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.
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
… without serious action, a sharp drop in government employment, with a loss of a million jobs or more, is what we can expect over the next year. This has implications for the economy as a whole and also for the well-being of large parts of the American public who depend on state and local government services. Two intrinsic features of the American system of government come together to threaten a social disaster: the limited capacity of state and local governments to spend beyond their immediate revenues even in the harshest economic crises, and our peculiar federal system in which education and social services are largely funded by local and state authorities rather than by the federal government, with its deep pockets and ability to spend beyond its revenues as needed to maintain existing services….
Google Alerts today highlights the public impact of research by two UMass Economists:
Papers by UMass Economist Lee Badgett with law faculty co-authors R. Bradley Sears (UCLA) and Suzanne Goldberg (Rutgers) form the basis of the answers to “Questions about Same-Sex Marriage” on the GayBoomers (news for the middleaged queer and more) blog. A working paper by Deepankar Basu, the newest addition to the UMass Economics Department, provides an “Analysis of Classes in India: A Preliminary Note on the Industrial Bourgeoisie and Middle Class.” An excerpt appears on the influential blog Sanhati: Fighting Neoliberalism in Bengal and Beyond. The paper also earns favorable mention on the Epoliticus blog.
Sick of being trampled by the big boys ridin’ their bulls and bears? SAFER was founded by UMass Econ Chair Gerald Epstein and Jane D’Arista to bring sanity and safety to the financial system.
Economists’ Committee for Stable, Accountable, Fair and Efficient Financial Reform (SAFER)
The Economists’ Committee for Stable, Accountable, Fair and Efficient Financial Reform (SAFER) is a focal point, clearinghouse and coordinating mechanism for progressive economists and analysts to gather and present their views on financial re-regulation and reform; to reach, to the degree possible, a consensus on the key issues relating to regulation and reform; and to help incorporate this work into the public debate over these issues that will ensue over the coming six to nine months or so. By bringing these analysts together to speak in a concerted voice, we will be able to broaden the perspective on financial regulation and reform, and enhance our impact on this public debate.
James Garang has overcome extraordinary challenges to study economics at UMass Amherst. A recent news article described his ongoing odyssey and an upcoming event to support him.
Garang is a former “Lost Boy” of Sudan and has been in the United States since being resettled here as a refugee in 2001.
He married his wife on a visit back to Sudan in June 2007, and their son was born after his return to Amherst, where he is a graduate student in economics at the University of Massachusetts.
November 30, 2009, 9:06 am
Sex, Abortions and Health Insurance
By NANCY FOLBRE
An economist asks: Are reproductive rights activists overreacting about the Stupak-Pitts amendment in the health care reform legislation?
[excerpt] With sex (as with food and exercise) Americans don’t seem, on average, to be very good at planning. Almost one-half of all pregnancies — and about one-third of births — are described as “unintended.”
We need insurance for a reason.
UMass Economics Professor Nancy Folbre has published two new entries on possibilities for cooperative businesses in her regular Economix blog at the New York Times.
November 23, 2009, 7:45 am
The Case for Worker Co-ops
By NANCY FOLBRE
Worker-owned and -managed businesses combine the romance of entrepreneurship with a commitment to community, an economist writes. But are they better than traditional companies?
November 16, 2009, 6:32 am
Workers of the World, Incorporate
By NANCY FOLBRE
A move toward establishment of manufacturing cooperatives represents a new direction for the American labor movement, an economist writes.
Cap-And-Dividend Advocates Pitch Plan To Ease Regional Disparities
Charles Davis, Carbon Control News, Posted November 12, 2009
A coalition of local and regional environmental groups is citing an unpublished analysis from researchers at the University of Massachusetts to argue that an emissions trading scheme that auctions all carbon permits and returns the revenue directly to citizens through rebates or tax cuts—a policy known as cap-and-dividend—is better suited to easing the impacts of greenhouse gas restrictions on areas of the country most dependent on fossil fuels…
… [A] new paper by George Abar, a former legislative director for Kerry and currently a consultant to the Rockefeller Family Fund,… cites a previously unpublished analysis from the University of Massachusetts’ Political Economy Research Institute (PERI) indicating that a modest set-aside for “transition assistance” to the most carbon-intensive regions of the country—based on a formula that weighs the number of manufacturing and coal-mining employees a state has and the carbon-intensity of its electricity—would more than compensate those areas likely to most adversely affected by greenhouse gas restrictions…
The scenario analyzed by PERI would also leave an additional $30 billion for other uses, “such as clean energy investments, compensating local, state and national governments for higher energy costs, or addressing regional variability,” according to the paper.
“A policy that caps carbon, auctions pollution permits, and returns the revenue directly to the American people will meet our environmental and economic goals,” Abar concludes. “It will limit carbon emissions and send a powerful price signal, spurring investment, innovation and job creation in clean energy techologies. It will provide a knowable, timely and direct benefit to American households, and it will leave lower- and middle-class families better off or unharmed.”
Professor Emeritus Samuel Bowles, whose continued close ties with the department include teaching his graduate course on competition, coordination, cooperation and conflict, has recently published an important article in the journal Science. “Did Warfare Among Ancestral Hunter-Gatherers Affect the Evolution of Human Social Behaviors?” asks whether between-group conflict between tribes of early humans may have rewarded substantial within-group cooperation.
Much of the coverage included a riff on “War, What’s It Good For?” Here’s a more serious excerpt from the Wired report,
According to his analysis of archaeological evidence from Stone Age sites and and ethnographic studies of remaining tribes, combat between groups accounted for about 14 percent of all deaths in hunter-gatherer societies. Composed of a few dozen people with no social institutions, such groups were the dominant community form for most of human history.
“These were not modern societies. As with chimpanzees going out on patrol, there was no leadership. You could stay home if you wanted,” said Bowles.
After estimating the rate that altruism would reduce an individual’s chances of reproducing, Bowles plugged the numbers into a model of intergroup competition where an individual’s altruism would also improve a group’s chances of combat triumph. Groups with selfless individuals eventually predominated, and altruism predominated within those groups.
In addition to Emeritus status at UMass, Sam Bowles is Professor at the Santa Fe Institute and the University of Siena.