Argmax.com more current…
Argmax.com more current…
The Rockefeller Foundation Appoints New Managing Directors
January 12, 2012 / Press Releases
The Rockefeller Foundation today announced that Nancy Kete, Scott Leeb and John Irons have been appointed to the role of Managing Director. Nancy Kete will focus on the Foundation’s global work on Resilience. John Irons will coordinate the Rockefeller Foundation’s domestic work in the United States, with an initial concentration on the current jobs crisis. Scott Leeb will take on the new role of Managing Director, Knowledge Management. All three of the new Managing Directors will be based in New York.
“I am thrilled to welcome these three extraordinarily talented individuals to the Foundation,” said Judith Rodin, President of the Rockefeller Foundation. “They bring significant expertise in their field, a passion to make the world a better place and a commitment to help the Rockefeller Foundation maximize its impact.”
John Irons has been named Managing Director and will be focused on the Rockefeller Foundation’s work within the United States. His first area of concentration will be the jobs crisis. Dr. Irons will apply his skills to the Foundation’s existing portfolio of domestic employment priorities, including the Transitions to Growth program, which studies how to apply successful employment programs at scale; the Sustainable Employment in a Green US Economy (SEGUE) Initiative, which is catalyzing the development of green jobs; and the Brookings–Rockefeller Project on State and Metropolitan Innovation, focusing on a new regional approach to economic development.
“I have spent my career analyzing the U.S. economy and domestic economic policies to better inform public policy decisions. I am excited about the opportunity to continue and expand the work at the Rockefeller Foundation, including projects targeted at impacting the ongoing jobs crisis,” said Dr. Irons. “I hope my experience as an economist, with a background in policy analysis, will contribute to the Rockefeller Foundation’s work on jobs, economic opportunity, and the economic security of all Americans.”
Dr. Irons joins the Foundation from the Economic Policy Institute, where he was Research and Policy Director. He led a department responsible for research and policy development on labor markets, macroeconomics, education, international trade, public investment, health care policy, regulatory policy, and a program on race, ethnicity and the economy. Prior to his time at EPI, Dr. Irons was Director of Tax and Budget Policy at the Center for American Progress where he directed and organized tax activities and research. He also served as Staff Economist at OMB Watch and Assistant Professor of Economics at Amherst College. He started his career as a Research Assistant at the Federal Reserve Board of Governors in DC. Dr. Irons’ academic publications have appeared in several Journals including the Journal of Monetary Economics, Journal of Applied Econometrics, Review of Financial Economics and the Eastern Economic Journal. John holds a Ph.D in economics from MIT and a B.A. in economics from Swarthmore College.
This was on the top of my to-read list… Arrow points to the asymmetric information in the finance industry as a lead driver of income inequality…
Economics and Inequality
The specific problems of the current U.S. economy—the drastic increase in unemployment and sluggish increase in output—overlay a tendency of much longer duration, a drastic and rapid increase in the inequality of income. Every economy of complexity produces an unequal distribution of the good things in life. But the period immediately following World War II showed a considerably increased equality of income compared with either the Great Depression or the previous period of relative prosperity.
Since the middle 1980s, this tendency has been reversed. In the United States, median family income adjusted for size has remained virtually constant since 1995, while per capita income has risen at about 2 percent per annum. The difference in income between college graduates and those with only high school degrees increased at a rapid rate, even during the period before 1990 when per capita income grew very slowly. Further, the proportion of the college-age population enrolled in college, which had been rising rapidly, stopped increasing and has remained the same for thirty years.
Clearly, the bulk of the gains from increased productivity went to a small group of upper-income recipients. Indeed, closer study has shown that the bulk of the increase went to the top 1 percent of income recipients and much of that to those in the top .1 percent.
The causes of this growing inequality are varied. There has been a steady attack on the use of the tax system as a means of equalizing income. Income and estate taxes were once the most directly effective factors in redistribution. The top rate in the federal income tax was over 90 percent in the 1950s and is about 35 percent today. The exemption level for estate taxes has risen steadily, ensuring that less and less can be taxed. On the other hand, the earned-income tax credit has actually permitted negative income taxes payments by the government to the tax filer at the lowest end.Shifts in the composition of goods and services have reduced income opportunities for many. Skilled industrial jobs have disappeared, while growing information services require a different set of skills. This shift has undoubtedly been augmented by globalization, which has resulted in considerable imports of manufactured goods. The weakening of unions is in good measure attributable to the relative decline in manufacturing, where unionization is easier.
Contemporaneous with the decline of manufacturing has been the increase of two service industries, finance and health. Profits from the finance sector, which historically have been about 10 percent of all profits, have risen to an extraordinary 40 percent. The sector’s labor needs are, of course, directed in considerable measure to the best-educated.
Last Wednesday I presented to the CPC on jobs and deficit reduction. Intro to written testimony below (full document at link).
Written testimony prepared by Andrew Fieldhouse, Ethan Pollack, and Rebecca Thiess
Wednesday 11:00 a.m., November 16, 2011: Rayburn House Office Building
The U. S. economy remains mired in a prolonged jobs crisis with no substantial improvement in sight. More than 25 million Americans are unemployed or underemployed, poverty is on the rise, and economic insecurity abounds.
Rather than address the crisis at hand, many in Washington are obsessed with a nonexistent fiscal crisis, at the expense of job creation. A political crisis created by conservatives’ refusal to raise the statutory debt ceiling last summer led to the passage of the Budget Control Act BCA, which made significant cuts to discretionary spending and created the Joint Select Committee on Deficit Reduction. Better known as “the supercommittee,” this group is tasked with finding at least an additional $1.2 trillion to $1.5 trillion in deficit reduction. Unfortunately, the supercommittee was not explicitly charged with addressing the more pressing economic problem—the ongoing job crisis.
As the deadline for the supercommittee’s recommendations approaches, public reports confirm that the committee is not focusing on the pressing job of boosting growth and employment.
Congress must change the course of fiscal policy; failure to do so risks prolonged high unemployment and long-term economic scarring that will impede economic growth and international competitiveness. Congress should pass meaningful job-creation policies to address this real crisis.
As the deadline looms for the Super Committee to report back to Congress, some have raised the specter that “failure” would lead to a collapse in financial markets. For example, Massachusetts Sen. John Kerry has expressed concerns that a failure to reach an agreement would send a dangerous signal to markets, and the Committee for a Responsible Federal Budget has said that a “go big” agreement is needed to “reassure markets about our ability to repay our creditors.”
These concerns are misplaced.
First, even if the Super Committee fails to find an agreement, there would still be a $1.2 trillion 10-year spending reduction put onto the books via a process called sequestration that would limit annual appropriations by Congress. From a pure deficit-reduction perspective, a $1.2 trillion agreement would be no different than a so-called failure. Congress can of course revisit those cuts, but they could also revisit any other kind of spending agreement too.
Second, remember that financial markets are forward looking and respond primarily to unexpected news. Does the market believe that Democrats and Republicans will come together in a Kumbaya moment to pass $3 trillion in tax increases and/or cuts to spending? I wouldn’t bet on it. Goldman Sachs noted in a recent Q&A on the Super Committee that, “a ‘grand bargain’ to resolve this imbalance appears to be a low probability this year. Instead, the politically realistic outcomes range from no agreement to a deal reaching $1.2 trillion in deficit reduction over 10 years.” They also note that just “32% of economists polled in the November Blue Chip financial survey expected a super committee agreement to become law.” Thus a failure would merely confirm market expectations, and there should be little reaction in the markets.
Third, as I noted in an earlier post, real interest rates on federal debt are negative for some maturities, and very low for longer term bonds. There is no indication that markets are worried about U.S. debt and need to be reassured. For example, Moody’s rating agency recently stated that, “failure by the committee to reach agreement would not by itself lead to a rating change.”
Finally, the main worry for businesses is the lack of demand for their goods and services and the main worry for individuals is the lack of jobs. The markets would react if Congress fails to fails continue a payroll tax holiday or fails to continue unemployment insurance payments. The real, immediate crisis is jobs and economic growth – Congress needs to focus on getting people back to work. A jobs-first focus would, more than anything else, reassure markets that the U.S. economy is poised for growth, and not slipping into premature, job-killing austerity.
[Cross Posted at EPI's Blog]
Ezra Klein with a useful reminder…
Just a reminder: The market will literally pay us to borrow money from them for 5, 7 or 10 years. Pretty good deal for a country that has, say, trillions of dollars in infrastructure repairs it needs to make, or millions of workers who are unnecessarily unemployed. More here.
Real interest rate on Treasury’s TIPS:
[Cross-posted at Working Economics]
In a blog post yesterday, Paul Krugman again noted that the growth in income inequality is not all about education.
He pointed to two different charts to illustrate: one showing the growth of the top 1 percent relative to other income groups and a second with wage growth by education levels. Since the two charts had different scales, it was hard to see just how out of whack the education-explains-inequality story really is.
Below is a chart that combines the two series in one chart, showing that the top 1 percent has outpaced, by a very wide margin, not just those with less formal education, but college grads as well. And this gap between the growth of the top 1 percent and the rest is much larger than the growth gap between education levels.
This is not to say that education is not important. The chart also shows that those with a college (or post-secondary) degree have outpaced others. But it’s also clear that this trend only explains a small part of the broader inequality story.
(Note: The top 1 percent line shows the growth in average after-tax incomes for this group, via the CBO, data from Figure 2. The education lines show the growth in wages for all workers, via EPI’s State of Working America data onwage and compensation trends by education. Both are inflation adjusted.)
Live over at US News… vote it up if you like it!
You can call it 9-9-9, the Perry two-step, or a national sales tax. But the various flat tax plans being proposed by Republican candidates, right-wing think tanks, and media commentators share some common characteristics that should worry most middle-class Americans.
Interesting article by Gregory Rosston and Scott Wallsten on broadband. Useful reminder that there are two challenges – the initial build-out to ensure access, and then facilitating adoption by making sure it’s affordable to people.
As the discussion above demonstrates, expanding wired coverage in rural areas will require large investments, yet it will generate fairly small returns in terms of increased broadband use. Instead, the most effective way to increase broadband adoption is likely to be inducing subscription by low-income people to whom broadband is available, but who do not currently subscribe.
Barry Schwartz of Swarthmore College (who taught me intro psychology) challenges the notion that more choices are better.
Good reality check for us economists….
Some of my EPI colleagues suggested breaking down the Macroeconomic Advisors analysis into an easy-to-read graphic:
Macroeconomic Advisers has a new analysis of the Republican alternative to the American Jobs Act.
Bottom line job impact through 2013 according to MA:
Obama’s American Jobs Act: +1.3 million
Republican’s Jobs through Growth Act: zero (or worse).
via Macroadvisers: Man Up: AJ(obs)A vs. J(obs)TGA. (Emphasis added)
Last week the Republican leadership unveiled the Jobs through Growth Act (JTGA) as a counterpoint to the President’s proposed American Jobs Act (AJA). JTGA includes a Balanced Budget Amendment (BBA), reform of the income tax code, repeal of “Obamacare,” Dodd-Frank, and other regulations, fast-track authority for the President to negotiate new trade agreements, and the easing of restrictions on the exploration for new domestic sources of energy.
Without more detail on the Republican plan, we cannot offer a firm estimate of its economic impact in either the short or long run. However, if what we do know of JTGA were enacted now, we would not materially change our forecasts for either economic growth or employment through 2013.
If actually enforced in fiscal year (FY) 2012, a BBA would quickly destroy millions of jobs while creating enormous economic and social upheaval.
Greg Mankiw–Harvard prof, textbook author, and adviser to Mitt Romney – points us to a good article by Nordhouse on energy, and again endorses a tax on carbon…
via Greg Mankiw’s Blog.
A smart friend recommends this article by Yale economist Bill Nordhaus. The Pigou Club endorses the conclusion:
The need for taxes on energy externalities such as carbon emissions is central to our ability to reduce the harmful side effects of economic growth. It is striking how the political dialogue in the US has ignored a policy that has so many desirable features. Perhaps, in the near future, faced with the deadline of a dire economic situation, negotiators will formulate such a policy. It would generate substantial revenues while bringing so many long-run economic and environmental benefits. Simply put, externality taxes are the best fiscal instrument to employ at this time, in this country, and given the fiscal constraints faced by the US.