All Articles Tagged "american economy"
Nobel Prize Winner Stiglitz: “A Lot of People Still Believe In the American Dream. I Think They’re Wrong To.”
People in this country and abroad talk lovingly about “The American Dream”; that idea that with hard work, perseverance, a lot of brains and a little luck, one can make their way up the ladder to a better life. Well, according to Joseph Stiglitz – Columbia University professor, co-chair of the school’s Committee on Global Thought, 2007 Nobel Prize winner for economics and one of Time magazine’s 100 most influential people in the world — you should forget that.
“A lot of people still believe in the American Dream. I think they’re wrong to,” Stiglitz told the suit-wearing audience at The National Museum of the American Indian yesterday. They had all gathered for The Economist‘s two-day Buttonwood Gathering, which brought together experts and executives in areas of finance, business and academics to talk about the economic issues and opportunities available in the modern world.
This “conversation about inequality” focused on the economic problems facing the US right now. From Stiglitz’s point of view, the biggest problem facing our country is not just the huge levels of inequality, but the fact that the people in the middle aren’t doing well.
“Trickle down hasn’t been working,” he said. “Americans believe in equality of opportunity. The data suggests that that has become a myth.” The data he pointed to shows that the US is woefully lacking in equality of opportunity when compared to other modern societies. And he blamed not just the market, but the laws and other “distortions” in the American system for creating this vast inequality. For instance, he took issue with bankruptcy laws that seem very generous when helping banks but stick individuals in financial distress with their student loans.
He also took issue with a system, such as our patent process, which eliminates competition and creates monopolies. ”We need to be more forceful in enforcing competition law.”
On the other side of this conversation was Martin Feldman, the George F. Baker Professor of Economics at Harvard University and the former chief economic adviser to President Ronald Reagan. In his estimation, low incomes, low wealth, and overall poverty are the real problems. Particularly when you take into account that hundreds of millions that the country is spending every year on Social Security only to have a vast number of the elderly living in penury.
Instead, he suggested, we need to address the “inefficiencies in the economy.” Top among them is the education system.
“The education system is not preparing people of lesser ability for jobs where they can support a family,” said Feldman. We should be “trying to educate and train people for market-oriented jobs.” That, said Feldman, would not only strengthen bank accounts, but families, marriages, and other social areas that are suffering because of the financial pinch.
“When people talk about schools, they talk about going to college,” Feldman added. “They should be talking about skills for getting a job.” He also, at one point, brought up European apprenticeship programs, which he thought would be a useful and more effective form of education here.
Stiglitz agreed that education is a top priority. And both believe that tax reform is necessary to alleviate Stiglitz’s aforementioned “distortions” in the system and to encourage wealth accumulation, according to Feldman.
Feldman still seemed to believe in the American Dream, pointing out that many CEOs aren’t Harvard or Yale graduates, and stating that the lack of cronyism here in the US (unlike places like China and Latin America) means that a lot of wealthy Americans made their money on the up and up.
But I thought that Stiglitz’s assertion about the American Dream was an interesting one. I would agree that the path to the middle and upper class in this country has changed. But modern-day success stories like Mayor Michael Bloomberg, Jay Z, Steve Jobs and President Barack Obama show that it’s possible to start small and move into the big time. However, it has gotten to the point where that sort of mobility is reserved for a very, choice few.
What do you think? Is the American Dream dead?
There are two new rituals about the yearly census reports on poverty in America. One is that the census figures show more Americans continue to sink into poverty. The poverty rate this year jumped to the highest level in nearly two decades. Those hardest hit remain the same. Blacks and Hispanics were nearly twice as likely as whites to be poor. But racial distinctions aside, the census figures showed that there were a lot of poor whites too, and what’s become an increasingly even more common trend is that many of those who tumbled into the poverty column are those who at one time were by all measures considered middle class.
The other ritual is that the news of rising poverty makes headlines one day. And the next it is forgotten. This year is no different. Not one of the GOP presidential candidates made mention of the poverty rate jump. The White House was equally mum on the report. Poverty remains the taboo word on the campaign stump, among lawmakers, the media, and the general public. It remains even a taboo word among many of the poor.
Political and public references to poverty virtually disappeared from the nation’s vocabulary by the end of the 1960s. The continued existence of so many poor people after a decade of civil rights gains, the rash of initiatives and programs to end poverty, and massive government spending on the poverty programs by President Lyndon Johnson in the 1960s, was ultimate proof to many that tossing money and programs at ending poverty was flawed, failed, and wasteful. It seemed to fly squarely in the face of the embedded laissez faire notion that the poor in America aren’t poor because of any failing of the system, but because of their personal failings. This is not just the hard bitten attitude of GOP free market conservatives. It is the attitude of the majority of Americans, including many of those who were poor. When poverty started to inch up in 2001, National Public Radio (NPR), the Kaiser Family Foundation, and Harvard University’s Kennedy School, conducted a national poll to find out just what Americans attributed poverty in the nation too. The terms that were bandied about by many of the respondents no matter their background was that the poor were “unmotivated,” “lacked aspirations to get ahead,” and “didn’t work hard enough.” A majority believed America was a place where with hard work and determination anyone could succeed. In other words, the loud message was that if you’re poor, it’s your fault, don’t blame society, and especially don’t look to government to be the cure.
Democratic presidents and presidential contenders took this message to heart. Still reeling from the fierce conservative backlash to the perceived failure of Johnson’s war on poverty, they gingerly moved around making any public pronouncements about massive government spending hikes on welfare, income supplement, and health care programs for the next two decades. The Democrats trembled that such talk would only stir up white anger by reinforcing the old perception that Democrats tilt toward minorities, and especially blacks.
But the poor stubbornly refused to go away. There was some hope during the 2008 presidential campaign that Democrats might lift the taboo about talking about the plight of the poor. Democratic presidential contender John Edwards fueled that hope when he openly talked about poverty, and that he would the issue one of the centerpieces of his campaign. In a well publicized appearance, Edwards launched his presidential campaign in the front yard of a mangled brick house in New Orleans’s mostly black, Katrina and poverty devastated Upper Ninth Ward. He talked boldly about the need to crusade against poverty. Democratic presidential rivals Obama, and Hillary Clinton, not to be outdone, also gave speeches challenging the nation to do more to alleviate poverty. The talk didn’t last. With the exception of Edwards, whose candidacy quickly disintegrated after public revelations about his love tryst, the candidates didn’t utter another word about poverty during the rest of the campaign. The GOP presidential contender, John McCain, as expected, made no mention of poverty as a policy issue either.
The mantra for the GOP and many Democrats are deficit reduction, tax cuts, and measured, and narrow spending on infrastructure projects to jump start the economy. The widespread view that government should play a minimal role in assisting the poor has crept through in President Obama’s speeches and talks in which he touts personal responsibility as the key to uplift. It would be the height of political and fiscal incorrectness, even heresy, to expect that to change in Obama’s drive to keep and the GOP’s drive snatch back the White House.
The ritual census figures that show that the number of poor continue to grow with little end in sight to the rise hasn’t budged the nation to do anything about their plight. Poverty is the forbidden word that sadly is doomed for now to remain America’s taboo word.
Earl Ofari Hutchinson is an author and political analyst. He is a weekly co-host of the Al Sharpton Show on American Urban Radio Network. He is an associate editor of New America Media. He is host of the weekly Hutchinson Report Newsmaker Hour on KTYM Radio Los Angeles streamed on ktym.com podcast on blogtalkradio.com and internet TV broadcast on thehutchinsonreportnews.com Follow Earl Ofari Hutchinson on Twitter: http://twitter.com/earlhutchinson
Fresh off his post-Labor Day speech in which he revealed preliminary details of the American Jobs Act, President Barack Obama’s disapproval rating escalated to a new high of 55% while his approval rating sunk to a new low of 48%, according to a CNN/ORC poll released Tuesday.
Obama’s approval numbers are even more dismal in the areas of unemployment and economic growth, where he received diminutive ratings of 39% and 36% respectively. A few months ago, in the aftermath of Osama bin Laden’s death, public support for President Obama couldn’t have been higher. Now, amid heightened concerns stemming from the infamous debt ceiling debates, the S&P credit downgrade and a stalled economy, Obama may have to sweat out re-election.
Given the fact eight out of ten Americans are completely dissatisfied with the economy, inquiring minds would like to know one thing: If approved through congress, will the $447 billion American Jobs Act work?
Obama says it’s imperative Congress take immediate action. ”We continue to face an economic crisis that has left millions of our neighbors jobless and a political crisis that has made things worse,” said Obama during his national address on employment. ”We need a tax code where everyone gets a fair shake and everybody pays their fair share. And I believe the vast majority of wealthy Americans and CEOs are willing to do just that if it helps the economy grow and gets our fiscal house in order.”
Here’s the details of the American Jobs Act:
• The payroll tax would be cut in half on the first $5 million of businesses’ payrolls. The measure would cover 98 percent of U.S. businesses.
• Payroll taxes for businesses firms that increase their payrolls by adding new workers or increasing average wages would be eliminated. (The benefit would be capped at the first $50 million in payroll increases.)
• Payroll taxes would be cut in half for 160 million workers.
• New tax credits of $5,600 to $9,600 to encourage the hiring of unemployed veterans.
• Renovation of 35,000 public schools with new science labs, Internet-ready classrooms and other upgrades.
• Increased spending on roads, rail, airports and waterways.
• A “Project Rebuild” program to people to work rehabilitating homes, businesses and communities.
• An extension of unemployment insurance for 5 million more Americans.
• A $4,000 tax credit for companies that hire long-term unemployed workers.
• A new government fund to expand job opportunities for low-income youth and adults.
On paper, the plan looks absolutely scrumptious.
Tax credits to employers in exchange for hiring new employees? Sounds pretty good. Grants and government funding geared towards putting our nation’s teens back to work? Not too shabby. Renovation projects designed to upgrade functionally obsolete schools? A little pricey, but necessary nonetheless.
Like I said, everything looks delicious.
However, skeptics are quick to point out discrepancies in Obama’s $787 economic stimulus package in 2009 as a precursor for what to expect with his new conception. Some have even labeled it a ‘bust.’ As of now, even the most optimistic of Obama supporters would concur it makes little sense to confute the critics. Why?
The U.S. unemployment rate sits at 9.2 percent, a figure that would be significantly higher if both the underemployed and those who have conceded rejection were included. By underemployed, we’re talking former full-time workers who have been inflicted with part-time hours and zero benefits. Also, a U.S. record 44.2 million Americans are currently receiving food stamps; a figure that’s expected to grow as new job creation remains stagnant, and has been for months.
The economic numbers are even more grim for African-Americans.
The black unemployment rate continues to marinate at a depression-like 16.1 percent, including 17 percent for black men, 13.8 percent for black women, and (gulp)… 39.9 percent for black teens. Just a few weeks ago, an estimated 5,000 unemployed souls braved the excessive dirty south heat to attend a job fair in Atlanta. Ninety companies were reportedly present as hundreds, perhaps thousands, camped out over night; wearing their best business suits and office heels.
Most of the job hopefuls spent hours waiting in line. And dozens more received medical treatment for heat exhaustion. To prevent a repeat occurrence, the expectation here is that the American Jobs Act will actually spur job growth. Then there’s the sensitive issue of education.
College graduates return home equipped with diplomas and high hopes. But, in reality, most are saddled with large student loan debt accompanied by rapidly shrinking job prospects. State budget cuts in the areas of public education continue to decimate urban communities nationwide where most school closings, mergers and scholastic extractions take place.
For instance, in Kansas City last year, former Superintendent John Covington contracted a U.S. record 26 public schools (most in the urban core) to help the district slice $68 million from its dwindling budget. As a byproduct, hundreds of teachers were either fired, laid off or reassigned.
Twelve months later, after Covington divorces Kansas City to serve in a similar role in Detroit, we learn his “right-sizing” project hasn’t fulfilled the academic goals many had anticipated. Today, the district’s accreditation remains in serious jeopardy of a state takeover.
Again, will the American Jobs Act work? Will the proposal protect education and keep teachers tenured as Obama profoundly announced on national television? Will college graduates receive a fair shake? Because, as of now, the aforementioned group is feeling nothing but melancholy, heartache and contempt. To say that a confidence boost is needed would be a vast understatement.
No excuses. The American Jobs Act simply has to work. ”We want them [Congress] to act now on this package,” said campaign strategist David Axelrod to ABC. “We are not in negotiation to break up the package. And it’s not an a la carte menu.” That’s right. An a la carte menu won’t do. For the economy to survive, a full entree and two sides are mandatory.
Wayne Hodges is the Editor-in-Chief of Mass Appeal News
It seems that in the last decade, there’s been a lot of bad news for the U.S. economy and just when things seemed to be getting better, they got worse. A new report by the U.S. Census Bureau reveals that the national poverty rate has risen to 15.1% which is the highest rate reported since 1983. That percentage roughly translates to 46.2 million Americans living below the poverty line.
Unemployment and the shrinking of the economy is the culprit for the stunning poverty levels. In addition, median income fell 2.3 percent between 2009-2010. As the cost of living is increasing, salaries are not keeping up. Nearly 50 million Americans lack health insurance, which includes freelancers and those with full-time jobs whose employers have cuts costs by cutting health insurance.
With many jobs going overseas and demands of the economy rapidly changing, it’s time for the American economy to embrace fruitful change.
Everybody knows that the unemployment rate today is 9.1%. Common knowledge is that, to create jobs and to reduce unemployment, the economy should begin to grow much faster than its current, anemic 1.3% rate.
But what are our expectations? How fast should the economy actually grow? These two questions embody several key considerations; including understanding how growth is computed in the context of inflation, what is potential growth, and how fast is too fast.
For the layperson who hears about China’s and India’s economies growing above the 9.0% and 8.0% rate, respectively, it is bothersome to hear that the U.S. economy is growing so slowly. Clearly, the U.S. economy should be able to grow faster.
The U.S. economy can grow faster. However, a key question to ask is how does one measure growth? There are two basic steps to measuring growth. First, one measures output (the value of all final goods and services produced in the economy) at current market prices. The second step is removing inflation. Removing inflation helps us identify increases in real output or the actual quantity of goods and services produced.
For example, if you are told that output increased to 110 this year from 100 last year, then what was the growth rate? An economist will tell you that it depends. If 10 items were produced at a price of 10 each last year and if 11 items were produced this year at a price of 10, then growth has been 10%. On the other hand, if this year the number of items produced remained at 10, but the price of each item rose by 10% to 11, then there has been no real growth. Essentially, to obtain real growth, we must subtract inflation from growth at market prices (i.e., nominal growth).
Now that we understand the relationship between real growth and inflation, we can now turn to potential growth. Recognize that growth at different economy sizes can be quite different. That is, 10% growth for an economy that has size 10 is only 1. However, 10% growth for an economy that has size 100 is 10. Therefore, it is easier to grow fast when you have a small economy than it is to grow rapidly when an economy is large.
In reference to China’s and India’s economy, China’s economy is valued in the $5-to-$6 trillion range. India’s economy is even smaller at about $1.5 trillion. The US economy, on the other hand, is nearly $15 trillion.
Many economists argue that the U.S. economy should be growing at about a 3.5% rate. Given our current inflation rate of about 3.0% based on the Consumer Price Index, the US economy must grow 6.5% at market prices in order to experience 3.5% real growth. Given a $15 trillion economy, that means the U.S. economy must add over $900 billion in new output at market prices to achieve about 3.5% real growth.
Looking at gross domestic product statistics from the U.S. Bureau of Economic Analysis, U.S. Department of Commerce, the U.S. economy has not produced this level of nominal growth at any point over the last 20 year. The nation’s largest growth year during this period in nominal terms was $769.7 billion (6.5%) in 2005. Inflation was 3.3% that year, so we experienced 3.1% real growth. Maybe we should not count on 3.5% growth.
In and of itself, growth is not always peaches and cream. If the economy begins to grow fast, inflation can arise. As output expands, there is upward price pressure on resources. Because we must subtract inflation when measuring real growth, a faster economy (at market prices) accompanied by a higher rate of inflation means that real growth may not accelerate so sharply.
Although we may have every reason to want the U.S. economy to grow faster to help reduce unemployment, and even though that expectation is fueled by fast growth in other economies, there are limits to how fast the U.S. can or should grow—at least as evidenced by growth rates over the past 20 years.
How fast should the economy grow? Like most other economists, my answer is, “As fast as possible without generating high inflation, because inflation is a genie that you don’t want to let out of the bottle.”
Dr. B.B. Robinson is an economist and director of BlackEconomics.org, a resource for economic concepts, issues and policies affecting African-Americans.
(Businessweek) — Is the American system of taxation nearing a watershed moment? It doesn’t seem like it, considering the political brawl in Washington over the soon-to-be-expired 2001 and 2003 tax cuts passed during the Bush era. Lawmakers have known for the past several years that, if they did nothing, the tax breaks would automatically end on Dec. 31, 2010. Now, Washington is scrambling as the deadline looms and the economy sputters.
(NYTimes.com) – The American economy appears to be in a cyclical recovery that is gaining strength. Firms have begun to hire and consumer spending seems to be accelerating.
That is what usually happens after particularly sharp recessions, so it is surprising that many commentators, whether economists or politicians, seem to doubt that such a thing could possibly be happening.
Usually you can depend on the White House to view the economy with the most rose-tinted glasses available. But it was not until last week, after a strong employment report, that President Obama started to sound a little optimistic.