Welcome Dean Baker (co-founder of the Center for Economic and Policy Research)(CEPR Blog), and Host Mike Konczal (Fellow at the Roosevelt Institute)(Rortybomb)(Twitter)

Getting Back To Full Employment: A Better Bargain for Working People

In 2009 there was the Keynesian moment. With the economy shedding hundreds of thousands of jobs a month, with the financial system imploding and GDP crashing, the US government stepped in with a stimulus bill designed to get spending started, to boost the states, and to invest for the long-term. At a spending level nowhere near the challenged, President Obama still managed to oversell what it would deliver. By 2010, with unemployment still high, Democrats would silently walk away from the entire endeavour.

This lead to the counter-Keynesian assault of 2011-2012. Politically lead by the Tea Party in Congress, the issue became one of austerity to boost economic confidence, focuses on so-called structural unemployment leaving our workforce unprepared for the jobs that were available, and a terror over the idea that debt reaching 90 percent of GDP would slow the economy permanently.

This wave, in turn, collapsed in early 2013. Studies, like the famed Reinhart-Rogoff paper, that captivated the press turned out to have serious errors and were seen as oversold given their shaky foundations. The short and medium term deficit collapsed, but lead to no sudden wave of investment or growth. The worries about unemployment fell with collapsing inflation.

This has not lead to a new moment. Into this void steps Dean Baker and Jared Bernstein’s Getting Back to Full Employment: A Better Bargain for Working People (available as a free e-book at that webpage). This short book walks through the economic arguments for why low unemployment is a key goal for the immediate economy, and how we can get there with the tools we have.

The book proceeds to show that the late 1990s had significant wage growth, a sudden and important reversal of stagnating trends that existed 20 years before and 10 years after then. They then link this not to deficit reduction, or welfare reform, but instead to the macroeconomic effects of Federal Reserve actions.

They also show ways forward, including more aggressive Federal Reserve action, actions that would also act as insurance against potential future recessions. Work sharing, reducing the trade deficit, the government acting as an employer of last resort to do useful investments, are all potential avenues.

This is a policy focused work, and the arguments are very persuasive. Full employment needs to be one of the core goals of liberals everywhere. The question that remains is why isn’t it? Why has there been so much focus on Grand Bargains and deficit reduction? Should elites and the rich support full employment as well, or do they prefer a slightly weak economy?

Or, to put it in other words, who are the enemies of full employment, and what motivates them? That’s where I’d like to start with comments.

 

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions.  Please take other conversations to a previous thread. - bev]

126 Responses to “FDL Book Salon Welcomes Dean Baker, Getting Back To Full Employment: A Better Bargain for Working People”

dakine01 January 19th, 2014 at 1:49 pm

Dean, Mike, Welcome back to the Lake.

Mike, Thank you for Hosting today’s Book Salon.

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dakine01 January 19th, 2014 at 2:00 pm

Dean, I am in the process of reading your book so forgive me if you address this if I haven’t gotten tot his point as yet. Is the Fed so captured and remiss in their mission in “pursuit of maximum employment”?

It seems blatantly obvious to me (I am one of the long term un/underemployed) that so many in DeeCee are just going through the motions anymore when they claim to care about jobs and workers yet every action they take belies their words yet they continue to claim the “American Exceptionalism” even as they blame people who have worked for decades are suddenly lazy. There are still at least 3 applicants for EVERY job and even if/when we get back to ’07 levels of employment, we are still down something like 7 or 8 million jobs to accommodate all the people entering the work force since ’07

I’ll get off my soap box now

Mike Konczal January 19th, 2014 at 2:02 pm

Hey everyone. I’m so glad to be part of this discussion with Dean Baker, one of our best economists out there.

I want to start with where my intro left off. Given that the case for full employment is so persuasive, why isn’t it a much larger rallying cry? Who opposes it, and who is indifferent to it, in our politics?

bluewombat January 19th, 2014 at 2:03 pm

Welcome to the Lake, Mr. Baker.

I don’t know if my question is off-point, but will ask it anyway:

Iceland seems to be the only country that has prosecuted its banksters. Has it also non-conformed in rejecting austerity and, if so, what differential has that produced in the rate of their ability to create jobs?

eCAHNomics January 19th, 2014 at 2:03 pm

Are you open for questions?

My first observation/question.

Of course it is low unemployment, empirically around 4% in post-WWII period, when workers are scarce enough to force employers to bid workers away from each other.

Other than immediate post-WWII sorting out from wage & price controls, there have been only two other such periods: mid-late 1960s, ditto 90s. Fewer than 10 years in a 70-year period.

Other than the vaporous whimsey of hoping for return to low unemployment, which neolibs will not let happen, what other methods might promote growth in real wages?

Dean Baker January 19th, 2014 at 2:04 pm

I have been plenty critical of the Fed over the years, including its decision to bailout the banks while leaving them largely in tack, but I think the Fed has been reasonably good in trying to boost the economy and create jobs. The QE programs have been helpful, maybe not hugely so, but better than nothing. I would like to see them be more aggressive, for example deliberately target a higher inflation rate like the Bank of Japan is doing, but still they are at least trying.

Congress and President Obama really deserve most of the blame here. They have deliberately slowed the economy and thrown people out of work by massively cutting the deficit the last three years. They are trying to convince everyone that we will just have to tough it out. That’s easy to say if you living on a 6 or 7 figure salary. It’s much harder for the millions who are out of work.

dakine01 January 19th, 2014 at 2:07 pm
In response to Dean Baker @ 6

As a technical note, there is a “Reply” button in the lower right hand of each comment, Pressing the “Reply” will pre-fill the commenter name and comment number being replied to and make it easier for folks to follow the conversation.

Note: some browsers do not like to let the Reply function correctly if pressed after a hard page refresh but before the page completes loading

RevBev January 19th, 2014 at 2:08 pm
In response to Dean Baker @ 6

What is the goal of the tough-it-out strategy? What do “they” accomplish?

eCAHNomics January 19th, 2014 at 2:09 pm
In response to Dean Baker @ 6

The FRB is a banking cartel. It has done nothing to promote job growth since 2007, only desperate attempt to keep bankrupt banks from failing.

Dean Baker January 19th, 2014 at 2:09 pm
In response to Mike Konczal @ 3

Sorry, Mike — didn’t see your comment. Great to have one of the country’s best economic bloggers here.

Anyhow on the failure of full employment to catch on as a political rallying cry, I would say two things. First, the evil-doers are happy. The folks who dominate political debate are doing fine. Profits are up, the stock market is up. Things look good to them, which means that the poor economy is not a highlight in most news reporting. (Just to remind folks, President Bush signed the first stimulus when the unemployment rate was 4.7 percent, so times have changed.)

The other point is that most people don’t think that anything can be done. Much of economics is about making simple things complicated. the basic story is very simple, we need someone to spend money and if the private sector won’t do it then the public sector must fill the gap. This basic point has been obfuscated by economists who insist that it is all very complicated.

Of course aspects are complicated, just as aspects of tying your shoe can be complicated, but the basic story is very simple, but this fact has been hidden from people.

Dean Baker January 19th, 2014 at 2:10 pm
In response to dakine01 @ 7

thanks — forgot

eCAHNomics January 19th, 2014 at 2:10 pm
In response to Dean Baker @ 6

Targeting higher inflation rate does not create jobs, unless one is a contortionist.

What are DIRECT methods of creating jobs?

David Kaib January 19th, 2014 at 2:10 pm

How much of an impact could a fair contracting order, which raised wages among low wage workers for federal contractors, have?

Mike Konczal January 19th, 2014 at 2:11 pm
In response to Dean Baker @ 6

I agree re: Congress and the President, especially his goal of locking in $4 trillion in deficit savings with unemployment so high.

But I wonder if there’s a greater ideological issue here. The right Hoover-esque “let the purging happen” and gold-standard logic is understood, but I wonder if you see a bigger issue with Democrats who feel intervention in the market is forbidden – so the most they can do is offer education and some support, but not much else.

Or: You’ve written about this loser liberalism of market non-interference in other, excellent work. I’m wondering how you see it overlap with full employment.

erik January 19th, 2014 at 2:11 pm

Money seems to be the key issue? I’m not sure why but for some apparent reason the ‘Fed’ makes money. Now this is definitely something to ‘think’ about but whenever I try, I become somewhat baffled because obviously it’s pretty complicated.
3D technology apparently allows people to pretty much make whatever they want. Perhaps we need to begin considering the possibility of policy makers using printers to create money?
If they made enough of it and the proper authorities were permitted to allocate it fairly then obviously many of these ‘problems’ would go away.
Life often imitates art right?
“Show me the money” may have been one of those iconic works that mysteriously predated reality?
I don’t know but clearly we need change………………

eCAHNomics January 19th, 2014 at 2:13 pm
In response to Mike Konczal @ 14

bigger issue with Democrats who feel intervention in the market is forbidden

As if there were a “D” party.

Dean Baker January 19th, 2014 at 2:14 pm
In response to RevBev @ 8

Two things. First the question is what is the downside risk. For those doing well, they see no downside from doing nothing. The risk of course is that we could have inflation, we could have uppity workers. Maybe they aren’t too worried about this prospect, but why take chances?

The other story, and this is more clearly the case in Europe than in the U.S., is that high unemployment is being used as blackmail to force countries to pare back their welfare states. The ECB has been pretty explicit on this point. They are telling countries, and not just the crisis countries, that they will have to cut back the generosity of their welfare states before the ECB will push more to allow more growth.

It is a pretty pernicious story, but the ECB is shielding enough from democratic control that they can impose an agenda that is hugely unpopular without serious challenge. By comparison the fed is a paragon of accountability (joke).

Dean Baker January 19th, 2014 at 2:15 pm
In response to eCAHNomics @ 12

Or unless one believes that real interest rates affect demand — which a great deal of research shows it does. Sorry if you don’t like the evidence.

David Kaib January 19th, 2014 at 2:15 pm

The trick is that much government action is not considered an ‘intervention’.

bearman January 19th, 2014 at 2:16 pm

Hi Dean…I think I might have missed this! Anyway. I agree with a lot of your comments about full employment and economic policy. How can we fight back against the neo liberal attacks? We know what works but with entrenched interests how can we fight? Also I think it is very important you and those like you in a position to be heard and seen explain to others about neo liberalism. Most people think Dems= liberals GOP= conservatives. When in fact these labels only divide and confuse. Both parties are close in policies

Thanks

bluewombat January 19th, 2014 at 2:17 pm

My question @4 skipped, so will re-post:

Iceland seems to be the only country that has prosecuted its banksters. Has it also non-conformed in rejecting austerity and, if so, what differential has that produced in the rate of their ability to create jobs?

Dean Baker January 19th, 2014 at 2:18 pm
In response to erik @ 15

Well, it may sound silly, but we really would be benefited by a good counterfeiter right now. We need demand and it doesn’t matter where it comes from.
This really was the story of WW II, which is not to say the war was a joke or did not need to be fought. The point is from the standpoint of the economy the war was just a massive source of demand. Tanks and bombers didn’t increase our productive capacity an iota, but they did create a lot of demand in the economy.

William Black January 19th, 2014 at 2:18 pm
In response to Dean Baker @ 17

Dean,
Congrats on the book. Can you explain to folks why the most recent IMF/OECD meme about the “threat of deflation” which purports that the answer to high unemployment, weak growth, and trivial inflation is to — wait for deflation to hit and then respond promptly to it with qualitative easing (QE) is insane.

Best,
Bill Black

RevBev January 19th, 2014 at 2:20 pm
In response to bearman @ 20

To explore the politics….who are the sane voices?

eCAHNomics January 19th, 2014 at 2:20 pm
In response to Dean Baker @ 18

Interest rates and stock prices influence demand because consumers think they do. Added some questions to U.Mich survey in 1987 that were conclusive. 87% thought interest rates influenced economy somewhat or a lot and 69% thought same about stock prices.

If you are going to drag out interest rate influence on economy, you must address bimodal direct effect. Make borrowers richer when they go down, but fixed income people poorer.

joelmael January 19th, 2014 at 2:20 pm

Dean, when I began following your ‘Beat the Press” years ago, I asked if the beltway apologists ever acknowledged the many factual corrections and spin unwinding that you did. You replied to effect of apparently not. Are they still as obstinate?

Dean Baker January 19th, 2014 at 2:21 pm
In response to bearman @ 20

I can’t say there is a clear politics forward. Obviously we have to continually remind people that this is a horrible economy. The “could be worse” line is not much consolation. that was true in the Great Depression as well.

We have to tell people the story in a convincing way — it sounds strange to people that just having the government spend money can create jobs and growth. We also have to highlight the success stories where they appear. It looks like Japan is achieving a healthy growth rate and drop in unemployment. unfortunately they have scheduled an increase in their payroll tax in March or April — that will be bad news in my book.

Knut January 19th, 2014 at 2:21 pm

Dean, thank you for coming here today. The thing that amazes and bothers me is how little impact the basic Keynesian line of reasoning and the national income accounting identities that support it have had for the past 30 nigh onto 40 years. I think it’s fair to say that the macro we learned a half century ago (I learned mine directly from James Tobin and Arthur Okun) has simply been discarded. It’s not as if it has been superseded by fresh evidence, apart from some refinements in evaluating exogenous expenditure multipliers. Gavin Wright told me when he was chair of the department at Stanford 20 years ago there was a strong effort to eliminate macro altogether from the graduate curriculum.

The technicians who make policy in the EU seem to have gone over completely to a Say’s Law view of the world. I don’t see how this can be cured as long as politicians think they have to rely on mainstream economists who rhink they are committing sins against reason if they abandon full-equilibrium models of the economy.

eCAHNomics January 19th, 2014 at 2:24 pm

Hint about real wage growth: Unions.

Next: 15% import tariff. Conventional economics teaches that tariffs suck away consumer income.

More profoundly, every country that transformed itself from 3d world to developed did so with protective tariffs.

Tariffs allow for development of internal industry, which in turn can pay decent wages.

Free trade is worker race to the bottom.

June Carbone January 19th, 2014 at 2:25 pm

Hi Dean,

I’ve been working on a book on inequality and the family that looks at the way that the employment picture produces more conservative family values at the top and single parent families at the bottom. When we get to the end of the book, we struggled with what to propose because our whole argument is that it’s not the family causing this and then just after we sent in the manuscript, we saw your proposals and loved them.

So here’s my question: how do we get this on the political radar? The House seems to be playing a game that says 1) It’s all Obama’s fault, 2) we won’t do anything that let’s him look better); 3) Romney in the debate, “The government can’t create jobs; 4) therefore vote for us and we’ll cut taxes and stimulate employment. And yet they pay no political price for doing this.

Dean Baker January 19th, 2014 at 2:26 pm
In response to William Black @ 23

Hi Bill,

good to see you here. I think the IMF “threat of deflation” line is so loony that they should all have their economists’ license revoked. I have been infuriated by the fear of deflation talk through this whole episode. Who gives a damn whether prices are falling at a 0.5 percent annual rate or rising at a 0.5 percent rate? The latter is better, but only in the same way that a 1.5 percent rate of inflation is better than a 0.5 percent rate of inflation. There is no importance whatsoever in crossing zero except for people who worship numbers.

The things people say about crossing zero are inane beyond belief. They say people will put off buying things because they will wait for the price to fall. Really?
Someone who was going to buy a $10k car will wait a year so that they can save $50? give me a break. Furthermore, when the inflation rate is near zero, many prices are already falling. Computer prices have been falling sharply for the last three decades. last I looked people were buying lots of computers.

When someone says that they are worried about deflation it is their way of saying they have no clue about economics. The problem is that the inflation rate is too low. we are already seeing that problem, deflation is beside the point.

dakine01 January 19th, 2014 at 2:26 pm

(It appears we are having a meeting of the sane economists club right here this afternoon)

David Kaib January 19th, 2014 at 2:28 pm

In terms of the politics, it strikes me that we spend a lot of time imploring politicians that it would ‘help the economy’ to address joblessness and that it would be good politics. It strikes me that they’ve hired the people they want to give them policy and political advice. What we aren’t doing is demanding better, and not accepting excuses. That’s essential.

Dean Baker January 19th, 2014 at 2:28 pm
In response to Knut @ 28

Yes, it is incredible — didn’t know that about Stanford, really pathetic. (I knew Gavin Wright because he was an outside examiner in a course i took as an undergrad at Swarthmore, decent guy and very good economist.)
Anyhow, economics has really gone backwards.

Dean Baker January 19th, 2014 at 2:29 pm
In response to David Kaib @ 33

yes, but you need political organization to make the point — which largely means money.

William Black January 19th, 2014 at 2:29 pm
In response to dakine01 @ 32

It’s a small club, but there are those who love it.
Bill

Dean Baker January 19th, 2014 at 2:30 pm
In response to eCAHNomics @ 29

dropping the value of the dollar will accomplish the same thing as tariffs and more — it also helps on the export side.

Dean Baker January 19th, 2014 at 2:30 pm
In response to William Black @ 36

yes, too small.

Mike Konczal January 19th, 2014 at 2:32 pm

Dean, I’ve noticed you’ve written with the conservative Kevin Hassett about why work sharing would be a good idea for the government to get behind. Do you see any room for conservatives and liberals to get together on unemployment solutions – either as a political matter, or as an intellectual policy matter? I’ve seen some conservative writers move on the Fed in a positive way, but the political matter hasn’t budged.

Knut January 19th, 2014 at 2:32 pm
In response to Dean Baker @ 31

I think some of the talk about deflation is from people (institutions) who are highly levered and fear a deflation in asset prices as a consequence of general price deflation. This supposes that prices fall faster than wages, which is generally the case.

Mike Konczal January 19th, 2014 at 2:33 pm

Also – what are you hopes and worries as Janet Yellen takes over the Federal Reserve this year? Her actions will determine much of the economic landscape for the next decade.

William Black January 19th, 2014 at 2:33 pm
In response to Dean Baker @ 38

Could you take a minute and explain what CEPR does for folks who don’t know of the breadth of your work?

Bill

DWBartoo January 19th, 2014 at 2:34 pm
In response to Dean Baker @ 34

Good evening, Dean. Who has most benefited since the “dismal science” has gone “backwards”?

Frankly, it does not seem, to me, that “we” have ended up where “we” are by accident … it appears some deliberate connivance was involved.

Are we not, now, at the point where society is serving the economic system rather than the economic system serving society?

DW

bluewombat January 19th, 2014 at 2:34 pm

My question at #4, reposted at #21, may be a dumb question, but, since it’s drawn no response, I’ll ask it again:

Iceland seems to be the only country that has prosecuted its banksters. Has it also non-conformed in rejecting austerity and, if so, what differential has that produced in the rate of their ability to create jobs?

kafka January 19th, 2014 at 2:34 pm

Or, to put it in other words, who are the enemies of full employment, and what motivates them?

You could probably start with the likes of the Koch Brothers, the WSJ, the US Chamber of Commerce and other Reich wing types, because (to use Gilded Age terminology) a “reserve army of the unemployed” helps enforce “the Iron Law of Wages”. But then again these are the same people who are on the “liberal” side of immigration “reform”. I’ll leave that irony to Baker.

Dean Baker January 19th, 2014 at 2:35 pm
In response to June Carbone @ 30

Unfortunately there is not an easy answer. I mentioned before highlighting success stories — Japan seems to be one at the moment. But we also have our own history. The New Deal worked to reduce unemployment and of course the spending on the war brought the unemployment rate down to 2.0 percent.

There is some bizarre myth that spending on a war can create jobs and growth in a way that spending in health, education, and infrastructure does not. It makes no sense, dollars don’t care where they are spent, but somehow it persists.

I thought when the downturn began that people would just embrace massive stimulus as the way out. I blame Obama largely for not making this case. Instead of yapping about pivoting to deficit reduction after the passage of the stimulus he should have been saying “good first step, but we will likely need more.” Unfortunately when a Democratic president says the priority is deficit reduction, it takes a huge amount of steam out of the effort to push stimulus.

dakine01 January 19th, 2014 at 2:35 pm
In response to Dean Baker @ 38

I wrote a blog post a few years ago asking “Why Are Economists Always Surprised?” – the exceptions are the economists that have joined us today as they seem to not try to force the data to fit pre-existing biases

Sarah Jaffe January 19th, 2014 at 2:36 pm

Hi Dean (and Mike),

One of the things that i’ve appreciated about your work in the past is the discussion of shorter working hours as a solution to unemployment. Haven’t had a chance to read the new book yet (hope to soon), but does that subject come up here and what role do you think a movement for shorter hours could play in getting us back to full employment?

(Mike, would love your thoughts too.)

-Sarah Jaffe

Dean Baker January 19th, 2014 at 2:38 pm
In response to Mike Konczal @ 14

yes, I think there is a fear about letting on to the fact that the government does have such a large role to play in the economy. I don’t know if I would call it ideological — most of these folks are not big thinkers — but I think there is a strong bias towards cautious small steps. They feel the push of the wall Street folks and other big money types when they do things that threaten their interest. They don’t see anything similar from the unemployed, underemployed or people seeing stagnant wages. Most of them of course don’t recognize that the government could do anything.

Dean Baker January 19th, 2014 at 2:40 pm
In response to Sarah Jaffe @ 48

Yes, we have a discussion of work sharing and also other initiatives that could lead to shorter hours (paid family leave, sick days, paid vacations). This is the norm across Europe where the average work year has 20 percent fewer hours than here.
Since the economic problem we face right now is not enough work, makes much more sense to deal with it by sharing leisure than unemployment — great environmental story here also. Unfortunately, there is a real bias among economists not to think this way.

Dean Baker January 19th, 2014 at 2:41 pm
In response to dakine01 @ 47

I still have people tell me all the time that no one saw this crisis coming. I remember a few months back arguing with this guy who was very insistent that no one saw it coming. He told me people had looked into it and no one had warned of it. I kept telling him to check CEPR’s website.

dakine01 January 19th, 2014 at 2:42 pm
In response to Dean Baker @ 49

As one of the long term underemployed, I think it is people being willfully obtuse – they don’t want to see the effects on the long term un and underemployed so they don’t. Plus there does seem to be the ideological side as well since those people who are without jobs, working part-time minimum wage, and poor are obviously not worthy of consideration. If they were worthy, they would have already been in the lucky sperm winners club so not having problems (/only partly snark)

Knut January 19th, 2014 at 2:44 pm

It does seem to me that the fundamental problem is intellectual, in the sense of the religious belief in most of the economics profession that the ‘market’ can sort this all out if we just give it a chance. That there is no evidence whatever for this view is what makes it a religion. I’ve noted, and I’m sure you have, that professional academic economics is incredibly authoritarian by the standards of most so-called scientific disciplines. There are obvious exceptions, but the general run is retty much acquiesence in the conventional wisdom as handed down from the top half dozen to dozen departments. Nothing like this exists in the ‘hard’ sciences, which are much more decentralized. Most of what I see at seminars is trivial, which is what ypu would expect whenmost people are afraid to take risks (the alternative explanation is that they are simply mediocre).

Mike Konczal January 19th, 2014 at 2:45 pm
In response to Sarah Jaffe @ 48

Hey Sarah!

And yes, there’s a good section on this in the book. The policy solution is both smart in the short term and a wise way that restructures the economy for more leisure in the long run – though there needs to be more discussion of this as an objective.

One good place for more discussion of leisure time as a goal for readers checking this out is here:
http://inthesetimes.com/article/15448/opting_for_free_time/

William Black January 19th, 2014 at 2:46 pm
In response to bluewombat @ 44

I have been brought to Iceland twice by their shareholders’ association to give talks to the public and to meet with their regulators and prosecutors. Iceland does deserve credit for a serious prosecution effort, but it would be a large overstatement to say that they have prosecuted their banksters. It’s a thin slice of the banksters who drove their crisis who will be prosecuted. You can read my article on the subject if you wish greater detail.

Iceland did not follow the IMF playbook on how to respond to the crisis. It rejected UK and Dutch efforts to force it to bailout in full, with national funds, the UK and Dutch depositors that lost money. It did not fall in love with austerity. It recently reelected the conservative party that created the policies that facilitated the bank fraud, but for years after the crisis their policies were driven by rivals of that conservative party.

Bill

Dean Baker January 19th, 2014 at 2:46 pm
In response to DWBartoo @ 43

Yes, sometimes you do get open pay for services (certainly much analysis of the financial sector and patent protection fits the bill). I think much of it is more complicated though.
In many ways the basic (and true) Keynesian story about the economy is very simple. I could never get my stuff on the housing bubble published in an academic journal because it wasn’t complicated enough. (I could make it complicated, but i don’t need academic publications.) In the interest of making economics more of a profession rather than common sense that anyone could learn in a few weeks there was a real need to make it more complicated. This tended to pull it away from Keynesianism and make it more right-wing since it meant grounding it maximizing behavior of individuals. We can construct models where people do not narrowly maximize and you don’t get the need market clearing results that the right-wingers like, but this was the natural route for economics to go.

William Black January 19th, 2014 at 2:49 pm
In response to William Black @ 55

And I should add, before my UMKC colleagues flay me, that Iceland still had a sovereign currency (it didn’t use the euro) so it had vastly greater policy space to respond to the crisis.

Bill

Knut January 19th, 2014 at 2:49 pm
In response to dakine01 @ 52

The other side of that coin are retired people like me whose defined contribution pensions have made out like bandits under QE. I never expected ever to be rich, but Bernanke and company have made it possible.

bearman January 19th, 2014 at 2:49 pm

This question is for Bill Black

Bill I saw an interview you had with Bill Moyers were you stated that the DOJ or Obama admin has a legal duty to investigate and prosecute Wall st “Executives” for fraud. Of course they did not carry out the law. Would this be an impeachable offense against Obama? I am not a lawyer but it seems to me that failure to carry out the law must have SOME consequences.

You and Dean do a great job and keep up the great work!

bluewombat January 19th, 2014 at 2:49 pm
In response to William Black @ 55

Thanks for your response, Mr. Black, and for correcting my overstatements. You’re one of my heroes — I dream of an Elizabeth Warren administration with you running the SEC.

June Carbone January 19th, 2014 at 2:50 pm
In response to Dean Baker @ 50

I wonder about combining work sharing ideas with European style flexicurity. We see all this celebration of entrepreneurs and small businesses but the Obamacare bashing is the only time we see discussion of the fact that part of what is driving small business employment is big business desire not to pay benefits.

Do you discuss the idea of the role of a government safety net in allowing companies’ like Walmart not to pay more benefits? If I remember correctly, there some point earlier back where firms like Walmart wanted the government to pick up health care benefits but they got shot down by the united Republican ideological opposition.

Is there any prospect for business support of these ideas in the future? I.e., make businesses more flexible through more government support for retraining, health benefits, pensions, etc.?

June Carbone

Dean Baker January 19th, 2014 at 2:51 pm
In response to bluewombat @ 4

Iceland is not doing great compared to a country that did not experience a huge crisis, but for one that in many ways saw the biggest bubble out there, it is doing fantastic.

It was great that they locked up the bankers. To be as clear as possible, since this comes up repeatedly here, I am quite convinced that many of the honchos committed serious crimes.

We have had many people say that they weren’t criminal, they were stupid and being stupid should not land you in jail. While they are right about not jailing people for stupidity, these are not mutually exclusive.

Many of the bankers probably thought the bubble would continue indefinitely. But they also knew that they were passing along billions of dollars of fraudulent mortgages in MBS. This is a crime for which they should go to jail.
To take an analogy, my guess is that the top people at Enron probably believed in their business model. That didn’t mean that they didn’t commit crimes.

bluewombat January 19th, 2014 at 2:53 pm
In response to Dean Baker @ 62

We have had many people say that they weren’t criminal, they were stupid and being stupid should not land you in jail. While they are right about not jailing people for stupidity, these are not mutually exclusive.

Well-said :) Thanks for your response.

Dean Baker January 19th, 2014 at 2:53 pm
In response to bluewombat @ 60

I learned a lot about the course of the Obama administration when I bumped into Bill in early 2009. I asked him if the Obama folks had asked him about job. Bill just laughed. If Obama were serious about going after financial corruption, Bill would have been at the top of the list for one of the key regulatory spots.

bearman January 19th, 2014 at 2:54 pm

also would be interested to know what Dean, Bill and Mike think of Richard Wolff’s ideas of worker coops? and a democratic work place

Dean Baker January 19th, 2014 at 2:55 pm
In response to June Carbone @ 61

Unfortunately we have not seen much business support for flexicurity (of a real type) models. This may change if we ever get the unemployment rate down or we see some successful union drives at one of the big retail chains. But that is something for the future, not right now.

bearman January 19th, 2014 at 2:55 pm
In response to bluewombat @ 60

include Alan Grayson and I think we could begin to kick butt

June Carbone January 19th, 2014 at 2:57 pm
In response to Knut @ 58

Bill Black (my husband) and I were at UMKC when the University of Missouri system brought in the failed head of Sprint to run the university system. Typical red state politics: don’t trust those egghead types, need a real businessman to run the system. He kept repeating the business mantra, “employees must bear the risk, employees must bear the risk,” while of course his reward for running Sprint into the ground was a highpaying job as University Chancellor.

Here’s the kicker, though. The University of Missouri system pays badly, but benefits are decent. It’s a nice place to raise children and housing is affordable. The old system rewarded the people who stay. The new system, which still has hard to get tenure track positions, says “you’re a fool if you stay.” Punch your ticket and go elsewhere.

The Chancellor never got that university professors or anyone else might be motivated by something other than the opportunity to cash in. It’s sad.

Dean Baker January 19th, 2014 at 2:58 pm
In response to bearman @ 65

I like coops, but the question is how to make them grow. The reality is that coops have been around for a long time and no where have they really thrived. Even in the Basque region in Spain, the share of the work force in the Mondragon cooperatives has fallen sharply in the last three decades. I don’t know of any magic wand that will suddenly make cooperatives competitive with conventionally organized businesses and absent that, I don’t see how they will become a major segment of the economy.

dakine01 January 19th, 2014 at 2:58 pm
In response to Knut @ 53

I was a Sociology major my first time through college and I think most Sociologists would be embarrassed by putting out the nonsense put out by a lot of Economists and called “research” (In My Not So Very Humble Opinion)

Knut January 19th, 2014 at 3:00 pm

Obeyond the academic economics disaster, which was avoidable, there is a kinf of business folk wisdom that seems to make self-destructive policies tye right thing to do. If you are a businessman in a reasonably competitive setting (which seems to exclude an ever-growing share of the American economy) your costs relative to your prices are a major determinant of your decision to expand or contract. It makes sense that if you could get a little less regulation, lower wages, changes in accounting rules that would allow you to contribute lessto a defined benefits pension plan, yourbusiness would he more profitable and yoy could grow it faster. This wisdom, however, involves a fallacy of composition not much taught in the tonier grad departments, which is if the changes applyto all firms–i.e., are products of a general government policy, no one on average is better off. It’s ‘beggar thy neighbor’.

Dean Baker January 19th, 2014 at 3:01 pm
In response to Knut @ 53

Whenever i have suggested that people at places like the IMF or the Fed should pay some career price for missing the bubble people think I’m just being vindictive. There is a vast economics literature on the importance of firing for being able to ensure workers’ commitment and good performance, but somehow when you seek to apply this logic to economists themselves it is just vindictive.

Dean Baker January 19th, 2014 at 3:02 pm
In response to DWBartoo @ 43

I’d just say that we are serving the interests of the rich and powerful. they have been well-served by the economic system.

dakine01 January 19th, 2014 at 3:04 pm
In response to Dean Baker @ 72

Instead, those who were most wrong are seemingly most celebrated and feted by the pols and TradMed. Failing upwards (or the Dilbert Principle in operation – Fail badly enough and you will be promoted beyond your level of incompetence)

William Black January 19th, 2014 at 3:05 pm
In response to bearman @ 59

This one requires me to wear my lawyer/law prof and regulatory hats. What I said was that the “Prompt Corrective Action” (PCA) law that Congress passed in response to the S&L debacle required the Bush and Obama administrations to take prompt action to correct — or close — the failed banks (or to make an explicit finding that closure would cause grave damage, i.e., a systemic crisis).

The legal standard in the U.S. is that prosecutors have a non-reviewable right to refuse to prosecute — regardless of the guilt of the potential defendant. More loosely, but also more importantly, one can argue that all federal employees is to defend the constitution and to faithfully execute the laws — which means that Holder and Lanny Breuer’s obscene “too big to prosecute” doctrine and practice is not only a disastrous public policy but a violation of the spirit of their oaths of office and a repudiation of the Rule of Law.

bluewombat January 19th, 2014 at 3:05 pm
In response to Dean Baker @ 64

Yes. The tells were there early across the board.

One of the issues I follow most closely is illegal wiretapping (and this was years before Edward Snowden). It came out during the 2008 presidential campaign that the NSA had been wiretapping us all since ’02.

Civil suits were filed against the major telcos for helping the NSA break the law. The telcos told Congress to give it retroactive immunity for all the years it had been helping the NSA break the law. Then-Senator Obama said if that bill came up in the Senate, he’d filibuster it.

When it came up in the Senate, he voted to end the filibuster, then voted to give the telcos retroactive immunity. I voted for Obama in the California primary but, seeing what he was made of, I voted for Nader in the general.

FISA Amendments Act of 2008

Dean Baker January 19th, 2014 at 3:05 pm
In response to Knut @ 71

yes, I think this is part of the problem. There also is the natural response to think of the government like a family. We all know that we can’t run up large debts month after month. People tend to think of the government the same way and the politicians (including Obama) have encouraged this. It sounds very strange to people to say that as a practical matter the government actually can run up large deficits month after month and that it is best for the economy that it does.

It would have been enormously helpful if the economics profession could have spoken with one voice on this point, but those making this argument seem to be a minority, at least among those who get air time.

bluewombat January 19th, 2014 at 3:06 pm
In response to bearman @ 67

A Warren-Grayson ticket. Well, one can dream…

William Black January 19th, 2014 at 3:07 pm
In response to bluewombat @ 60

Ah, and I dream of Dean being Treasury Secretary!

Bill

fladem January 19th, 2014 at 3:07 pm

As I see it, something changed profoundly in 2000. The 2001 recovery was jobless,and labor’s share of income broke a 40 year range.

It is simply impossible to avoid the conclusion that the free trade agreement with China was one of the decisive economic events of the last 30 years. Frankly I think people like Jared Bernstein and Robert Reich have deliberately evaded a central truth: they knew that free trade was going to clobber wages for the bottom 50% and so they talk a bunch of nonsense about worker retraining and a better safety net – as if that is a substitute for a decent paying job.

They do not know how to get back to an economy where wages are decent – and even though I have graduate training in economics I am not sure I know either.

Am I mad? Yes. I have seen friends have their jobs outsourced, and wages steadily decline in the face of globalization.

I am mad at Robert Reich – who parades around like a progressive while showing up at outsourcing conventions. I am mad at liberal economists who either failed to predict or who deliberately pretended that side agreements in trade deals made a damn an bit of difference.

I think back to grad school – and how all my profs were so confident about free trade. I know the theory.

The theory was wrong.

DWBartoo January 19th, 2014 at 3:08 pm
In response to Dean Baker @ 56

“Economics” or economists? Knut’s comment @53, seems to touch on some interesting aspects of the current “lock-step” … however, I would go further and suggest that, if it is not in an academic economist’s “interest” to understand then, too often, he or she will not understand. It is somewhat equivalent to an Attorney General being unable to discern criminal fraud because those engaged in it are too dangerously “big” … to indict.

Again, though, I ponder, have we not lost sight of the essential function of an economic system which is to provide the resources essential to living to the members of a society making use of such a “system”?

Are we not now facing corporate power so vast and conjoined with “official” government “interests” so seamlessly, that we must contemplate a serious power shift, away from national governments, and toward corporate “finance” which is independent from and insulated from most government “restriction”, or “oversight”, which the TPP will simply underline as obvious?

That is why I suggest that the economic system, unfettered “greed is good”, end-empire stage US capitalism, is directing societal policy to the benefit of the capitalist/political elite … and that the economic system is, thereby, controlling society far more powerfully than ever before … especially when it comes to ideas, such as yours and those of others … limiting, intentionally, what the many might come to know.

Is not the secrecy surrounding the TPP evidence of precisely what what we, the people, must insist that this government move beyond, if it is to serve the genuine interests of the people and not the elite?

DW

Dean Baker January 19th, 2014 at 3:09 pm
In response to Sarah Jaffe @ 48

btw, there actually are work sharing programs in 26 states, including big ones like CA and NY. They are part of the unemployment insurance system. Unfortunately the take-up rate is very low largely because employers don’t know about them. There actually is federal money to pick up the tab for these programs through 2014. It would be great to see more pick-up. Also, I think it would be possible to extend the funding. Even Boehner supports the program.

William Black January 19th, 2014 at 3:10 pm
In response to bluewombat @ 63

Amen.

CTuttle January 19th, 2014 at 3:10 pm
In response to bluewombat @ 60

I dream of an Elizabeth Warren administration with you running the SEC.

I’d vote for that Dream Team…! ;-)

Aloha, Dean, Bill, and Mike…! Mahalo for coming to the Lake…!

Dean Baker January 19th, 2014 at 3:12 pm
In response to DWBartoo @ 81

yes, the TPP is a real abomination. It is absurd that it is being sold as “free-trade” agreement. It is about getting pro-corporate regulations imposed on governments that could not do them through the normal democratic process. It has nothing to do with advancing free-trade, in fact increasing patent and copyright PROTECTION is one of the main purposes of the deal.

bearman January 19th, 2014 at 3:12 pm

one other question. Why is Obama so obsessed with the Grand Bargain? I am aware of the power of people such as Pete Peterson but Obama I would think would know cutting SS and Medicare would very unpopular and would do harm to a lot of people. Also do you think people like Sen Warren has helped to at least slow down this charge to gut SS Medicare?

William Black January 19th, 2014 at 3:13 pm
In response to Dean Baker @ 72

Greenspan’s standard stump speech as Fed Chair claimed that the Robber Baron era taught business that maintaining a reputation for the highest integrity was the key to success and that there was no such thing as an unregulated market because concern for reputation regulated every market. But as Dean says, as soon as one says that economists and bankers should suffer a reputational penalty for constantly screwing up they scream “class warfare,” “pitchforks,” and “bloodlust.”

Bill

SanderO January 19th, 2014 at 3:13 pm

Am I wrong… are the shareholder class and the board room folks and upper management not concerned about “this” economy…. low wages… and all?

and…

What’s the next bubble they’re gonna pump and dump?

CTuttle January 19th, 2014 at 3:14 pm
In response to William Black @ 83

Who should head the Fed…? ;-)

Dean Baker January 19th, 2014 at 3:15 pm
In response to fladem @ 80

FWIW, I don’t think Jared was a supporter of the trade deals of the 1990s. In any case, we can get back a lot of these jobs by lowering the value of the dollar, which will make our products more competitive. I also want to put our doctors, who heavily populate the one percent, in direct competition with doctors in the developing world. Great gains for patients in lower health care costs and a big step toward redressing inequality.

William Black January 19th, 2014 at 3:15 pm
In response to dakine01 @ 74

They are feted because they are willing to be wrong, repeatedly, in defense of the interests of the banksters and oligarchs.

Bill

BrandonJ January 19th, 2014 at 3:17 pm

Hello Dean, Mike. I’ve arrived late, but already seen discussion to be very lively.

Forgive me for not having the chance to read your book yet Dean, but I’ve read others book by you and was persuaded to learn more on economics. Thank you for your work.

My question is whether environmentalism would be necessary in future economic policies and what solutions you provide. A lot of talk has been made on how the planet is warming and I can’t help but feel economists must be forced to provide a solution (judging by their recent acts, it won’t be good.)

William Black January 19th, 2014 at 3:18 pm
In response to CTuttle @ 89

Yellen is assuredly exceptionally well-qualified to run the macro operations of the Fed. She has been very strong in fighting off the insane inflation hawks.

In an ideal world I would choose Jamie Galbraith because he would get the macro part right and would also transform the Fed into a real regulator. I think the second aspect, reg, is more critical than the macro part.

Bill

Peterr January 19th, 2014 at 3:18 pm

Years ago, before I went to seminary and became a pastor, I studied economics with Dale Mortensen. Right after Mortensen’s Nobel prize was announced in 2010, June Carbone hosted an FDL Book Salon Chat with Joan Williams of the University of California-Hastings College of Law, who had just published “Reshaping the Work-Family Debate: Why Men and Class Matter.” In the course of that chat, Joan made the following observation:

For 40 years, the Republicans have blamed every scraped knee on government — so that now, the automatic assumption is to do so, and to believe it when others do. Democrats need to reverse that, both by pointing out the good things government does, and the bad results the market can produce. How about a sign picturing bread line during the Depression with a legend: “Wonder why there were no bread lines this time around? Thanks unemployment insurance, brought to you by the American people, and your federal government.”

That’s an advertisement waiting to be made. The problem is getting a candidate to chime in at the end “I’m so-and-so, and I approve this message.”

(Sadly, Mortensen died last week, so the club of sane economists is now down one. He will be missed.)

Dean Baker January 19th, 2014 at 3:18 pm
In response to bearman @ 86

Obama is responding to pressure from the rich and powerful. The NYT, NPR and WAPO all report on the grand bargain like it is the home team in a baseball game. Obama is first and foremost a politician (and a very good one). He knows that if he doesn’t take their deficit whining seriously they will beat him up. What will the rest of us do if he actually succeeds in cutting SS or Medicare? that is the question he is asking himself.

Yes, Warren has been fantastic. Her comments about increasing Social Security benefits threw the Peterson crowd for a huge loop. They can’t just ignore her like they could Bernie Sander (who is also great).

bearman January 19th, 2014 at 3:21 pm
In response to William Black @ 75

Thanks for explaining this. I thought my head would explode when I saw Lanny B’s interview on Frontline

William Black January 19th, 2014 at 3:22 pm
In response to bearman @ 86

Too much time as an adjunct at U. Chicago law (which is even crazier than U. Chicago’s econ dep’t and B school). What Obama’s staff has repeatedly said in leaks to the Wash Po is that Obama views the “Grand Betrayal” (oops, Bargain) as his “legacy” achievement. It is the fact that he would be acting against the desires of the base, they claim, that would establish that Obama governed as a “statesman” rather than a mere politician.

Bill

CTuttle January 19th, 2014 at 3:23 pm
In response to William Black @ 93

What about Stanley Fischer’s role as the #2, Bill…?

Dean Baker January 19th, 2014 at 3:24 pm
In response to BrandonJ @ 92

yes, we are doing almost nothing to stop global warming.We are treating it as though it is an optional problem. In many ways the crash should have provided a great opportunity to get serious about retrofitting buildings to save energy and pushing our wind and solar power everywhere. Obama did some of this, but on a small scale. It would have been great to see these programs multiplied by a factor of ten — we had the money, remember the problem was a lack of demand.

It would also be good to see a bit of creativity in trying to address the problem. What’s the downside of making bus fare free? Are we worried that the bill Gates of the world will take advantage of it? people who could afford to pay for their bus fare won’t?

How about encouraging 4-day workweeks to cut down on the number of commuting trips? We should also find a way to pay China to use cleaner fuels. (It’s in our interest and it is the cheapest way to bring about emission reductions.)

Anyhow, we are almost nowhere in combatting global warming and our kids will pay a huge price for it.

RevBev January 19th, 2014 at 3:24 pm

That sounds really crazy to me. Is betrayal a mark of statesman? Didn’t think so.

William Black January 19th, 2014 at 3:25 pm
In response to bearman @ 96

As a former DOJ attorney (as is June), a feel his disgrace with a particular passion. He, of course, has left via the revolving door and is now openly servicing the banksters’ interests.

Bill

Dean Baker January 19th, 2014 at 3:26 pm
In response to CTuttle @ 98

I worry very much about Fisher. He had been a serious voice of neo-liberalism. he was at the center of the botched IMF bailout from the East Asian financial crisis. Being someone with enormous stature in the profession, if he and Yellen were to take opposing views he is exactly the sort of person who could effectively organize opposition to the chair.

William Black January 19th, 2014 at 3:26 pm
In response to CTuttle @ 98

I think Obama put him there to have his guy at the Fed for the purposes of watching Yellen and undercutting her if she becomes too progressive.

Bill

DWBartoo January 19th, 2014 at 3:27 pm
In response to William Black @ 87

Bankers, economists, and the political class, which includes the media, never have to apologize, Bill, or suffer any “consequence” for their, words, policies, or behaviors … and so long as that obtains as “ever thus”, there is little likelihood that things will much improve … and considerable reason to consider that things shall become very much worse …

Perpetual war, environmental degradation, and austerity …

Were we not so exceptional a nation … would we still “believe” our own hype?

What is that gem? Oh yes, we are a nation that tolerates no class … since everyone is in the middle class …

Ain’t that classy?

Always great to see you here, Bill!

;~DW

Dean Baker January 19th, 2014 at 3:28 pm
In response to William Black @ 103

My thoughts exactly.

DWBartoo January 19th, 2014 at 3:29 pm
In response to William Black @ 103

Yes.

DW

Dean Baker January 19th, 2014 at 3:31 pm
In response to SanderO @ 88

I don’t see them concerned about the economy as a whole. In terms of future bubbles, we had a real risk of the reappearance of the housing bubble last year. Prices nationally were rising at a double-digit rate and in several markets were rising at 30 or even 40 percent rates. Bernanke’s taper talk press conference in June sent interest rates soaring and appears to have stemmed this bubble, but I would still keep my eye on it. House prices are above trend, but not obviously out of line with fundamentals. THe UK and Canada both have serious housing bubbles.

BrandonJ January 19th, 2014 at 3:33 pm
In response to Dean Baker @ 99

Very troublesome indeed.

I’m curious on your thoughts regarding recent strikes by workers for $15/hour. The conservatives in the media have been fighting back as if it’ll destroy the entire world while those on the left (including the Democrats) have advocated for $10.10 as a standard. Is the wage increase too taboo for those even in the economic profession considering the change in power it can bring?

bearman January 19th, 2014 at 3:36 pm

ok here is another question. What do you guys see with economy going forward? there has ben a lot of talk of another collapse by 2016 do you see anything like this happening? I was laid off in 2009 and it took nearly a year to get back to work..I don’t want to go through that again. I have been lucky and I turn 61 very soon

Dean Baker January 19th, 2014 at 3:36 pm

I think the effort for $15 is great. Just to be clear, this is not a demand for a minimum wage of $15, which i think would cause unemployment, it is a demand for a collective bargaining agreement that would give workers considerably higher wages.

What has been so neat about this effort is that it has drawn considerable public support. this is why so few of the workers involved have been fired. These companies usually are not shy about firing workers for trying to organize, even though it is against the law.

One other point to keep in mind. From 1938 to 1968 the minimum wage kept pace with productivity growth. if it had continued to keep pace with productivity over the last 45 years it would be $17 an hour today. that would be a very different world.

Dean Baker January 19th, 2014 at 3:39 pm
In response to bearman @ 109

I’m glad you were able to get another job. The somewhat good news is that I don’t see another collapse on the horizon. we get downturns either when the Fed raises interest rates because it is concerned about inflation or because we have a bubble that bursts (this only happened in 2001 and 2008). I don’t see any problems with inflation any time soon and there are no notable bubbles at the moment, so i would say the horizon is cloud-free for now.

bearman January 19th, 2014 at 3:42 pm

I think FDL should start a petition to demand congress stand before Bill, Dean and anyone else they chose and explain their actions on behalf of the American people…

bearman January 19th, 2014 at 3:44 pm
In response to Dean Baker @ 111

Thank You I can sleep a little better at night

Dean Baker January 19th, 2014 at 3:47 pm

Just to emphasize a point that Jared and i consider really central in the book, we argued that the wages of large segments of the workforce are affected to a great extent by unemployment. This means that not only do we see millions of people needlessly unemployed or underemployed, but tens of millions of workers re getting lower wages than they would in a fully employed economy.

DWBartoo January 19th, 2014 at 3:49 pm
In response to Dean Baker @ 110

It would also be a very different world had US manufacturing not been shipped abroad, as well, Dean, would it not?

From a purely pragmatic perspective, beyond the loss of jobs, of worthwhile endeavor, the cost to security, to the security of the nation, was it wise or responsible to make the US dependent upon the good will of other nations to produce those things the US no longer produces?

From a purely social perspective of economic sustainability, in the sense of creating actual wealth, was that also not the beginning of what has amounted to an “Age of the Divine Right of Money”, in which money is all that matter and how it is “gotten” does not?

Why should the many ever be subject to the whims of an elite who may simply bribe government and take over all channels of communication?

Is it not time for society to move to protect itself from concentrations of wealth and power … history is not mute as to the consequences of the corruption that, too often, attends both … together, they may coalesce into something rather vile and oppressive.

Superb Book Salon, btw, Dean, my great appreciation to both you and Mike.

DW

dakine01 January 19th, 2014 at 3:52 pm

As we come to the last few minutes of this interesting Book Salon discussion, any last thoughts?

Dean, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book.

Mike, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:

Dean’s website, blog, and book

Mike’s website and blog.

Thanks all. Have a great weekend.

If you would like to contact the FDL Book Salon: FiredoglakeBookSalon@gmail.com

DWBartoo January 19th, 2014 at 3:54 pm
In response to dakine01 @ 116

My appreciation to you, also, dakine, for managing this Book Salon so ably and well … not to mention all the other things you do for FDL and the community.

DW

karenjj2 January 19th, 2014 at 3:54 pm

Interesting discussion. Re not seeing any inflation on the macro level:

There is ample hidden inflation all around us. One glaring example is the bathroom tissue holder vs. the rolls sold today. Originally 5″ x 5″ the rolls are now 4″ x 4″ with fewer sheets per roll at the same or higher price.
The 16 oz. “pound of coffee” is now 12 oz. People are buying common household products for the relatively same price, but are receiving less. It does not show up in the CPI market basket.

RevBev January 19th, 2014 at 3:56 pm
In response to karenjj2 @ 118

Very accurate description….and interesting, of course.

Dean Baker January 19th, 2014 at 3:56 pm

Thanks all for a great discussion. I would just add that we always have to keep pressing on every possible front. In this book and in all my work I have argued for using whatever channel we can to book employment. If we can do it by government stimulus, that’s great. If that channel is blocked then we should press the Fed to do everything it can. And we should also try to push for a lower valued dollar to get the trade deficit down. And we should promote work sharing, which is a great policy that can be done at the state level.

There are reasons why one policy may be better than the other, but all are better than doing nothing. And it is not acceptable to do nothing. Tens of millions of people are suffering because of bad policy decisions. That should not be happening.

William Black January 19th, 2014 at 3:57 pm
In response to dakine01 @ 116

Thanks to Dean and the entire Lake community.

Best,
Bill

jo6pac January 19th, 2014 at 3:57 pm
In response to Dean Baker @ 120

So true change only comes if we keep working at it, thanks DB.

RevBev January 19th, 2014 at 3:57 pm
In response to DWBartoo @ 117

And to you, also, DW; you add alot. Thanks.

CTuttle January 19th, 2014 at 3:58 pm

Mahalo Nui Loa, Bill, Dean, and Mike, for all your efforts and being here today…!

Mahalo, dakine, and all the pups for another excellent Salon…! *g*

marym January 19th, 2014 at 4:01 pm
In response to karenjj2 @ 118

Thanks for mentioning that.

Elliott January 19th, 2014 at 4:03 pm

Thank you everyone, this was legendary

Thanks Dean and Mike
and BevW and dakine

Sorry but the comments are closed on this post