Economics

If the US economy is so good, why does it feel so bad?

January 19, 2016
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If the US economy is so good, why does it feel so bad?

“If the US economy is so good, why does it feel so bad?”* by Salvatore Babones (*adapted from Sixteen for ’16: A Progressive Agenda for a Better America, first published on the Policy Press Blog) *** With a 2 percent annual growth rate, 5 percent unemployment, and zero inflation, the US economy is the envy of the world. Growth seems to be rising and unemployment seems to be falling, which means that most analysts expect an even better US economy in 2016. Throw in low gas prices and a strong dollar, and what’s not to like? If the US economy is doing so well, why are ordinary people so unhappy with their own economic prospects? The aggregate US economy may be growing but most people’s personal economies are not. Census Bureau data show that real per capita income is still below 2007 levels—despite six years of solid economic growth. And Bureau of Labor Statistics data show that despite today’s low unemployment rates the jobs still haven’t come back. Back in 2006 the employment rate of the civilian population—the proportion of adults who had jobs—was over 63 percent. Allowing for people who are still in school, people who are retired, people who . . .

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The Political Origins of Inequality

December 22, 2015
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The Political Origins of Inequality

“How To Spread the World’s Wealth beyond Corporate Elites,” from The Political Origins of Inequality: We have reached a crossroads in our history. For all the achievements and riches of our time, the world has never been so unequal or more unjust. A century ago, at the time of the First World War, the richest 20% of the world’s population earned eleven times more than the poorest 20%. By the end of the twentieth century they earned seventy-four times as much. Today, despite seven decades of international development, three decades of the Washington Consensus, and a decade and a half of Millennium Development Goals, our world is even more divided among the haves, the have-nots, and—as President George W. Bush once quipped in an after-dinner speech—the have-mores. When it comes to wealth, rather than income, the picture is more extreme. Globally, the richest 1% now own nearly half of all the world’s wealth. The poorest 50% of the world, by contrast—fully 3 billion people—own less than 1% of its wealth. Anyone with assets of more than $10,000 a year is an exception to the global norm and is better off than 70% of everyone else alive. Yet most of us . . .

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Can We Race Together? An Autopsy

April 8, 2015
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Can We Race Together? An Autopsy

“Can We Race Together? An Autopsy”* by Ellen Berrey *** Corporate diversity dialogues are ripe for backlash, the research shows, even without coffee counter gimmicks. Corporate executives and university presidents are, yet again, calling for public discussion on race and racial inequality. Revelations about the tech industry’s diversity problem have company officials convening panels on workplace barriers, and, at the University of Oklahoma spokespeople and students are organizing town-hall sessions in response to a fraternity’s racist chant. The most provocative of the efforts was Starbucks’ failed Race Together program. In March, the company announced that it would ask baristas to initiate dialogues with customers about America’s most vexing dilemma. Although public outcry shut down those conversations before they even got to “Hello,” Starbucks said it would nonetheless carry on Race Together with forums and special USA Today discussion guides. As someone who has done sociological research on diversity initiatives for the past 15 years, I was intrigued.  For a moment, let’s take this seriously What would conversations about race have looked like if they played out as Starbucks imagined, given the social science of race? Can companies, in Starbucks’ CEO Howard Schultz’s words, “create a more empathetic and inclusive society—one conversation . . .

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House of Debt on the Independent’s Best of 2014

December 16, 2014
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House of Debt on the Independent’s Best of 2014

Atif Mian and Amir Sufi’s House of Debt, a polemic about the Great Recession and a call to action about the borrowing and lending practices that led us down the fiscal pits, already made a splash on the shortlist for the Financial Times‘s Best Business Book of 2014. Now, over at the Independent, the book tops another Best of 2014 list, this time proclaimed, “the jewel of 2014.” From Ben Chu’s review, which also heralds another university press title—HUP’s blockbuster Capital by Thomas Piketty (“the asteroid”): As with Capital, House of Debt rests on some first-rate empirical research. Using micro data from America, the professors show that the localities where the accumulation of debt by households was the most rapid were also the areas that cut back on spending most drastically when the bubble burst. Mian and Sufi argue that policymakers across the developed world have had the wrong focus over the past half decade. Instead of seeking to restore growth by encouraging bust banks to lend, they should have been writing down household debts. If the professors are correct—and the evidence they assemble is powerful indeed—this work will take its place in the canon of literary economic breakthroughs. We’ve blogged about . . .

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House of Debt on FT’s shortlist for Business Book of the Year

September 24, 2014
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House of Debt on FT’s shortlist for Business Book of the Year

Congrats (!) to House of Debt authors Atif Mian and Amir Sufi for making the shortlist for the Financial Times and McKinsey Business Book of the Year. Now in competition with five other titles from an initial offering of 300 nominations, House of Debt—and its story of the predatory lending practices behind the Great American Recession, the burden of consumer debt on fragile markets, and the need for government-bailed banks to share risk-taking rather than skirt blame—will find out its fate at the November 11th award ceremony. From the official announcement: “The provocative questions raised by this year’s titles have been addressed with originality, depth of research and lively writing.”  The award, now in its 10th edition, aims to find the book that provides “the most compelling and enjoyable insight into modern business issues, including management, finance and economics.” The judges—who include former winners Mohamed El-Erian and Steve Coll—also gave preference this year to books “whose influence is most likely to stand the test of time.” To read more about House of Debt, including a list of reviews and a link to the authors’ blog, click here. . . .

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Lawrence Summers on House of Debt

June 9, 2014
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Lawrence Summers on House of Debt

From Lawrence H. Summers, former Secretary of the Treasury and president emeritus of Harvard University, in the Financial Times: “Atif Mian and Amir Sufi’s House of Debt, despite some tough competition, looks likely to be the most important economics book of 2014; it could be the most important book to come out of the 2008 financial crisis and subsequent Great Recession. Its arguments deserve careful attention, and its publication provides an opportunity to reconsider policy choices made in 2009 and 2010 regarding mortgage debt.” House of Debt takes a complicated premise—unraveling the threads of the 2008 financial crisis from a tangle of Federal Reserve policies, insolvent investment banks, predatory mortgage lenders, and private label securities—and delivers a clean-cut conclusion:  the Great Recession and Great Depression, as well as the current economic malaise in Europe, were caused by a large run-up in household debt followed by a significantly large drop in household spending. Recently, in addition to Summers’s endorsement in today’s Financial Times, the book has been profiled at the New York Times, the Wall Street Journal, the Atlantic, and the Economist, among others; Paul Krugman, writing for the NYT, noted that  its associated House of Debt blog has “instantly become must reading.” How do . . .

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Gary S. Becker (1930–2014)

May 6, 2014
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Gary S. Becker (1930–2014)

Gary S. Becker (1930–2014), a Nobel Prize–winning economist and longtime professor at the University of Chicago, who in later years became a noted columnist and blogger, died this past Saturday, May 3, at Northwestern Memorial Hospital in Chicago, following a long illness. Born in Pottsville, Pennsylvania, Becker earned in MA (1953) and PhD (1955) from the University of Chicago, where he studied with the economist Milton Friedman, and began teaching as an assistant professor in 1954, leaving Chicago in 1957 for Columbia University, where he conducted research at the National Bureau for Economic Research, and returning to Chicago in 1970, where he would spend the rest of his career. Becker, who held a joint appointment as University Professor in the the Departments of Economics and Sociology, remained active well into his eighties, where his acute stance on the role of human capital in labor economics, free-market orientation, and commentator on the economic dimensions of social phenomena helped earn his reputation as “an original, prolific, and sometimes provocative” scholar. As a columnist for Business Week from 1985 to 2004, Becker “was forced to learn how to write about economic and social issues without using technical jargon, and in about 800 words . . .

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New Chicago Short from Cass R. Sunstein

December 16, 2013
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New Chicago Short from Cass R. Sunstein

Chicago Shorts offer distinguished selections, including never-before-published material, off-the-radar reads culled from the University of Chicago Press’s commanding archive, and the best of our newest books, all priced for impulse buying and presented exclusively in DRM-free e-book format. With that in mind, we’re delighted to announce the debut of our latest Short: How to Humble a Wingnut and Other Lessons from Behavioral Economics by Cass R. Sunstein.  *** In How to Humble a Wingnut, leading constitutional scholar, behavioral economist, and former Administrator of the White House Office of Information and Regulatory Affairs Cass R. Sunstein examines the unconventional impetuses behind human decision-making. Why it is that people often choose to behave so strangely? Sunstein’s incisive commentaries point to recent empirical findings to demonstrate how and why people convince themselves they are right despite evidence to the contrary; fear dangers they are unlikely to encounter; and ignore real risks. Mining developments in recent behavioral studies for tips on everything from holiday shopping and political biases to staying healthy and clear thinking in general, Sunstein nudges his reader towards that rarest of grounds—understanding. To read more about How to Humble a Wingnut, go here. To see the full series of Chicago Shorts, . . .

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Manufacturing Morals

October 24, 2013
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Manufacturing Morals

Michel Anteby’s Manufacturing Morals: The Values of Silence in a Business School Education explores the pedagogy behind corporate accountability—from within the closed doors of Harvard Business School, where Anteby, an associate professor, offers an unprecedented take as to how silence, ambiguity, and open-ended directives play key roles in generating a model of learning that leaves wiggle room for moral complexity. Anteby riffed on this topic in a recent op-ed for the Guardian, where he observed that, “While business schools’ relative silence on moral issues like inequality might have worked in the past, the situation today has dramatically changed.” He goes on to consider the grounds for this ideological shift: These business schools’ inclusive historical DNA allowed them to train thousands of students, but also left a lasting imprint on many institutions’ moral outlook. A diverse membership required flexibility on moral issues. To be sure, teaching about increasing productivity, ensuring sufficient margins, and maintaining workers’ satisfaction assumed an implicit moral stand: one that offered legitimacy to profit-making ventures. Yet, the broader aspirations of these ventures often remained elusive. An idea of higher ethical goals prevailed (such as “setting higher business standards” and conducting business “decently”), but their content was vague: the . . .

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Milton Friedman at 100 (+1)

July 31, 2013
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Milton Friedman at 100 (+1)

Last year, to mark what would have been Milton Friedman’s 100th birthday, we recapped tributes from the web. As a refresher, here’s Friedman at 100 again, +1: From the Chicago Tribune: On the 100th anniversary of his birth Tuesday, one may wonder what the Nobel laureate would say about the more controversial policies now unfolding across America. What would Friedman have thought about the recent advances in school choice, an idea he developed in 1955? How would he react to the government’s decision to tax Americans who do not purchase health insurance? Would Friedman take a position regarding the financial impact of soaring public union pensions on state economies? As an expert on monetary policy, certainly Friedman would have an opinion regarding the federal government’s bailout of the financial industry and its impact on our personal freedom. From Forbes: I think the most important measure of a thinker’s influence are his once-controversial ideas that are now considered so obvious that no one seriously disputes them. I’ve recently been reading a collection of Friedman’s Newsweek columns from the late 1960s and early 1970s, a time when he was at the peak of his fame and influence. Among the proposals he wrote . . .

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