A columnist from Maryland arguing that Medicare-for-All is both politically realistic and affordable at the state level cites a report by the Political Economy Research Institute at UMass Amherst that a similar program, if adopted in California, would lead to an 8-percent drop in health care costs. The writer says in a system where the government pays for health care, the main incentive would be to save money, not to make money for insurance companies, hospitals and drug companies. (Delmarvanow.com, 8/11/18)
The Alliance for Jobs and Clean Energy, the group behind a clean energy and economic equity ballot initiative in Washington State, used an economic analysis by Robert Pollin and a team from from the Political Economy Research Institute to develop the measure. Initiative 1631 calls for massive reductions in CO2 emissions, carbon emission fees for big polluters and job retraining for workers in fossil fuel-reliant industries. (The Nation, 7/20/18)
A news story about a proposal to create a new carbon tax that is moving through Congress is attracting some support from the fossil fuel industry and some environmentalists. The plan calls for a $40 per metric ton tax on carbon, with the amount increasing over time and the proceeds given back to the American public as dividends. A recent study done by the Political Economy Research Institute at UMass Amherst, however, says the tax would have to reach $200 per ton to begin changing consumer behavior and protect low-income consumers. (Climateliabilitynews.org, 7/17/18)
Robert Pollin, co-director of the Political Economy Research Institute (PERI) and professor of economics, appeared on The Real News Network to discuss the low minimum wage of the U.S., which, when adjusted for inflation, is lower in 2013 than it was in 1968. Pollin also postulated that, if you corrected the minimum wage for both inflation and increased worker productivity, it should be closer to $25 per hour; the current federal minimum wage is $7.25 per hour.
In an interview on The Real News Network, Professor Robert Pollin states that a lack of national policies aimed at achieving full employment, including stronger minimum wage laws- not the presence of immigrants- is the cause of high unemployment.
UMass Amherst Department of Economics Professor James K. Boyce discusses why GDP is not necessarily a good economic indicator in an interview on The Real News Network.
UMass Amherst Department of Economics professors and researchers at the Political Economy Research Institute (PERI), Michael Ash and James Boyce, release the fifth edition of Toxic 100 Air Polluters, an index ranking corporations by the pollutants they release, the toxicity of those releases, and the number of people exposed.
Robert Pollin, UMass Amherst professor of economics and co-founder of the Political Economy Research Institute (PERI), was interviewed by The Real News Network regarding the U.S. minimum wage and youth without jobs.
The minimum wage in the country right now, at $7.25 an hour, is about $3 an hour–more than $3 an hour below what it actually was in 1968 in this country. In 1968 in this country, the minimum wage, after we properly adjust for inflation, was $10.65 an hour. That means in 1968–let’s take a young girl in Texas walking into her job at McDonald’s on the first day. Legally she would have to have been paid $10.65 an hour. That’s in 1968. So the proposal by Congressman Alan Grayson is basically just to bring the United States minimum wage today back to where it was in 1968.
A new study by UMass Amherst Department of Economics Graduate Student Thomas Herndon and Professors Michael Ash and Robert Pollin refutes the Reinhart and Rogoff analysis that underpins austerity policy around the world; shows no relation between debt and lack of growth. Watch The Real News Network interview with Ash and Herndon.
The following comment appeared in the April 17, 2013 print edition of the Financial Times. It is available online at http://www.ft.com/intl/cms/s/0/9e5107f8-a75c-11e2-9fbe-00144feabdc0.html#axzz2Qk3zV4ww.
Austerity after Reinhart and Rogoff
Robert Pollin and Michael Ash
In 2010, two Harvard economists published an academic paper that spoke to the world’s biggest policy question: should we cut public spending to control the deficit or use the state to rekindle economic growth? Growth in a Time of Debt by Carmen Reinhart and Kenneth Rogoff has served as an important intellectual bulwark in support of austerity policies in the US and Europe. It has been cited by politicians ranging from Paul Ryan, the US congressman, to George Osborne, the UK chancellor. But we have shown that several critical findings advanced in this paper are wrong. So do we need to rethink austerity economics more broadly?
Their research is best known for its result that, across a broad range of countries and periods, economic growth declines dramatically when a country’s level of public debt exceeds 90 per cent of gross domestic product. In their work with a sample of 20 advanced economies in the postwar period, they report that average annual GDP growth ranges between about 3 per cent and 4 per cent when the ratio of public debt to GDP is below 90 per cent. But it collapses to -0.1 per cent when the ratio rises above a 90 per cent threshold.
In a new working paper, co-authored with Thomas Herndon, we found that these results were based on data errors and unsupportable statistical techniques. For example, because of miscalculation and unconventional methods of averaging data, a one-year experience in New Zealand in 1951, during which economic growth was -7.6 per cent and the public debt level was high, ends up exerting a big influence on their overall findings.
When we performed accurate recalculations, we found that, when countries’ debt-to-GDP ratio exceeds 90 per cent, average growth is 2.2 per cent, not -0.1 per cent. We also found that the relationship between growth and public debt varies widely over time and between countries.
So what does this mean? Consider a situation in which a country is approaching the threshold of a 90 per cent public debt-to-GDP ratio. It is not accurate to assume that these countries are reaching a danger point where growth is likely to decline precipitously.
Rather, our evidence shows that a country’s growth may be somewhat slower once it moves past the 90 per cent public level. But we cannot count on this being true under all, or even most, circumstances. Are we considering the US demobilisation after the second world war or New Zealand during a severe one-year recession? One needs to ask these and similar questions, including whether slow growth was the cause or consequence of higher public debt.
What of our present circumstances? Using the Reinhart/Rogoff data, we found that the average GDP growth rate for countries carrying public debt levels greater than 90 per cent of GDP was either comparable to or higher than those for countries whose debt ratios ranged between 30 per cent and 90 per cent.
Of course, one could say that these were special circumstances due to the 2007-2009 financial collapse and Great Recession. Yet that is exactly the point. When the US and Europe were hit by the financial crisis, and subsequent collapse of private wealth and spending, deficit-financed government spending was the most effective tool for injecting demand back into the economy. The increases in deficits and debt were indeed large in these years. But this was a consequence of the crisis and a policy tool for moving economies out of the recession. The debt was not the cause of the growth collapse.
The case for austerity has never relied entirely on Prof Reinhart and Prof Rogoff. But the other major claims made recently by austerity hawks have also not held up well. Austerity supporters circa 2009-2010 consistently argued, frequently in this newspaper, that the large US deficits would lead to dangerously high inflation and interest rates. Neither prediction came true. In fact, both inflation and interest rates on treasuries were at historic lows in the four years, 2009-2012, during which deficits were at their peak.
It is also untrue to say that the large deficits have created an unsustainable burden on the US public finances. In fact, since 2009, the US government’s interest payments on debt have been at historically low levels, not historic highs, despite the government’s rising level of indebtedness. This is precisely because the US Treasury has been able to borrow at low rates throughout these high deficit years.
We are not suggesting that governments should borrow and spend profligately. But judicious deficit spending remains the single most effective tool we have to fight against mass unemployment caused by
severe recessions. Recent research by Prof Reinhart and Prof Rogoff, along with all related arguments by austerity proponents, does nothing to contradict this fundamental point.
The writers are professors of economics at the University of Massachusetts Amherst.