Government – Page 49 – artdiamondblog.com

Growth of Labor Safety Net Made Great Recession Deeper and Longer

Source of book image: http://si.wsj.net/public/resources/images/OB-VE881_bkrvre_GV_20121101145828.jpg

(p. 309) [Mulligan’s empirical results suggest] that employment was dropping not only because of declining demand for the employees’ products, but also because employers were substituting capital and other factors for labor. This surprising finding suggests that although a decline in aggregate demand for goods and services was one of the reasons for the decline in labor, other causes were also at play in most sectors of the economy. This fact is consistent with an inward shift in the supply of labor to the marketplace during this period.

In chapter 3, Mulligan introduces the main culprit responsible for this supplycurve shift–the unintended consequences of increases in the social safety net that substantially increased the marginal tax rate on work. In his model, Mulligan operationalizes this force into changes in the replacement rate (the fraction of productivity that the average nonemployed person receives in the form of means-tested benefits) and the self-reliance rate (1 minus the replacement rate), which is the fraction of lost productivity not replaced by means-tested benefits.
His conjecture is that, in a reverse of government policies in the 1990s that made work pay for single mothers by transforming welfare as we knew it into a program that nudged single mothers off the Aid to Families with Dependent Children rolls and into the workforce, “temporary” government program expansions to mitigate the (p. 310) short-run consequences of unemployment and the bursting of the housing bubble made a prolonged paid period of nonwork an offer that many Americans found too tempting to refuse.
Mulligan identifies and incorporates the major expansions in eligibility and benefit amounts for Unemployment Insurance and food stamps into an eligibility index that shows that most of the 199 percent growth in these programs between 2007 and 2009 was due to these changes. He uses this growth rate in a weighted index of overall statutory safety-net generosity to determine the degree to which it has influenced overall employment. He does a similar analysis of the means-tested Home Affordable Modification Program (HAMP), which facilitated substantial lender-provided discounts on home mortgage expenses for unemployment insurance-eligible workers. He finds that these market distortions that increased the marginal tax on work grew substantially in 2008, peaked in 2009–at almost triple their 2007 level–and then modestly fell in 2010 to a level appreciably above the 2007 level.
. . .
But his empirical evidence shows that the implementation of these “recession cures” was primarily responsible for the Great Recession’s depth and duration.

For the full review, see:
Burkhauser, Richard V. “Review of: “The Redistributive Recession: How Labor Market Distortions Contracted the Economy” by Casey B. Mulligan.” The Independent Review 18, no. 2 (Fall 2013): 308-11.
(Note: ellipsis, and words in brackets, added.)

Book that is under review:
Mulligan, Casey B. The Redistribution Recession: How Labor Market Distortions Contracted the Economy. New York: Oxford University Press, USA, 2012.

Brazil’s Cardozo Envies England’s Rule of Law

“Michael Palin.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. C11) For his most recent project in Brazil, which will go on to become a PBS series, Mr. Palin interviewed former Brazilian President Fernando Cardoso, who is often credited with the country’s economic turnaround. Whereas he says most political leaders are hesitant to say anything controversial, Mr. Cardoso was refreshingly straightforward. “I asked him, ‘Brazil has so many good things going for it–the people are friendly and relaxed, the economy is booming. Is there anything you envy about us in England?’ ” He was surprised by Mr. Cardoso’s answer. “He said straight out, ‘The rule of law.’ He said, ‘Our problem here is we have endemic corruption,’ ” says Mr. Palin. “I just thought it was incredibly honest for a world leader.”

For the full story, see:
ALEXANDRA WOLFE. “WEEKEND CONFIDENTIAL; Michael Palin Takes on the World; The former Monty Python performer is turning his global adventures into comic tales.” The Wall Street Journal (Sat., August 31, 2013): C11.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date August 30, 2013.)

Margaret Thatcher Funeral: “Suddenly from the Crowd a Great Roar”

“A supporter of Margaret Thatcher holds a banner outside St. Clement Danes church in London.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A15) The funeral of Margaret Thatcher was beautiful, moving, just right. It had dignity and spirit, and in that respect was just like her. It also contained a surprise that shouldn’t have been a surprise. It was a metaphor for where she stood in the pantheon of successful leaders of the 20th century.
. . .
At the end of the funeral they all marched down the aisle in great procession–the family, the queen, the military pallbearers carrying the casket bearing the Union Jack. The great doors flung open, the pallbearers marched forward, and suddenly from the crowd a great roar. We looked at each other. Demonstrators? No. Listen. They were cheering. They were calling out three great hurrahs as the pallbearers went down the steps. Then long cheers and applause. It was electric.
England came. The people came. Later we would learn they’d stood 30 deep on the sidewalk, that quiet crowds had massed on the Strand and Fleet Street and Ludgate Hill. A man had held up a sign: “But We Loved Her.”
. . . When they died, Ronald Reagan, John Paul II, and Margaret Thatcher were old and long past their height of power. Everyone was surprised when Reagan died that crowds engulfed the Capitol; people slept on sidewalks to view him in state. When John Paul died the Vatican was astonished to see millions converge. “Santo Subito.”
And now at the end some came for Thatcher, too.
What all three had in common: No one was with them but the people.
Margaret Hilda Thatcher, rest in peace.

For the full commentary, see:
PEGGY NOONAN. “DECLARATIONS; Britain Remembers a Great Briton; Margaret Thatcher’s coffin stood over he crypts that hold the tombs of Nelson and Wellington. It mattered.” The Wall Street Journal (Sat., April 20, 2013): A15.
(Note: the online version of the story was updated April 22, 2013 (I did not see any update in the part I quoted above), and has the title “DECLARATIONS; Noonan: Britain Remembers a Great Briton; Mrs. Thatcher is with Wellington and Nelson now.”)

Jeb Bush Reads Clayton Christensen on His Kindle

Jeb Bush. Source of caricature: online version of the WSJ article quoted and cited below.

Clayton Christensen is a kindred spirit: he cares about making the world a better place through innovation in free markets. He research is almost always thought-provoking, and sometimes highly illuminating. So it speaks well of Jeb Bush that he has the good judgement to be reading one of Christensen’s books on education.

(p. A11) Currently [Bush is] reading “Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns” — on his Kindle electronic reader.

For the full interview, see:
FRED BARNES. “THE WEEKEND INTERVIEW with JEB BUSH; Republicans Must Be a National Party Florida’s former governor on immigration, school choice, and the GOP’s limited-government foundation.” The Wall Street Journal (Sat., February 14, 2009): A11.
(Note: words in brackets added.)

The Christensen book mentioned on education, is:
Christensen, Clayton M., Curtis W. Johnson, and Michael B. Horn. Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns. New York: NY: McGraw-Hill, 2008.
(Note: a revised edition of the book appeared in 2011.)

“Inflexible Labor Laws” Lead Indian Firms “to Substitute Machines for Unskilled Labor”

(p. A19) . . . , India is failing to make full use of the estimated one million low-skilled workers who enter the job market every month.
Manufacturing requires transparent rules and reliable infrastructure. India is deficient in both. High-profile scandals over the allocation of mobile broadband spectrum, coal and land have undermined confidence in the government. If land cannot be easily acquired and coal supplies easily guaranteed, the private sector will shy away from investing in the power grid. Irregular electricity holds back investments in factories.
India’s panoply of regulations, including inflexible labor laws, discourages companies from expanding. As they grow, large Indian businesses prefer to substitute machines for unskilled labor.

For the full commentary, see:
ARVIND SUBRAMANIAN. “Why India’s Economy Is Stumbling.” The New York Times (Sat., August 31, 2013): A19.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date August 30, 2013.)

Salt May NOT Be Bad for Our Health, After All

(p. A7) An influential government panel said there is no evidence that very low-salt diets prevent heart disease, calling into question current national dietary guidelines on sodium intake.
The Institute of Medicine, in a report released Tuesday [May 14, 2013], said there isn’t sufficient evidence that cutting sodium intake below 2,300 milligrams per day cuts the risk of heart disease. The group of medical experts also said there is no evidence that people who already have heart disease or diabetes should cut their sodium intake even lower.

For the full story, see:
JENNIFER CORBETT DOOREN. “U.S. NEWS; Low-Salt Benefits Questioned.” The Wall Street Journal (Weds., May 15, 2013): A7.
(Note: bracketed date added.)
(Note: the online version of the story has the date May 14, 2013.)

For a summary of the Institute of Medicine report, see:
Institute of Medicine of the National Academies. “Sodium Intake in Populations: Assessment of Evidence.” Report Brief. Washington, D.C.: National Academy of Sciences, 2013.

Urban Planners Made La Défense an Architectural Statement, But a Terrible Place to Live

“La Défense can feel like a ghost town after 5 p.m. and on weekends, once the district’s office workers have left.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) . . . La Défense, begun during the presidency of Charles de Gaulle in the late 1950s and built just west of Paris by bulldozing slums and paving over farmland, has always worked better in architectural theory than in anthropological practice.

Rather than the Parisian business hub its founders described, it often seems more like the isolated end of a spoke that has highlighted a crucial flaw in urban planning — a concern with making architectural statements — rather than an affinity for the people in and around the buildings.
When non-French planning experts assess La Défense, they say it shares the same problems as the Canary Wharf complex in London, where developers have tried to supplant the City with Big Architecture and whose artificial origins may be hard to overcome. The experts look more favorably on the somewhat organic mix of (p. B6) business and residential of Lower Manhattan, which has evolved over the last century.
“La Défense has always suffered from a creative hypothermia,” said Wojciech Czaja, an Austrian architecture critic. “It is a sad area because it is atmospherically and emotionally perceived as a business district only.”
The public agency that manages the complex has hired an architectural firm to draft a new master plan in hopes of making the grandiose vision for La Défense a livable reality.
. . .
“There is nothing good about living here,” said Carlin Pierre, 54, who works at a waste disposal center in the district and resides in one of the Brutalist communal, rent-subsidized housing blocks tucked amid the high-rise office buildings. “Sure, it’s a nice area to come as a tourist, or even to work,” Mr. Pierre said, “but it’s terrible to live in La Défense.”

For the full story, see:
GEORGI KANTCHEV. “Plan Aims to Enliven Paris’s Financial District, Long Called Soulless.” The New York Times (Tues., July 30, 2013): B1-B2.
(Note: ellipses added.)
(Note: the online version of the story has the date July 30, 2013.)

Dubai Has Strong Ruling Clan, But Weak Institutions

Source of book image: http://www.christopherdavidson.net/sitebuilder/images/DVOS_cover-210×300.jpg

(p. 4) For Mr. Davidson, Dubai’s greatest weakness lies in its autocratic governing system. Politics in the emirate, as in most of the Middle East, pivots not on institutions but on clans — a ruling dynasty and its favorites who own and run Dubai in opaque fashion.

True enough, but most of the Middle East is authoritarian, yet Dubai’s enlightened despotism and welcoming social environment have stood out for fostering economic advance. Like China, albeit on a tiny scale, Dubai is engaged in an experiment of economic liberalization without political democracy.
Mr. Davidson further contends that unstable neighbors threaten Dubai’s success, but here he may have matters reversed. When Egypt and Iran stifle their entrepreneurs, many of them find a wide berth in Dubai. When Saudi Arabia imposes cultural restrictions on its population, Dubai offers a place to drink and let loose. When India and Pakistan have trouble creating jobs for their large populations, Dubai absorbs labor migrants. When Iraq or Lebanon descends into war, Dubai profits from rebuilding them.
In short, until a vast arc of countries from East Africa to Southeast Asia changes substantially, Dubai will remain poised to benefit by providing a relatively open, secure, low-tax, business-friendly alternative.

For the full review, see:
STEPHEN KOTKIN. “OFF THE SHELF; The Glittering Emirate, Revisited.” The New York Times, SundayBusiness Section (Sun., December 7, 2008): 4.
(Note: the online version of the review has the date December 6, 2008, and the title “OFF THE SHELF; Dubai, the Glittering Emirate, Revisited.”)

The book under review, is:
Davidson, Christopher M. Dubai: The Vulnerability of Success. New York: Columbia University Press, 2008.

FDR and LaGuardia Legacy for NYC: Feds Fund Foolish Projects?

Source of book image: http://si.wsj.net/public/resources/images/OB-XZ916_bkrvam_DV_20130627152210.jpg

(p. 16) Fiorello La Guardia is regularly ranked not only as the greatest mayor of New York City, but as the greatest mayor of any city in all of American history. His pugnacious charisma, managerial competence and expansive vision still set a near-impossible standard for any candidate for municipal office.

But, as Mason B. Williams’s fascinating new book “City of Ambition: FDR, La Guardia, and the Making of Modern New York” reminds us, La Guardia’s success rested to a large degree on Franklin Roosevelt’s decision to “channel the resources of the federal government through the agencies of America’s cities and counties.”
The questions raised by the New Deal’s role in the development of New York remain relevant. President Obama champions infrastructure spending, but does that spending create local value? Should Washington support cities, like Detroit, that cannot support themselves? Does the power created by an expansive public sector lead to unacceptable abuse?
. . .
Williams tells the story of La Guardia and Roosevelt with insight and elegance, but his book doesn’t address the deeper controversies around that partnership. Did La Guardia’s New Deal spending saddle New York with obligations too expensive to maintain in the long run? Did a car-heavy construction strategy eventually enable an exodus from the city? La Guardia built much that still has value, but did the precedent of federal funding make foolish projects more likely?
Still, Williams’s aim is to write history, not policy analysis, and he succeeds impressively at that. America’s cities are the country’s true economic heartland, and much of our most important past is urban. “City of Ambition” helps us to understand that past.

For the full review, see:
EDWARD L. GLAESER. “Fiorello!; LaGuardia’s Outsize Personality Contributed to His Success, But So Did His Partnership with Franklin D. Roosevelt.” The New York Times Book Review (Sun., July 18, 2013): 16.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 18, 2013, and the title “Fiorello!; ‘City of Ambition,’ by Mason B. Williams.”)

The book under review, is:
Williams, Mason B. City of Ambition: FDR, La Guardia, and the Making of Modern New York. New York: W. W. Norton & Company, 2013.

In Greece, Votes Are Traded for Government Jobs

(p. A4) Some members of Parliament have lobbied for fishing licenses for the owners of pleasure boats in the Aegean islands. Others have asked for government jobs for award-winning athletes or members of dismantled state agencies. One sought to exempt theaters and cinemas from a controversial property tax. Another to reduce fines for the owners of illegally built homes in parts of northern Greece. The list goes on.
In all, more than 90 such budget-busting proposals have been floated as lawmakers scramble to push through last-minute amendments to bills otherwise intended to meet the demands of creditors who want Greece to liberalize its job market, cut red tape and shrink state payrolls.
. . .
But the proliferation of items threatens to delay that step, as lawmakers go to the trough one last time. Greece’s practice of trading favors — often government jobs — for political support is as old as its 400 years of Ottoman rule, when the system evolved. The word for it, “rousfeti,” which means favor, has its roots in the Turkish word for bribe.
. . .
“In Greece, the cross is sold in exchange for a government job,” said one of them, Theodoros Pangalos, the outspoken deputy prime minister and seasoned Socialist, referring to the X that voters make on the ballot.
“No one has dared touch this system to date,” Mr. Pangalos, who will not seek re-election, said this month in an interview with the French-German television channel Arte. “But it is time for it to change.”

For the full story, see:
NIKI KITSANTONIS. “Despite Warning, Old Handouts Die Hard for Greek Politicians Facing Voters Soon.” The New York Times (Tues., April 10, 2012): A4.
(Note: ellipses added.)
(Note: the online version of the article has the date April 9, 2012.)