Daily Archives: December 18, 2009

Friedman at D&S on Bernanke’s Easy Pass

Professor Gerald Friedman

Professor Gerald Friedman

The Dollars and Sense blog featured Ben Bernanke’s undeservedly easy week. Bernanke got a pass for reappointment from the Senate Banking Committee and was named Time’s Person of the Year for 2009. The blog post featured the comment of UMass Econ Professor Gerald Friedman.

Bernanke, Time, Senate Banking Committee by Dollars and Sense
I asked Jerry Friedman, who wrote Bernanke’s Bad Teachers for our July/August issue, to give us his reaction to Time’s announcement. Here’s what he had to say:

In picking Ben Bernanke as Person of the Year, Time Magazine recognizes the man responsible for the little good and much bad that has characterized policy the worst economic crisis since the 1930s. When President George W. Bush appointed him to succeed Alan Greenspan as head the Federal Reserve, Bernanke was Chair of the President’s Council of Economic Advisors and an acknowledged acolyte of Milton Friedman. Like Friedman and Greenspan, Bernanke believes in “Say’s Law” or the principle that individual action through markets will eliminate unemployment. To Bernanke, the current crisis was caused by government mistakes, particularly the misalignment of currencies and the subsequent Chinese savings glut which, when it flowed into the United States housing market, led to an unsustainable real-estate boom. To address the subsequent financial crisis, Bernanke has been willing to move very aggressively but his actions have stopped with the Wall Street bailout because he sees no broader ramifications of the crisis. Confident in free-market capitalism, there is, for Ben Bernanke, no problem with free capital markets, no concern that growing income inequality or changing industrial policy may be undermining effective demand, and no reason, therefore, to revisit the conservative and pro-business policy decisions made during the neo-liberal era that began in the 1970s.

Boyce on Cantwell-Collins CLEAR Bill at Baseline Scenario

Professor James K. Boyce

Professor James K. Boyce

UMass Prof James K. Boyce had a guest post earlier this week at the influential Baseline Scenario blog (Simon Johnson and James Kwak on the crisis of ’08 and beyond—considered required reading at the White House). Boyce outlined the state of play of Climate Protection legislation in the United States.

Baseline Scenario — New Deal for U.S. Climate Policy?
This guest post was submitted by James K. Boyce, an economist at the University of Massachusetts, Amherst. He has been a proponent of a “cap-and-dividend” policy to curb global warming while protecting the incomes of American families.

Last Friday, Senators Maria Cantwell (D-WA) and Susan Collins (R-ME) unveiled the CLEAR (Carbon Limits and Energy for America’s Renewal) Act, which could break the impasse in the debate over U.S. policy on climate change (McClatchy coverage is here.)

CLEAR has won a favorable reception from a broad swath of the political spectrum, ranging from ExxonMobil to Friends of the Earth. The scroll of supportive statements on Cantwell’s website includes praise from the AARP, the American Enterprise Institute, former U.S. Labor Secretary Robert Reich, Alaska’s Republican Senator Lisa Murkowski, and MoveOn.org.

CLEAR is a “100-75-25-0” policy:

* 100% of the permits to bring fossil carbon into the U.S. economy will be auctioned from day one – there are no permit giveaways.
* 75% of the auction revenue is returned directly to the public as equal per person dividends.
* 25% of the auction revenue is devoted to investments in energy efficiency, clean energy, adaptation to climate change, and assistance for sectors hurt by the transition from the fossil-fueled economy.
* Zero offsets are allowed: polluters cannot avoid curbing use of fossil fuels by paying someone else to ostensibly clean up after them.

The Cantwell-Collins bill also strictly limits the buying and selling of permits to prevent carbon market speculation and profiteering.

In all these respects, the 39-page CLEAR Act differs markedly from the Waxman-Markey (ACES) bill that passed the House in June, whose cap-and-trade provisions (Title III) alone run to 410 pages. Waxman-Markey initially gives away 85% of the permits. Dividends to the public eventually would grow to about half of the permit value pie, but not until the 2030s. The House bill’s offset provisions would turn the emissions cap into a sieve, and have stoked worries about creating a “subprime carbon market” (see and Annie Leonard’s animated primer). We need to cap carbon, but we do not need to cap-and-trade or, especially, cap-and-give-away. Instead, we should cap-and-dividend.

The New York Times reported on the on the legislative sausage-making that went into Waxman-Markey. The redolent process, lubricated by special favors to special interests, has stalled since June with legislative arteriosclerosis; its backers now hope that passage can be cleared by implanting stents to boost nuclear power and transform America into “the Saudi Arabia of clean coal.”

The road to a Senate-led compromise is open: CLEAR could replace Title III of the House bill, while keeping the other titles that set forth non-price policies to promote energy efficiency and clean energy. The resulting comprehensive climate policy could have a real chance of becoming the law of the land – and the air – in the year ahead.

By James Boyce

Nancy Folbre comments in two stories about how society values women and the work they do

One story focuses on how some women are responding to the economic downturn by selling their eggs, renting their bodies to carry other people’s babies to term and selling breast milk. Folbre says women feel the economic strain more acutely than men because they earn less in the market place and have less money in savings. Folbre was also a guest lecturer at Delhi University’s Institute of Economic Growth, giving a talk on how to value unpaid work. (MSN Health & Fitness, 12/17/09; IndianExpress.com, 12/17/09)