Category Archives: Folbre

Faculty and grad students on “Occupy” protests

Anastasia Wilson (Photo by Diane Lederman, The Republican)

Many UMass Amherst Economics Department faculty and graduate students have participated in the “Occupy” protests that started on Wall Street and have spread internationally. Occupy protests have been held locally in Amherst, Boston and Northampton.

On Oct. 19 UMass Amherst economics professors Gerald Friedman, David Kotz, and Stephen Resnick joined colleagues Dean Robinson and Jillian Schwedler (political science), Max Page (art), and Millicent Thayer (sociology) for the first Occupy UMass Teach-In held in the Cape Cod Lounge on the UMass Amherst campus. (The Daily Collegian, 10/20/11)

Deepankar Basu (Photo by Diane Lederman, The Republican)

Nancy Folbre, UMass Amherst economics professor, writes in the Economix blog about the Occupy Wall Street movement and what it may mean for the debate about wealth distribution in the U.S. She says visiting the protestors in New York City showed her that they weren’t proposing class warfare, but were instead expressing class rage. (New York Times, 10/17/11

Graduate student Mark Paul is profiled in a story about local residents who are taking part in the Occupy Wall Street demonstrations in New York City. (Gazette, 10/11/11)

A group of UMass Amherst students held a rally outside the Student Union on Oct. 12 calling for economic justice as part of the Occupy Wall Street movement. Speakers at the rally included UMass Amherst economics professors Deepankar Basu and David Kotz. (Republican, 10/13/11)

UMass Amherst graduate students, including Anastasia Wilson (shown in photo), participate in the Occupy Amherst protest on the Town Common. A video of the event highlights their message. (Republican, 10/5/11)

Folbre a supporter of the “Tax Wall Street” campaign, quoted in The Nation

Nancy Folbre

A columnist writing for The Nation says President Obama could pay for an expansive new job creation program by taxing financial transactions by Wall Street traders. The author notes that top national economists, such as UMass Amherst economics professor Nancy Folbre, have supported the idea, noting that European countries already have such taxes. Folbre argues that the current U.S. tax policy encourages speculation in financial instruments that don’t invest in productive outcomes. (The Nation, 8/31/11)

How Will We Pay for Obama’s New Jobs Push? Answer: Tax Wall Street
John Nichols | August 31, 2011

University of Massachusetts Amherst economics professor Nancy Folbre [6], a MacArthur Fellowship recipient who has consulted with the World Bank and the United Nations Development Office professor of economics at the University of Massachusetts Amherst, praised the NNU’s “Tax Wall Street” campaign in a recent New York Times piece that explained the push in an international context.

“Purchases of stocks, bonds and other financial instruments in the United States go untaxed but for a tiny fee on stock trades that helps finance the Securities and Exchange Commission. In Britain, by contrast, a 0.5 percent tax on stock transactions raises about $40 billion a year. President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany recently announced plans to introduce a similar tax in the 27 nations of the European Community,” wrote Folbre. [7] “Our current tax policies favor speculative investment in financial instruments over productive investments in human capabilities. This imbalance helps explain why nurses’ unions in the United States (NNU) have been particularly outspoken advocates of a financial transactions tax. As they put it: ‘Heal America. Tax Wall Street.’ ”

Folbre blogs, “Unemployment? Who Cares?”

Nancy Folbre

In her Economix blog, Nancy Folbre, UMass Amherst economics professor, examines why deficit reduction and not unemployment is dominating the public policy agenda. She offers several possible explanations including the fact that high unemployment rate is not adversely affecting overall business profits.   (New York Times, 7/11/11)

July 11, 2011
Unemployment? Who Cares?

The A.F.L.-C.I.O. and other unions keep demanding “Good jobs now!” Progressive think tanks like the Economic Policy Institute carefully monitor employment trends. Many economists, including the professionally prominent members of the Employment Policy Research Network, insist on the need for more attention to the issue. As Till von Wachter of Columbia University put it, “Unemployment is the No. 1 economic problem facing the country today.”

Some business leaders have spoken up. Last summer, Andrew Grove, the former chief executive of Intel, wrote a passionate commentaryfor Bloomberg BusinessWeek calling for a “job-centric” economy.

But this is not something the country can achieve with jobs-oblivious politicians. Why isn’t unemployment reduction front and center on the policy agenda? More specifically, why has the debate over deficit reduction shoved it aside?

First, unemployment is concentrated among the less educated, blacks and Hispanics who lack political or economic clout.

Second, high unemployment is not hurting overall business profits, which have soared to historic heights. In the 1930s, joblessness reduced the demand for consumer goods, idling many businesses as well as workers, creating economic incentives to support public job-creation efforts.

Today, our largest corporations and richest investors are well positioned to take advantage of growing demand in emerging markets far from our shores, whether in the form of increased exports or new investment opportunities.

As a small-business owner explained in a recent Wall Street Journal article, he only sells domestically and does not have the opportunity to “exploit foreign markets that are growing faster.”

Folbre blogs, some children may be “Born to Lose”

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, writes in the Economix blog about how low birth weight is a strong economic indicator of how a child will do in society. She also argues that exposure to environmental pollution is a key contributor to the health of newborns and has a strong impact on birth weight. (New York Times, 6/27/11)

June 27, 2011
Born to Lose: Health Inequality at Birth

Epidemiologists and economists have long agreed that low birth weight is an important, albeit approximate, predictor of future health problems. A wealth of new economic research tracing individuals over time shows that it is also an approximate predictor of future earnings problems, with statistical effects almost as strong as children’s test scores.

Among other things, low birth weight increases the probability of suffering from attention deficit hyperactivity disorder and lowers the probability of graduating from high school.

In the current American Economic Review, Janet Currie of Princeton, a pioneer in this new area of research, summarizes recent findings and points out that children of black mothers who dropped out of high school are three times as likely as children of white college-educated mothers to suffer low birth weight.

Many of the mechanisms that underlie this inequality are linked to characteristics of the physical environment, such as exposure to environmental toxins.

Folbre blogs on the value of early childhood education

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, writes in the Economix blog about the value of early childhood education and why businesses should consider it a good investment. She notes that the programs have political support across the ideological spectrum, but also points out that budget cutting at the state and federal levels are likely to reduce funding for the programs. (New York Times, 6/20/11)

June 20, 2011
Will Business Buy In To Early Childhood Edcuation?

Economists disagree about a lot of things, but many agree that public investments in early childhood education pay off. The social benefits far exceed the social costs.

A recently released study of 1,000 poor children who benefited from Chicago’s Child-Parent Center Education Program (which includes intensive preschool, parent training and support for students through third grade), suggests that every dollar spent on the program yielded nearly $11 to society, including increased tax revenue and reduced spending on child welfare, special education and grade retention.

VT moves toward single-payer health insurance

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, writes in the Economix blog about how Vermont is bucking the national trend and creating a Canadian-style, single-payer health insurance system for its citizens. She notes that Gerald Friedman, economics, estimates Massachusetts could see savings of 17 percent in its health care costs under a similar system. (New York Times, 6/6/11)

June 6, 2011
Vermont’s Move Toward Single-Payer Health Insurance

My University of Massachusetts Amherst colleague Gerald Friedman, active in efforts to promote a single-payer system in this state, estimates that similar changes in Massachusetts could sharply reduce the cost of billing and processing insurance claims, generating savings of 17 percent. As he puts it, a universal single-payer approach is not just more affordable; in the long run, it may be the only affordable option.

The current Massachusetts health-insurance system, like that emerging on the national level, requires residents to buy health insurance and provides subsidies only to low-income families. As a result, it leaves many people vulnerable to increases in the cost of insurance and may also create political resentments among those with incomes just above the subsidy eligibility level, who are forced to buy insurance they can ill afford.

The system is not “wildly unpopular,” as some conservatives assert, but it’s not wildly popular either.

As Vermont moves forward with its plan, a fascinating standard of comparison should emerge. The Canadian single-payer system grew out of successful innovations in the province of Saskatchewan, which led other provinces to follow suit. Here in Massachusetts, many of us are looking hopefully over our shoulder at the Green Mountain State.

Folbre blogs on “Shared Capitalism”

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, discusses “shared capitalism,” a term for arrangements that businesses can make to share profits with employees, in her Economix blog. She notes that her departmental colleague, Fidan Kurtulus and another economist last week offered evidence that companies with employee ownership showed greater employment stability during economic downturns between 1999 and 2008. The study was presented at the London School of Economics. (New York Times, 5/30/11)

May 30, 2011
Shared Capitalism

How could public policies promote and expand this shared capitalism? Public policies already offer companies tax benefits for setting up employee stock-ownership plans, and these could be increased. It would also be relatively easy to encourage companies to offer more workers incentive pay based on company performance.

In a report published by the Center for American Progress in March, Professors Freeman, Blasi and Kruse point to a strange anomaly in current tax policy: Companies are allowed to write off costly stock options that represent incentive pay for top executives, despite a lack of evidence that such incentives lead to improved company performance.

Why not restrict the tax benefits to companies that provide the same type of incentive pay for all full-time employees, stipulating that the value expended on the bottom 80 percent of employees by salary must equal at least that expended on the top 5 percent?

Similar restrictions have long been in effect for employee retirement and health plans. The costs of these programs are not tax-deductible unless they are offered in a nondiscriminatory way to all workers.

Private-sector precedents are also strong. Two very successful American companies, the Wegmans supermarkets and Cisco Systems, offer broad-based incentive systems that effectively meet these restrictions.

If America’s capitalists mean what they say about the virtues of an ownership economy, they should throw their weight behind modest changes in tax incentives that could expand it. If they don’t, we might infer that they prefer to keep the benefits of ownership to themselves.

Folbre: “Super Sad True Jobs Story”

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, writes in the Economix blog about how large numbers of unemployed workers in the U.S. may be left behind because the close relationships between economic recovery, job creation and increased profits are being frayed by globalization. Folbre cites a paper co-authored by Deepankar Basu, assistant professor of economics at UMass Amherst. Basu and his co-author found that there is a weakening correlation between output growth and employment growth in the United States. This means that even as the economy grows, employment has not risen as much as the models predicted. Folbre’s blog also notes that the unemployed, in addition to not being needed by business, become increasingly viewed as a drag on society because they spend less and depend on unemployment benefits. (New York Times, 5/2/11)

May 2, 2011
Super Sad True Jobs Story

Macroeconomic models of these relationships based on historical data are increasingly obsolete. As Deepankar Basu and Duncan Foley argued in a recent Political Economy Research Institute paper, the correlation between output growth and employment growth in the United States has declined in recent years.

Foreign-owned businesses may locate in the United States, helping compensate for declining investment by American multinationals. But as all businesses become more footloose, they have less incentive to support public spending on education, health, human services or social safety nets, including unemployment insurance.

Unneeded as workers, the unemployed also become superfluous as consumers and burdensome as citizens.

Cutting unemployment benefits (as was just accomplished in Michigan and is well under way in Florida) becomes just another means of cutting losses.

Super sad no-love story. Wish it weren’t true.

Folbre discusses public higher ed funding on WGBY’s Connecting Point

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor and author of Saving State U: Why We Must Fix Public Higher Education, was a guest on WGBY’s Connecting Point. She discusses the pressure that has been put on state universities, and in particular the University of Massachusetts, by the decreased amount of public funding. Decreased funding has led to tuition and fees increases, with another expected this year. Folbre feels that public higher education is now out of reach for many residents, which could negatively impact our economy. According to Folbre, a college education should not just be looked at as someone’s personal ticket to a better job; “there are many spillover benefits to the business community and the state and national economies.”

Folbre on NPR’s Marketplace: Ethics for economists

Nancy Folbre

Nancy Folbre, UMass Amherst economics professor, discusses the need for economists to maintain a high level of ethics when commenting on the current economic situation. She cites research by UMass colleague, Gerald Epstein, which found that prominent academic economists didn’t always disclose their work outside of academia, such as investing in or advising for-profit businesses, and that the lack of transparency can lead to suspicion surrounding their policy recommendations. Folbre suggests this may be preventable by adopting a code of ethics. (Marketplace [NPR], 2/22/11)  Listen to the audio