adam Smith in 1776, not to feed the people of the village, but to improve his lot in life.
The idea that people act to promote their self-interest is not surprising, but what is remarkable is Smith's contention that the actions of these individuals, driven by the desire to make themselves better off, result in the greatest improvement in society's welfare. ...
July 24, 2005
For Economists, Happiness is Still a Difficult Territory, The
Happiness. It’s not a subject that economists pay much attention to. Not
professionally, that is—although, in their personal lives, economists are
quite likely to engage in the “pursuit of happiness” with as much vigor as
other mortals. But, as a matter of scholarly study, happiness has proved
to be of less interest than fluctuations in gross domestic product and
changes in the consumer price index. ...
Sept. 15, 2004
Free markets or no, U.S. trade
woes continue, The Patriot-News
In the 1990s, the United States signed off on two major trade agreements
-- NAFTA and WTO. Overcoming significant opposition, most of it directed
by fellow Democrats, President Clinton shepherded the agreements through
Congress and served notice to the world that the U.S. was committed to
the goal of advancing free trade. ...
April 4, 2004
Bitter Rivals Show Signs
of Diplomacy, The Patriot-News
"For a country long associated in the West with tigers and elephants,
colorful spices and curry powder, and sages of dubious merit, India has
of late come under the international spotlight for decidedly different
China and the Level Playing
Field, The Patriot-News
"In an op-ed piece in the Nov. 5th Wall Street Journal dealing
with U.S.-China trade, Commerce Secretary Don Evans asserted that China
was not playing by the rules. If China wished to retain access to the
U.S. market, he warned, trade between the two countries would have to
occur on a level playing field. In fact, Evans used the phrase “level
playing field” seven times, and apparently fearing that this wasn’t
enough, in his eighth usage, referred to the need for a genuinely level
playing field. ..."
Aug. 8, 2003
Democrats Pin Their
Hopes on Weak Economy, The Patriot-News
"In their bid to reclaim the Presidency next year, the Democrats
appear to be outgunned. President Bush’s approval ratings, although
down a bit recently, remain fairly robust. The controversies surrounding
the Iraq war seem to have faded from the public mind. The discredited
16-word sentence in the State of the Union address claiming to show Iraq’s
intent to procure nuclear weapons, the continuing failure to unearth weapons
of mass destruction, the inadequate efforts at reconstruction of a battered
economy, the inability to develop the vestiges of a civil society in Iraq,
the sharp disapproval of U.S. policy from the international community
– these no longer figure prominently in public discourse...."
May 11, 2003
Cutting taxes not best
remedy for the economy, Green Bay Press-Gazette
[A version also appeared in The Patriot-News: Comments often confuse
supply, demand. May 14, 2003.]
"The radio talk-show host was explaining Bush's supply-side tax cuts
to his unseen audience.
'When the government cuts taxes, you see, consumers are left with more
disposable income. They will then go and buy more stuff. This increased
spending will encourage businesses to hire more workers and produce more
goods. The economy will thus grow faster.'..."
Mar. 10, 2003
Bush’s economic team faces challenges, Green Bay Press-Gazette
"During a CNBC talkfest, Treasury Secretary John Snow’s attention
was drawn to recent polls showing a glaring lack of confidence in President
Bush’s economic team. Don’t the unfavorable numbers, asked
the talk show host, make his (Snow’s) job of selling the Bush tax-cut
package all the more difficult?..."
Feb. 09, 2003
Deficits balloon quickly under Bush, Green Bay Press-Gazette
[A version also appeared in The Patriot-News, Feb. 20, 2003.]
"President Bush has presented a federal budget of $2.23 trillion
for fiscal year 2004 beginning Oct. 1. It calls for increased spending
on defense, Medicare and education. It also seeks deep tax cuts, and as
a result, the federal government is expected to post a deficit of $307
billion in 2004...."
Dec. 06, 2002
Productivity increase good news for workers, Green Bay Press-Gazette
"'The productivity numbers are in! BLS has come out with the numbers!'
Anand was prone to excitement in such matters, but his exuberance in this
case, Sylvia felt, was fully justified.
Labor productivity, defined by the Bureau of Labor Statistics as output
per hour of all workers, is the key to the citizenry’s living standards.
Growth in labor productivity enables firms to raise wages without commensurately
increasing the prices of their goods, thereby increasing the real purchasing
power of workers. ..."
Sep. 03, 2002
Life in Hershey isn’t sweet right now, Green Bay Press-Gazette
"Life in Hershey, also known as Chocolatetown USA, has not exactly
been sweetness and light in recent months.
In April, workers at Hershey Foods Corp. staged a strike over management
plans to cut health-care benefits. The strike, the first in 22 years,
turned unusually rancorous, with the CEO Rick Lenny being forced to hire
bodyguards while attending the annual shareholders meeting...."
Aug. 18, 2002
Faltering economy tests this Bush, too, Green Bay Press-Gazette
"Amid deepening gloom on the immediate prospects for the U.S. economy,
President Bush presided over an economic forum at Baylor University in
July 11, 2002
Scandals a painful reminder: CEOs are human, Green Bay Press-Gazette
"Another day, another accounting scandal.
Sylvia was reminded of Professor Homer’s microeconomics class dealing
with the principal-agent problem facing a corporation’s shareholders.
' The shareholders, or the owners, of a corporation are the principal,"
said Homer. "They hire the agent--the managers--to run the corporations.
But this leads to an immediate problem.'..."
December 22, 2001, The Winter of Harvard's Discontent
“Uh, oh,” said Sylvia, reading the newspaper. “Trouble in paradise.”
Anand was immediately interested. Trouble always seemed to interest him. “What is it, Syl?”
“Harvard,” said Sylvia. “Looks like Mr. Lawrence Summers, president of the university, has a problem on his hands.” ...
December 19, 2001, Bush's Growing List of Accomplishments
In Afghanistan, the wretched Taliban has been vanquished, the dreaded al-Queda routed. President Bush, considered a foreign policy neophyte not long ago, has overseen a superbly-executed military campaign and as a result, enjoys surging popularity at home. ...
November 27, 2001, Confirmed: We Are in a Recession
“March,” said Sylvia. “It began in March.”
“What began in March?” said Anand, as he fiddled with the TV remote, looking for the Food Network.
“Oh, that,” said Anand absent-mindedly. Iron Chef was on. ...
Nov. 15, 2001, The Rocky Road to Free Trade
Two years ago, the World Trade Organization met in Seattle to advance the cause of free trade. The palaver, marred by obstreperous protests by a motley group of labor unions, environmentalists and students, was doomed by internecine wrangling among the member countries themselves. Despite days of intense negotiations, they failed to arrive at an agreement, and when they finally left Seattle, cowed and dispirited, prospects for increased global trade appeared bleak. ...
Sept. 10, 2001, Globalization and the League of Women Voters
I spoke to the League of Women Voters recently. The subject was globalization. “Could you take the ‘pro’ side?” said Ms. Joan Young, who was arranging a debate on the topic for the benefit of the League members. I agreed, with relief. The “pro” position fit in with my own natural sensibilities–so I wouldn’t have to try unduly hard to come up with arguments in support of globalization. ...
August 30, 2001, The Consequences of Declining Productivity
Anand, the Consumer Spending czar, was shaken. After a trip to the bookstore (where Sylvia, at Anand's urging, had spent a small fortune on books), they were drinking coffee at the neighborhood café.
“Look,” he said in a distressed voice, pointing to the newspaper, “productivity has slowed down.” ...
Aug. 22, 2001, Interest Rates Cut Yet Again
Alan has ceased to surprise.
At the Federal Open Market Committee meeting this week, Greenspan and Co. lowered the federal funds rate (the rate at which commercial banks lend to each other) to 3.5 percent and watched the stock market react with studied indifference. In fact, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq all fell, as investors discerned no glimmer of hope in the Fed's widely-anticipated action: the decision to lower rates yet again, they felt, only underscored the Fed's inability to restore the economy's flagging fortunes. ...
August 12, 2001, Sylvia Undergoes Tough Questioning
“Is it true, Ms. Sylvia” asked Pat Schillinger, “that you called Mr. Anand a dope?”
Sylvia recalled her conversation with Anand last week. He had driven up from Milwaukee for the weekend and they had discussed purchasing cars. In the course of their banter, she had referred to him as a dope. And now the city leaders, having got wind of it, had called her in for questioning.
August 2, 2001, Free Trade Under Fire
In 1999, the World Trade Organization got a rude shock. At their meeting in Seattle, where the member countries had assembled to launch a new trade round, they discovered considerable--and ultimately insurmountable--rifts within the organization. The Europeans and the Japanese were implacably opposed to the removal of farm subsidies, the Americans wished to retain the use of anti-dumping duties to protect favored industries such as steel, developing countries assiduously sought to keep labor and environmental standards out of the discussions. ...
July 20, 2001, The Trade Deficit Narrows: Is it a Good Thing?
In 2000, the U.S. recorded its largest trade deficit: imports exceeded exports of goods and services by $376 billion. Such large numbers tend to excite attention, especially among the likes of Ross Perot and Pat Buchanan who regard growing trade deficits as the harbinger of imminent economic doom. If imports exceed exports, they claim, domestic unemployment will rise implacably as U.S. workers lose jobs to workers abroad. ...
July 12, 2001, The Tyranny of Low Money Market Rates
Sylvia blanched at the figures. Her money market fund at Fidelity was earning a return of 3.7%. With inflation running at 3.6%, her real interest rate came to a measly 0.1%. Zero-point-one! Good grief, that was practically zero! In fact, Sylvia frowned, it was even worse once she accounted for taxes. After federal and state taxes on her interest income were deducted, concluded a thoroughly displeased Sylvia, the nominal 3.7% return on her Fidelity money market account yielded a real, after-tax rate of return of -1.1%!
July 11, 2001, Battling the Economic Slowdown
The rise in unemployment to 4.5% in June served as yet another indication of the country's economic woes. Job cuts abound as firms, confronting lackluster demand and inflated capacity, resort to laying off workers in order to cut costs. It was the technology sector that first felt the ground give beneath its feet. Telecommunications firms like Nortel and Lucent discovered that the projected demand for their equipment had been woefully overblown; now, as customers reined back on spending, their inventories accumulated sharply while sales fell. ...
May 6, 2001, A Worthy Celebration
The Cinco da Mayo celebration at St. Norbert College on Saturday, May 5 th was a colorful affair, filled with food, music and dancing. The turnout of students, faculty, staff and community members, for the first such celebration at the College, was quite considerable, and it's fair to say that a good time was had by all. ...
March 6, 2001, The Drug Price Dilemma
How much should pharmaceutical companies charge for their drugs?
In the face of skyrocketing health care costs, this question has come to occupy a prominent role in public policy debate. Consumer groups favor reining in drug prices, arguing that medical care should be affordable for all. Health and profits don't mix, they say: companies like Merck and GlaxoSmithKline should not be in a position to reap excessive profits from their treatment of AIDS and other diseases. ...
March 1, 2001, The Bush Plan
Sylvia was in a reminiscent mood. Ah the early 90s, those were the good old days. Then we had budget deficits. Politicians were forced to exert a certain discipline. But now, Washington is awash in budget surpluses. And true to form, Republicans and Democrats alike are salivating at the prospect of doling them out to please their respective constituencies. ...
Feb. 10, 2001, Sylvia Ponders the Curious Case of the Supply-Side Tax Cuts
The resemblance is striking, thought Sylvia. Twenty years ago, President Reagan cut taxes and increased military spending. Now, President Bush seeks to do the same.
But there the similarities end. In the early 1980s, the economy was in the throes of a recession. Unemployment, inflation, interest rates were all markedly high. Now, the economy is operating near full employment, inflation is quiescent, and interest rates are low. Moreover, the budget situation that seemed uncompromisingly bleak just a few years has improved dramatically. Over the next 10 years, projects the Congressional Budget Office, the accumulated surpluses will reach an astounding $5.6 trillion, enough to pay off the national debt and then some. ...
Jan. 8, 2001, We are the World
Sylvia reluctantly turned to the financial pages. The news was unremittingly bad these days -- weak consumer spending, layoffs by dot-coms and Old Economy types alike, a faltering stock market. Even the delirious fervor unleashed by the Fed's cut of 0.5 percentage points in the federal funds rate proved to be ephemeral as investors came to the gnawing realization that the economy's travails appeared to be deeper than earlier imagined. ...
December 6, 2000, Recessions and Tax Cuts
November 29, 2000, The Economy Takes a Breather
"Suddenly," thought Sylvia, "recession is in the air."
Everywhere, there were signs of a stalling economy. The output of goods and services grew a mere 2.4 percent in the latest quarter. Businesses seemed reluctant to spend more on equipment and factories. The real estate sector had lost its bounce. Even consumers appeared to have lost their appetite for the untrammeled spending they had become addicted to -- spending financed by easy credit. ...
"What?" gasped Slyvia, when she heard the news. A scant 2.4 percent. Surely there was a mistake. Could the economy have slowed that much?
In 1997, the economy's output of goods and services (or gross domestic product) grew a blistering 4.4 percent. This was followed, in 1998, by an identical performance -- output grew another 4.4 percent. In 1999, with barely a hiccup, the economy continued to sizzle, posting a growth of 4.2 percent. ...
Oct. 30, 2000, A Primer for the Undecided Voter
The time to vote is almost upon us. The polls continue to show Bush and Gore running neck and neck, with a surprisingly large number of voters still undecided about their choice. Below is a primer, for the undecided voter, on how the candidates differ on certain issues ...
Oct. 25, 2000, Bush and Gore Woo the Elderly
The three debates starring George Bush and Al Gore under the moderating influence of the imperturbable Jim Lehrer have come and gone. Gore, the consummate debater who burnished his reputation with a triumphant performance over Ross Perot on Larry King Live on the subject of Nafta, showed a masterful command of the issues, even at one point appearing to educate Bush about his - Bush's - plans. Bush, the relative neophyte, tried to stay away from numbers ("fuzzy math") and was clearly glad to see the entire affair come to an end. ...
Sept. 14, 2000, The Death of OPEC
Is OPEC dead?
What an absurd question, you might say. OPEC's clout remains clearly formidable. Why, just look at the price of oil. Not long ago, it languished in the low teens; now it breaches the $35 per barrel mark with impunity, and threatens to go even higher. ...
Aug 7, 2000, The Year of Living Dangerously: Coping with the Nasdaq
When the Nasdaq fell resoundingly earlier this year, it was with a suddenness that chilled the blood. In March, the technology-laden index stood triumphantly atop the 5000-mark; but then, in a matter of weeks, it lost more than one-third of its value. At its worst point, in May, the Nasdaq had fallen below the 3200-level and anguished investors could see no end to the rout. ...
June 10, 2000, Microsoft 2000: The End of the Affair?
It has not been a good year for Bill Gates. After months of legal sparring with the U.S. Dept. of Justice, his beloved Microsoft has been found guilty of violating antitrust law. The punishment? Harsh: Judge Thomas Penfield Jackson has ordered Microsoft to do what was considered unthinkable not long ago -- viz., to be split in two. Furthermore, Microsoft must eschew certain business practices deemed to be anti-competitive. ...
May 26, 2000, Greenspan and Interest Rates
Is it possible that Mr. Greenspan's popularity has dimmed?
For long, the redoubtable Fed chairman could do no wrong. His reputation was arguably cemented in 1987, when following the October stock market crash, he successfully used monetary policy to steer the economy away from what appeared to be certain disaster. ...
May 24, 2000, Trade with China
China-U.S. trading relations -- abnormal no more?
For the last 20 years, the U.S. has undergone an annual ritual--approving normal trading relations with China . The occasion would give Congress the opportunity to denounce China's dismal record on human rights; the Chinese government would retaliate by threatening to restrict access for American corporations to the growing Chinese market. ...
April 28, 2000, Finance Professors vs. Day Traders
Last year, as the Nasdaq kept climbing relentlessly, the success enjoyed by day traders appeared to have consigned the old rules of finance to the dustheap of history. The iron-clad relationship between a portfolio's risk and its expected return, so beloved of finance professors, had finally been severed. Or so it seemed, as month after searing month, the returns of technology-laden portfolios soared, while risk - the likelihood of loss - evaporated. ...
Apr. 24, 2000, Betting on Procter & Gamble
The news from Procter & Gamble in the recent past had been of a decidedly cheerless sort. Early in March, they dropped a bombshell when they announced that their earnings would fall short of analysts' forecasts. Rising raw material prices and intense industry competition were cited as the culprits, and jittery investors drove down the stock a whopping 31 percent. The fall hit P&G employees especially hard: About 20 percent of P&G's stock is owned in an Employee Stock Option Plan (ESOP) by employees. ...
April 13, 2000, Credit Card Security
It was about 7 p.m. when the phone rang. Sylvia put down the Press-Gazette and picked up the phone. It was a very friendly voice on the other end. "Hello," said the unseen man. "I am calling on behalf of Fraud Security. As you know, with the Internet and everything, people can steal your credit card numbers and use them for their purchases." ...
March 15, 2000, The Fed and Interest Rates
For those interested in the movement of interest rates, the meetings of the Federal Open Market Committee are irresistible events. Occurring once every six weeks, these meetings set the course for interest-rate policy. They are usually preceded by considerable hand-wringing among Wall Street pundits who seem to live in constant dread of higher rates. An increase in interest rates, they fear, will bring the bull run in the stock market to a crashing halt. ...
Feb. 20, 2000, Industrial Policy and the Packers
It would appear from the pronouncements of public officials that the primacy of the market economy has been established beyond doubt. Even Democrats such as Bill Clinton, who have grimly endured the “tax-and-spend liberal” epithet hurled at them by market-friendly Republicans, have professed dissatisfaction with "big government." ...
Jan. 27, 2000, Oil Price Rise May Be Cause For Concern
With oil prices inching towards $30 a barrel, is inflation about to rear its ugly head once again?
Ever since the twin oil crises of the 1970s, policy makers and businesses alike have dreaded the specter of higher oil prices. The transportation industry is the first to feel the impact: higher prices for gasoline and jet fuel immediately translate into higher operating costs and diminished profits for the trucking and airline companies. ...
Dec. 6, 1999, The WTO Fiasco in Seattle
Sylvia knew the meeting of the World Trade Organization was in trouble when she learned that a few witches from San Francisco would be joining the motley group of anti-WTO protesters in Seattle. What possible recourse, Sylvia reckoned, did ordinary mortals, especially the craven minions of WTO, have against the powers of witchcraft?
Nov. 17, 1999, The Fed and Interest Rates
Sylvia sipped her coffee as she scanned the newspaper. There was something about interest rates. She read on. At the meeting of the Federal Open Market Committee on Nov. 16, Sylvia learned, the Fed had decided to raise interest rates. ...
Nov. 5, 1999, Democracy and Economic Development in the Philippines
Sylvia was surprised. She read the announcement in the papers again. Yep, that's what it said -- Fidel Ramos was coming to Green Bay , Wisconsin.
Sylvia had heard about Fidel Ramos. He was responsible for ousting the Marcos dictatorship in the Philippines in 1986. Relying on a defiant and massive outpouring of "people power" in the streets of Manila , Ramos had forced President Marcos and his wife Imelda (of shoe-fetish fame) to relinquish their control of the country. ...
Oct. 29, 1999, The Budget Surplus
Budget deficits are rapidly becoming a thing of the past. In the 1998 fiscal year, the federal budget surplus was $69 billion. In the recently-ended fiscal 1999, it was a whopping $123 billion. One would think that such rosy numbers would impart a spirit of bonhomie to Washington -- after all, both President Clinton and the Congressional Republicans can claim credit for this stunning reversal in budgetary fortunes. ...
Sept. 8, 1999, Things are Looking Up
Two years ago, the global economy faced certain catastrophe. What began as a financial hiccup in Thailand in July 1997 metamorphosed into an economic crisis that spread its tentacles across vast swathes of the globe. Neighboring countries in Asia succumbed to the contagion. The miracle economies of South Korea, Indonesia, Malaysia and the Philippines ground to a halt, their currencies decimated, their stock markets ravaged, and unemployment rising ominously. Emerging markets in Russia, Latin America and Africa shuddered in unison. Western Europe, barely showing signs of recovery from a slowdown, now faced an inglorious return to the abyss. Even the mighty United States, it appeared, would fall prey to the Asian contagion. ...
July 19, 1999, Are Tax Cuts a Good Idea?
There's something about Republicans and tax cuts.
In 1993, much to the fury of conservatives, President Clinton raised the top marginal income-tax rates. The editorial pages of the Wall Street Journal fairly bristled with wrathful indignation. Predictions of imminent doom abounded. Hitherto hard-working Americans, waxed the apoplectic critics, would work less, earn less and save less. The budget deficit would explode, the dollar would depreciate, the stock market--Good God, the stock market!--would go into free fall. ...
Apr. 29, 1999, Markets and Income Inequality
Economists, it has been noted, are prone to disagreement. Even individually, we offer conflicting views. An exasperated American President is said to have wished for a one-handed economist – one who wouldn't start off by saying “On the one hand...”
April 6, 1999, Student Activism and Multinational Corporations
Self-absorbed. Awash in apathy. Avarice-ridden. Brains addled by gangsta rap. This is how the young folks of today, the Generation X-ers, are often portrayed in the media. The greatest generation they are not. Perhaps, if Tom Brokaw was kind enough to them, they might make it to the Top Ten Generations of All Time. ...
Dec. 1998, Unemployment: A Brighter Picture
Judging by reports in the media, the news on the job front is decidedly alarming. Accounts of layoffs predominate. Consider, for instance, the recently-announced merger of Exxon and Mobil. With two of the largest oil companies about to be rolled into one, several jobs are at risk: Why have two accountants when you can make do with one? Or have two gas stations in the same neighborhood when shutting down one will result in cost savings?
Oct. 1998, Hedge Funds and Nobel Laureates
When I met my friend Dan, an Accounting professor, the other day, he had a wicked gleam in his eye. "Aha," he cried triumphantly, "you economists have done it again!"
I feigned ignorance. "What do you mean, Dan?" I said innocently. ...
Aug. 1998, Got Milk?
Long ago, when refrigeration systems were still in their infancy, milk produced in Wisconsin or Minnesota could not be transported easily to distant cities in the southern and eastern parts of the United States. In order to encourage farmers in those reg ions to produce milk, Congress authorized the Department of Agriculture to set higher support prices there. But how much higher? ...
Aug. 8, 1998, Dow drop causes headache, but it's time to sit tight
As the stock market fell during the week, Sylvia's headache started to worsen. As if it wasn't enough that her portfolio had gone through the wringer, she had to endure endless expert analyses of the market's decline. Everywhere she looked, there was a pundit holding forth on what ailed the stock market. No medium was immune from the outpourings of these self-appointed gurus -- television, radio, the Internet, the newspaper, even -- gasp! - the Business Forum of the Press-Gazette. ...
July 1998, The Battle Over the Budget Surplus
After several years of seemingly impregnable budget deficits, the prospect of budget surpluses for the next few years is decidedly a piquant one. As Washington grapples with the question of what to do with them, battle-lines are being drawn in somewhat surprising ways. ...
May 16, 1998, Many seek credit for federal budget surplus
It would have seemed fanciful a couple of years ago - the thought that the United States would enjoy a budget surplus in the near future. Yet, pleasantly enough, that's the situation the federal government finds itself in today. ...
Apr. 1998, Tax Credits Galore?
The 1040 Forms and Instructions booklet arrived the other day. Homer made himself a cup of coffee and sat down at his table. He looked at the booklet.
Some months ago, President Clinton and the Congress had signed off on a "historic" balanced-budget agreement. It was an occasion that had been marked by an unseemly burst of congeniality between Clinton and the congressional Republicans: beaming uncontrollably, they had presented the gift of fiscal rectitude to the American public. ...
Mar. 1998, A trade deficit ain't all bad
Something was bothering Dave Hoeft. A student in my class in international finance, Dave had read an article in the Wall Street Journal describing the U.S. trade balance. The current account deficit for 1997, the article stated, was $166 billion. ...
Dec. 1997, The Year Ahead - Similar to the One Behind Us?
"A year ago, the economy had low inflation, low unemployment, low interest rates and moderate economic growth....One year later, things seem to be pretty much unchanged. Heading into 1997, the U.S. economy enjoys low inflation, low unemployment, low interest rates and moderate economic growth." That is what I wrote in a Business Forum article last year ("Tax Reform, Trade Will Be Issues Worth Watching," Green Bay Press-Gazette, December 29, 1996.) Replace 1997 by 1998, and the description of the U.S. economy remains remarkably apt another year later. ...
Nov. 17, 1997, Investors Grit their Teeth, Hope for the Best
When the stock market fell thunderously on Monday a couple of weeks ago, I realized with a pang that here at last was an occasion for economists to rejoice in. Economics, you see, has long been disparagingly called the dismal science, and a drop of 554 p oints in the Dow Jones Industrial Average would surely cause dismal-ness to spread like wildfire among the economics profession and thence to the general public. I sat back and waited for the inevitable pall of gloom to descend upon the country. ...
Sept. 6, 1997, Tax Law Numbers Political
Months of negotiations, often steeped in acrimonious wrangling, have come to an end. With considerable fanfare, President Clinton and the Republican Congress have at long last signed off an agreement that promises to balance the budget by 2002. ...
July 5, 1997, Growing Philippines Lures U.S. Investors
In a region accustomed to blistering economic growth, the Philippines is the odd man out. The depredations of the Marcos regime in the 70s and 80s left the country tottering on the brink of disaster. In 1986, democracy was restored but with uncertain prospects. President Corazon Aquino survived numerous coup attempts and the resulting political instability kept foreign investors at bay. The economy limped along. ...
Mar. 29, 1997, Foreign Aid Can Benefit Domestic Development
There is a general presumption in certain quarters that rapid economic growth in other countries is somehow detrimental to our standard of living. This feeling was especially pronounced in the late 1980s when a slew of horripilatory articles and books stoked fears about Japanese domination of the global economy -- and the concomitant decline of the United States. ...
Feb. 17, 1997, Pros, Cons of Balanced Budget Amendment
If ordinary households can balance their budgets, say the proponents of the balanced-budget amendment, why can't the government? It sounds like a reasonable question: after all, shouldn't the government exhibit the same fiscal rectitude as the citizens they serve? ...
Dec. 29, 1996, Tax Reform, Trade Will Be Issues Worth Watching
A year ago, the economy had low inflation, low unemployment, low interest rates and moderate economic growth. And Bill Clinton was President. One year later, things seem to be pretty much unchanged. Heading into 1997, the U.S. economy enjoys low inflation, low unemployment, low interest rates and moderate economic growth. And, oh yes, Bill Clinton is still President. ...
Dec. 15, 1996, Greenspan May Have Done Us a Favor
Those words, uttered with purposeful intent by Alan Greenspan on Thursday last week, sparked feverish sell-offs in stock markets around the world. Tokyo, Hong Kong, London, Frankfurt all fell resoundingly. And when the New York markets opened on Friday, the Dow Jones Industrial Average plummeted 145 points in the first thirty minutes of trading.
Nov. 16, 1996, Congress, Clinton Need to Stop Fighting and Fix Medicare
Is Washington bathed in the warm glow of congenial bipartisanship? Don't bet on it.
Chastened by their performance in the recent elections, the Republicans have become decidedly less pugnacious of late. Even Newt Gingrich, in trying to present his kinder and gentler side, has started to speak softly about cooperating with the President. ...
Oct. 19, 1996, Clinton has Right to Brag About Agreements
On Sunday, hours after Packer fans rejoiced in yet another thrashing of the hapless Chicago Bears, Bill Clinton and Bob Dole squared off in their first of two debates. For ninety minutes, they sparred cautiously - with Clinton trying to maintain a certain Presidential aloofness, while Dole strove to exhibit his sense of humor. ...
Sept. 28, 1996, Fed Passed on Interest Rate Hike; Now What?
The Fed met on Tuesday. And decided to...do nothing.
In the preceding weeks, speculation about the likelihood of a hike in interest rates had been rife. Market sentiments gyrated almost daily as Wall Street analysts sought to divine the extent of inflationary pressures in the economy from freshly-released economic data.
Sept. 14, 1996, It's unlikely anybody won last face-off of U.S. and Iraq
Who won the latest skirmish in northern Iraq - Saddam Hussein or Bill Clinton? Both have been quick to claim victory - and the bounce in their domestic standings in their respective countries appears to back their claims. Saddam Hussein has made the most of the opportunity to remind his people that the villainous United States is to blame for the appalling condition of Iraq's economy. Bill Clinton, on the other hand, boasts of having brought the ruthless Iraqi dictator to his knees, and savors a pre-election foreign policy triumph. ...
Aug. 1996, What, Me Worry About Inflation?
Recently released data show that the consumer price index, a commonly-used measure of prices in the economy, rose by 0.3% in July. Since this was slightly higher than analysts had expected, the financial markets faltered on the news.
Is inflation about to rear its ugly head? ...
Aug, 10, 1996, Dole is not forthcoming about tax cuts
In an attempt to revive his flagging Presidential campaign, Bob Dole has proposed an economic plan centered around an array of tax cuts. And these are no piddling cuts either: an across-the-board 15 percent reduction in the tax rate alone would cost the Treasury $406 billion over the next six years. And adding the costs of the other proposed tax cuts - the $500 child-care credit, 50 percent reduction in the capital-gains tax rate, deductibility of Social Security taxes, repeal of the 1993 tax increase, etc. - would bring the six-year bill for the Dole plan to around $550 billion. ...
Mar. 1996, The Rise of the Stock Market
On Friday, March 8, the stock market fell sharply. Dow Down 171 Points, screamed the headlines, sending investors scurrying nervously to the financial pages. Saturday and Sunday were filled with agony, suspense, and a sense of imminent doom. The markets opened on Monday, and investors held their breath. Would this be a repeat of Black Monday, that fateful day in October 1987 when the Dow Jones Industrial Average lost 508 points? ...
Feb. 1996, The Flat Tax and Property Values
The smell of taxes is in the air. The 1040's have arrived, and so have the W-2's and the 1099's and all the rest. It is time for that annual ritual - the filing of the tax return.
The entries have been made, the calculations done, the deductions taken. Many hours have been spent, but finally it's all over. You turn to your husband with a pleased smile and say, "Dear, we are getting a refund this year. Let's go out for dinner tonight." To which your husband, whose culinary offerings these past few days have tested your taste-buds sorely, promptly agrees.
February 15, 1996, Free Trade vs Patrick Buchanan
Patrick Buchanan is proving to be a headache for some of his fellow-Republicans. While his strong views on abortion and gay marriages find support among the so-called social conservatives, his belligerent stance on international trade and corporate profits is alienating the "economic" conservatives within his party. ...
Nov. 25, 1995, European, U.S. Labor Markets Strikingly Different
Which of the following countries has an unemployment rate under 10% - Belgium, Denmark, France, Italy, United States? Answer: United States.
While many countries in Europe grapple with the problem of stubbornly high unemployment, the unemployment rate in the U.S. has fallen steadily over the past three years and now stands at 5.6%. Recently the Labor Department reported that 120,000 new jobs were created in September.
Sept. 9, 1995, Cutting Nation's Budget Deficit Has Drawbacks
Ever since Ross Perot displayed his charts on television during the 1992 Presidential campaign, it has become an article of faith that one of the most serious problems facing the country is the size of its budget deficit. Indeed, after Bill Clinton took office, one of the first things he did was to address the issue of deficit reduction. ...
Aug. 5, 1995, Economy's not so bleak if you look at the signs
Is the economy slowing down? According to some recent data on the U.S. economy, the answer is Yes. Consider the figures for gross domestic product (GDP), the country's output of goods and services. In the second quarter of 1995, GDP grew at an anemic annual rate of 0.5%. ....