Pakistan finally pissed enough to do something?

Well yes, now that a NATO helicopter air strike has killed three of it's soldiers rather than mere citizens, Pakistan is blocking a NATO supply route, according to the Guardian. Enough is enough?

I am not shocked

by the news that income inequality is worse than it's been in a looooong time.

Robert Barro's pony express to lower unemployment

In a Wall Street Journal Op-Ed (why do I read these!?), Harvard economist Robert Barro claims that "according to [his] calculations" without extended unemployment benefits the unemployment rate would now be 6.8%. What are these calculations? Glad you asked!

To get a rough quantitative estimate of the implications for the unemployment rate, suppose that the expansion of unemployment-insurance coverage to 99 weeks had not occurred and—I assume—the share of long-term unemployment had equaled the peak value of 24.5% observed in July 1983. Then, if the number of unemployed 26 weeks or less in June 2010 had still equaled the observed value of 7.9 million, the total number of unemployed would have been 10.4 million rather than 14.6 million. If the labor force still equaled the observed value (153.7 million), the unemployment rate would have been 6.8% rather than 9.5%.

See? If you assume that long-term unemployment is caused by extended unemployment insurance benefits, then removing unemployment insurance extensions solves the problem of long-term unemployment (and you get a pony!). This must be why he makes the big bucks. Magical thinking.

Suppose we make a different assumption. Let's assume that changes in consumer demand has an effect on the level of employment. If so, then the decision to not extend unemployment benefits would reduce demand for goods and services. Where will the jobs come from? Businesses are not going to expand their capacity or their workforce in the face of falling demand for their products. The only way that extending unemployment benefits could actually increase the unemployment rate above what it would otherwise be (other than just assuming it will, as Barro does) is to assume that the people receiving those benefits, rather than spending them on food and rent, use the checks to set fires to businesses that are currently employing people. This assumption has the advantage of actually leading to the conclusion that Barro reaches, without magic.

Update: cross-posted at Multiplier Effect.

Not a nation, but a republic of property owners

Uwe Reinhardt in Are We a Nation of Property Owners?, uses research by Arthur Kennickell at the Federal Reserve and my colleague Ed Wolff at Levy Economics Insitute (and NYU) to argue that Michael Barone of American Enterprise Institute is wrong to say that we are a republic of property owners. The specific passage of Barone's that Reinhardt takes exception to is:

The fact is that we are once again, as in the days of the early republic and not in the heyday of the Progressives and the New Dealers, a republic of property owners. Most Americans have accumulated — or will, during the course of their working years, accumulate — significant amounts of wealth. And that is why, I believe, American voters seem to be rejecting the policies of the Obama Democrats.

Reinhardt's point, made using the research mentioned above, is that most people in the U.S. own very little property, since almost 50% of families have net worth (including homes) of $10,000 or less. So Barone is just wrong to claim that most Americans have or will accumulate "significant" amounts of wealth. Of course, if you believe that significant in this context should mean more than zero, I can't help you.
I think that Barone is onto something, though, as is so frequently the case, not what he intended. The definition of republic is:

a state in which the supreme power rests in the body of citizens entitled to vote and is exercised by representatives chosen directly or indirectly by them.

Barone was talking about a republic in the Jeffersonian sense, apparently, a republic of small property owners (or for Jefferson, yeoman farmers). What we have, essentially is a republic more in the Roman mold, where the property owners are the citizens entitled to vote. But, you say, there are no property restrictions on voting in the U.S.! Right you are, but there are certainly property restrictions on who you get to choose from when you go to vote. More accurately there are property restrictions on who gets to decide who you get to choose from. In this unintended sense, Barone is right. Reinhardt is also right to say that we are not a nation of property owners.

We are not a nation, but a republic of property owners.

In which, if you read between the lines, I foam at the mouth

Half a stimulus is better than none « Multiplier Effect

Care: effective and equitable job creation

Nancy Folbre references some research my colleagues at Levy Economics Institute and I have done: Improving Home-Care Services, Creating Jobs - Economix Blog - NYTimes.com. I'll wait while you go read her post . . .
Long story short from our research : $50 billion would provide early childhood education for the entire country, employ more people than $50 billion in infrastructure construction spending, and provide those jobs to people from the lowest income families. More effective and more equitable than most other spending in last year's too-small stimulus package.

More grim warming news from NOAA

But don't worry, because it snowed in Washington D.C.: NOAA - National Oceanic and Atmospheric Administration - NOAA: June, April to June, and Year-to-Date Global Temperatures are Warmest on Record.

Cool post from the Bad Astronomer

Check it out: Rosetta sends back gorgeous asteroid closeups.

Daily News reports that the US is still confused about treaty obligations and tribal sovereignty

Iroquois lacrosse team banned from flying overseas: U.S. refuses to recognize tribe-issued passports. Hmm . . . What does this remind me of? Oh, Yeah! This:


Good to see we've come so far.

Onion Report: Poor People Pretty Much F@$%d

Truly, the Onion IS America's finest news source: Report: Poor People Pretty Much F@#$%^d. Warning! Naughty words!

The pain in Spain

OK, I've been watching the world cup every possible minute for the last month. Rooting for Germany, Paraguay and the US in that order. And it is with not an inconsiderable amount of sour grapes that I say: 8 goals = 1 World Cup Championship?!!!?!?!??

New book: Solidarity Economy I: Building Alternatives for People and Planet

I am happy to announce the publication of Solidarity Economy I: Building Alternatives for People and Planet, a Center for Popular Economics publication with the cooperation of many in the U.S. Solidarity Economy Network (ussen.org). Many thanks to Emily Kawano and Jonathan Teller-Elsberg, who both put in a lot of time and effort on this project. Especially Emily who graciously and capably took the lead on this project. Thanks also to all the authors who put in the work of producing the chapters and taking our feedback with such good grace. It's a wonderful book. Lots of interesting and hopeful perspectives on what kind of economics we humans can create and practice when we put our minds and our hearts into it. You should buy five copies.

Things to remember with the climate bill

Progressive Fix has a handy Cheat Sheet for Climate Policy (via Environmental Economics). Definite food for thought.

EPI: unemployed/job ratio is 5.6

Not great, but at least it's not growing like it did all of last year: Unemployed workers outnumber job openings 5.6-to-one in March.

How Much Would YOU Pay to Try to Save $60 million a Year and Fail?

Juan Gonzalez, (via Econospeak) tells us how much Michael Bloomberg is willing to pay, and it's not a pretty picture. $722 million and counting.

All About the Benjamins

Check out this link for a notice from the Fed about the new $100 bill. be sure to click through to the exciting video highlighting the features of the new bill. Great fun!

Poignant

And We Shall March shares this link to Ta-Nehisi Coates' tribute to Confederate History Month.

They really shouldn't say such things out loud.

Funny, though: U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion. The Onion truly is America's finest news source. My favorite paragraph:

As news of the nation's collectively held delusion spread, the economy ground a halt, with dumbfounded citizens everywhere walking out on their jobs as they contemplated the little green drawings of buildings and dead white men they once used to measure their adequacy and importance as human beings.

Voting and class

Another great post from Andrew Gelman on whether or not people vote against their own interests (spoiler alert: they don't). Written in reaction to this awful BBC article, it serves as a useful reminder to check the occasional fact.

Update: on a related note, this from factcheck.org, on non-elder health insurance coverage rates.

Tim Pawlenty dishes just what Tea-partiers want to hear

Bruce Bartlett has an excellent take-down of Presidential wannabe, Minnesota Governor Tim Pawlenty. I agree completely, except for the conclusion:

Tim Pawlenty is not ready for prime time. He may think he has found a clever way of appealing to the right wing tea party/Fox News crowd without having to propose any actual cuts in spending, but it isn’t going to work. It’s too transparently phony even for them.

The first sentence is fine. I don't think that last part is true: Pawlenty's reason-free rhetoric is just what many of the Tea-party types seem to want to hear.

Quicker growth? first estimate of fourth quarter GDP growth released

Catherine Rampell reports based on a BEA release that in the 4th quarter real Gross Domestic Product (sometimes referred to as 'the economy') grew at an annual rate* of 5.7%. Since this is a first estimate, Rampell rightly points out that the first estimate for 3rd quarter annual growth rate was 3.7%, which has since been revised downward to 2.2%. Less encouraging still is the fact that more than half of the reported growth is increase in inventories, meaning businesses didn't sell as much stuff as they were planning to, or are building up inventories in expectations of a return to higher consumer spending. But the latter added only 1.44% to the overall growth rate, half a percent off from its 3rd quarter showing. Given the continuing job losses last quarter, inventory increases coupled with a consumer spending slow down looks to me like a bad situation for employment in the near future.

* Annual growth rate here means that if the economy grew as fast as it did in the 4th quarter all year, the economy would grow by 5.7%.

Facts versus Other Facts About the Chicago School's Influence

John Taylor, in a post entitled Opinions versus Facts About the Chicago School, tries to make the case that blaming Chicago School economics for the financial crisis just isn't fair, because Chicago PhDs haven't been in the president's Council of Economic Advisers. He even has a graph that proves it's a TRUE FACT. Maybe. Maybe.
However, the CEA isn't the only important player in the world of financial regulation. Take these guys, for example:

What are these guys doing? Read more about it in this WaPo story. Which school of thought do YOU think those guys wielding chainsaws and pruning shears menacingly over that defenseless pile of financial regulations are from? I lean towards Friedman more than Samuelson on that question.

Economic Theory Throwdown

Check out the Keynes vs. Hayek rap video. Hilarious, at least for an economist like me.

Something I like about Paul Krugman

While Krugman agonizes over the Bernanke Conundrum, he says Bernanke has been assimilated by the banking Borg. Gotta love a geek, I say in an entirely self-serving way. I don't agonize over the decision of whether or not to keep Bernanke. I don't trust him to take the right side between bankers and workers (in other words, I think he's been assimilated by the banking Borg). Krugman himself would be better, as Simon Johnson argues. I think he's probably the best of the could-happen category. My favorite in the wish-it-could-happen category is Jim Crotty.

Still Shedding Jobs

Today's employment report from the BLS shows that we are still shedding jobs (only 85,000 this month, though; woo-hoo!). The unemployment rate remains 10%. Graphs like this one (from Calculated Risk) help make clear why some folks call the the Great Recession. You can see that the employment-population ratio hasn't been this low since 1983. This is most likely not because people are opting for more leisure.

Update:Here's a link to the BLS employment report.

For 6 million Americans, Food Stamps are Their Only Income

In The Safety Net - Living on Nothing but Food Stamps, we learn that: "About six million Americans receiving food stamps report they have no other income, according to an analysis of state data collected by The New York Times." Oy.

H/t Brad DeLong