Dean Baker's Prescriptions for Moving the Economy Forward: Work Share, Right to Rent, and the Financial Speculation Tax Dean Baker's work share concept, which would which would provide an employer tax credit for paid time off as a way to quickly boost demand in the economy, continues to gain attention as well as bi-partisan support. The Los Angles Times recently printed this op-ed, co-written by Dean and the American Enterprise Institute's Kevin Hassett, and the Miami Herald also ran the piece. On April 27, 2010, Baker and Hassett are slated to discuss work share with the House Democratic Caucus.
Congressman Raúl Grijalva (D-AZ) and Congresswoman Marcy Kaptur (D-OH) introduced legislation on April 15, 2010 to create a "Right to Rent" for homeowners facing foreclosure. The bill allows a family to petition a judge to stay in their home as renters under a 5-year lease. Dean Baker conceived of the right to rent concept several years ago, and has been promoting the plan as a viable solution to the foreclosure crisis ever since. He recently discussed the right to rent option in his testimony before the House Subcommittee on Housing and Community Opportunity on the Obama administration's Homeowner Affordability Modification Program (HAMP).
Dean Baker was part of a panel that included Wall Street and economic experts, labor leaders, and consumer, development and global health advocates who called on President Obama and Treasury Secretary Timothy Geithner to embrace this tax and on Congress to move swiftly to enact it. The groups held a press conference on April 15, 2010 to push for a Financial Speculation Tax. Baker has been vocal in calling for support of the FST, recently pointing out that it "would go a long way towards addressing future budget shortfalls and it would raise money from people who can afford it: the Wall Street crew whose financial shenanigans led to the meltdown."
Haiti CEPR continues to monitor the situation in Haiti through the Haiti: Relief and Reconstruction Watchblog. CEPR also released a paper that proposes that international donors seeking to support Haiti's agricultural sector and provide food to those in need could help Haiti become more self-sufficient by purchasing the entire Haitian rice crop over the next two years. The paper finds that buying up all of Haiti's rice should be close to the amount of food aid for rice that the international community is likely to provide this year, and would provide a tremendous boost to Haitian farmers, who currently are unable to compete with low-cost rice imports from the U.S.
CEPR VS the Wall Street Deficit Hawks
CEPR has been fighting the scare tactics of the Wall St deficit hawks for ten years now. It wasn't enough that the people who missed the housing bubble are still in power - now they want to come after Social Security. At a time when we should be focusing on job creation and stimulus to get the wrecked economy moving, the deficit hawks are trying to scare the public with untruths. As Dean Baker says here "the scary budget stories being hyped in the media and by the Wall Street crew are driven almost entirely by projections of exploding health care costs. But instead of proposing ways to fix the health care system, these deficit hawks want to attack Social Security." Dean also takes on the deficit hawks here and here.
CEPR joined forces with the Campaign for America's Future to oppose Wall St mogul Pete Peterson's program, "I.O.USA: America's Money Crisis" that aired on CNN over the weekend of April 10th. The call went out for progressives to pressure CNN to cancel this program or make it more balanced by including progressive solutions for addressing the budget deficit. Watch Dean and CAF's Roger Hickey discuss the program here.
New Releases: Capital Controls
CEPR's latest paper, "Capital Controls and Monetary Policy in Developing Countries", looks at both the theoretical and empirical literature on capital controls and finds that capital controls can play an important role in developing countries by helping to insulate them from some of the harmful effects of volatile and short-term capital flows. CEPR Co-Director Mark Weisbrot will debate the IMF on the topic of Capital Controls on April 23 - see below for more information.
Catch CEPR Co-Directors Live and In-Person On April 22, 2010, Mark Weisbrot will participate in a panel discussion on Special Drawing Rights for Climate Finance. The event, sponsored by Action Aid and the Nature Conservancy, will be held at the World Bank as part of the Spring Meetings Civil Society Forum. Click here for more information.
On April 23, 2010, Mark will join Reza Baqir, deputy chief in the International Monetary Fund's Strategy, Policy, and Review Department in a discussion of capital controls. The event will be held at the World Bank as part of the Spring Meetings Civil Society Forum. Click here for more details.
Later that same day, Mark will take part in a discussion with Luis Arce, the Republic of Bolivia's Minister of Finance, on the country's economic growth over the last four years. The event, titled "Bolivia's Economic Success Story: Making the Economy Work for the Bolivian People", will be held at 2:30PM at George Washington University's Elliott School of International Affairs in Washington, DC. Click here for more information.
On April 24, 2010, Dean Baker will discuss themes from his book False Profits: Recovering from the Bubble Economy at the Chazen Art Museum Auditorium on the University of Wisconsin campus in Madison, WI. The event, titled "The Origins of the Economic Crisis and the Way Out", is free and open to the public, and is sponsored by The Madison Institute. Details can be found here.
On April 26th, Dean will travel to Ottowa, Canada to participate in a parliamentary roundtable discussion on the G8/G20 agendas regarding the financial crisis, organized by Canadian civil society.
And on April 29th at 5:15PM, Dean will present a talk titled "The Second Great Depression: How Dumb Can We Be?" At Sarah Lawrence College in Bronxville, NY. The event is open to the public - click here for more details.
New Features on CEPR's Website!
Beat the Press After a successful run on the American Prospect's website, Dean Baker's blog on economic reporting can now be found here, on CEPR's website. You can also become a fan of Beat the Press on Facebook.
A Revived CEPR Blog CEPR economists will soon take turns blogging about the important economic issues of the day. Check out what they have to say here starting April 26th.
For Dean Baker's newest book: Taking Economic Seriously. The book, which is scheduled to be released by the MIT Press on April 30, 2010, provides an "an alternative Econ 101."
The most recent available data (2008) show that 46.3 million people in the United States had no health insurance. Adults between 18 and 64 are by far the largest group of uninsured (38.3 million in 2008). Children are the next largest group of the uninsured (7.3 million). Thanks primarily to Medicare, only a small share of the uninsured are 65 or older (0.6 million). Most uninsured adults are workers. Over 23 million workers 18 to 64 have no health insurance from any source, compared to about 15 million non-working adults in the same age range. A large majority of the working adults (14.7 million) are “full-time, full-year” (that is, worked at least 50 weeks in the year, for at least 35 hours per week).
CEPR contributed a key graph to the report. As the PSN writes:
"Public Employee Unions are Not Driving Underfunding of Retiree Benefits: Part of the rhetoric around high-paid retirees and the supposed public pension crisis is blaming public employee unions for pushing states into fiscal crisis. Yet as the graph below indicates, courtesy of the Center for Economic and Policy Research, there is zero correlation between the degree of state employee unionization and how well funded state plans are. In fact, New York state has the highest unionization rate in the country and the highest funding level compared to its liability of any state, while other high unionization states like Connecticut and Rhode Island share honors with low-unionization states like Kansas and Louisiana for falling somewhat below the 80% goal for pre-funding retiree obligations. What's clear is that budgetary factors quite unrelated to the level of public employee unionization are the main factors in how well states pre-fund their pension obligations."
Well, why not? We've been trying to think of some new and creative ways to support all the good work that CEPR's been doing over the past few months, and since Sarah Palin's been in the news lately, we thought that maybe she'd lend a hand…
OK, not really. But CEPR has been working hard to address the many serious issues facing all of us - from the continuing foreclosure crisis to the unacceptable unemployment rate to the devastating situation in Haiti - and we do need the support of all of our friends so that we will be able to continue that good work.
We know that you are stretched thin. We all are. But we ask that you lend us a hand, so that we can continue to inject data and logic into policy debates. Unlike our elected officials, we don't accept any funding from corporations, government agencies or unions. CEPR has always gone rogue, and we hope to continue for years to come. We ask that you help us to keep up the fight.
Dean Baker Writes the Washington Post’s Obituary Dean Baker was the first to notice that a Washington Post article on the budget deficit came from the Fiscal Times, a newly-formed “news service” funded by billionaire Peter G. Peterson, who has been using his vast fortune to try to cut back and/or privatize Social Security and Medicare for the last two decades. As Baker noted in his blog “Beat the Press,” the Post’s New Year’s Eve article conveyed Peterson's budget fear-mongering view, but did not mention Peterson’s funding of the Fiscal Times and the main sources cited in the article. Baker’s discovery was picked up by other blogs, and the issue was highlighted in a New York Times piece that was published on January 5th. Baker co-signed a letter sent to the Post’s Ombudsman protesting the article, and another letter to the Chairman of the Post. After the Ombudsman printed this disappointing reply, Baker fired off another critique.
As the Senate is set to vote on a fast-track commission on the budget deficit next week, this scrutiny of Pete Peterson’s agenda and his ties to the Fiscal Times could not come at a better time. Dean Baker’s New Book is now Available! Dean Baker’s new book, False Profits: Recovering From the Bubble Economy is officially released today! In this sequel to Plunder and Blunder: The Rise and Fall of the Bubble Economy, Baker recounts the causes of the economic meltdown, outlines how policymakers failed to recognize the warning signs, and offers a thoughtful progressive program for rebuilding the economy and reforming the financial system. The book is available here.
And if you’re in Washington DC on January 28th, please join Dean Baker at 6:30pm for a book talk at Busboys and Poets, 2021 14th St. NW, Washington, DC 20009 (202) 387-POET (7638). For more details about this free event, click here.
CEPR’s Response to the Earthquake in Haiti In the wake of the devastating earthquake that hit Haiti, CEPR has responded by working with other organizations - such as Jubilee USA and the Institute for Justice and Democracy in Haiti - to promote the use of grants, rather than loans, from international financial institutions’ assistance to Haiti. This was prompted by news that the International Monetary Fund would require Haiti to pay back its $100 million in assistance money. CEPR staff also raised the question of why the Obama administration has not yet provided Temporary Protective Status to Haitians in the U.S., as currently there are 30,000 Haitians awaiting deportation; and CEPR has worked to put experts, independent journalists, and relief workers in contact with major media outlets. CEPR staff will lead a workshop on Haiti at a conference on January 25, 2009 organized by TransAfrica Forum. Participants will include Congressional staff and other policy makers.
Support for a Financial Speculation Tax Grows Support continues to build for a financial speculation tax (FST). Dean Baker was one of 200 economists, including Nobel Laureate Daniel McFadden, James K. Galbraith, who signed a letter in support of the FST. Representative Peter DeFazio (D-OR) and Senator Tom Harkin (D-IA) have introduced bills calling for the adoption of an FST. Dean Baker continues to point out the benefits of the FST, responding to criticism here and offering it as a viable solution to address the deficit in an interview on NPR’s Morning Edition. And just today, Steven Pearlstein of the Washington Postendorsed the FST.
Mark Weisbrot in Latvia CEPR Co-Director Mark Weisbrot just returned from Latvia, where he presented on the serious challenges facing Latvia's economy due to its overvalued currency, which is pegged to the Euro. Swedish, Austrian, and other European banks have put enormous pressure on Latvia to maintain the peg through the European Union, even though this is contributing to Latvia's worst-ever recession, and the IMF is also supporting this policy. Weisbrot's presentation immediately followed remarks by the Latvian Prime Minister, who attended the event along with most of the cabinet. While he was there, Weisbrot also had several meetings with other top policy makers and economists, and his visit was a top news story on all the major Latvian media and was covered by international media outlets as well. Weisbrot’s new column for The Guardian examines Latvia's economic problems in detail.
In Case You Missed It… CEPR’s 10th Anniversary webcast is now available in seven (briefly annotated) parts. Originally broadcast in September of 2009 and moderated by Jane Hamsher of firedoglake, the webcast features CEPR CO-Directors Dean Baker and Mark Weisbrot in a wide-ranging discussion of CEPR’s past, present and future.
Once again, we’d like to extend our sincere appreciation to everyone who made this possible. To all of our friends, many thanks for your financial and moral support over the past ten years – we couldn’t have done it without you. We look forward to another ten years of setting the record straight…stay tuned!
Dear Friends of CEPR, I have a new book out this month: False Profits: Recovering from the Bubble Economy. I felt the need to write this book because, remarkably, the people who somehow could not see an $8 trillion housing bubble still could not understand the bubble even after it wrecked the economy. It was as though their house had burnt down in a fire and they were checking on the burglar alarm.
There is not a lot of mystery as to the source of the current problems. First and foremost, the country's top regulators, Alan Greenspan and Ben Bernanke, were incredibly incompetent in allowing the bubble to grow unchecked. This bubble drove the economy ever since the last recession. Predictably, high house prices led to an enormous construction boom. Soaring home equity also led to a massive consumption boom as people spent based on the newly created wealth in their homes.
In its later years, the bubble was further inflated through complex financial engineering and, in some cases, outright fraud by the financial industry. While it would be desirable to have a better regulatory structure and it is important to fully prosecute the high level bankers who violated the law, this should not obscure the fact that the basic problem was very simple: the Fed committed one of the biggest policy blunders of all-time by allowing the bubble to expand unchecked.
At this point, we have to push for the measures that will best help us recover from the disaster that Greenspan/Bernanke created. At the top of the list is getting people back to work. Second, we have to help the homeowners who got caught up in the bubble. Finally, we have to rein in our bloated financial sector. There are other simple policy solutions to what, in many cases, are actually simple problems. But there is a whole industry of professional lobbyists, many of them economists, whose job is to make simple problems appear complicated.
False Profits, like my other writing, is an effort to assure people that the problems and solutions really are simple. That may put me at odds with many of the leading names in the economics profession. But, when it came to the bubble, most of them were wrong. I hope False Profits will help them better understand what caused, and how to cure, the current crisis. And I hope you'll find it a worthwhile read also.
This past year has been a special one for the Center for Economic and Policy Research. CEPR was founded in 1999, so 2009 marked our 10th anniversary. Over the course of the year, we’ve had some time to reflect on how far we’ve come, and how much we’ve accomplished.
From our humble beginnings just ten years ago, CEPR has grown into a force to be reckoned with. Fairness and Accuracy in Reporting (FAIR) named us the 15th most-cited think tank in the US in their annual study – up from #25 just last year. We’ve been cited over 7,750 times in various media so far this year – an increase of 1,100 over all of last year. We know that we couldn’t have survived - let alone thrived - without the help of friends like you: the thousands of people who believe in our mission, who help to spread CEPR’s message, and who support us financially.
We are most grateful for that support, for it has enabled us to consistently "speak truth to power"…Or, as the editors of The Guardian (UK) put it:
“Set up in 1999 with a total budget smaller than some other thinktanks' entertainment funds, CEPR has been a professional thorn in the side of orthodoxy…In a world of Goliaths, CEPR makes a rather effective David.”
We are proud of the fact that we have accomplished so much given our small size and lean budget, and given our influence-free funding structure. Throughout our 10-year history, we have relied solely on the financial support of foundations and individuals. We take no corporate funding, no union funding, and no government funding. In these times of revolving door lobbying and billion dollar bank bailouts, we steadfastly maintain our independence. And CEPR was the most cost-effective think tank in 2008 measured by media citations and web traffic, ranking first in media citations per budget dollar for the fifth consecutive year, and first in web traffic per budget dollar for the second consecutive year. In other words, we aced our own “stress test”.
As the end of our 10-year anniversary celebration draws near, we ask that you please help us to continue our fight into the next decade and beyond. We’ve had many successes over the course of the past year, but there is still much more to do. The recession drags on both here and abroad. Too many people are still unemployed and at risk of losing their homes. The “Washington Consensus” still influences much of our foreign policy. We need your financial and moral support – now, perhaps more than ever. We still have many more battles to fight. And we are committed to using your gift wisely and effectively.
From all of us at CEPR, best wishes for a safe and healthy holiday season, and a happy New Year.
University of Chicago economist Casey Mulligan has a post today at the New York Times Economix blog where he seems to argue that the current push for statutory paid sick days in the United States is ignoring the role of economic incentives. According to Mulligan, workers in countries with generous paid sick day policies stay home because of "incentives, and not the flu".
I don't think Mulligan has been following the U.S. debate on paid sick days very closely. The U.S. debate is very serious about incentives. The current system --which does not require employers to provide paid sick days and leaves upwards of 50 million workers without paid sick days-- gives strong incentives to workers to go to work sick, lowering productivity and potentially spreading illness.
Of course, offering paid sick days also gives workers incentives to take time off when they are not sick. But, there is nothing in Mulligan's post that says where we should set the optimal level. He doesn't even make a case that the most generous systems in Europe are too generous, just that they lead to more sickness absences in some cases. For all we know, after we factor in the cost of contagious diseases, the most generous European systems might still be too stingy.
To make his point about the effect of incentives, Mulligan features the following graph from a recent IMF paper:
Mulligan, however, has made very selective use of the original IMF graph:
In the original, Denmark, Germany, and seven other countries with more generous statutory paid sick days policies all have lower sickness absence rates than the United States. A really interesting question is: how is it that these countries are able to provide both guaranteed paid sick days and lower sickness absence rates? (And why didn't Mulligan include these countries in his graph?)
In honor of our 10th Anniversary, CEPR hosted a two-hour live webcast. CEPR Co-Directors Dean Baker and Mark Weisbrot were on hand to answer questions from viewers, and Jane Hamsher of firedoglake was the special guest moderator. Dim lights
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CEPR Co-Director, Mark Weisbrot has written numerous columns, analyzing the aftermath of the coup in Honduras, and in which he questions the Obama Administration's commitment to restoring democracy in Honduras.
As the IMF and World Bank prepare to meet this weekend, CEPR's released a paper that shows that the International Monetary Fund (IMF) is still prescribing inappropriate policies that could unnecessarily worsen economic downturns in a number of countries.
CEPR Co-Director Dean Baker was on the Diane Rehm Show, with Jared Bernstein (Chief Economist and Economic Policy Adviser for Vice President Biden and Executive Director of the Vice President's Middle Class Task Force), Deborah Solomon (reporter for The Wall Street Journal) and, Vincent Reinhart (resident scholar at the American Enterprise Institute).
A new report from CEPR shows that unionization significantly boosts the wages of service-sector workers. The report, which was written by CEPR Senior Economist, John Schmittshows that unionization significantly boosts the wages of service-sector workers. Specifically, the report finds that unionization raises the wages of the average service-sector worker by 10.1 percent, which translates to about $2.00 per hour. This report is the latest in a series of reports produced by John Schmitt on the advantages of unionization for lower-wage workers and other groups.
CEPR Co-Director, Dean Baker appeared on GRIT TV with Laura Flanders to discuss the G-20 summit, together with Ann Lee, professor of economics at New York University and visiting professor at Peking University in Beijing, and Greg Denier, Communications Director of Change to Win.
CEPR Senior Research Associate, Ha-Joon Chang was on Democracy Now! with Amy Goodman, where he discussed his book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. Ha-Joon Chang, is an economist at the University of Cambridge specializing in developmental economics. In 2005, he was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought. He is also the author of Kicking Away the Ladder: Development Strategy in Historical Perspective. The interview begins around the 15:00 minute mark.
Sean Hannity asserted that the economic stimulus bill would amount to spending at least $217,000 for every job created, echoing a false calculation from a press release issued by the Republicans on the House Appropriations Committee and repeated by numerous media figures. In fact, by calculating the per-job cost by dividing the estimated total cost of the stimulus package by the estimated number of jobs created — and thus suggesting that the sole purpose of that package is to create jobs — these media figures ignored other tangible benefits stemming from the package, such as infrastructure improvements and education, health, and public safety investments.
One of the little-noticed but most important international responses to the current world recession is the reassertion of power by the International Monetary Fund, which ten years ago was the most powerful financial institution in the world. The IMF answers mainly to the U.S. Treasury Department, although it is ostensibly a 185-country member organization.
The Treasury Department is using the IMF the same way it did ten years ago, during the last major financial crisis, in East Asia. Treasury is trying to re-establish the IMF’s former pre-eminent position as gatekeeper to any rescue funds. This would enable the IMF/Treasury to choose which developing countries get loans and what conditions are attached to the lending.
The IMF played a disastrous role in the Asian crisis, which is one of the reasons that its portfolio shrank to almost nothing over the last decade, and any country that could, avoided them like the plague. Now they are back, unreformed and unreconstructed. Despite the G20 meeting’s lip service to making some developing countries partners in international financial reform, the idea of giving them any more representation in the IMF’s decision-making is decidedly off the agenda. China, the world’s second-largest economy with 1.3 billion people, has just 3.6 percent of the vote in the IMF; the United States has 16.5 percent. But since Europe and Japan virtually always side with the United States, the developing countries are effectively without a voice.
While the IMF wants the rich countries to adopt large stimulus packages and lower interest rates to counter the world recession, it is requiring its borrowers — so far Iceland, Hungary, Ukraine, and Pakistan — to do the opposite. Perhaps even worse, some countries will need to adopt capital controls, to prevent damage from money fleeing the country; the IMF will use its muscle to prevent that. Washington and the U.K. are trying to get the countries with surplus reserves — mostly China and the Gulf states – to pitch in to the IMF. So far, only Japan is willing to do so. Hopefully, the developing countries that have excess international reserves and want to help those who need them will find other ways to channel the money.
As world leaders gather in Washington this weekend for a summit to address the global economic crisis, the International Monetary Fund is being touted as a "financial firefighter." However, the IMF's track record of the last 30 years casts serious doubts on that institution's ability to contain the financial meltdown. Rather than dousing flames, the IMF's prescriptions have often poured gasoline on economic fires in emerging nations, crippling long-term development. Should the IMF be designated as the lender of last resort, it must overhaul the structural adjustment policies that prevent many nations from providing basic services for their people. CEPR Co-Director Mark Weisbrot joined Robert Weissman, Director of Essential Action, in a call with reporters that was moderated by Joanne Carter, Executive Director, RESULTS Educational Fund. To listen to a recording of the call, dial 719-457-0820, and enter passcode 4097561. A transcript is available on the RESULTS site.