Normative Narratives

Monthly Archives: November 2012


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Q & A Friday: Which Country is Worth its Wieght in BRICs?

Another question from Tim out in Madrid:

Q: What makes Brazil so special? We often hear Brazil is a leader in sustainability, how does Brazil’s growth differ from the rest of the BRIC countries?

A: The term BRIC was coined by then Goldman Sachs director Jim O’Neill in 2001, predicting the rapid growth of Brazil, China, India, and Russia. Now 11 years later, this prediction appears to be spot on. However, of all of the BRICs, I would argue (and many would agree) that Brazil’s growth model has been the most “sustainable”. Sustainability can mean a lot of things, in this sense I believe Brazil’s growth has been the most environmentally, economically, and socially sustainable. Brazil would probably be recognized as the most popular BRIC, evidenced by both the 2014 World Cup and 2016 summer Olympics.

Brazil’s environmental sustainability comes from two main sources, hydroelectric power and sugar cane ethanol. Over 90% of Brazil’s electric energy is produced by hydroelectric means. Sugar cane ethanol, which is much more cost-effective to produce than the corn ethanol produced in the U.S., accounts for 50% of light vehicle fuel demand, and is expected to account for 80% by 2020. Brazil is also the world’s largest ethanol exporter, accounting for 90% of the world market.

China actually produces more renewable energy than Brazil. The problem is it also produces much more coal and imports much more gasoline than Brazil. China accounts for a whopping 49.5% of world coal production, with India at 5.6%, Russia at 4%, and Brazil at .1%. Among proposed new projects, China (363) and India (455) have far more than even Russia (at 3rd with 48) and Brazil (not even on the list)—2/3s of new coal projects will be in China and India. China is also the leading oil importer of the BRICs at over $200 billion a year, with India ($150 billion) in second, and Brazil in third (at around $35 billion). Russia is in the unique position of being an oil exporter, which is financially more sustainable, but not environmentally more sustainable.

Other than energy, Brazil seems to be the best of the countries to live in. Russia and Brazil are numbers 1 and 2 in both GDP per capita ($15,600 a yr versus $11,300 a year) and higher HDI (human development index, the closer to 1 the better, a measure of overall standard of living) (Russia = .755, 66th  ; Brazil =.718, 85th). There is something about Brazil that makes it seem like a more appealing place to live, for me, than Russia. I guess  maybe the weather?

Having said that, things are not always sunny in Brazil. Brazil has the highest income inequality of the BRICs, a legacy from colonial times when the indigenous people were treated like second class citizens. Today, this issue has manifested itself into a dualistic economy, a modern growing urban economy and a stagnant subsistence rural economy. While government reforms aim to correct these issues, this is no easy task. Perhaps unsurprisingly, violent crime is also the highest out of the BRICs in Brazil, with over 40,000 confirmed homicides in 2010.

Brazil has been a model of sustainable development, weathering the most recent global financial crisis very well. Continued leadership in renewable energy production and exports ensures a long term sustainable source of revenue. Commitment by the government to education reform and adequate social spending, along with falling unemployment, should help reduce income inequality and violent crime in the country. If the government can commit ample resources to fixing the backwards rural parts of society, then Brazil has a truly bright future.

All of the BRICs have their comparative advantage, and will therefore continue to grow going forward. China has the world’s largest population, and therefore workforce and customer base. India is the world’s largest democracy, and therefore will always be an important bridge between the developed and developing world. Russia has very close ties to European markets, and its natural resources provide a constant stream of revenue for the country.

In terms of sustainable development, however, I believe Brazil takes the cake.


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Transparency Thursday: The “Fiscal Cliff” Explained, and Partisan Politics on the Hot Seat

Good question Dan.

The “fiscal cliff” is a series of automatic tax increases (or an expiration of the Bush-era tax cuts) and spending cuts (across the board: education, healthcare, military, ect.) that are set to kick in early in 2013. With the economy in it’s current state, everyone believes this will cause another recession in the U.S. (and probably make a recovery for the EU much more difficult as well). This option was supposed to be so unpopular that it forced a new budget plan, yet here we are a month before the “cliff” without a resolution–yet.

The “fiscal cliff” was a resolution to the “debt ceiling” debate in the summer of 2011, when the G.O.P. agreed to let U.S. debt to go past a certain point (as opposed to defaulting on our debt) in exchange for an extension of the Bush era tax cuts. Other than the Bush era cuts, another major tax cut that will expire is the payroll tax cut, which will either make hiring employees more expensive, make workers after tax wages go down, or some combination of both.

The issues are as follows: The Democrats (and probably the Republicans) want the Bush era tax cuts to remain in effect for lower-middle class families. Where they differ is what should happen to tax rates of wealthiest Americans. Democrats wish for tops rates to go back to Clinton levels (39.6% top rate) and to raise capital gains taxes (which are disproportionately skewed to high income Americans, from 15%). Republicans, who believe raising taxes on the richest will cause the economy to stall, do not want to raise taxes on the wealthiest, and instead wish to reduce the deficit by closing loopholes / exemptions, broadening the tax base. and overhauling certain social programs (such as Medicare and Medicaid).

There is evidence this will not do enough to close the deficit, such as the fact that any budget plan stating this does not propose any specific cuts (or their effects on economic growth) and rather states that some ambiguous cuts will be made (i.e. Paul Ryan’s whole budget plan). Republican’s continue to oppose raising taxes on the wealthiest, despite evidence that it will not affect overall economic output.

The G.O.P. raises good points. The American tax code and social spending have needed to be overhauled for some time now. The point is, these important long term issues should not be held to the same short term time constraints as the “fiscal cliff”. If a deal is not reached (or they do not decided to “kick the can down the road” by extending all current tax cuts a while longer), all Bush era tax cuts will expire–both on the rich and the not so rich.

This is why I say the G.O.P. is taking the U.S. economy “hostage”, by saying that if they do not get reforms–which have eluded congress for decades–figured out in a month, they are willing to go over the fiscal cliff and make everyone pay. It is important that people realize going over the fiscal cliff is not a failure of President Obama, or any one person, but a failure of partisan politics in general. If the whole country is made to pay for the inability of congress to avoid the fiscal cliff, it would be a completely avoidable crisis coming to pass. Whats more, taxes on the rich would go back up to 39.6% anyways, we would just have a depressed economy on top of it.

Ironically, it is not raising taxes on the rich or debt from social spending which will cause the U.S. economy to stall, it is a failure to ensure spending remains at its current level (or better yet, increases with new stimulus), and raising taxes on low / middle class earners that would ultimately cause a recession. Low / middle class earners naturally spend more of their tax deductions; their marginal propensity to consume is higher, meaning every dollar they get they spend more than a rich person, boosting the economy, and the “Ricardian Equivalence” argument against tax cuts stimulating the economy does not hold for low income beneficiaries as it does for wealthier beneficiaries, because they do not believe these cuts will be offset by higher future taxes. A combination of higher taxes and lower transfers to low and middle income earners would depress the economy much more than raising taxes on the wealthiest. Going over the “fiscal cliff” would actually cause the debt / GDP ratio to go up (debt would go down, but GDP would go down more), despite higher taxes and lower spending. If the country were running a surplus (like under Clinton), going over the fiscal cliff would be strong counter-cyclical economic policy. In the current context, however, it would just punish all American’s.

In this light, some business leaders have campaigned against the fiscal cliff and agreed to pay higher taxes to avoid it. Some G.O.P. congressman have backed off their hard line approach to raising taxes. For the good of America, hopefully a deal is reached. Then we can being the long process of overhauling the tax code and making entitlement spending more efficient.

Furthermore, if the G.O.P. wants any chance of becoming more popular, and having any campaign to run on other than “do nothing and show how the Democrats failed” (which didn’t work so well in the most recent presidential election), it would make sense, both politically and economically, to ensure America does not go over the “fiscal cliff”.


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Economic Outlook: America doing “The Least Worst Among Major Economies”

The recession has been over in America for some time now, since about June 2009. However, lackluster growth and high unemployment (7.9% as of October 2012) has the U.S. in what is sometimes referred to as a “growth recession”. Although GDP growth is positive, so the economy is not technically in a recession, certain indicators have not returned to their pre-recession levels.

However, the U.S. is doing far better than the EU, which has by some estimates fallen into a “double-dip recession”. This is probably due to the constraints on monetary policy, forcing countries to pursue austerity to get ECB financing for their debt even though it is counterproductive in terms of growth and therefore debt/GDP ratio. Unemployment is much higher in the EU as well, above 11% for the region and as high as 25% in Spain and Greece.

There are a few reasons why the U.S. is doing so much better. For one, “Quantitative Easing” helped keep markets liquid despite a lack of private capital (as evidenced by the zero bound liquidity crisis). Printing money has not caused the dollar to inflate, nor driven interest rates up. Also, Obama’s stimulus package, often talked about as a failure, almost certainly prevented the recession from being worse. Perhaps it was inadequate in size, or money was not spent as efficiently as possible, but it was almost assuredly better than doing nothing or cutting important programs. If the U.S. can avoid the fiscal cliff, perhaps more stimulus spending will help bolster economic growth and further reduce unemployment.

Euro countries cannot print their own money, so they must borrow externally to keep their economies running. But nobody wants to lend to Euro countries right now, understandably, because they fear default. Both EU countries and the U.S. have high debt/GDP ratios, but only EU countries which cannot print their own money face the high borrowing costs that make this debt “unsustainable”. Recently, the ECB has signaled a willingness to engage in its own “Quantitative Easing” by buying unlimited amounts of Euro country debt at lower rates. But in order to unlock this financing, the countries must pass unpopular and economically unsound austerity policies.

So while things are not all sunshine and rainbows here in the U.S., you need to look no further than the Euro zone to see how bad things really could’ve gotten here had Ben Bernanke and Barack Obama listened to the tight monetary / fiscal policy people following the Great Recession. We are not out of the woods yet, with much riding on the so called “fiscal cliff” negotiations, however “America is doing the least worst among major economies”

 

 


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Conflict Watch: Catalonia Taking Independence From the Bull by the Horns

For the first conflict watch, I decided to focus on the current conflict in Spain to highlight that conflicts do not necessarily have to be violent. I would like to write about the cease-fire in Gaza, but there has been surprisingly little news on that front, which is probably a good thing—in that case no news is good news.

A little background on Spain’s current condition. In 2008, before the global recession began, Spain had a very manageable 36.1% Debt/GDP ratio. This had not always been the case, in the late 90s the newly integrated EU countries received huge capital inflows, and Spain’s Debt/GDP ratio peaked at 67.4%. However, in the years leading up to the crisis, Spain was reducing its Debt/GDP ratio at an impressive pace. However, capital inflows have the effect of making a nation’s currency stronger, making its exports weaker. This is all good and fine while money remains available at a reasonable rate. Once a cataclysmic event occurs, such as the “Lehman-Moment”, liquidity can dry up very quickly, and there is no longer money to keep the economy going. Being in the Eurozone, countries give up their right to print more money. In order to attract money, interest rates on debt go up, making debt accumulate even faster. Spain currently has 25% unemployment, a Debt/GDP ratio of 90%, and are currently facing austerity measures that will further depress the economy in order to unlock low interest debt relief. To put it simply, through little fault of itself, Spain finds itself in a Great Depression-esq recession.

To make matters worse, one of Spain’s largest regions, Catalonia, has recently agreed to vote on Independence from Spain. With 7.5 million people and 126.6 billion Euros of GDP, Catalonia accounts for roughly 8% of Spanish economic output and 16% of the population.

Catalonia leaving Spain would create many complications. For one, Catalonia has a large debt burden (44 billion Euros as of June) representing 22% of its GDP. If Catalonia seceded, would Spain still be responsible for Catalonia’s debt up to this point? Could Catalonia default on its debt? Considering the vast majority of Catalonia’s trade would occur with Spain and the EU, a split from Spain would have to be “amiable”.

Spain currently pays 77.67% of Catalonia’s debt and 50% of its public spending. On the flip side, Catalonia pays roughly 8% of its GDP per year to projects outside the region, money it could use to finance debt and social spending. It appears the people of Catalonia believe they would be better off on their own.

What would a split mean for Spain, as Catalonia is one of Spain’s largest regions? We often hear that Greece must stay in the EU to avoid a domino-effect of countries leaving; could a large providence have a similar effect on the greater EU?

Given the current situation, as someone who believes in the importance of the EU as a symbol of democracy and “western values”, it would be best for Catalonia to put off calls for independence until after the recession is over. Of course, this is why Catalonia feels like it must act now; with a new round of austerity on the horizon, Catalans believe it is in their best interest to become independent now.


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Monday Morning QB: Setting the Market

Hello everybody. I hope you all had a happy holidays, and were able to save up enough good feelings to make it through these next few weeks until the next round of holiday festivities.

Quick thoughts about the NFL before I get to my main point:

RGIII is the truth; he’s going to give the G-men headaches for years. Eli is back in elite form and the giants D-line showed up in a big W vs. the Packers. The Bears look good on both sides of the ball again. Kolin Kaepernick seems to be for real; the guy’s got a laser arm, can run and avoid pressure, and is now 2-0 as a starter vs. two good teams—guess I focused on the wrong backup QBs to highlight last week huh?

The Steelers need Ben Roethlisberger back if they want to a chance to get to the playoffs this year. After committing 8 turnovers against the Browns, it will be ugly next week vs. a much better Ravens defense if he’s not under center.

The Eagles look to continue rebuilding with Nick Foles during Andy Reid’s lame duck period as his time with the Eagles comes to an end. Both Vick and Reid have a history of success in the NFL, and I would bet both of them find a new NFL team next year. The Dallas Cowboys look like they should follow suit and begin rebuilding—the Tony Romo project has failed.

The Jets are terrible, maybe I’ve been to kind to Mark Sanchez. Fireman Ed “quits” in a symbolic move; if he’s as much of a fair-weather fan as most other Jets fans, he’ll be back when they start winning again.

The Patriots, Texans, and Falcons are all very good; It’s gonna be a tough road to the SB this season in both the AFC and the NFC, as it always is.

In baseball, I believe the market has been set for Josh Hamilton. Over the weekend, the Tampa Bay Rays extended Evan Longoria for 6 years 100 million dollars. Longoria is 27 years old, and will be 29 when the extension kicks in. Hamilton is a bit older at 31, but due to off the field issues will be starting only his 7th MLB season next year (it will be Longoria’s 6th). Both players are leaders on their clubs, have MVP type talent, and have a history of injuries. Hamilton’s off the field issues make him a bigger risk, but his talent level is a bit higher than Longoria’s so I believe there value evens out.

Hamilton’s camp wanted somewhere in the 5-6 year, 140 million dollar range, but after Longoria’s extension and unwillingness by teams to sign the big deals this offseason, I believe they will have to readjust their asking price.


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Thanksgiving is not Over at NN: How Big is the Pie, and How Should it be Cut?

In line with what I wrote in an earlier post, this study examines the effect of top income tax rates on economic growth and income inequality. I urge you to read the summary, which is about two pages, as the whole article is a bit long.
As I would expect, tax rates on top earners seem to have insignificant effects on savings, investment and consumption. They do however, have an effect on income inequality. So all the G.O.P. rhetoric about how increasing income/capital gains taxes on America’s wealthiest would cause the economy to stall is, to put it as nicely as possible, bullshit. It is nothing more than wealthy people using their most abundant resource–their wealth–to try to shape political discourse and policy.

The sustainability of the American Dream requires this false ideology to be exposed and thrown away like the trash it is.


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Q & A Friday: The Importance of “Made In America”

Q: Hey Ben,

People on both sides of the aisle argue that the decline in U.S. manufacturing is bad for the economy, even if this decline has been accompanied by an increase in the value of services we generate. Is there any truth to this, or is it really a disguised social argument about Wall Street versus Main Street?

A: Hi Travis. A great question that will draw strong reactions from both sides of the political spectrum as you mentioned. Many people point to the auto industry bailout as one of the deciding factors in the 2012 election. While I agree there is truth to manufacturing being “special”, I also believe this is a case of Wall St. versus Main St. After all, if everyone believed in the importance of manufacturing there would be no debate at all!

Manufacturing is an important development mechanism for any country. Virtually no country today developed without a strong manufacturing sector aimed at import substitution and export promotion. The middle class has for a long time been the cornerstone of the strong U.S. economy. This idea was driven home by Bill Clinton in a famous quote “if you just ‘work hard and play by the rules’ you should expect that the American system will deliver you a decent life and a chance for your children to have a better one”. A strong manufacturing sector is important for a strong middle class.

It also taps into a concept, brought to my attention by Paul Krugman, of “economies of agglomeration”. The basic principle is that “manufacturing plants don’t exist in isolation; [they] benefit a lot from being part of a manufacturing cluster, with specialized suppliers and a large pool of workers with the right skills close at hand” Many factors, including “transportation costs, economies of scale, and factor mobility”, make the sum of “agglomerated” economies greater than its parts. (Think of them as the modern day version of 19th century “company towns”, except the workers are much better off because they are unionized / have better labor laws). This is one of the reasons why the collapse of the auto industry would’ve had such dire effects on the U.S. economy, and why Obama’s auto-bailout was so popular.

By the value of services we generate, I assume you are referring mainly to financial services. Capital gains tend to be realized by the upper-class of society–the 1% or .1%, if you will. Not only is there less of a shared benefit (as evidenced by Gini coefficients over time), but it diverts reinvestment away from the real economy to the financial sector. A combination of lax oversight (perhaps due to very high profits or “rents” and the subsequent corruption that follows), an implicit “too-big-to-fail” view of the mega-banks, and low capital gains taxes created an implicit subsidy to invest in the financial services industry. This holds true for both domestic and international capital. What you end up with is over-investment in a bubble (which inevitably pops), and under-investment in the real economy (manufacturing, infrastructure, education, healthcare, non-financial services, etc; the real driver of sustainable economic growth). When the bubble pops, we are left with a deep recession combined with a systematically under-investment-in real economy. Open capital accounts lead to “contagion”, and a domestic recession becomes a global crisis. Fiscal deficits make this worse; as people will be calling for expansionary fiscal austerity (which is a myth in the current context, austerity would be contractionary). Using the “Absorption Approach”, we can see how over-investment and low incentives to save money lead to large current account deficit, as we have here in America now.

This concept is illustrated below (model by me, click on the pic to see the model):


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Cowboys and “Indians” (In Sports)

Cease-fire in Gaza as of 2pm ET, I want give it a few days to see how effective it is at stopping the most recent Israeli-Palestinian conflict before writing about it.

In the spirit of Thanksgiving, we should all remember how lucky we are to be Americans, to live in this great country, and to not have to worry about our security on a day-to-day basis. My prayers go out to the innocent people on both sides of this conflict (and the innumerable conflicts going on constantly in the developing world which do not get any media coverage) –they deserve better.

When thinking about a uniquely American culture, it would be hard not to consider the “Western”. The rugged individualism of the stereotypical cowboy embodies many of the qualities Americans value: toughness, hard work, and a certain defiance of the rules. This image has been made even more popular through media, specifically through Western films.

In a less appealing light, there is also nothing quite as American as taking advantage of Native Americans. We are all taught at a young age how the early Americans took advantage of the Native Americans (beads for Manhattan), driving them from their lands and killing those who would not go quietly. There is nothing that can be done about past atrocities, except to be as transparent as possible about what happened, and to be conciliatory going forward to those who were wronged. This holds true for many past atrocities; denying history as a defense mechanism only serves to open up old wounds and ensure new relationships will not form.

Continuing in the spirit of Thanksgiving, I would like to do a little fluff piece about “Cowboys” and “Indians” in another distinct form of American culture—Professional Sports:

MLB:

Cowboys: Texas Rangers

Indians: Cleveland Indians, Atlanta Braves, Cincinnati Reds (?)

NFL:

Cowboys: Dallas Cowboys, Denver Broncos

Indians: Washington Redskins, Kansas City Chiefs

NBA:

Cowboys: Dallas Mavericks, San Antonio Spurs

Indians:

NHL:

Cowboys: Dallas Stars (?)

Indians: Chicago Blackhawks

Some Native American groups have spoken out; saying Native American images in sports insignias are disrespectful. However, polls show these people to generally be a loud minority, with most Native Americans supporting the use. After all, sports are popular, and no press is bad press right?

A few patterns emerge here. For one, most “Cowboy” teams are unsurprisingly located in Texas. Another trend is that more quintessentially “American” sports (baseball and football), seem to feature more “Cowboys and Indians” than more international sports (hockey and basketball). As sports become more international, perhaps we will see even less team names that fit into these two American categories.

I’m sure I missed some, so help me fill in the blanks in the comment section. Also, I know there are lots of college sports teams which fit into these two categories; if anyone with extensive knowledge of college sports wants to begin making a list it would be appreciated, and I will update the post to include them.

Happy Thanksgiving! See you all on Friday.


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The Fiscal Cliff Revisited

With the conflict in the Gaza strip in a fluid state, I have decided to forgo blogging about this issue until more solid decisions are made. Instead I will answer a commenter’s question:

Q:  Lets talk about the fiscal cliff, the wisdom of austerity in america, and the implications to organized labor… GO!

A:            If America “goes over” the fiscal cliff, then automatic spending cuts and tax increases will kick in. This is, for all intents and purposes, the same thing as “austerity”. There is no wisdom in American austerity right now. With the fiscal multiplier > 1, credit markets in a “liquidity crisis” (meaning even at zero % nominal interest rates, private investors still favor investing in federal bonds over private markets), and unemployment still at unacceptably high levels, there should undoubtedly be more government stimulus, not austerity. Being in a liquidity crisis, the “crowding out” effect of stimulus spending is non-existent; government investment doesn’t get in the way of private investment because there is inadequate private investment to begin with. Government stimulus could reduce the unemployment rate by hiring more teachers, undertaking new infrastructure projects, investing more in affordable healthcare, or investing in research and development projects (in renewable energy, for example). All of these measures would not only cut unemployment, but would also increase human capital, ensuring America will continue to grow despite the negative consequences of globalization / job-outsourcing (Globalization is mainly a positive force, but there are some negative issues that have affected the U.S. middle class specifically). There is no wisdom in austerity in America right now as it would cause a double dip recession. With 0% borrowing costs, and flexibly monetary policy (two things the EU does not have which make austerity measures an unfortunate reality there), there is no reason the U.S. should engage in austerity programs.

The issue of reducing the federal deficit is important. The U.S. has needed to overhaul its tax code for a long time, specifically with regards to tax deductions / exemptions. Certain entitlement programs, such as Medicare and Medicaid, need to be re-examined to ensure that they run efficiently and are not wasteful. However, this is true of all government programs; they should all be subject to review to ensure they run efficiently. This is nothing new and is not an indictment of any specific program. Anything that requires a lot of resources should be subject to review, to ensure those resources are being allocated as efficiently as possible. Making sure a program runs efficiently (best use of available resources), is different than austerity (cutting resources).

However, these long term goals (tax code overhaul and fixing entitlement spending), are separate from avoiding the fiscal cliff, which is a short term goal. By refusing to talk about tax rates without addressing entitlement programs / tax exemptions, the G.O.P. is basically holding the U.S. economy hostage, saying if we do not come to an agreement about these complex issues fast, we are willing to send America back into a recession. Overhauling the tax code and fixing entitlement programs is a huge undertaking, one that cannot be completed before the fiscal cliff passes. Adjusting tax rates and avoiding the fiscal cliff is a simpler matter, which has been made into a complex one. Different factions, insisting on addressing peripheral matters instead of working on a deal to avoid the cliff, are playing game theory with the U.S. economy. The most pressing issue for the U.S. is to avoid a fiscal-cliff-recession. U.S. debt is sustainable as long the government can borrow at low rates and print money without the risk of inflation, which it currently can (because of the liquidity crisis, and the fact that the USD is the world’s most important reserve currency). The fiscal cliff must be addressed immediately; tax-code overhaul and entitlement reform should be addressed without the time constraints imposed by the fiscal cliff. Congress should absolutely start talking about these long term objectives (they should’ve been addressed earlier, but congress hasn’t exactly been a model of efficiency in recent years, in fact tax code reform has been on the agenda for decades), but they should not be artificially held to the same time constraints as a fiscal cliff deal.

Some big employers may threaten to cut their work force if they are faced with higher taxes, but this is for the most part an intimidation technique. Businesses make their decisions based on profitability, increased costs from higher taxes can be passed on to the customer, or manifest themselves in lower wages (which, in light of high unemployment, should not be seen as the end of the world by organized labor, at least they would still have jobs albeit at lower wages), without greatly altering a company’s employment structure (I do not think any business would forgo profits just to show its distaste for higher taxes). However, if the a deal is not reached, then there will be government spending cuts, meaning less money for public sector organized labor (such as teachers unions). Also, a recession would put a dent in people’s disposable income, meaning less demand for certain goods, and less need for labor to produce these goods. In order to avoid higher taxes, business leaders may state higher taxes will lead to lay-offs, but in reality a failure to avoid the fiscal cliff would have much more devastating effects on employment and the economy as a whole (or aggregate demand if you want to be technical).
Businesses supply goods (which require labor and capital among other things), in response to consumer demand. If there is another recession, and consumer demand takes a hit, companies will have no choice but to cut employment and supply fewer goods. Higher taxes on the rich should have modest effects on unemployment, while a recession and/or cutting important social programs would have a much larger impact.


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Get Involved!

I don’t know if I stated this clearly enough, so I’ll take this opportunity to explain how I hope NN works going forward.

I created this blog not only to be my outlet, but also to be your outlet. Everybody has something intelligent to say on some issue, everybody has their area of expertise. The blog can be as diverse as the world itself, but I need people who know about issues I do not know about to contribute too. You do not have to be a professional or a student of a certain area; you simply need to know enough to put together a coherent argument about how something could work more efficiently.

Also, I know some of my posts can get technical. At a certain point, you need to be technical in order to directly express your point. If at any time you do not understand something I have said, comment or email me and I will be happy to explain it as simply as possible to the NN community as a whole. It’s like your teachers always told you, if you have a question chances are 10 other people are wondering the same thing.
As I said, you can determine what topics this blog focuses on. It can be just me spinning my wheels every week, or it can be you getting your opinions heard as well. So get involved and make a difference. Email me any stories you want me to put up at bzupnick@fordham.edu.

I have been busy with interviews and classes today so no posts other than MMQB. Check back tomorrow for an in-depth analysis of the current Israeli-Palestine conflict in Normative Narratives’ inaugural “Conflict Watch Tuesday”