TCF fellow Jeff Madrick speaks with New York Times columnist Paul Krugman about the themes in his recently released book Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World. Madrick questions the accuracy and legitimacy of the conventional economic wisdom that we use to explain past, present and future economic outcomes in the U.S. and abroad.
Watch the full interview video here.
TCF fellow Mark Thoma writes about the differentiation of the short-term unemployed and the long-term unemployed that make up the labor market. He spells out the differences between the two factions, which turn out to be nearly identicaly in terms of age, gender, race, education level, and even industry.
On the basis of these observable characteristics, we find that long-term unemployed workers are not less attached to the labor market than short-term unemployed workers. If anything, the long-term unemployed group has the largest share of prime-age workers, the age group likely to have the strongest labor force attachment. We also see that long-term unemployment is an economy-wide phenomenon, spread across industries and occupations. While there may be unobservable characteristics of long-term unemployed workers that make them less attached to the labor force, when looking at their observable characteristics, it's hard to argue that they should not be considered as part of labor market slack.
Read Thoma's full article.
A new report from TCF policy associate Mike Cassidy argues that most labor market reporting relies on the wrong statistics.READ MORE
Contrary to what economic theory would predict, business investment in things like new plants and equipment often increases when interest rates go up. Says Thoma:
The answer lies in the "all else equal" assumption economists make when examining the relationship between two variables. If nothing else in the world changed when interest rates go up, investment would fall.
But -- as Fed policy shows -- interest rate increases often result from an improving economy, and the outlook for the future has a much larger impact on investment than interest rate changes. Thus, when the economic outlook improves, we see interest rates rising in general, but the improved outlook has a larger positive impact on business investment than any negative impact from higher rates.
Read the full article.
John Wasik reviews TCF senior fellow Jeff Madrick’s new book, Seven Bad Ideas for Forbes. Says Wasik:
When I read the book recently, I came to the conclusion that Madrick will not only make a ton of enemies among his fellow economists, he’s trashing the conventional wisdom of mainstream economics. It’s about time.
Read the full review at Forbes.
In recent decades, and especially since 2000, the richest Americans have enjoyed soaring income and wealth while the rest of the population's living standards have stagnated. The Century Foundation was one of the first institutions to raise serious concerns about these trends and propose ideas for improving economic conditions for all Americans- not just the fortunate few.
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