.

Wednesday, February 29, 2012

Government:  I Work for Uncle Sam, and I'm Proud of It

It seems that all I hear these days are the once and future leaders of our country tripping over themselves to denigrate the work we do. I'm tired of it, and I'm fed up. I don't claim to represent anyone other than myself, but I would bet that a fair number of federal employees feel as I do. We are lawyers, doctors, PhD students, economists, writers, electricians, construction workers, security officers and technology specialists. We are not a drain on the national economy; rather, we are a primary reason why the United States remains as great as it is.

Like many federal workers, I have sacrificed: a high-paying job in the private sector; a year of my life (and the first six months of my daughter's life) spent in Iraq; long hours; high stress; pay freezes. I'm not complaining; in fact, I quite enjoy my career and my life in the Foreign Service. Yet when I hear our politicians talking about fixing Washington, I often wonder to myself: whom would they like to fix? Is it the guy I see on the Metro every day, heading to work at the Food and Drug Administration to ensure that our food is safe? Is it the woman going into Commerce Department headquarters to support U.S. companies abroad? Or do they mean the thousands of people who support our troops overseas? How about my fellow Foreign Service officers, who put themselves in harm's way in Baghdad, Kabul, Damascus and hundreds of other places around the world?

For more, see I Work for Uncle Sam, and I'm Proud of It by Jason Ullner, February 26, 2012 at The Washington Post.

Tuesday, February 28, 2012

Economics:  What Ails Europe?

So what does ail Europe? The truth is that the story is mostly monetary. By introducing a single currency without the institutions needed to make that currency work, Europe effectively reinvented the defects of the gold standard — defects that played a major role in causing and perpetuating the Great Depression.

More specifically, the creation of the euro fostered a false sense of security among private investors, unleashing huge, unsustainable flows of capital into nations all around Europe's periphery. As a consequence of these inflows, costs and prices rose, manufacturing became uncompetitive, and nations that had roughly balanced trade in 1999 began running large trade deficits instead. Then the music stopped.

If the peripheral nations still had their own currencies, they could and would use devaluation to quickly restore competitiveness. But they don't, which means that they are in for a long period of mass unemployment and slow, grinding deflation. Their debt crises are mainly a byproduct of this sad prospect, because depressed economies lead to budget deficits and deflation magnifies the burden of debt

For more, see What Ails Europe? by Paul Krugman, February 26, 2012 at NYTimes.com.

Saturday, February 25, 2012

Economics:  America Is Europe

The U.S. does not have a significantly smaller welfare state than the European nations. We're just better at hiding it. The Europeans provide welfare provisions through direct government payments. We do it through the back door via tax breaks.
The Organization for Economic Cooperation and Development recently calculated how much each affluent country spends on social programs. When you include both direct spending and tax expenditures, the U.S. has one of the biggest welfare states in the world. We rank behind Sweden and ahead of Italy, Austria, the Netherlands, Denmark, Finland and Canada. Social spending in the U.S. is far above the organization's average.

You might say that a tax break isn't the same as a spending program. You would be wrong.

David Bradford, a Princeton economist, has the best illustration of how the system works. Suppose the Pentagon wanted to buy a new fighter plane. But instead of writing a $10 billion check to the manufacturer, the government just issued a $10 billion weapons supply tax credit. The plane would still get made. The company would get its money through the tax credit. And politicians would get to brag that they had cut taxes and reduced the size of government!

This is essentially what's been happening in sphere after sphere.

For more, see America Is Europe by David Brooks, February 23, 2012 at NYTimes.com.

Thursday, February 23, 2012

Education:  Improving Higher Education

More regulations ...

Access to college has been the driving force in federal higher education policy for decades. But the Obama administration is pushing a fundamental agenda shift that aggressively brings a new question into the debate: What are people getting for their money?
He wants to slightly reduce federal aid for schools that don't control tuition costs and shift it to those that do. He also has proposed an $8 billion program to train community college students for high-growth industries that would provide financial incentives to programs that ensured their trainees find work. Both proposals need congressional approval.

At the same time, the administration is developing both a "scorecard" for use in comparing school statistics such as graduation rates as well as a "shopping sheet" students would receive from schools they applied to with estimates of how much debt they might graduate with and estimated future payments on student loans.

Historically, policy conversations have centered on getting students into college. [Education Secretary Arne] Duncan said graduating is just as important.

"To be real clear, I think that's been the problem with federal policy in the past is 100% has been focused on the front end on inputs, that's clearly important, but that's the starting point. That gets you in the game. The goal isn't to get to the game, the goal is to get to the finish line," Duncan said.

For more, see Obama Takes Tougher Stance on Higher Education by The Associated Press, February 20, 2012 at NYTimes.com.

Wednesday, February 22, 2012

Economics:  Pain Without Gain

Greece would have been in deep trouble no matter what policy decisions were taken, and the same is true, to a lesser extent, of other nations around Europe's periphery. But matters were made far worse than necessary by the way Europe's leaders, and more broadly its policy elite, substituted moralizing for analysis, fantasies for the lessons of history.
Now the results are in — and they're exactly what three generations' worth of economic analysis and all the lessons of history should have told you would happen. The confidence fairy has failed to show up: none of the countries slashing spending have seen the predicted private-sector surge. Instead, the depressing effects of fiscal austerity have been reinforced by falling private spending.

Furthermore, bond markets keep refusing to cooperate. Even austerity's star pupils, countries that, like Portugal and Ireland, have done everything that was demanded of them, still face sky-high borrowing costs. Why? Because spending cuts have deeply depressed their economies, undermining their tax bases to such an extent that the ratio of debt to G.D.P., the standard indicator of fiscal progress, is getting worse rather than better.

Meanwhile, countries that didn't jump on the austerity train — most notably, Japan and the United States — continue to have very low borrowing costs, defying the dire predictions of fiscal hawks.

Now, not everything has gone wrong. Late last year Spanish and Italian borrowing costs shot up, threatening a general financial meltdown. Those costs have now subsided, amid general sighs of relief. But this good news was actually a triumph of anti-austerity: Mario Draghi, the new president of the European Central Bank, brushed aside the inflation-worriers and engineered a large expansion of credit, which was just what the doctor ordered.

For more, see Pain Without Gain by Paul Krugman, February 19, 2012 at NYTimes.com.

Monday, February 20, 2012

Gender:  Women Find Their Work More Meaningful

For more, see Women May Earn Less, but They Find Their Work More Meaningful by Catherine Rampell, February 16, 2012 at Economix.

Healthcare:  Texas Has Death Panels

When families demand treatments that have an exceedingly low likelihood of success or that sustain life of such low quality that one might reasonably say it is of no benefit to the patient, Texas law allows physicians to refuse to provide such treatments.

Under the Texas legislation, demands by families for treatments that appear to meet these criteria are adjudicated by a hospital-based committee, and if the committee agrees with the clinicians, and if other providers cannot be located who are willing to provide such care, then treatment may be withdrawn without the permission of the patient's surrogate.

From The Texas Advance Directives Act by Ezra Klein, February 19, 2012 at Ezra Klein.

Sunday, February 19, 2012

Economics:  The Stimulus Bill, Three Years Later

For more, see The Stimulus Bill, Three Years Later by Brad Plumer, February 17, 2012 at Ezra Klein.

Politics:  Moochers Against Welfare

Political scientists who use Congressional votes to measure such things find that the current G.O.P. majority is the most conservative since 1879, which is as far back as their estimates go.
... why do regions that rely on the safety net elect politicians who want to tear it down?
Cornell University's Suzanne Mettler points out that many beneficiaries of government programs seem confused about their own place in the system. She tells us that 44% of Social Security recipients, 43% of those receiving unemployment benefits, and 40% of those on Medicare say that they have not used a government program.
The truth, of course, is that the vast bulk of entitlement spending goes to the elderly, the disabled, and working families, so any significant cuts would have to fall largely on people who believe that they don't use any government program.

For more, see Moochers Against Welfare by Paul Krugman, February 16, 2012 at NYTimes.com.

Friday, February 17, 2012

Climate:  The Heartland Institute's Climate Denial Machine

Internal Heartland Institute strategy and funding documents obtained by DeSmogBlog expose the heart of the climate denial machine — its current plans, many of its funders, and details that confirm what DeSmogBlog and others have reported for years. The heart of the climate denial machine relies on huge corporate and foundation funding from U.S. businesses including Microsoft, Koch Industries, Altria (parent company of Philip Morris) RJR Tobacco and more.

For example ...

funding for high-profile individuals who regularly and publicly counter the alarmist AGW message. At the moment, this funding goes primarily to Craig Idso ($11,600 per month), Fred Singer ($5,000 per month, plus expenses), Robert Carter ($1,667 per month), and a number of other individuals, but we will consider expanding it, if funding can be found.

And ...

Efforts at places such as Forbes are especially important now that they have begun to allow high-profile climate scientists (such as Gleick) to post warmist science essays that counter our own. This influential audience has usually been reliably anti-climate and it is important to keep opposing voices out.

For more, see Heartland Institute Exposed: Internal Documents Unmask Heart of Climate Denial Machine by Brendan Demelle, February 14, 2012 at DeSmogBlog.com.

Thursday, February 16, 2012

Politics:  Even Critics of Safety Net Increasingly Depend on It

The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54% in 1979 to 36% in 2007, according to a Congressional Budget Office analysis published last year.
In 2000, federal and state governments spent about 37 cents on the safety net from every dollar they collected in revenue, according to a New York Times analysis. A decade later, after one Medicare expansion, two recessions and three rounds of tax cuts, spending on the safety net consumed nearly 66 cents of every dollar of revenue.
One of the oldest criticisms of democracy is that the people will inevitably drain the treasury by demanding more spending than taxes. The theory is that citizens who get more than they pay for will vote for politicians who promise to increase spending.

But Dean P. Lacy, a professor of political science at Dartmouth College, has identified a twist on that theme in American politics over the last generation. Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates.

Conversely, states that pay more in taxes than they receive in benefits tend to support Democratic candidates. And Professor Lacy found that the pattern could not be explained by demographics or social issues.

For much more, see Even Critics of Safety Net Increasingly Depend on It by Binyamin Appelbaum and Robert Gebeloff, February 11, 2012 at NYTimes.com.

Tuesday, February 14, 2012

Mind:  Speaking up Is Hard to Do: Researchers Explain Why

Research from scientists at the Virginia Tech Carilion Research Institute offers an explanation of why many people become, in effect, less intelligent in small group settings.
The researchers administered a standard intelligence test to 70 individuals and divided them into 14 groups of five. Then the groups repeated 92 test questions dealing with sequences and spatial problems.

Two subjects from each group answered the questions while having fMRI scans. After each question, the subjects saw how they ranked within the group and whether their ranking went up, down or stayed the same relative to the group.

Initially, all the brain scans showed spikes in activity in the amygdala, the part of the brain that registers fear and processes emotion. But after answering 10 or so questions, 13 subjects recovered and ended up with scores that were closer to their initial performance. Meanwhile, 14 didn't recover.

"Some people stayed stressed and freaked out the whole time, and some people habituated relatively quickly and started solving small problems," Dr. Montague said.

The researchers reported that 11 of the 14 "low performers" were female; 10 of the 13 "high performers" were men.

The low-performers were more attuned to group social dynamics, subconsciously worrying about their performance and evaluating themselves in relation to others, the researchers speculate.

Women often are more attentive to what others may be feeling or thinking, a sensitivity that likely has an evolutionary origin, Dr. Montague says.

If you are quiet in a group setting, it doesn't necessarily mean you are shy, but it does mean you might be an introvert.

Introverts prefer to collect their thoughts before speaking and can be overwhelmed in a group, especially of extraverts, who tend to "think out loud" and process information by speaking.

For more, see Speaking up Is Hard to Do: Researchers Explain Why by Elizabeth Bernstein, February 7, 2012 at WSJ.com.

Monday, February 13, 2012

Politics:  Obama Takes Aim at GOP Policies in 2013 Budget

Obama's budget proposal ...

From Obama Takes Aim at GOP Policies in 2013 Budget, February 13, 2012 at WSJ.com.

Classes:  Money and Morals

Adjusted for inflation, entry-level wages of male high school graduates have fallen 23% since 1973. Meanwhile, employment benefits have collapsed. In 1980, 65% of recent high-school graduates working in the private sector had health benefits, but, by 2009, that was down to 29%.

For more, see Money and Morals by Paul Krugman, February 9, 2012 at NYTimes.com.

Saturday, February 11, 2012

Classes:  Education Gap Grows Between Rich and Poor

It is a well-known fact that children from affluent families tend to do better in school. Yet the income divide has received far less attention from policy makers and government officials than gaps in student accomplishment by race.

Now, in analyses of long-term data published in recent months, researchers are finding that while the achievement gap between white and black students has narrowed significantly over the past few decades, the gap between rich and poor students has grown substantially during the same period.

For much more, see Education Gap Grows Between Rich and Poor, Studies Say by Sabrina Tavernise, February 9, 2012 at NYTimes.com.

Politics:  The Crowd Pleaser

If Rick Santorum weren't running for president, he would still be saying the same things he is saying today. Very few people believe that about Mitt Romney.

For more, see The Crowd Pleaser by David Brooks, February 9, 2012 at NYTimes.com.

Friday, February 10, 2012

Health:  Trans-Fat Blood Levels Plummet After FDA Regulation

More regulations ...

The amount of trans fat in the American bloodstream fell by more than half after the Food and Drug Administration required food manufacturers to label how much of the unhealthful ingredient is in their products, according to a new study.

Blood levels of trans fat declined 58% from 2000 to 2008. FDA began requiring trans-fat labeling in 2003. During the same period several parts of the country — New York most famously — passed laws limiting trans fats in restaurant food and cooking. The makers of processed food also voluntarily replaced trans fats with less harmful oils.

For more, see Trans-Fat Blood Levels Plummet After FDA Food-Labeling Regulation by David Brown, February 8, 2012 at The Washington Post.

Politics:  Saul Alinsky, Who?

... just who was Alinsky, really? Born in 1909, in the ghetto of Chicago's South Side, he saw the worst of poverty and felt the ethnic prejudices that fester, then blast into violence when people are crowded into tenements and have too little to eat. He came to believe that working people, poor people, put down and stepped upon, had to organize if they were going to clean up the slums, fight the corruption that exploited them, and get a handhold on the first rung of the ladder up and out.

He became a protégé of labor leader John L. Lewis and took the principles of organizing into the streets, first in his hometown of Chicago, then across the country, showing citizens how to band together and non-violently fight for their rights, then training others to follow in his shoes. Along the way, Alinsky faced down the hatred of establishment politicians, attacks both verbal and physical, and jail time.

One thing Newt has right -- Saul Alinsky was a proud, self-professed radical. Just look at the titles of two of his books - Reveille for Radicals and Rules for Radicals. But a communist or socialist he was not. He worked with them on behalf of social justice, just as he worked alongside the Catholic archdiocese in Chicago. When he went to Rochester, NY, to help organize the African American community there after a fatal race riot, he was first invited by the local Council of Churches. It was conscience they all had in common, not ideology.
... according to the Wall Street Journal, ... the one-time Republican majority leader in the House of Representatives, Dick Armey, whose FreedomWorks organization helps bankroll the Tea Party, gives copies of Alinsky's "Rules for Radicals" to Tea Party leaders.

For more, see Saul Alinsky, Who? by Bill Moyers and Michael Winship, February 6, 2012 at The Huffington Post.

Wednesday, February 8, 2012

Lib/Con:  Across the Aisle

In the month leading up to the 2008 election, researchers led by the University of California, Los Angeles psychologist Emily Falk performed brain scans on self-identified Republicans and Democrats as they considered statements from each Presidential candidate.

As the election neared, brain areas linked to emotion and social cognition were intensely active. Areas linked to logic and rational thought, however, were relatively inactive.

For more, see Human Nature and the Neurobiology of Conflict by Brandon Keim, January 26, 2012 at Wired.com.

Society:  Adolescent Birthrates

The U.S. adolescent birthrate is by far the highest among industrialized nations. The birthrate among girls ages 15 to 19 was 39.1 per 1,000 teens in this age group in 2009, the most recent year for which statistics are available. The rate in Western Europe ranges from about 24 per 1,000 teens in the U.K. (slightly lower than the U.S. white non-Hispanic rate) to four in the Netherlands.

From Sex-Ed Less Effective in Red States, Study Says by Christopher Wanjek, February 7, 2012 at Vitals on msnbc.com.

Tuesday, February 7, 2012

Economics:  In Many Countries, G.D.P. Growth May Continue to Slow

For more, see In Many Countries, G.D.P. Growth May Continue to Slow by Floyd Norris, February 3, 2012 at NYTimes.com.

Politics:  Newt Nixon

Dismissing conventional wisdom that portrays the increasingly entertaining Mitt vs. Newt spectacle in standard political language — moderate vs. right-winger, pragmatist vs. ideologue, establishment vs. Tea Party — essayist Kevin Williamson analyzed the conflict in far more basic terms:

It is between those Republicans who disagree with Barack Obama, believing his policies to be mistaken, he writes, and those who hate Barack Obama, believing him to be wicked.

As a political matter ... the parallels between Nixon and Gingrich are ... focused on three streams of conservative resentment:

• Media: Nixon brilliantly used the liberal media as a political foil, casting major news organizations as tools of left-wing Democrats; Gingrich built his breakthrough South Carolina win on two bombastic debate performances in which he tongue-lashed talking heads Juan Williams and John King as elites, winning standing ovations, along with widespread voter support, for his attacks.

• Race: Nixon's Southern Strategy, which exploited the anger and resentment of whites about federal civil-rights legislation, made him the first Republican to dominate presidential voting in the South after the Civil War; Gingrich's statements in South Carolina featured thinly veiled, dog-whistle appeals on race, as when he trashed Obama as the food-stamp president or thundered that Williams, an African American, was unfamiliar with the concept of work.

• Culture: Nixon defined as anti-American bums Vietnam and civil-rights protesters, contrasting them with ordinary Americans yearning for law and order. Gingrich cast Obama not as a partisan rival with whom he disagrees but as an existential threat to America, a dangerous left-wing radical who appeases Islamic terrorists and empowers grotesquely dictatorial judges; his pitch was widely applauded by right-wing Republicans who say they want to take back our country from the foreign Obama, whom they have viewed from the start as an illegitimate leader.

For more, see Newt Nixon by Jerry Roberts, January 26, 2012 at Santa Barbara Independent.

Sunday, February 5, 2012

Diversion:  Calvin and Hobbes

From Calvin and Hobbes by Bill Watterson, January 27, 2012 at GoComics.

Economics:  The Role of Austerity

The chart here offers one of the better recent snapshots of the American economy that you will find.

The blue line shows the rate at which the government — federal, state and local — has been growing or shrinking. The red line shows the same for the private sector.

For more, see The Role of Austerity by David Leonhardt, January 27, 2012 at Economix.

Classes:  The Great Divorce

... there are vast behavioral gaps between the educated upper tribe (20% of the country) and the lower tribe (30% of the country). This is where Murray is at his best, and he's mostly using data on white Americans, so the effects of race and other complicating factors don't come into play.

Roughly 7% of the white kids in the upper tribe are born out of wedlock, compared with roughly 45% of the kids in the lower tribe. In the upper tribe, nearly every man aged 30 to 49 is in the labor force. In the lower tribe, men in their prime working ages have been steadily dropping out of the labor force, in good times and bad.

People in the lower tribe are much less likely to get married, less likely to go to church, less likely to be active in their communities, more likely to watch TV excessively, more likely to be obese.

Murray's story contradicts the ideologies of both parties. Republicans claim that America is threatened by a decadent cultural elite that corrupts regular Americans, who love God, country and traditional values. That story is false. The cultural elites live more conservative, traditionalist lives than the cultural masses.

Democrats claim America is threatened by the financial elite, who hog society's resources. But that's a distraction. The real social gap is between the top 20% and the lower 30%. The liberal members of the upper tribe latch onto this top 1% narrative because it excuses them from the central role they themselves are playing in driving inequality and unfairness.

For more, see The Great Divorce by David Brooks, January 30, 2012 at NYTimes.com.

Saturday, February 4, 2012

Lib/Con:  Left versus Right, in the Brain

Research has already shown that, compared to liberals, conservatives display heightened responses to threatening images.

Michael Dodd of the University of Nebraska wanted to explore this in finer detail: He showed 46 left- or right-leaning Nebraskans a series of images alternately disgusting (spiders on faces, open wounds) and appealing (smiling children, cute rabbits.) Dodd's team found that conservatives reacted most strongly to negative images, and liberals most strongly to positive photographs.

Then he showed them pictures of well-known politicians. The same patterns held: Conservatives displayed more distaste than liberals for politicians they disliked, while liberals felt more positive than conservatives about politicians they liked.

Given these and other findings, wrote Dodd's team, "those on the political right and those on the political left may simply experience the world differently."

For more, see Human Nature and the Neurobiology of Conflict by Brandon Keim, January 26, 2012 at Wired.com.

Government:  Federal Pay vs. Private Sector Compensation

Less-educated federal workers make a bit more than their private-sector counterparts and receive more generous benefits. Workers with a complete or incomplete college education or a master's degree tend to make about the same amount, again with more generous benefits. But highly educated federal workers earn less than their peers in the private sector.

The Congressional Budget Office went further than some other studies in ensuring a comparison of apples to apples — controlling for a worker's education, years of experience, occupation, neighborhood, age, sex, ethnicity and immigration status, among other characteristics.

For more, see Federal Pay vs. Private Sector Compensation by Annie Lowrey, January 30, 2012 at Economix.

Economics:  January Jobs Report

For more, see January Jobs Report, First Impressions by Jared Bernstein, February 3, 2012 at The Huffington Post.

Thursday, February 2, 2012

Mind:  Group Intelligence

When cognitive scientist P. Read Montague of Virginia Tech's Carilion Research Institute administered intelligence tests to people individually and in groups of five, they found that IQ actually dropped in the social setting.

"Individuals express diminished cognitive capacity in small groups," wrote Montague's team, and they're not sure why, though they suspect that social pressure plays a role. Groups have hierarchies and pecking orders; stress and intimidation could translate into compromised cognition.

From Human Nature and the Neurobiology of Conflict by Brandon Keim, January 26, 2012 at Wired.com.

Taxes:  Capital Gains Tax Scheduled to Rise Sharply in 2013

Donald Marron at the Tax Policy Center reminds us that taxes on capital gains are scheduled to increase in 2013, whether the Bush tax cuts are extended or not.

For more, see Capital Gains Tax Scheduled to Rise Sharply in 2013 by Suzy Khimm, January 25, 2012 at Ezra Klein.

Politics:  With Audiences Encouraged to React, Primary Debates Seem More Made for TV

... the protocol for the general election debates, which are overseen by the Commission on Presidential Debates, is that audiences sit in virtual silence or risk being escorted out.

But the primary debates play by different rules. They are often co-sponsored by state parties or other political organizations, like the Tea Party Express, which teamed up with CNN for a debate in September. These groups are given discretion over most of the tickets, meaning that the audiences are usually a politically charged bunch.

Network executives from Fox and CNN argue that regardless of the occasionally unruly crowds, their presidential debates are civic exercises intended to help educate and inform voters. But they also see the debates' value as television productions. Active, engaged crowds are fun to watch. People who sit on their hands are not.

A debate with a mute audience, said Michael Clemente, senior vice president for news at Fox News, is like a movie without a soundtrack. Fox's productions tend to be some of the slickest in the business, complete with a boom camera that sweeps over the roaring crowd, sometimes thousands strong.

For its part, CNN is proceeding with Thursday's debate as it would for any other. Their stage director will be in Jacksonville, Fla., to loosen up the crowd of 1,200, most invited by the state Republican Party. Reaction will be encouraged, as long as it is respectful.

For more, see With Audiences Encouraged to React, Primary Debates Seem More Made for TV by Jeremy W. Peters, January 25, 2012 at NYTimes.com.

Wednesday, February 1, 2012

Government:  New Rules on Airline Fees Take Effect Thursday

More regulations ...

The ticket price touted in airline advertising should be the price you pay under new federal airline regulations intended to save passengers from hidden taxes and fees.
The rules require that airlines include all mandatory taxes and fees in published airfares and that they disclose baggage fees to consumers buying tickets.

Under another rule, passengers now will be able to hold a reservation without payment for 24 hours or cancel a reservation during that period without penalty. Airlines also will be required to notify passengers of delays of more than 30 minutes, as well as flight cancellations and diversions. In most cases, they will be prohibited from increasing the price of passengers' tickets after purchase.

In addition, airlines must disclose baggage fees when passengers book a flight online. Information on baggage fees is required on all e-ticket confirmations.

For more, see New Rules on Airline Fees Take Effect Thursday by Ashley Halsey III, January 23, 2012 at The Washington Post.

Economics:  The Hangover

But for a truly grim picture, read a new report on deleveraging by the McKinsey Global Institute. It points out that in many rich countries the process of debt reduction hasn't even started. America has begun to pare its debt burden, although the drop is small compared with the build-up in 2000-08 (see chart). But many European countries are more, not less, in hock than they were in 2008. There the hangover could last another decade or more.
The McKinsey report pores over two episodes that it considers most relevant for today: the experiences of Sweden and Finland following their banking busts in the early 1990s. Debt reduction took place in two stages. In stage one, the private sector reduces its debts; the economy is weak and public debt soars. In stage two, growth recovers and the longer-term process of reducing government debt begins. In both these cases growth was buoyed by booming exports, a boon that seems unlikely this time. But it is telling that Sweden did not begin its budget-cutting until the economy had recovered; and that when Finland tried an early bout of austerity, this worsened its recession.

The McKinsey analysts carefully avoid suggesting this means Europe's austerity is misguided. Circumstances today are different, they argue: European governments began with higher debt and deficits, leaving them with less room for manoeuvre. But the message is clear: America is closer to Sweden's successful template than Europe is. Debt reduction is very difficult without economic growth, and the scale of Europe's austerity makes it hard to see where that growth will come from.

That's all the more true because Europe's governments have been remarkably timid, compared with the Nordics, in exploiting another avenue to growth—structural reform. The report underscores just how dramatically Sweden and Finland overhauled their economies in the wake of their debt crises. Banks were nationalised and restructured; whole sectors, such as retailing, were deregulated. Thanks to a slew of efficiency-enhancing reforms, productivity soared and investment boomed.

For more, see The Hangover, January 21, 2012 at The Economist.

Classes:  The New American Divide

From a good, long article ...

America is coming apart. For most of our nation's history, whatever the inequality in wealth between the richest and poorest citizens, we maintained a cultural equality known nowhere else in the world—for whites, anyway.
Americans love to see themselves this way. But there's a problem: It's not true anymore, and it has been progressively less true since the 1960s.
When Americans used to brag about "the American way of life"—a phrase still in common use in 1960—they were talking about a civic culture that swept an extremely large proportion of Americans of all classes into its embrace. It was a culture encompassing shared experiences of daily life and shared assumptions about central American values involving marriage, honesty, hard work and religiosity.

Over the past 50 years, that common civic culture has unraveled. We have developed a new upper class with advanced educations, often obtained at elite schools, sharing tastes and preferences that set them apart from mainstream America. At the same time, we have developed a new lower class, characterized not by poverty but by withdrawal from America's core cultural institutions.

I'm not sure his solution will work, but for more, see The New American Divide by Charles Murray, January 21, 2012 at WSJ.com.