Full employment, trade deficits, and the dollar as reserve currency. What are the connections?
I’ve been looking for an excuse to scratch out a few lines about the connections between full employment, the trade deficit, and dollar policy—connections that understandably don’t jump out at everyone—and I’ve found a particularly good one.
I don’t plan to publish this wage mash-up every quarter, but given the building and misguided pressure on the Fed to start raising rates to prevent allegedly incipient wage and price inflation, I thought I’d update the previous quarter’s result through the first half of this year.
We don’t yet have all the data I need to update my full-monty-wage-mash-up, but a few series to which I pay attention are now available for the first half of the year: median weekly earnings (MWE) of full-time workers and two flavors of average hourly earnings. What do they show?
Not much, in terms of wage pressures. MWE is a very noisy series–medians are a more volatile statistic then means–so in order to show underlying pace in nominal weekly earnings, I’ve smoothed the series (using an HP filter; both figures show year-over-year changes). Amidst the jumpiness, the deceleration is clear.
AN insidious trend has developed over this past third of a century. A country that experienced shared growth after World War II began to tear apart, so much so that when the Great Recession hit in late 2007, one could no longer ignore the fissures that had come to define the American economic landscape. How did this “shining city on a hill” become the advanced country with the greatest level of inequality?
One stream of the extraordinary discussion set in motion by Thomas Piketty’s timely, important book, “Capital in the Twenty-First Century,” has settled on the idea that violent extremes of wealth and income are inherent to capitalism. In this scheme, we should view the decades after World War II — a period of rapidly falling inequality — as an aberration.
This is actually a superficial reading of Mr. Piketty’s work, which provides an institutional context for understanding the deepening of inequality over time. Unfortunately, that part of his analysis received somewhat less attention than the more fatalistic-seeming aspects. Continue reading Joseph E. Stiglitz: Inequality Is Not Inevitable | NYTimes→
Over the past three decades, Congress has conducted a major experiment in anti-poverty policy. Legislators have restructured benefits and tax breaks intended for the poor so that they penalize unmarried, unemployed parents — the modern day version of the “undeserving poor.” At the same time, working parents, the aged and the disabled are getting larger benefits.
Before 1996, Aid to Families With Dependent Children was the single most important program that provided direct cash payments to poor families, the overwhelming majority of which were headed by single women. Just under 60 percent of adult recipients were never-married mothers, and 24 percent were divorced or separated mothers. Continue reading Thomas Byrne @Edsall: Cutting the #Poor Out of #Welfare – NYTimes→
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Shahien Nasiripour
