CEPR Update: May 2007
Inclusion · New Expertise
Housing Bubble · SIPP
· Book Talks · Work/Family Policies
Bridging the Gaps · Economic Inequality · Social Exclusion ·
and Retirement Security ·
Continued Growth Failure · Spring Meetings/Events ·
Bolivia · Debt Relief
· Trade Gains & Losses · CEPR's Influence
CEPR in Spain ·
This spring, CEPR announced a special partnership with Inclusion, a new think tank dedicated to advancing a progressive long-term vision for producing a fairer, more sustainable world — which means improving wages, job quality, benefits, and opportunities for workers.
Inclusion spreads its work through policy papers, research, op-eds and a blog. Inclusion co-founders Shawn Fremstad, Rachel Gragg and Margy Waller have, between them, worked for the White House Domestic Policy Council in the Clinton Administration, Senator Paul Wellstone, the Center on Budget and Policy Priorities, the Brookings Institution and the Center for Community Change.
In March, Inclusion released its first paper with CEPR, Understanding Low-Wage Work in the United States, co-authored by Heather Boushey, Shawn Fremstad, Rachel Gragg, and Margy Waller.
In addition, Margy Waller and Shawn Fremstad have recently co-authored three op-eds on low-wage issues (published in the Philadelphia Daily News, Policy Innovations and AlterNet).
CEPR is pleased to welcome a new Senior Research Associate, economist Roberto Frenkel. He is Principal Research Associate at the State and Society Research Center (Centro de Estudios de Estado y Sociedad—CEDES) and Professor at the University of Buenos Aires (Universidad de Buenos Aires) in Buenos Aires, Argentina.
In February, CEPR released his article, Argentina: The Central Bank in the Foreign Exchange Market. The original article (in Spanish) was published in La Nación on December 31, 2006. CEPR released a second paper written by Frenkel in April: Argentina’s Monetary and Exchange Rate Policies after the Convertibility Regime Collapse. For more information on Roberto Frenkel, see his biography or his full CV (in Spanish).
This year, CEPR’s warnings about the housing bubble have unfortunately become reality. With vacancy rates on the rise, story after story of foreclosure, and dropping real house prices, many mainstream economists are now recognizing what Co-Director Dean Baker has been pointing out for a long time: that recent price increases in the national real estate market are unsustainable in the long run.
Since December, Dean Baker and Mark Weisbrot have both appeared on CNBC Evening News, and Dean has made several appearances on CNBC’s Kudlow & Company, to discuss the housing bubble. In addition, Dean has also written several op-eds about the housing bubble for his weekly column on Truthout, in addition to a recent column for the Washington Post online.
Dean has discussed the effects of the housing bubble at numerous conferences, such as the 23rd Annual Washington Economic Policy Conference, hosted by the National Association for Business Economics and the Association for University Business and Economic Research in March.
In February, CEPR released an updated version of Dean’s July 2006 paper on the housing bubble,
2007 Housing Bubble Update: 10 Economic Indicators to Watch, which continues to garner many hits on our website. In addition, we have been cited in articles in nearly every leading paper, including the Wall Street Journal, New York Times, Washington Post, USA Today, and Newsweek.
After a year of drafting letters and organizing researchers to oppose the elimination of the Census Bureau's Survey of Income and Program Participation (SIPP), we are pleased that Congress has fully funded the SIPP for another year. Unfortunately, the President’s FY08 budget again called for the elimination of the survey. This time around, researchers are already familiar with the drill and are ready to fight to preserve this important data set. More on the SIPP can be found at the ceprDATA website.
Dean Baker’s newest book, The United States Since 1980, was released in March by Cambridge University Press. The book details the sharp right turn that the United States has taken since President Reagan took office, and explains how this path is at odds with most of the rest of the world and is not sustainable in the long run.
In February, Dean Baker discussed his 2006 book, The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, at the Modern Times Bookstore in San Francisco.
Dean will be back in California later in May for two separate book talks on each of his books. Details will be posted on our website.
A special issue of The American Prospect (March 2007) opened with an article by Senior Economist Heather Boushey. Values Begin at Home, but Who's Home? examines the compounded expenses and needs of families as they move from a one-breadwinner, one-full-time parent household to a two-breadwinner, no full-time parent situation. The special issue, entitled Motherload, was devoted to examining obstacles that working families encounter as they try to balance work and family, especially in relation to inflexibility in the majority of U.S. workplaces.
In February, Heather Boushey moderated a panel on class and work/family issues at a Barnard College conference, The Work/Family Dilemma: A Better Balance. The event featured a variety of speakers discussing low-income working women, the difficulties they face in supporting their families, and future policy proposals.
This year, CEPR’s research has been presented twice to Congressional committees: in January, CEPR advisory board member Eileen Appelbaum, Director of the Center for Women and Work at Rutgers University, testified in before the Senate Committee on Health, Education, Labor and Pensions in January, to discuss Economic Security and Opportunity for Working Families. In April, Heather Boushey testified before the House Committee on Education and Labor about the gender wage gap. Briefings such as these continue to spread CEPR’s research on work/family issues.
Bridging the Gaps
One major initiative of the work-life team is Bridging the Gaps, now entering its third and final year. This collaborative project looks at whether combined earnings and public benefits are sufficient for families trying to make ends meet in nine states and the District of Columbia. The partner states are Illinois, Iowa, Massachusetts, Minnesota, New York, North Carolina, Ohio, Texas, Washington and the District of Columbia. Ultimately, the project's goal is to document the gaps in social programs and propose realistic policy solutions at the state and federal levels.
Since December, Bridging the Gaps team members have traveled to New York, North Carolina, Ohio, and Washington state to meet with local partners and review state-by-state research findings. Each state group will release their individual state findings this summer through reports, press releases or other materials.
Illinois was the first partner to release state findings; the Chicago-based organization Heartland Alliance released its 2007 Report on Illinois Poverty in February. The report describes income gains for poor and middle-income Illinois families, and includes the number of people eligible but not receiving food stamps, housing support and TANF: numbers that are entirely based on our BTG findings. In late August, CEPR will release a report analyzing trends across the nine states and the District of Columbia. On October 18, CEPR will host a conference in Washington, DC, where our state partners and policymakers will discuss the project’s findings and proposed policy solutions.
In addition, Heather Boushey participated in the
Allied Social Sciences Association (ASSA) conference in Chicago, joining Randy Albelda from the University of
Massachusetts-Boston to present the initial findings of the Bridging the Gaps
project: Bridging the Gaps: Can Single Mothers Package Earnings and
Government Benefits to Make Ends Meet? Heather's second talk, The
Wage-Curve: Cognitive Ability, Schooling, Race, Unemployment Probabilities and the
Black-White Wage Gap, was presented with William M. Rodgers, III from
Rutgers University and William E. Spriggs from Howard University.
As domestic policies continue to exacerbate inequality within the United States, CEPR’s research on the true state of the economy is becoming more and more important. Earlier this month, CEPR released a paper,
The Productivity to Paycheck Gap: What the Data Show, by Dean Baker. It explored the growing gap between increases in productivity, with real wage growth and pointed out that much of this gap is due to some technical issues, such as the growing share of output that goes to replace depreciated capital equipment. While this means that there has not been as much redistribution away from typical workers as many believe, it also means that “usable productivity” has been growing much less rapidly than is generally recognized. If “usable productivity” had grown at the same rate in the post-1973 era as it did in the years from 1947-73, then potential compensation per hour would be 80 percent larger today.
In addition, Dean’s new book, The United States Since 1980 (Cambridge University Press), details the sharp increase in inequality over the last quarter-century. Dean summarized his main points in an article published in the Post-Autistic Economics Review, published in December: Increasing Inequality in the United States.
Senior Economist John Schmitt has been doing a substantial amount of research on social exclusion (the extent to which individuals are marginalized as a result of low-income or other factors), specifically by comparing the level of social exclusion in the United States with other developed economies in Europe.
Is the U.S. a Good Model for Reducing Social Exclusion in Europe?, will be translated into Spanish and published in an upcoming conference volume from the Fifth Encounter conference (held in Spain in June 2006). The paper was presented to an audience of over 100 seminar participants. In addition, it appeared in the International Journal of Health Services, and the Post-Autistic Economics Review.
Health Policy and Medicare
The current state of health care in the U.S. has given CEPR many opportunities to comment on our health care system. Since December, we have written two reports and more than a half a dozen op-ed pieces on different aspects of health care policy.
We have focused much of our work on the Medicare Drug Benefit, which went into effect early last year. CEPR’s March report, Celebrating Pork: The Dubious Success of the Medicare Drug Benefit by Dean Baker, details the problems with the drug benefit, most of which were written into the original legislation.
In April, Dean presented the findings from this report on a press conference call about Congressional efforts to allow Medicare to negotiate for better drug prices. Senator Debbie Stabenow (D-MI) also participated in the call, which was organized by the Campaign for America’s Future. This resulted in widespread media coverage for CEPR's analysis, including our conclusion that Medicare could save $30 billion by negotiating drug prices directly with pharmaceutical companies.
High drug prices are usually justified as being necessary to spur research into the development of new drugs, however the drug industry has not been doing too well at this either. A second report,
Stagnation in the Drug Development Process: Are Patents the Problem?, also by Dean Baker, explores the ways in which patent protection might be contributing to the well documented stagnation in drug development.
In addition, CEPR economists have explored the health care proposals of presidential hopefuls, scandals in the drug industry, health care coverage of children under the SCHIP program, and the feasibility of expanding Medicare to all citizens. (All of these op-eds can be found on our Health Care page.)
With the collapse of the defined benefit pension system and weakness of individual savings, retirement security is becoming a more distant goal for tens of millions of workers. In December, Dean Baker authored a paper,
Universal Voluntary Accounts: A Step Towards Fixing the Retirement System, that explores the possibility of national or state-level voluntary retirement accounts, transferable from job to job, to provide a simple retirement system that all Americans could buy into. Currently, several states are examining such a system on the state-level; Washington State has taken the lead with its legislature approving a measure to study the steps needed to implement such a program in the state.
John Schmitt and research assistant Ben Zipperer collaborated on two reports on the current state of unions in the United States. The first paper,
Dropping the Ax: Illegal Firings During Union Election Campaigns, found that union organizers had a one-in-five chance of being fired illegally during a unionization campaign.
This paper has had a huge impact in the debate over the Employee Free Choice Act which is currently being debated in Congress. The report was widely covered in the media, and resulted in nearly 20 separate news articles. Members of the NLRB (National Labor Relations Board) requested the report from us for review. In addition, the paper was cited in two congressional testimonies. It is continually cited in editorials, columns, and by political leaders in the debate over the need to reform the country’s labor laws. Finally, as an indication of its truly wide coverage, it was picked up
by over 50 blogs, where the paper received many accolades, notations,
A second paper, released in February, was an update of a report CEPR released last year.
The Decline in African-American Representation in Unions and Manufacturing, 1979-2006 found that, after a long period of being disproportionately represented by unions, African-Americans are now less likely than whites to be represented by a union in manufacturing.
A Continued Growth Failure
Most Latin American countries are only marginally better off than they were 25
years ago, and in drastic cases like Bolivia, people are actually making less
income than they were a quarter-century ago. Yet, the International Monetary
Fund (IMF) and World Bank continue to prescribe the same economic policies,
regardless of their prior poor performance.
For the last five years, CEPR has been calling attention to
this unprecedented long-term economic growth failure in an attempt to stimulate
debate over what has gone wrong. And the media and other institutions have
begun to pay attention -- in part due to the fact that significant political
changes are taking place in Latin America as citizens are electing candidates
who advocate a break with the failed policies of the past.
We reached an important outlet this spring: Emerging
Markets, the “paper of record” for the International Monetary Fund, World
Bank, and other international financial institutions, solicited an article from
Mark Weisbrot for publication during the IDB’s Annual Meeting in March. The
Turning the Tables, examined the decline of the IMF’s influence in Latin America and
how new sources of lending in the region have affected the policies of international
financial institutions, was distributed to all of the delegates at the meeting.
Spring Meetings and Events
This new political
landscape in Latin America has had a serious effect on the traditional
multilateral lending institutions that formerly wielded much political power:
the International Monetary Fund, Inter-American Development Bank, and World
Bank. Furthermore, the newly created “Bank of the South” — a bank led by
Argentina, Brazil, and Venezuela — could contribute to their decline.
When the World Bank and
IMF held their Spring Meetings this April, part of their agenda was to discuss
their relevance amidst recent global economic and political shifts. As part of
these meetings, during which hundreds of economists, NGOs, and activists
converge on DC, CEPR hosted two events.
The first event, Global Imbalances, Power Shifts and the Future of Multilateralism, a panel
discussion featuring Nobel Laureate Joseph Stiglitz, UN Under-Secretary-General
José Antonio Ocampo, and CEPR Co-Director Mark Weisbrot, focused on the
challenges of current global economic imbalances and the implications of the
IMF's diminished role in middle-income countries.
The second event, A Latin American Success Story: Five Years of Extraordinary Economic Growth and Poverty Reduction in Argentina,
featured Argentine Minister of the Economy Felisa Josefina Miceli in a
presentation with Mark Weisbrot. The two discussed Argentina's successful
implementation of heterodox economic policies that have made it the fastest
growing economy in the Western Hemisphere over the last five years.
In January, CEPR hosted a press breakfast in which
Co-Director Mark Weisbrot discussed the state of U.S.-Latin American relations
with Dr. Riordan Roett, Director of Western Hemisphere Studies for the Johns
Hopkins Paul H. Nitze School of Advanced International Studies (SAIS). The two
economists examined how a new wave of Latin American leaders is changing the
face of the region and its relations with the U.S., multilateral institutions,
international financial markets, and foreign investors. Audio
files are available online.
In March, at the fifth annual Ecumenical Advocacy Days in
Crystal City, VA, Mark Weisbrot addressed the economic and political changes
taking place in Latin America. Over 1,000 international faith leaders and
activists took part in the four-day event.
The same week, Mark Weisbrot was a featured speaker at a
conference hosted by ActionAid International USA: Getting More Doctors,
Nurses, and Teachers Hired in Developing Countries. The conference
discussed obstacles to development in the Global South, particularly those
related to government spending limits imposed by the IMF, and alternative
development strategies currently being pursued by governments.
As part of CEPR’s continuous coverage of the social and
political changes taking place in Latin America, CEPR published an issue brief,
Bolivia's Economy: The First Year, on the current economic situation and
potential challenges facing first-time President Evo Morales. This was
circulated widely among Congressional staff and journalists.
CEPR was also involved in consultations around the
Inter-American Development Bank’s (IDB) decision to cancel $4.4 billion worth
of debt for five of the poorest countries in Latin America and the Caribbean
(Bolivia, Guyana, Haiti, Honduras, and Nicaragua.) CEPR played a major role in
bringing about this cancellation, supplying not only economic analysis but
high-level lobbying of various Latin American governments.
Trade Gains and Losses
In February, Mark Weisbrot spoke at a briefing on the World
Trade Organization (WTO) for Congressional staff. He discussed the shrinking
gains from trade that are to be expected from a successful Doha Round of WTO
negotiations, and weighed them against the potential losses to developing
countries. Mark pointed out that — according to the World Bank's research —
developing countries have very little to gain from the further trade
liberalization that would be required under the Doha Round, and compared these
gains to the costly changes, including adopting new rules and tariff reductions
that would limit their development options.
Increasingly, other organizations are turning to CEPR for
analysis and research. As two small examples, see Robin Broad’s piece for the
Bretton Woods Project, Investigación,
conocimiento y el arte del ‘manejo del paradigma’, and Suzanna Dennis and Elaine Zuckerman's article for Gender Action: Gender Guide to World Bank
and IMF Policy-Based Lending.
As developing countries advance their economies, they will
have some important decisions to make. Foremost will be the choice between a
U.S.- or European-style economy, which not only has an effect on social
welfare, but on the environment as well.
Research associate David Rosnick and co-director Mark
Weisbrot looked at the difference in energy consumption between the
United States and Europe in their paper, Are Shorter Work Hours Good for the Environment? A Comparison of U.S. & European Energy Consumption. They found that Europe's much lower
consumption of energy (about half of the United States on a per capita basis)
was very much related to the fact that these countries have taken more of their
productivity gains in the form of reduced work hours, rather than increased
consumption. The impact on the pace of global climate change of these different
work patterns was found to be very significant.
David Rosnick authored the article, Rush, Rush, Rush for Policy
Innovations, a publication of the Carnegie Council. He detailed the
implications of longer work hours, both in terms of output and how the energy
is consumed. Rosnick and Weisbrot’s research received considerable attention in
the media, and was written about in the Washington Post, the Philadelphia
Inquirer, and in dozens of other news outlets across the nation.
Also, Dean Baker’s policy analysis argues that
pay-by-the-mile auto insurance is one of the simplest methods for reducing
pollution output by the United States. If we structured auto insurance such
that less driving corresponds to lower rates, we will be giving drivers a large
incentive (equivalent to $2 a gallon gas tax) to reduce miles driven. This would reduce the number of miles driven and, in turn, reduce the total U.S.
carbon output. Baker describes his proposal in his column,
If Environmentalists Cared About Global Warming... The proposal is
slowly being picked up by environmental organizations around the country and
recognized as a simple way to reduce emissions.
CEPR in Spain
For six weeks this winter, John
Schmitt worked from Barcelona, where he taught at the Pompeu Fabra University.
John has been a visiting professor there since 1999. This year he gave two
courses, one on political economy and another on labor markets.
In January, CEPR outreach staff Liz Chimienti and Jeremy
Bigwood produced a short guide to CEPR's experts and program issues, which was
distributed to over 150 Congressional staff members.