Category: economics

A Strong Welfare State Produces More Entrepreneurs

A Strong Welfare State Produces More Entrepreneurs

The mechanism in each case is the same: publicly funded insurance lowers the risk of starting a business, since entrepreneurs needn’t fear financial ruin. (This same logic explains why more forgiving bankruptcy laws are associated with more entrepreneurship.)

Completely sensible argument that leaves me wondering why GEDI statistics seem to show little to no correlation between welfare state expenditures and entrepreneurship. But WMF stats show a correlation between time and cost to start a business and entrepreneurship.

Liberals, Conservatives, and Jobs

Liberals, Conservatives, and Jobs

If creating “millions” of jobs means adding 2 million or more in a given year, then we did that in three of Jimmy Carter’s four years in office, and 13 times since Reagan left the White House — 8 times under Bill Clinton, twice under George W. Bush, and three times so far under Barack Obama. Actually, the only times we haven’t added millions of jobs under Democrats have been in the aftermath of severe shocks — the oil shock of 1979 and the financial crisis of 2008. Am I claiming that Democratic presidents were responsible for all this job creation? No, not at all, nor do I need to. The point, instead, is that their policies didn’t prevent a lot of employment growth. That is, what you learn from both national experience and the California story is that you can raise taxes on the rich and expand access to health care without killing the economy.

Giving housing to the homeless is three times cheaper than leaving them on the streets

Giving housing to the homeless is three times cheaper than leaving them on the streets

The most recent report along these lines was a May Central Florida Commission on Homelessness study indicating that the region spends $31,000 a year per homeless person on “the salaries of law-enforcement officers to arrest and transport homeless individuals — largely for nonviolent offenses such as trespassing, public intoxication or sleeping in parks — as well as the cost of jail stays, emergency-room visits and hospitalization for medical and psychiatric issues.” Between 2005 and 2012 the rate of homelessness in America declined 17 percent By contrast, getting each homeless person a house and a caseworker to supervise their needs would cost about $10,000 per person.

Something economists thought was impossible is happening in Europe

Something economists thought was impossible is happening in Europe

Something really weird is happening in Europe. Interest rates on a range of debt — mostly government bonds from countries like Denmark, Switzerland, and Germany but also corporate bonds from Nestlé and, briefly, Shell — have gone negative. And not just negative in fancy inflation-adjusted terms like US government debt. It’s just negative. As in you give the owner of a Nestlé bond 100 euros, and four years later Nestlé gives you back less than that.* In my experience, ordinary people are not especially excited about this. But among finance and economic types, I promise you that it’s a huge deal — the economics equivalent of stumbling into a huge scientific discovery entirely by accident.

This the exact opposite of a the sovereign debt crisis that the austerity crowd has been warning about. The demand for debt is so high that people are willing to lose money to purchase it.

Those Radical VSPs

Those Radical VSPs

although many of the press reports describe Syriza as “far-left”, it’s actually preaching fairly conventional economics, while the supposedly responsible officials of Brussels and Berlin have been relying on radical doctrines like expansionary austerity and a growth cliff at 90 percent. The same has to a certain extent been true in the US context. Once again: textbook macroeconomics says that focusing on deficit reduction in a depressed economy, where the zero lower bound constrains the effectiveness of monetary policy, is a very bad idea. And although nobody will believe it, textbook macro has actually been a very good guide to the economy since the financial crisis, as Jared Bernstein also emphasizes.

Krugman points out how current right of center economic theory isn’t based on conservative economic or on textbook mainstream economics. Its based on very radical and very untested ideas that aren’t working out.

Obama’s bank tax is a big idea that might actually get done – Vox

Obama’s bank tax is a big idea that might actually get done – Vox

What Obama proposed was a 0.07 percent tax on borrowing by America’s largest banks. The way this works is that banks with over $50 billion in assets (which is about 100 banks) would need to pay a 7 cent tax to the federal government on every $100 that they borrow. That has two goals — raising revenue and restraining risky debt from bailout-prone institutions. And Congress isn’t going to pass it.

This would both make a bailout less likely, it would create a fund that would pay for a bailout. And it would fall onto the banks directly. Why is anyone against this?

American transit activists need to speak up about exorbitant construction costs

American transit activists need to speak up about exorbitant construction costs

But the problem hits transit the hardest because the basic fact of the matter is that political and economic elites don’t rely on mass transit. The clearest case is the growing popularity of mixed-traffic streetcar projects. These are much cheaper than grade-separated light- or heavy-rail, but still far more expensive than a conventional bus without actually moving people any faster. In terms of offering a transportation service, spending money on a streetcar is much worse than spending the same amount of money on multiple new bus routes or upgrades to existing ones. Soon this bus will have a streetcar in its way | Elvert Barnes/Flickr Streetcars appeal, however, because those high costs create construction jobs and because the aura of classiness around them appeals to real estate developers and other would-be drivers of gentrification. So cities across America are opening stub streetcar lines rather than investing in improving the transit experience of bus riders.

A Canadian City Once Eliminated Poverty And Nearly Everyone Forgot About It

A Canadian City Once Eliminated Poverty And Nearly Everyone Forgot About It

Between 1974 and 1979, residents of a small Manitoba city were selected to be subjects in a project that ensured basic annual incomes for everyone. For five years, monthly cheques were delivered to the poorest residents of Dauphin, Man. – no strings attached. And for five years, poverty was completely eliminated. The program was dubbed “Mincome” – a neologism of “minimum income” – and it was the first of its kind in North America. It stood out from similar American projects at the time because it didn’t shut out seniors and the disabled from qualification. The project’s original intent was to evaluate if giving cheques to the working poor, enough to top-up their incomes to a living wage, would kill people’s motivation to work. It didn’t. But the Conservative government that took power provincially in 1977 – and federally in 1979 – had no interest in implementing the project more widely. Researchers were told to pack up the project’s records into 1,800 boxes and place them in storage. A final report was never released.