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ilanaprincilus06

'Social recession': how isolation can affect physical and mental health | Coronavirus |... - 0 views

  • Long-term, isolation even increases the risk of premature death. It’s being called a “social recession”
  • “People who are more socially connected show less inflammation, conversely people who are more isolated and lonely show increased chronic inflammation.
  • “Loneliness increases earlier death by 26%, social isolation by 29% and living alone by 32%.”
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  • The risk of every cause of death – including heart disease, cancer, stroke, renal failure – increased from isolation.
  • One of the reasons people can suffer in social isolation is because personal relationships can help us cope with stress,
  • “For instance: the ongoing uncertainty of what’s going on right now in the world, your body’s response to that may differ. Depending on the extent to which you feel like you have the resources you need to cope with that. And that in large part may be dependent on whether or not you feel like you have others in your life you can rely on.
  • “We have evolved to be social creatures. For all the history of humanity, people have been in family structures, people have been in groups, we’re evolved to kind of crave and rely on that interaction with other human beings,”
  • “So when we don’t have that it’s a huge void in the way that we go about being human. This is something that has been kind of hard-wired into who we are as beings.”
  • people do at least have a wealth of options to stay connected. Texting, video calling or even the phone could potentially help avert the sense of isolation or loneliness, Khullar said.
sanderk

The coronavirus-induced recession could become a depression, PIMCO says | Markets Insider - 0 views

  • The coronavirus pandemic has brought much economic activity around the world to a halt, making a global recession appear inevitable — it could become a depression if policy makers don't act fast enough, according to Joachim Fels of Pacific Investment Management Co. 
  • On Sunday, the Federal Reserve sprang into action in an attempt to save the US economy from fallout amid the coronavirus pandemic. The central bank lowered its benchmark interest rate to near zero and said that it will increase bond holdings by $700 billion, among other measures. 
  • The task at hand for governments and central banks continues to be that the recession "stays relatively short-lived and doesn't morph into an economic depression," Fels said. This will require a "very large fiscal response" to support individuals and businesses adversely affected by the crisis, he wrote.
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  • US equities all but shrugged off the emergency measures — the Dow Jones Industrial Average shed 2,700 points at the open, and the S&P 500 slipped 8%, hitting a circuit breaker that halted trading for 15 minutes. When it resumed, stocks continued to slump. 
  • In addition to facilitating more expansionary fiscal policy, "central banks will also have to ensure that credit can continue to flow to companies and households," he said. 
johnsonel7

Coronavirus Recession: Fears Of Economic Slowdown Race Around The World : NPR - 0 views

  • As odds of a global recession rise, governments and central banks around the world are racing to fend off the economic damage from the spread of the coronavirus. The toll has already landed hard on jittery financial markets. Stocks continued to sell off on Thursday as the Dow Jones Industrial Average plunged 969 points, or about 3.6%, as investors fled stocks. Companies have shut factories, canceled conferences and drastically scaled back employee travel.
  • Meanwhile, the U.S. Senate on Thursday gave final passage to a roughly $8 billion spending package to provide medical supplies in hard-hit areas and pay for vaccine research. President Trump has said he will sign the bill. Despite such measures, many economists now say growth is likely to slow considerably this year — if not contract altogether.
  • Goldman Sachs projected on Sunday that because of the coronavirus, the U.S. economy would grow by an anemic 0.9% during the first three months of 2020 and would flatline during the second quarter.
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  • The tumult in the U.S. economy still pales in comparison to the damage being felt in other countries. In China, auto sales cratered 80% last month, while a plunge in tourism is expected to push Italy and perhaps France into a recession.
  • The U.S. Travel Association predicts that international travel to the United States will fall by 6% over the next three months. "There is a lot of uncertainty around coronavirus, and it is pretty clear that it is having an effect on travel demand — not just from China, and not just internationally, but for domestic business and leisure travel as well," the association's president, Roger Dow, said in a statement.
Javier E

The Obama legacy that can't be repealed - The Washington Post - 0 views

  • There is no mystery about Barack Obama’s greatest presidential achievement: He stopped the Great Recession from becoming the second Great Depression. True, he had plenty of help, including from his predecessor, George W. Bush, and from the top officials at the Treasury Department and Federal Reserve. But if Obama had made one wrong step, what was a crushing economic slump could have become something much worse.
  • It is Obama’s unfortunate fate that the high-water mark of his presidency occurred in the first months, when the world flirted with financial calamity. The prospect of another Great Depression — a long period of worsening economic decline — was not far-fetched.
  • In the first quarter of 2009, as Obama was moving into the White House, monthly job losses averaged 772,000. The ultimate decline in employment was 8.7 million jobs, or 6.3 percent. Housing prices and stock values were collapsing. From their peak in February 2007 to their low point, housing prices dropped 26 percent. Millions of homeowners were “underwater” — their houses were worth less than the mortgages on them. Stock prices fell roughly by half from August 2007 to March 2009.
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  • There was no guarantee that the economy’s downward spiral wouldn’t continue, as frightened businesses and consumers curbed spending and, in the process, increased unemployment. The CEA presents a series of charts comparing the 2008-2009 slump with the Great Depression. In every instance, the 2008-2009 downturn was as bad as — or worse than — the first year of the Great Depression: employment loss, drop in global trade and change in households’ net worth.
  • The starkest of these was the fall in households’ net worth (people’s assets, such as homes and stock, minus their debts, such as mortgages and credit-card balances). It dropped by $13 trillion, about a fifth, from its high point in 2007 to its trough in 2009. This decline, the CEA notes, “was far larger than the reduction [adjusted for inflation] . . . at the onset of the Great Depression.”
  • What separates then from now is that, after 18 months or so, spending turned up in 2009 while it continued declining in the 1930s. This difference reflected, at least in part, the aggressive policies adopted to blunt the downturn. The Fed cut short-term interest rates to zero and provided other avenues of cheap credit; the Troubled Asset Relief Program (TARP), enacted in the final months of the Bush administration, poured money into major banks to reassure the public of their solvency.
  • Still, Obama’s role was crucial. Against opposition, he decided to rescue General Motors and Chrysler. Throwing them onto the tender mercies of the market would have been a huge blow to the industrial Midwest and to national psychology. He also championed a sizable budget “stimulus.” Advertised originally as $787 billion, it was actually $2.6 trillion over four years when the initial program was combined with later proposals and so-called “automatic stabilizers” are included, the CEA says
  • More generally, Obama projected reason and calm when much of the nation was fearful and frazzled. Of course, he didn’t single-handedly restore confidence, but he made a big contribution
  • the recovery from the Great Recession is mostly complete. This seems plausible. Since the low point, employment is up 15.6 million jobs. Rising home and stock prices have boosted inflation-adjusted household net worth by 16 percent. Gross domestic product — the economy — is nearly 12 percent higher than before the financial crisis
  • his impact is underestimated. Suppose we had had a second Great Depression with, say, peak unemployment of 15 percent. Almost all our problems — from poverty to political polarization — would have worsened. Obama’s influence must be considered in this context. When historians do, they may be more impressed.
sanderk

The economy is in for tough times, but here's a roadmap for recovery from the coronavir... - 0 views

  • Not for the next few months. The government still doesn’t know how widely the coronavirus has spread across America because of repeated snafus creating a test and it will take time to contain it. Until then large parts of the economy —schools, sports leagues, workplaces, cultural sites — are likely to remain shut down or operating on a limited basis.
  • The economy could shrink as much as 4% to 5% in the second quarter and trigger a sharp increase in unemployment, according to the most pessimistic Wall Street forecasts. The last time that happened was during the 2007-2009 Great Recession.
  • The vast majority of economists predict the U.S. will start to rebound later in the year, though they are split over how soon and how fast. Some like Donabedian see a rapid recovery starting in the summer. Others predict a short recession that extends through the fall.
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  • “There’s going to be a lot of bad news in the next three to four months,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “It will be pretty ugly. It is sure going to feel like a recession for awhile.”
  • “Some countries have proven that if you take precautionary measures such as social distancing you can get in front of this virus and contain it or at least slow it down,” said Sal Guatieri, senior economist at BMO Capital Markets.
  • If the U.S. achieves the same success as say, South Korea, the hope is that spread of the coronavirus will taper off by early summer, when illnesses such as the flu and cold also tend to weaken because of the heat and humidity.
  • The Fed has already cut a key interest rate on March 3 and could reduce it to basically zero by next week. The lowest rates in modern times is already encouraging a fusillade of mortgage refinancings that will put more money in family’s pockets.
  • Congress, for its part, is assembling what’s likely to be the first in a series of steps to cushion the blow to individuals and businesses most likely to suffer. A pending bill includes free testing, paid sick leave, emergency jobless benefits and small-business bridge loans.Economists says an overwhelming federal response is critical.
  • Still, even relative optimists such as Guatieri say there’s still too much uncertainty to feel confident. He and Wells Fargo’s Bullard say their firms have been changing their forecasts almost daily in the past week as the situation deteriorated. What’s made matters worse is simply not knowing the scope of the problem
  • “We’re not getting the insight into where we are or where we are going,” Bullard said. “So we’re all just speculating.”
tongoscar

China's coronavirus economic cardiac arrest | TheHill - 0 views

  • In the best of times, an economic cardiac arrest in China, the world’s second-largest economy, would not be good for the global economy. But these are far from the best of times. This makes it all the more difficult to understand both the financial markets’ and world economic policymakers’ complacency about the real risk of a coronavirus-induced global economic recession in the months immediately ahead.
  • Already China’s economic problems are reverberating throughout the global economy. As underlined by Apple and Hyundai’s recent earnings warnings, global supply chains, reliant on in-time Chinese parts deliveries, are being seriously disrupted. At the same time, commodity export-dependent emerging market economies are being dealt a body blow by a Chinese induced decline in international commodity prices, while those economies reliant on Chinese tourism are being severely impacted by a generalized suspension of international flights to China.
  • The world economy is hardly in a good state to withstand a Chinese economic shock. Already before the start of the coronavirus epidemic, Japan, Germany and the United Kingdom, the world’s third, fourth and sixth largest economies, respectively, were all on the cusp of economic recessions. Meanwhile, large emerging market economies like Brazil, China, India and Mexico were all experiencing marked economic slowdowns.
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  • The financial markets and global economic policymakers seem to be expecting that the coronavirus epidemic will soon be contained notwithstanding disturbing reports of its significant spread to other Asian countries like Japan, South Korea and Singapore. They also seem to be expecting that as was the case with the 2003 SARS epidemic, the Chinese economy will bounce back quickly and leave little lasting impact on the global economy.
  • In 2008, financial markets and global policymakers were caught by surprise by the way in which trouble in the U.S. subprime mortgage market triggered the worst global economic recession in the post-war period. Judging by their seeming complacency about China’s economic cardiac arrest, one has to wonder how much, if anything, they learned from their 2008-2009 near-death experience.
johnsonel7

The coronavirus recession is just getting started - The Washington Post - 0 views

  • The record 3.3 million jobless claims reported Thursday mark the beginning of an economic crisis facing American workers and businesses — a slump, experts say, that will only end when the coronavirus pandemic is contained.
  • Although no official figures exist yet, the unemployment rate has likely jumped to at least 5.5 percent, says economist Martha Gimbel of Schmidt Futures, a level not seen since 2015 and up from 3.5 percent in February.“The most terrifying part about this is this is likely just the beginning of the layoffs,” Gimbel said
  • The bill, which gives most Americans checks worth $1,200 or more and provides billions in low-cost loans to businesses, is likely to provide a lifeline to workers and companies facing devastation, but it won’t stop a severe recession nor be adequate to sustain workers if the coronavirus health crisis lasts more than a month or two.
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  • Much of the nation has made the gut-wrenching choice to stop about half the economy and encourage most workers to stay home in an effort to save as many lives as possible
  • The average unemployment benefit check is currently $385 a week, which is less than half the typical weekly paycheck in the United States. The amount is slated to rise an additional $600 a week once President Trump signs the relief bill into law, a substantial increase meant to tide workers over as they are forced to stay home
  • All employees now have their temperature tested on the way into the warehouse. He’s had lengthy discussions with each worker about whether they should take the health risk of coming to work. They now run two shifts and mandate that employees stand about 10 feet from each other. Between the shifts, they sanitize the whole facility — doorknobs, surfaces, bathrooms, tools.
peterconnelly

It's Doom Times in Tech - The New York Times - 0 views

  • The five biggest technology giants in the U.S. have collectively lost more than $2 trillion of stock market value this year.
  • Start-up founders who were turning away eager investors a few months ago now must make an effort to get more money. (Gasp.)
  • Every couple of years for the past decade, anytime there were some wobbles in technology or moments of doubt, smart people predicted that the growth of the tech economy since the Great Recession couldn’t possibly last.
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  • We haven’t seen this combination of economic anxiety and high inflation before. Economists are weighing the risks of a U.S. recession, and companies in many industries are worried that their businesses are slowing.
  • Fast growing start-ups in particular need the faith of investors, customers and employees to keep the momentum going.
  • If within a few months, stock prices bounce back, investors start putting money into start-ups again and the market for initial public offerings unfreezes, the industry might be fine. But if investors stay skittish for many months or years, that could lead to a major shake-up.
Javier E

Robert Samuelson: Economists face hard times - The Washington Post - 0 views

  • These are hard times for economists. Their reputations are tarnished; their favorite doctrines are damaged. Among their most prominent thinkers, there is no consensus as to how — or whether — governments in advanced countries can improve lackluster recoveries.
  • economists at the Organization for Economic Cooperation and Development (OECD) published a retrospective study of its economic forecasts. This qualifies as an act of bureaucratic courage, because the record was predictably dismal
  • Interestingly, one item not on the list is “too much austerity.” The OECD economists found that they generally hadn’t underestimated the effects of spending cuts and tax increases intended to shrink budget deficits in Spain, Italy, Ireland, Portugal and elsewhere
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  • This conclusion is surely controversial because many economists attribute the weak recovery to misguided austerity, especially in Europe.
  • Perhaps history will vindicate this appeal to Keynesianism. Or perhaps not. The fact is that the United States did respond aggressively under both George W. Bush and Barack Obama. It certainly didn’t embrace austerity. Federal budgets ran massive deficits — $6.2 trillion worth from 2008 to 2013, averaging 6.4 percent of the economy (gross domestic product).Nothing like this had occurred since World War II. Yet, the economy limped along. Why wasn’t this enough?
  • It’s not just Keynesianism that’s under a cloud. The same fate has befallen monetarism — the doctrine that stable growth in the money supply can promote a more stable economy. Since 2008, the Federal Reserve has poured more than $3.2 trillion into the economy to keep interest rates low and accelerate economic growth. By monetarist reasoning, so much money pumped out so quickly should spawn higher inflation. Some economists predicted as much; it hasn’t happened yet. Consumer prices today are up a mere 1.5 percent from a year earlier.
  • The Great Recession and financial crisis changed behavior in fundamental ways that economists have yet to incorporate fully into their models or theories
  • The widespread faith that modern societies were sheltered from deep and sustained economic setbacks has been shattered, causing consumers, business managers and bankers to be more cautious in borrowing and spending. Economic stimulus may offset this caution, but if it signals that the economy is weaker than expected, it may also further depress private spending.
  • The faith in economics was, in many ways, the underlying cause of both the financial crisis and Great Recession — it made people overconfident and careless during the boom — and the basic explanation for the weak recovery, as stubborn caution displaced stubborn complacency
Javier E

As Interest Fades in the Humanities, Colleges Worry - NYTimes.com - 0 views

  • “Both inside the humanities and outside, people feel that the intellectual firepower in the universities is in the sciences, that the important issues that people of all sorts care about, like inequality and climate change, are being addressed not in the English departments,”
  • nationally, the percentage of humanities majors hovers around 7 percent — half the 14 percent share in 1970. As others quickly pointed out, that decline occurred between 1970, the high point, and 1985, not in recent years.
  • “In the scholarly world, cognitive sciences has everybody’s ear right now, and everybody is thinking about how to relate to it,” said Louis Menand, a Harvard history professor. “How many people do you know who’ve read a book by an English professor in the past year? But everybody’s reading science books.”
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  • while it is easy to spot the winners at science fairs and robotics competitions, students who excel in humanities get less acclaim and are harder to identify.
  • “I got the sense from them that it’s not cool to be a nerd in high school, unless you’re a STEM nerd,” he said, using the term for science, technology, engineering and mathematics.
  • “I live in Seattle, surrounded by Amazon and Google and Microsoft,” said Ms. Roberts, a history buff. “One of the best things about the program, that made us all breathe a sigh of relief, was being in an environment where no one said: “Oh, you’re interested in humanities? You’ll never get a job.”
  • since the recession — probably because of the recession — there has been a profound shift toward viewing college education as a vocational training ground. “College is increasingly being defined narrowly as job preparation, not as something designed to educate the whole person,”
  • Many do not understand that the study of humanities offers skills that will help them sort out values, conflicting issues and fundamental philosophical questions, said Leon Botstein, the president of Bard College. “We have failed to make the case that those skills are as essential to engineers and scientists and businessmen as to philosophy professors,” he said.
Javier E

Buying stock in love - Great Recession | Economic Recession, Economic Crisis - Salon.com - 0 views

  • people seem to be increasingly casting a cynical, calculating eye toward romance. The past few years have seen the explosion of "sugar daddy" dating sites
  • "In the past, you didn't see as much as you do now of shows like 'Millionaire Matchmaker' and 'The Real Housewives' -- all showing off their bling-bling. You begin to absorb the same kind of values that you see on TV."
  • WhatsYourPrice.com, which lets "generous" men and "beautiful" young women "buy and sell first dates." The Econ 101 concept behind it is that for a beautiful and in-demand woman, there is an opportunity cost associated with a first date (or, more simply, time is money). So, men evaluate how much a particular woman is worth in their mind and place a bid; then the woman has to weigh her options, consider the competition, and decide whether that's what her time is truly worth.
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  • all you're guaranteed is a chance to make the woman fall for you.
  • Based on a six-month study of dates successfully brokered through the site, they found that "men who want to date women over 10 years younger than themselves have to pay approximately 13% more than the average to close every year of age gap." A man 40 years older than his object of affection "will have to pay approximately 400% (or 4 times) more than a man who is only 10 years older to attract the interest of the same woman,"
Javier E

The Cheapest Generation - The Atlantic - 0 views

  • today’s young people simply don’t drive like their predecessors did. In 2010, adults between the ages of 21 and 34 bought just 27 percent of all new vehicles sold in America, down from the peak of 38 percent in 1985. Miles driven are down, too. Even the proportion of teenagers with a license fell, by 28 percent, between 1998 and 2008.
  • What if Millennials’ aversion to car-buying isn’t a temporary side effect of the recession, but part of a permanent generational shift in tastes and spending habits? It’s a question that applies not only to cars, but to several other traditional categories of big spending—most notably, housing. And its answer has large implications for the future shape of the economy—and for the speed of recovery.
  • Half of a typical family’s spending today goes to transportation and housing
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  • Millennials have turned against both cars and houses in dramatic and historic fashion. Just as car sales have plummeted among their age cohort, the share of young people getting their first mortgage between 2009 and 2011 is half what it was just 10 years ago
  • he Great Recession is responsible for some of the decline. But it’s highly possible that a perfect storm of economic and demographic factors—from high gas prices, to re-­urbanization, to stagnating wages, to new technologies enabling a different kind of consumption—has fundamentally changed the game for Millennials
  • The emergence of the “sharing economy”—services that use the Web to let companies and families share otherwise idle goods—is headlined by Zipcar, but it also involves companies such as Airbnb, a shared market­place for bedrooms and other accommodations for travelers; and thred­UP, a site where parents can buy and sell kids’ used clothing.
  • tech­nology is allow­ing these practices to go mainstream, and that represents a big new step for consumers. For decades, inventory manage­ment was largely the province of companies, not individuals,
  • today, peer-to-peer software and mobile technology allow us all to have access, just when we need it, to the things we used to have to buy and hold. And the most powerful application is for cars.
  • Car ownership, meanwhile, has slipped down the hierarchy of status goods for many young adults. “Zipcar conducted a survey of Millennials,
  • “And this generation said, ‘We don’t care about owning a car.’ Cars used to be what people aspired to own. Now it’s the smartphone.”
  • Smartphones compete against cars for young people’s big-ticket dollars, since the cost of a good phone and data plan can exceed $1,000 a year. But they also provide some of the same psychic benefits—opening new vistas and carrying us far from the physical space in which we reside. “You no longer need to feel connected to your friends with a car
  • mobile technology has empowered more than just car-sharing. It has empowered friendships that can be maintained from a distance. The upshot could be a continuing shift from automobiles to mobile technology, and a big reduction in spending.
charlottedonoho

US unemployment at lowest since 2008 - but young people still can't find work | Busines... - 0 views

  • The US economy is booming. On Friday, the Commerce Department announced overall US unemployment had fallen to 5.5%. Yet the unemployment rate for young Americans rose to double digits last month. Unemployment rate for those aged 20-24 years old was 10% in February – up from 9.8% in January.
  • Coming of age during a recession can have impact one’s life for years to come. Earnings of young Americans who entered the job market during a recession will suffer for 10-15 years, says Will Kimball from the Economic Policy Institute.
Javier E

Scholar Behind Viral 'Oligarchy' Study Tells You What It Means - 0 views

  • Let's talk about the study. If you had 30 seconds to sum up the main conclusion of your study for the average person, how would you do so? I'd say that contrary to what decades of political science research might lead you to believe, ordinary citizens have virtually no influence over what their government does in the United States. And economic elites and interest groups, especially those representing business, have a substantial degree of influence. Government policy-making over the last few decades reflects the preferences of those groups -- of economic elites and of organized interests.
  • People mean different things by the term oligarchy. One reason why I shy away from it is it brings to mind this image of a very small number of very wealthy people who are pulling strings behind the scenes to determine what government does. And I think it's more complicated than that. It's not only Sheldon Adelson or the Koch brothers or Bill Gates or George Soros who are shaping government policy-making. So that's my concern with what at least many people would understand oligarchy to mean.
  • What "Economic Elite Domination" and "Biased Pluralism" mean is that rather than average citizens of moderate means having an important role in determining policy, ability to shape outcomes is restricted to people at the top of the income distribution and to organized groups that represent primarily -- although not exclusively -- business.
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  • Talk about some examples of policy preferences that the majority holds that the government is not responsive to. Financial reform -- the deregulatory agenda has been pursued, somewhat more fervently among Republicans but certainly by Democrats as well in recent decades. Higher minimum wage. More support for the unemployed. More support for education spending. We'd see, perhaps ironically, less liberal policies in some domains like religious or moral issues. Affluent people tend to be more socially liberal on things like abortion or gay rights.
  • When did things start to become this way? It's possible that in earlier eras, that we don't have data for, that things were better. But in the time period that we do have data for, there's certainly no such evidence. Over time responsiveness to elites has grown.
  • Given your findings, what do you make of the great sense of persecution that people at the top appear to feel in recent years? Is there a phenomenon you came by that speaks to this, and does that perpetuate the cycle of policy moving in their direction? It's certainly not something our study or data has addressed. But it's part of an effort to defend, in the face of growing inequality, their advantages and wealth.
  • sometimes non-rich people favor an agenda that supports the rich. For instance, middle class tea partiers want low taxes on the highest earners, just as Steve Forbes does. Isn't that still democracy at work, albeit in an arguably perverse way? Yes, absolutely. I think people are entitled to preferences that conflict with their immediate interests -- narrowly conceived interests. That may be an example of that. Opposition to the estate tax among low-income individuals is another. But what we see in this study is that's not what this is happening. We don't look at whether preferences expressed by these different groups are consistent or inconsistent with their interests, narrowly conceived. We just look at whether they're responded to by government policy-makers, and we find that in the case of ordinary Americans, they're not.
  • What are the three or four most crucial factors that have made the United States this way? Very good question. I'd say two crucial factors. One central factor is the role of money in our political system, and the overwhelming role that affluent individuals that affluent individuals and organized interests play, in campaign finance and in lobbying. And the second thing is the lack of mass organizations that represent and facilitate the voice of ordinary citizens. Part of that would be the decline of unions in the country which has been quite dramatic over the last 30 or 40 years. And part of it is the lack of a socialist or a worker's party.
  • Your study calls to mind something that Dennis Kucinich, the former congressman, said years ago during the recession. He essentially said the class war is over and the working class lost. Was he right? I mean, for now, it certainly seems like it. The middle class has not done well over the last three and a half decades, and certainly has not done well during the Great Recession. The political system responded to the crisis in a way that led to a pretty nice recovery for economic elites and corporations.
  • what kind of data do you use to test this theory and how confident are you in the conclusions? What we did was to collect survey questions that asked whether respondents would favor or oppose some particular change in federal government policy. These were questions asked across the decades from 1981 to 2002. And so from each of those questions we know what citizens of average income level prefer and we know what people at the top of the income distribution say they want. For each of the 2,000 possible policy changes we determined whether in fact they've been adopted or not. I had a large number of research assistants who spent years putting that data together.
  • A new political science study that's gone viral finds that majority-rule democracy exists only in theory in the United States -- not so much in practice. The government caters to the affluent few and organized interest groups, the researchers find, while the average citizen's influence on policy is "near zero."
  • TPM spoke to Gilens about the study, its main findings and its lessons.
Javier E

Opinion | What Do We Actually Know About the Economy? (Wonkish) - The New York Times - 0 views

  • Among economists more generally, a lot of the criticism seems to amount to the view that macroeconomics is bunk, and that we should stick to microeconomics, which is the real, solid stuff. As I’ll explain in a moment, that’s all wrong
  • in an important sense the past decade has been a huge validation for textbook macroeconomics; meanwhile, the exaltation of micro as the only “real” economics both gives microeconomics too much credit and is largely responsible for the ways macroeconomic theory has gone wrong.
  • Finally, many outsiders and some insiders have concluded from the crisis that economic theory in general is bunk, that we should take guidance from people immersed in the real world – say, business leaders — and/or concentrate on empirical results and skip the models
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  • And while empirical evidence is important and we need more of it, the data almost never speak for themselves – a point amply illustrated by recent monetary events.
  • chwinger, as I remember the story, was never seen to use a Feynman diagram. But he had a locked room in his house, and the rumor was that that room was where he kept the Feynman diagrams he used in secret.
  • What’s the equivalent of Feynman diagrams? Something like IS-LM, which is the simplest model you can write down of how interest rates and output are jointly determined, and is how most practicing macroeconomists actually think about short-run economic fluctuations. It’s also how they talk about macroeconomics to each other. But it’s not what they put in their papers, because the journals demand that your model have “microfoundations.”
  • The Bernanke Fed massively expanded the monetary base, by a factor of almost five. There were dire warnings that this would cause inflation and “debase the dollar.” But prices went nowhere, and not much happened to broader monetary aggregates (a result that, weirdly, some economists seemed to find deeply puzzling even though it was exactly what should have been expected.)
  • What about fiscal policy? Traditional macro said that at the zero lower bound there would be no crowding out – that deficits wouldn’t drive up interest rates, and that fiscal multipliers would be larger than under normal conditions. The first of these predictions was obviously borne out, as rates stayed low even when deficits were very large. The second prediction is a bit harder to test, for reasons I’ll get into when I talk about the limits of empiricism. But the evidence does indeed suggest large positive multipliers.
  • The overall story, then, is one of overwhelming predictive success. Basic, old-fashioned macroeconomics didn’t fail in the crisis – it worked extremely well
  • In fact, it’s hard to think of any other example of economic models working this well – making predictions that most non-economists (and some economists) refused to believe, indeed found implausible, but which came true. Where, for example, can you find any comparable successes in microeconomics?
  • Meanwhile, the demand that macro become ever more rigorous in the narrow, misguided sense that it look like micro led to useful approaches being locked up in Schwinger’s back room, and in all too many cases forgotten. When the crisis struck, it was amazing how many successful academics turned out not to know things every economist would have known in 1970, and indeed resurrected 1930-vintage fallacies in the belief that they were profound insights.
  • mainly I think it reflected the general unwillingness of human beings (a category that includes many though not necessarily all economists) to believe that so many people can be so wrong about something so big.
  • . To normal human beings the study of international trade and that of international macroeconomics might sound like pretty much the same thing. In reality, however, the two fields used very different models, had very different intellectual cultures, and tended to look down on each other. Trade people tended to consider international macro people semi-charlatans, doing ad hoc stuff devoid of rigor. International macro people considered trade people boring, obsessed with proving theorems and offering little of real-world use.
  • does microeconomics really deserve its reputation of moral and intellectual superiority? No
  • Even before the rise of behavioral economics, any halfway self-aware economist realized that utility maximization – indeed, the very concept of utility — wasn’t a fact about the world; it was more of a thought experiment, whose conclusions should always have been stated in the subjunctive.
  • But, you say, we didn’t see the Great Recession coming. Well, what do you mean “we,” white man? OK, what’s true is that few economists realized that there was a huge housing bubble
  • True, a model doesn’t have to be perfect to provide hugely important insights. But here’s my question: where are the examples of microeconomic theory providing strong, counterintuitive, successful predictions on the same order as the success of IS-LM macroeconomics after 2008? Maybe there are some, but I can’t come up with any.
  • The point is not that micro theory is useless and we should stop doing it. But it doesn’t deserve to be seen as superior to macro modeling.
  • And the effort to make macro more and more like micro – to ground everything in rational behavior – has to be seen now as destructive. True, that effort did lead to some strong predictions: e.g., only unanticipated money should affect real output, transitory income changes shouldn’t affect consumer spending, government spending should crowd out private demand, etc. But all of those predictions have turned out to be wrong.
  • Kahneman and Tversky and Thaler and so on deserved all the honors they received for helping to document the specific ways in which utility maximization falls short, but even before their work we should never have expected perfect maximization to be a good description of reality.
  • But data never speak for themselves, for a couple of reasons. One, which is familiar, is that economists don’t get to do many experiments, and natural experiments are rare
  • The other problem is that even when we do get something like natural experiments, they often took place under economic regimes that aren’t relevant to current problems.
  • Both of these problems were extremely relevant in the years following the 2008 crisis.
  • you might be tempted to conclude that the empirical evidence is that monetary expansion is inflationary, indeed roughly one-for-one.
  • But the question, as the Fed embarked on quantitative easing, was what effect this would have on an economy at the zero lower bound. And while there were many historical examples of big monetary expansion, examples at the ZLB were much rarer – in fact, basically two: the U.S. in the 1930s and Japan in the early 2000
  • These examples told a very different story: that expansion would not, in fact, be inflationary, that it would work out the way it did.
  • The point is that empirical evidence can only do certain things. It can certainly prove that your theory is wrong! And it can also make a theory much more persuasive in those cases where the theory makes surprising predictions, which the data bear out. But the data can never absolve you from the necessity of having theories.
  • Over this past decade, I’ve watched a number of economists try to argue from authority: I am a famous professor, therefore you should believe what I say. This never ends well. I’ve also seen a lot of nihilism: economists don’t know anything, and we should tear the field down and start over.
  • Obviously I differ with both views. Economists haven’t earned the right to be snooty and superior, especially if their reputation comes from the ability to do hard math: hard math has been remarkably little help lately, if ever.
  • On the other hand, economists do turn out to know quite a lot: they do have some extremely useful models, usually pretty simple ones, that have stood up well in the face of evidence and events. And they definitely shouldn’t defer to important and/or rich people on polic
  • : compare Janet Yellen’s macroeconomic track record with that of the multiple billionaires who warned that Bernanke would debase the dollar. Or take my favorite Business Week headline from 2010: “Krugman or [John] Paulson: Who You Gonna Bet On?” Um.The important thing is to be aware of what we do know, and why.Follow The New York Times Opinion section on Facebook and Twitter (@NYTopinion), and sign up for the Opinion Today newsletter.
sissij

Beginning 'Brexit' and Bracing for Impact - The New York Times - 1 views

  • Britain’s exit from Europe — Brexit
  • But the reassuring talk did not reckon with one significant detail: Nothing has actually happened yet.
  • The markets essentially shrugged. The move was as expected as the next Super Bowl. The pound dipped a tad. So did shares on London’s stock market.
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  • Trade would revert to the rules of the World Trade Organization, making Britain’s exports to Europe vulnerable to tariffs and other barriers to commerce, including health and safety rules.
  • Brexit supporters called the outcome a template for how a pragmatic British government would prevent businesses from abandoning its shores — with tax cuts, friendly regulation and deal making.
  • But consumer spending has been increasingly paid for by debt. The British pound has surrendered 17 percent of its value against the dollar since the referendum, raising the cost of imported goods.
  • During the campaign, Brexit supporters argued that Europe would ultimately make it happen because its most powerful member, Germany, now sends a parade of BMWs, Audis and Volkswagens to Britain.
  • Even if European leaders seek middle ground, any one of the member nations could hijack the proceedings with their demands while the clock ticks away.
  • Britain really is departing the largest consumer market on earth.
  •  
    As we learned in TOK, economics is a very hard to predict human social study. The depression and recession has already showed how market failure affect our optimistic prediction in economics. I think this also shows how the confidence of the general population is important for economics. We can not yet make a conclusion whether the departure of Britain from the Europe league is good or bad. --Sissi (3/30/2017)
caelengrubb

Will a Student Loan Debt Crisis Sink the U.S. Economy? - 1 views

  • Student debt has more than tripled since 2004, reaching $1.52 trillion in the first quarter of 2018, according to the Federal Reserve — second only to mortgage debt in the U.S. College costs have outpaced the Consumer Price Index more than four-fold since 1985, and tuition assistance today is often harder to come by, particularly at schools without large endowments.
  • About 44 million graduates hold student debt, and today’s graduates leave school holding promissory notes worth an average of $37,000, raising concerns that the burden is creating a cascade of pressures compelling many to put off traditional life milestones
  • The storyline, as it has emerged, is that college debt delays buying a house, getting married, having children and saving for retirement, and there is some evidence that this is happening.
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  • But the truth is more nuanced, and, statistically at least, the question of how burdensome student debt is and the extent to which it is disrupting major life events depends on a number of factors, including when you graduated from college with debt.
  • For those who graduated with debt as the economy was crashing, it was a double-whammy, said Keys, “so you’re seeing delayed marriage, delayed child-bearing, which are at least in part a function of the ongoing damage from the Great Recession.
  • Before the Great Recession, student debt levels were below auto loans, credit card debt and home-equity lines of credit in the ranking of household debt. Since then, student loan debt has surpassed these other debts
  • A $1,000 increase in student loan debt lowers the homeownership rate by about 1.5 percentage points for public four-year college-goers during their mid 20s, equivalent to an average delay of 2.5 months in attaining homeownership,
  • Individuals who attain higher education average higher salaries, which translates into a higher tax base. With higher levels of education attainment, there is also less reliance on social welfare programs, as individuals who attain higher education are more likely to be employed, less likely to be unemployed, and less likely to be in poverty. Higher levels of education are also associated with greater civic engagement, as well as lower crime.”
  • In 2014, the largest chunk of student debt — nearly 40% — belonged to people owing between $1 and $10,000.
  • The bigger problem, Webber said, comes when students take out loans and then don’t graduate from college
  • Nationally, 60% of people who start at a four-year institution wind up graduating within the next six years
  • There are other ways in which all debt is not created equal. “Many of the people who have the largest loans and are the most likely to default are also the people who got the worst credentials and poorest quality training when they graduated or potentially didn’t even graduate
  • But although $1.5 trillion is a big number, it may not be an unreasonable amount given the value it is creating
  • In 2002, a bachelor’s degree holder could expect to make 75% more than someone with just a high school diploma, and nearly a decade later that premium had risen to 84%
  • A bachelor’s degree is worth about $2.8 million over a lifetime, the study also found.
  • Australia has a system that links the repayment of loans with the tax system. “Income-driven repayment options have been created in the U.S.,” said Perna, “but these options are more cumbersome and administratively complex than in Australia and some other nations. By linking the amount of the monthly payment to an individual’s income, income-driven repayment options can help to protect borrowers against the risk of non-repayment. But a more seamless system wouldn’t require borrowers to annually report their income to the U.S. Department of Education
  • “Promise” or “free tuition” programs cropping up in some states are also worth examining
  • “Right now there is, frankly, very little accountability that schools have; they practically have no skin in the game. If students default on their loans, there is no bad effect for the school.”
katherineharron

A fresh wave of coronavirus job losses is about to come crashing down - CNN - 0 views

  • The coronavirus pandemic has quickly thrust the world into recession as bars and restaurants shut down and countries instruct their citizens to hunker down. The question now is just how deep the pain will be, and how long it will last.
  • A picture of the economic devastation in North America and Europe has already started to emerge. A US government report published Thursday showed that 281,000 Americans filed for their first week of unemployment benefits last week — a sudden 33% jump over the week before and the largest percentage increase since 1992.
  • This week is expected to be much worse. Goldman Sachs predicts that a shocking 2.25 million Americans will have filed for their first week of unemployment benefits. That would be eight times the number of people who filed last week and the highest level on record.
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  • Fears about joblessness on this scale could jolt markets again. Investors have priced in a recession by now, but may still be processing the size of the hole the coronavirus has blown into the global economy, Jeffrey Kleintop, chief global investment strategist at Charles Schwab, told me.
  • The Dow Jones Industrial Average is now down 35% from its all-time high in mid-February, erasing all its gains since President Donald Trump's inauguration. Between January 20 and last Thursday, $27 trillion was wiped off global stocks, according to Bank of America.
katherineharron

Fed takes emergency action to stave off a depression - CNN - 0 views

  • The Federal Reserve is signaling it will do whatever it takes to save the coronavirus-ravaged American economy from a depression.
  • Taken together, the Fed said the new programs will provide up to $300 billion in new financing to an economy getting crushed by the crippling health restrictions aimed at fighting the pandemic. The Fed is going all out to prevent the health crisis from turning into a full-blown financial crisis.
  • US stock futures spiked on the new emergency actions from the Fed, which has already slashed interest rates to zero. Recession fears and a liquidity crunch have crashed the stock market over the past month and caused parts of the bond market to malfunction.
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  • The Fed said it will support American households and businesses, but it acknowledged "our economy will face severe disruptions."
  • The social distancing policies imposed to fight the coronavirus crisis have brought the American economy to its knees. Malls are empty. Factories have been shut down. Casinos have gone dark. And countless flights have been suspended. The economic toll is massive.
  • Aided by extremely low interest rates, US businesses have borrowed heavily over the past decade to hire workers, build factories, research new products and pay for share buybacks. That debt now looks especially treacherous as the economy goes into a tailspin.
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