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CEPR News July 2014

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Written by Dawn Lobell   
Friday, 01 August 2014 14:57

The following newsletter highlights CEPR's latest research, publications, events and much more.

CEPR on the Minimum Wage
To mark the fifth anniversary of the last increase in the minimum wage, CEPR released its Minimum-Wage Pay-Cut Clock that demonstrates how much, down to the second, minimum wage workers continue to lose as long as the wage remains frozen at its current level. CEPR’s Pay Cut Clock was featured in a press conference held by U.S. Senator Tom Harkin (D-IA), U.S. Representative George Miller (D-CA), and U.S. Senator Al Franken (D-MN) commemorating the anniversary.

CEPR Director of Domestic Policy Nicole Woo wrote this piece on the clock for The Hill, and it was mentioned in this article in the Kansas City StarCEPR Domestic Intern Ben Wolcott’s June 30th CEPR Blog post received a lot of attention in July. Ben’s post, which updates previous posts by former intern Jeffrey Gianattasio, showed that the thirteen states that increased their minimum wage at the beginning of 2014 had faster employment growth than the states where the minimum wage remained at its 2013 level.  The Associated Press picked up the post, and it was mentioned by NPRABC News, the New York Times’ editorial page editor’s blog, and even President Obama, who remarked: “And, by the way, since I first asked Congress to raise the minimum wage, 13 states have gone ahead and raised theirs -- and those states have seen higher job growth than the states that haven’t raised their minimum wage “

CEPR Senior Economist John Schmitt was quoted in numerous articles, including Time and USA Today:

 “It raises serious questions about the claims that a raise in the minimum wage is a jobs disaster,” said John Schmitt, a senior economist at the liberal Center for Economic and Policy Research. The job data “isn’t definitive,” he added, but is “probably a reasonable first cut at what’s going on.” 


CEPR on Argentina
After the Supreme Court decided not to hear Argentina’s appeal of a lower court ruling in favor of hold-out creditors (“vulture funds”) who are demanding they be paid in full, CEPR has been widely-cited in the media on the topic. Mark Weisbrot did this TV interview (in English with Spanish subtitles) for INFOnews’ Channel 23 in Argentina, this interview with Argentine paper BAE, and was cited in this article in Toronto’s Globe and Mail. He also wrotecommentary (PDF) for the Inter-American Dialogue’s Latin America Advisor, while Dean Baker wrote this op-ed for Al Jazeera America. CEPR Senior Associate for International Policy Alex Main wrote this post noting that the U.S. was on its own (once again) at an Organization of American States meeting on Argentina’s sovereign debt. On July 31, Mark, Dean and other CEPR economists were among over 100 economists who sent a letter to Congress warning of the threats posed “to the international financial system, as well as to U.S. economic interests, Argentina, and fifteen years of U.S. bi-partisan debt relief policy” by the court decisions. Read CEPR’s press release on the letter here. 

CEPR on “Cheap Talk at the Fed”
This article in the New York Times gave CEPR Co-director Dean Baker some long overdue props. The article, by Neil Irwin, was about Federal Reserve Chair Janet Yellen’s statement on the stock market, which described her view that while the market overall is reasonably priced in line with historical experience, current valuations of certain stocks and bonds are excessive, especially social media and biotechnology stocks. Irwin compared these statements to the vague comments by Alan Greenspan in the run up to the bursting of the stock bubble in 2000 and the housing bubble in 2007, and he asked whether government officials should be making statements about the market and outlines the various options available to the Fed to spur growth. One option, as he writes, is something that Dean has been saying for 15 years:

   “And another is to use “open mouth policy” (as opposed to the usual “open market policy”), jawboning markets to try to rein in excesses that might create risks. It’s not an outlandish idea. An economist, Dean Baker, has argued that if Mr. Greenspan had made full-throated, public arguments that there was a housing bubble in 2004 and 2005, it might have led to fewer people stretching to buy a home and less damage when the bubble eventually popped.”

Dean wrote this op-ed on “cheap talk at the Fed” for Truthout, he wrote a piece for Fortune asking “Did Janet Yellen Slay the Tech Bubble Dragon?” and he penned this post for Beat the Press on central banks and the battle against bubbles. Dean’s views were also mentioned in this piece from the Washington Post’s Wonkblog.

CEPR on the BRICS
CEPR Co-director Mark Weisbrot wrote this op-ed for Al Jazeera America on the decision by the BRICS countries (Brazil, Russia, India, China and South Africa) to form two new institutions, independent of Washington: the Contingent Reserve Arrangement (CRA) – a fund - and the New Development Bank (NDB). “The BRICS’ defection is part of a process that has been taking place over the past 15 years, in which middle-income countries have accumulated sufficient reserves to vote with their feet and break out of the IMF’s orbit. Although most economists and most of the major media have ignored it, the IMF’s loss of influence over economic policy in most middle-income countries is one of the most important developments in the international financial system in the past half-century” wrote Mark.

Mark discussed the new BRICS institutions in this interview with CCTV America, this one for CCTV’s Biz Asia and this one for Sojourner Truth. He was also quoted in this Wall Street Journal articlethis one from Inter Press Service, and this one from AFP (Spanish). Mark’s analysis was also cited in a Público op-ed by Vicente Navarro, this article from La Voz de Galicia, and another one from Colombia’s La República

CEPR on Stimulus and Fiscal Consolidation
CEPR released a paper by Dean Baker and CEPR Economist David Rosnick that looks at the evidence on the effects of stimulus packages and fiscal consolidation during a severe economic slump, such as the recent economic crisis. The first part deals with the most important literature on the subject; the consensus in the research of the past decade attests a clear counter-cyclical effect of stimulus packages during a prolonged recession. The second part deals with the impact of both changes in government consumption and investment to growth. 

CEPR on the Central American Refugee Situation
CEPR has been cited in the media and our analysis sought by policy makers ever since the thousands of children and other refugees fleeing Honduras, Guatemala and El Salvador became a major news story. CEPR’s past work on the spiraling violence and economic downturn in Honduras have provided important context in explaining some of the factors pushing people to flee for the U.S. and other countries. Alexander Main discussed these themes at a Hill briefing on July 30 organized by the AFL-CIO, and expands on them in this new article for Dissent Magazine. Alex has also done numerous media interviews on the topic, including this one with “Background Briefing” with Ian Masters, this one with “Worldview” (WBEZ, the Chicago NPR station), thisTV interview with “Breaking the Set” (RT), and this one with KPFK’s “Sojourner Truth.” International Communications Director Dan Beeton was cited in this article in La Opinión, the largest circulation Spanish-language newspaper in the U.S.CEPR’s work on Honduras was also cited in this Huffington Post piece by scholar Dana Frank, this commentary piece by cartoonist and writer Ted Rall, and this Al Jazeera America op-ed by human rights attorney Lauren Carasik.

CEPR on Haiti
The U.S. Congress has passed the Assessing Progress in Haiti Act, introduced by Rep. Barbara Lee (D-CA) in the House, and Bill Nelson (D-FL) in the Senate, which will address some of the significant problems with the lack of transparency and accountability in U.S. contracting for aid and relief work in Haiti -- something that CEPR’s Haiti blog has advocated since its inception. The bill will go next to President Obama to be signed into law. Mark Weisbrot and Research Assistant (and Haiti blogger) Jake Johnston applauded the bill’s passage in this press release, and in these two posts, CEPR’s “Haiti: Relief and Reconstruction Watch” blog examined what impact the bill is likely to have. Jake discussed the bill further in this interview with Reuters.

The Haiti blog also included this post on the international community’s continued support for Haiti’s controversial electoral process despite serious flaws, and this one on U.N. Secretary General Ban Ki-moon’s “photo-op” trip to Haiti this month, which offered much rhetoric but no real news in terms of funding and implementing the U.N.’s plan for eradicating the cholera epidemic that its troops introduced to Haiti in 2010, and which has now killed over 8,500 people and sickened over 700,000.

CEPR on Venezuela
CEPR continued to provide important analysis on the latest economic and political developments in Venezuela. Mark Weisbrot wrote this op-ed for Fortune on the positive effects that could result from Venezuela’s moves toward a unified exchange rate; a similar version was also published in Venezuela’s largest-circulation daily Últimas Noticias earlier in the month. As U.S.-Venezuela relations remained tense, CEPR weighed in with analysis in op-eds and blog posts. Mark commented in a Hill op-ed and a subsequent Americas Blog post on whether the U.S.’ failed effort to have Venezuela’s former military intelligence chief extradited reveals a split in the Obama administration’s Latin America policy. Mark was also cited in Miami Heraldand El País articles on the same topic. International Intern Peter Hayakawa meanwhile examined the U.S. double-standard on human rights in proposed sanctions on Venezuela in another blog post.

CEPR on the WTO
CEPR Director of International Programs Deborah James has been working to ensure a development-focused outcome of the current negotiations in the World Trade Organization (WTO). One of the most harmful of current WTO rules severely limits the subsidies that most developing (but not developed!) countries can provide to their small farmers, directly contradicting global efforts to promote food security. A majority of developing countries,supported by global civil society, has been working to change these rules, but have been blocked by the United States. At the December Ministerial of the WTO, members finally agreed to start to review the current rules, but developing countries had to pay a steep price: a binding agreement on “Trade Facilitation” that will benefit transnational shipping and logistics corporations. In her role facilitating the global civil society network, Our World Is Not for Sale (OWINFS), Deborah has been leading global civil society efforts, including organizing a recent letter to WTO members – supporting the countries fighting for a more fair outcome in the WTO – which garnered the endorsement of 259 groups from over 150 countries. She also published an article in Huffington Post that outlines civil society concerns and the state of play. The July 31 deadline passed with India (with more than 600 million poor farmers and consumers benefitting from their food security program) holding its ground and refused to give in to U.S. bullying.


The Latest From the CEPR Blogsosphere:

The CEPR Blog
CEPR Senior Economist Eileen Appelbaum wrote four posts for the CEPR Blog on the themes addressed in her recent bookPrivate Equity at Work: When Wall Street Manages Main StreetThis one notes that the private equity returns for CalPers may be good, but they’re not good enough. In this post, she states that it may not be PE’s image that’s the problem, while inthis one she notes that private equity firms are “making hay while the sun shines”. In this piece Eileen warns that PE’s excessive use of debt endangers main street firms and workers.

Dean penned this post on the June jobs numbers, and this one on Dodd-Frank and the subprime auto loan market. Here are Dean’s quick thoughts on the new CBO projections, and here he notes that House Republicans ignore unemployment to keep inflation low. In this post, Ben Wolcott questioned the targets that Jason Furman, the Chair of the Council of Economic Advisors, used to describe the progress of the labor market.

The Americas Blog: Analysis Beyond the Echo Chamber

CEPR Research Associate Stephan Lefebvre wrote this critique of the Peterson Institute for International Economics’ (PIIE) misleading statements in a paper on NAFTA.Stephan also wrote this widely-discussed post on Latin American leaders’ responses to Israel’s siege on Gaza, which itself became the focus of an article in the Latin Post. Following the decision by several countries to withdraw ambassadors from Israel, Stephan penned this update. In this post, CEPR Director of International Communications Dan Beeton asks “Does the US Have a Double Standard When it Comes to Spying on Latin America?”

Beat the Press
Dean’s post “It’s Another Monday and Robert Samuelson is Yelling About the Deficit” was cited in an op-ed in the New York Times by Paul Krugman, who writes, “You often find people talking about our economic difficulties as if they were complicated and mysterious, with no obvious solution. As the economist Dean Baker recently pointed out, nothing could be further from the truth. The basic story of what went wrong is, in fact, almost absurdly simple: We had an immense housing bubble, and, when the bubble burst, it left a huge hole in spending. Everything else is footnotes.”

Dean also noted that Samuelson gets part-time work seriously wrong whilehere he calls out Justin Wolfers’ false symmetry on unemployment benefits. In this post he has a question for Tom Friedman, and here he tells the Financial Times “enough magical thinking on trade”. He also says that theNew York Times gets the story of Argentina and the vulture funds badly wrong.

Dean had several words for the Washington Post this past month. Here he calls them out for  “frat boy budget reporting”, here he notes that they don’t miss lower unemployment and rising wages, while here he writes that the WaPo is “so protectionist it can’t even discuss free trade”. But Dean also gives credit where credit is due, here to Dana Milbank for putting budget numbers in context and here to NPR’s Morning Edition for getting it right on patents.

And the winner for best BTP headline of the month:
Get Me Another Bucketful of Economic Nonsense : The Rich Boys Want to Pass the Transatlantic Trade and Investment Partnership

Director Watch
CEPR’s Director Watch (and its sister site, the Huffington Post’s Pay Pals) brings to light the performance of the companies that directors help oversee and the paychecks they and their CEOs collect, giving the public a much-needed and deserved look at a buddy system that effectively victimizes shareholders and working people alike.


In other CEPR News…
--In this piece for the New York Times’ Room for Debate section, Mark answered the question “What Standards of Child Labor Should Apply in Developing Countries to End Child Labor” by stating that Washington must press companies to act.

--Eileen wrote this op-ed on the success of New Jersey’s paid family leave program for the state’s largest newspaper. She also penned this op-ed for The Hill on the fourth anniversary of Dodd-Frank.

--Paul Krugman linked to Dean in this op-ed on infrastructure spending.

--Dean was on All In With Chris Hayes talking about the June jobs numbers, and he discussed the sharing economy on the Diane Rehm Show. He alsodiscussed Obamacare with The Real News.


CEPR’s Graphic Economics
This month’s graph is from the CEPR Blog post "2014 Job Creation Faster in States that Raised the Minimum Wage".

wolcott-2014-06-30

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