Okay so the good news we heard last week mas muffled by the disappointing but expected jobless report. Unemployment remains high at 9.8% and probably won't get down to 5 or 6% for anoter 3 - 5 years and that might be if we're lucky.
Today, however, the Dems and GOP compromised on a tax cut policy that continues the Bush tax cuts as well as the jobless benefits. Both are huge in repairing the economy and stimulating demand. Social Security taxes were also reduced for a year. The bad of this, in my opinion is the lack of progressivity, but that was unlikely to change due to the Republicans hard stance on that issue. So income inequality will probably continue to worsen in the coming years. But overall it is good to see the government is still on board with stimulating the economy. Large deficits really aren't something to worry about at the moment.
The best news out of this agreement is the extension of the jobless benefits. The worst is the tax break for the super-rich who certainly don't need it.
A Ph.D. student's perspective on Catholic Social Teaching and economics.
Monday, December 6, 2010
Thursday, December 2, 2010
Good News?
It is good to see indications that the economy is picking up some steam. Tomorrow will give us a better indication of improving conditions as the Bureau of Labor Statistics releases the November unemployment rate.
Optimism and confidence are starting to pick up which is a good sign, but it still looks pretty bleak for unemployed workers who are seeing their benefits expire. The longer they are out of work, the less attractive they are to a future employer. They also have to deal with physical and psychological health problems that are exacerbated by longer stretches of unemployment. Please keep these people in your prayers!
So despite better news about the health of the economy, good news is still around the distant corner.
Pope John Paul II on work:
"Man is made to be in the visible universe an image and likeness of God himself, and he is placed in it in order to subdue the earth. From the beginning therefore he is called to work. Work is one of the characteristics that distinguish man from the rest of creatures, whose activity for sustaining their lives cannot be called work. Only man is capable of work, and only man works, at the same time by work occupying his existence on earth."
and on unemployment:
"The opposite of a just and right situation in this field is unemployment, that is to say the lack of work for those who are capable of it. It can be a question of general unemployment or of unemployment in certain sectors of work. The role of the agents included under the title of indirect employer is to act against unemployment, which in all cases is an evil, and which, when it reaches a certain level, can become a real social disaster."
"The obligation to provide unemployment benefits, that is to say, the duty to make suitable grants indispensable for the subsistence of unemployed workers and their families, is a duty springing from the fundamental principle of the moral order in this sphere, namely the principle of the common use of goods or, to put it in another and still simpler way, the right to life and subsistence."
[from Laborem Exercens]
Optimism and confidence are starting to pick up which is a good sign, but it still looks pretty bleak for unemployed workers who are seeing their benefits expire. The longer they are out of work, the less attractive they are to a future employer. They also have to deal with physical and psychological health problems that are exacerbated by longer stretches of unemployment. Please keep these people in your prayers!
So despite better news about the health of the economy, good news is still around the distant corner.
Pope John Paul II on work:
"Man is made to be in the visible universe an image and likeness of God himself, and he is placed in it in order to subdue the earth. From the beginning therefore he is called to work. Work is one of the characteristics that distinguish man from the rest of creatures, whose activity for sustaining their lives cannot be called work. Only man is capable of work, and only man works, at the same time by work occupying his existence on earth."
and on unemployment:
"The opposite of a just and right situation in this field is unemployment, that is to say the lack of work for those who are capable of it. It can be a question of general unemployment or of unemployment in certain sectors of work. The role of the agents included under the title of indirect employer is to act against unemployment, which in all cases is an evil, and which, when it reaches a certain level, can become a real social disaster."
"The obligation to provide unemployment benefits, that is to say, the duty to make suitable grants indispensable for the subsistence of unemployed workers and their families, is a duty springing from the fundamental principle of the moral order in this sphere, namely the principle of the common use of goods or, to put it in another and still simpler way, the right to life and subsistence."
[from Laborem Exercens]
Wednesday, December 1, 2010
Saturday, November 20, 2010
Myths about the Deficit, Part 2
Part 1 can be found here.
Myth #2) Government deficits leave a debt burden to our children, or put in another way, deficits today mean higher taxes tomorrow.
In reality, debt or no debt, our children get to consume whatever they produce.
This is difficult to explain in terms understandable to a non-economist, but I'll try anyway. No matter what our government's debt is, our children get to use what they produce. When the government spends, it just adjusts the numbers in bank (checking) accounts. When it taxes, it does the same. When it sells bonds or Treasury securities it does the same except that bonds or securities earn interest, just like a savings account. When the security comes due, it 'transfers' the funds from the savings account to the checking account.
So our $13 trillion debt is nothing more than our savings account at the Fed, whether its owned by us, or banks, or the Chinese, or whoever. Government spending and taxation does influence distribution, but deficits will not cause us to go bankrupt and will not leave a burden to our children.
If deficits cause inflation and currency depreciation, then our children's dollars will have less purchasing power, but they still get to consume whatever they produce. They won't be any poorer or have to pay $40,000 to pay off their portion of the debt.
On the other hand, unemployment and underused factory equipment are detrimental to our children. We are losing output that could benefit us and future generations because of too little spending.
It is important to remember that all debt is someone's liability and another person's asset. When the government takes on liabilities, then that means someone else has an asset. As individuals or businesses we can't take on liabilities without limit, but the government can because it has power over its own currency. This can lead to inflation, but again, inflation is NOT a concern right now. We just set a record for the lowest core inflation measurement since it began in 1958.
The burden we are putting on our children's generation is not the debt, but the lack of employment, output, and the increasing income inequality gap.
Source:
http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/
Myth #2) Government deficits leave a debt burden to our children, or put in another way, deficits today mean higher taxes tomorrow.
In reality, debt or no debt, our children get to consume whatever they produce.
This is difficult to explain in terms understandable to a non-economist, but I'll try anyway. No matter what our government's debt is, our children get to use what they produce. When the government spends, it just adjusts the numbers in bank (checking) accounts. When it taxes, it does the same. When it sells bonds or Treasury securities it does the same except that bonds or securities earn interest, just like a savings account. When the security comes due, it 'transfers' the funds from the savings account to the checking account.
So our $13 trillion debt is nothing more than our savings account at the Fed, whether its owned by us, or banks, or the Chinese, or whoever. Government spending and taxation does influence distribution, but deficits will not cause us to go bankrupt and will not leave a burden to our children.
If deficits cause inflation and currency depreciation, then our children's dollars will have less purchasing power, but they still get to consume whatever they produce. They won't be any poorer or have to pay $40,000 to pay off their portion of the debt.
On the other hand, unemployment and underused factory equipment are detrimental to our children. We are losing output that could benefit us and future generations because of too little spending.
It is important to remember that all debt is someone's liability and another person's asset. When the government takes on liabilities, then that means someone else has an asset. As individuals or businesses we can't take on liabilities without limit, but the government can because it has power over its own currency. This can lead to inflation, but again, inflation is NOT a concern right now. We just set a record for the lowest core inflation measurement since it began in 1958.
The burden we are putting on our children's generation is not the debt, but the lack of employment, output, and the increasing income inequality gap.
Source:
http://moslereconomics.com/2009/12/10/7-deadly-innocent-frauds/
Against Vested Interests
Catholic social teaching should counter powerful vested interests, Pope says
The Pope is calling for us to take action in public life against the prevailing vested interests of big business and corrupt politicians to advance the vision of justice especially in defense of the dignity of the human person. We may soon see more institutions created for research and education of the laity. This would be a great step for the promotion and practice of Catholic Social Teaching!
The Pope is calling for us to take action in public life against the prevailing vested interests of big business and corrupt politicians to advance the vision of justice especially in defense of the dignity of the human person. We may soon see more institutions created for research and education of the laity. This would be a great step for the promotion and practice of Catholic Social Teaching!
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