Category Archives: Economy/Economics

Monday’s Mtg: Have Elites Failed Us?

Several members of our Meetup group asked what I had in mind by “elites.” I deliberately left it undefined to make a point. Americans have some very different ways of defining the horrible, no good elite that everyone supposedly voted to overthrow. In fact, I think vast differences in the way we define our elites lay at the core of our political polarization even before we elected Donald Trump president.

Trump’s populism claims to be a call to arms to overthrow the “Washington establishment” and its collaborators here and abroad. As he said in his inaugural address (in between the talk of carnage and despair):

“For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished, but the people did not share in its wealth. “

Trump’s parasitic elite seems to be our national governing elite, the establishment politicians and the permanent “deep state” that they command. His Hellish vision of a collapsing America sold out by its own elite is pretty stark, that’s for sure.

But, how specific is it, and how accurate?  Who exactly are these quislings and what did they do, and to whom? Maybe history helps. When CivCon discussed modern American populism last June, I noted that populist movements everywhere share a basic characteristic. They identify some despicable, self-dealing elite that exploits the virtuous but powerless masses. The elite is not only privileged; it is unfairly privileged. The elite can be a real or imagined; Its victims all of “the people” or just a subset.

Moreover, Right and Left populist movements in U.S. history usually pick a different elite to resent and not quite the same “We, the people” to champion. Left-wing populism’s villain is concentrated private power, like the Robber Barons and their trusts or today’s giant corporations and the 1% that help them rig the game for plutocracy’s sake. Its victims are everybody else (well, except people of color, until recently), but especially the lower classes and the poor. In contrast, right-wing populism has tended to see a conspiracy of both the top and the bottom against the middle. Its corrupt overlords are government insiders helping an undeserving underclass and/or foreigners redistribute wealth and cultural prestige away from hard-working real Americans.

I’m not trying to dismiss this whole topic nor one side’s POV. Quite the contrary. I feel confident in saying that elites have failed the country, as do large majorities of Americans in poll after poll going back years. But, I am pretty knowledgeable about this stuff. I believe I can connect our country’s worst problems to specific failures by the people with all of the power and influence. I picked this topic so we can explore why just about everyone else thinks the same – even though they seem t disagree about who the elites are and what they are doing wrong and why.

We have plenty to talk about on Monday.  Here are some discussion ideas and readings.

DISCUSSION QUESTIONS –

  1. Who are America’s elites? Are there multiple elites with different interests and power sources, such as…
    1. Economic class versus social/cultural elites.
    2. Racial and ethnic elites?
    3. Educated and regional/cosmopolitan elites.
  2. Do our elites perpetuate power unfairly, or are they a meritocracy?
  3. Why is everybody so mad at elites? Do Americans agree on who to be mad at and why?
  4. Are elites indeed responsible for the mess we are in? Why?
  5. Is Trump just scapegoating? What should/could be done to reduce the power of American elites?

SUGGESTED BACKGROUND READING –  

 

NEXT WEEK: A change of pace – What’s going right in the USA these days?

Monday’s Mtg: Should We Raise the Minimum Wage?

I had this idea for us to do a series of meetings in the run-up to November that highlighted the starkest policy differences between the two presidential candidates. Oops. Donald Trump’s candidacy and Media’s obsession with horserace trivia make that pretty hard to do. Trump’s policy platform involves him basically riffing a stream of consciousness on whatever topic an interviewer brings up, hoping to run out the clock before anyone notices he has no policy ideas at all nor a rudimentary grasp of the issue.  No one seems to know exactly what Trump’s position on the minimum wage is, much less what it might be tomorrow or in a face-to-face debate with Clinton.

But, I’m not sure it really matters. As I keep hammering away at week after week, we are electing a political party to govern us more than an individual. And, the Dems and GOP at all levels hold irreconcilably-opposite views on the minimum wage. The Republican Party is wholly opposed to raising the minimum wage at all. Period. Many conservatives would prefer it be abolished or reduced, although I doubt they would take the political risk of trying it at the federal level. Marco Rubio and Ted Cruz oppose any federal minimum wage.

In stark contrast, Democrats really, really want to raise the minimum wage, either nationally or in as many states as possible. Hillary Clinton campaigned on raising it by 60%, from $7.25 to $12 per hour, to be phased in over several years. This would be the largest such increase in history. Under pressure from Bernie Sanders, Clinton stated she would sign a $15 minimum wage bill if a Democratic Congress sent one to her. This would double it.  This November 8, minimum wage increases are on the ballot in five states.  Democrats want to make this a wedge issue – one that motivates base voters to turn out – like Republicans did with same sex marriage bans in 2004.

Luckily for us, the debate over what would happen if the minimum wage were raised significantly is not all theoretical. The current federal minimum wage is just $7.25 per hour, one-third lower in inflation-adjusted terms than it was in the late 1960s. However, 29 states have a higher minimum wage, 12 of which are over $9.00 per hour. California’s is $10 – the nation’s second-highest –and Brown just signed a law to raise it to $15 in 2022. This means that lots of studies have been done comparing places that have raised the minimum wage to those that have not raised it. The results are generally encouraging to the liberal economic case for raising the wage. Yet, as I will explain, it’s not quite that simple.

On Monday I will open with a brief tutorial on the minimum wage and the types of questions we should be asking about what might happen if we raised it to various levels. I don’t think lowering the minimum wage is really on the table right now as a viable policy option, although if Trump wins, all bets are off.

DISCUSSION QUESTIONS

  1. Current policy:
    1. How high are U.S. minimum wages now and how high are they due to rise in some states?
    2. What else does govt do to support working poor? How important a policy tool is the minimum wage in comparison?
  2. Arguments: What arguments are used to support and oppose raising/lowering/ending the minimum wage
  3. Evidence: Based on history what affects would raising min. wage have on:
    1. Helping people: Raising incomes of the working poor, reducing poverty and reliance on govt transfer programs.
    2. Hurting business: Killing jobs, raising prices, other business decisions (like replacing workers with machines).
    3. Would more spending on other govt programs (EITC, etc.) do more to help the working poor than raising the min. wage?
    4. Can we predict what would happen if we abolished the min. wage?
  4. Fairness:
    1. Will raising min. wage really put a dent in inequality?
    2. Will it make low-wage pay more “fair?” What’s fair?
    3. Does the minimum wage subsidize big corporations more than it helps the poor (they can keep paying low wages)?
  5. Politics: Is this a winning issue for Democrats or Republicans? How big a winning issue?

SUGGESTED BACKGROUND READING –  

Next Week (Sept 26):  Progressives’ Constitutional Philosophy.

Monday’s Mtg: Do Government Anti-Poverty Programs Work?

This month marks the 20th anniversary of federal welfare reform. The 1996 law drastically limited assistance under the U.S. govt’s largest welfare program, Temporary Assistance for Needy Families. Since then, a lot of other changes have been made to our anti-poverty safety net. Yes, TANF was gutted, but other programs have been created or expanded to make up the slack, and the whole system is now better targeted to incentive work and to reach the truly needy.

Still, perhaps welfare reform’s main accomplishment was political. It de-weaponized welfare as a high-profile, partisan issue in American politics. Rising poverty and inequality levels may bring it back, but it hasn’t yet. And if it ever does, most Americans will be just as easy to manipulate as before because few of us know anything at all about this part of government. For example, did you know that

  • The biggest and most effective ant-poverty programs by far are Social Security and Medicare?
  • Govt spending per poor American has gone up in recent years – not down as most progressives think?
  • Benefit levels are pretty paltry, and the biggest poverty programs do incentive work – contrary to what most conservatives think?

Given these and many more public misconceptions, I thought it might behoove us to devote an evening to taking a big picture look at how the government combats poverty in America and how effective it is.

I am a bit pressed for time this week (inc. finding you good, analytical links). Here are some discussion questions I will use to guide our meeting on Monday, and some background readings on anti-poverty programs and their effectiveness. My opening remarks will describe the largest federal and state govt anti-poverty programs and make a few points on the issue of effectiveness.

DISCUSSION QUESTIONS

  1. What are the main federal/state anti-poverty programs? How much do they spend and who gets benefits?
  2. What is their purpose? How is aid targeted and conditioned? Temporary v. permanent help? Cash v. non-cash benefits?   “Making work pay” v. helping non-working poor?
  3. (BTW: Why are there so many poor Americans, anyway?)
  4. Effectiveness at…
    1. Reducing poverty and helping the helpless?
    2. Targeting the “right” people.
    3. Incentivizing work?
    4. Keeping social cohesion.
  5. Problems with…
    1. High program costs.
    2. Dis-incentivizing work.
    3. Subsidizing low-wage employers, like Wal-Mart.
    4. Minimizing fraud and abuse.
  6. Past and future:
    1. Did welfare reform “work?” For whom?
    2. Future alternatives to / expansions of poverty programs.

SUGGESTED BACKGROUND READING –  

How much do we actually spend reducing poverty?

  • It depends what you count as “welfare” and exaggeration is common. Recommended.
  • A conservative group counts up the total.
  • [Update: Is entitlement spending for lazy people growing out of control?  No, it is not: 91% of entitlement spending goes to the elderly (50%), the disabled (20%), or the working poor (20%).  Only 9% goes to non-working, non-disabled adults.]

Impact of anti-poverty programs –

Conservative POV –

20 years after welfare reform:

Worldwide Poverty –

Next Week (Sept 5):  Will President Obama’s Achievements Endure?

 

Monday’s Mtg: Why Has Economic Productivity Slowed?

It is Econ 101 that ever rising labor productivity is the key driver of modern economies. When the amount of output per worker is higher every year than the year before all of the good stuff that Americans have come to expect is possible. The economy grows steadily with room for higher wages/benefits and consumer spending, business profits, savings and investment, and enough tax revenue for government to meet public investment and social needs. Without rising productivity, the economic pie stops getting bigger and we are all left fighting over the size of the slices. A zero-sum economy begets zero-sum politics, and we all look around for someone to blame.

Sound familiar? It’s starting to happen. Worker productivity roughly doubled in the USA from 1945 to the early 1970s, then slowed down for the rest of the 20th century. But since then it has slowed to a crawl, only growing about 0.5% annually since 2000. In 2016, productivity actually began falling.

Now, maybe the fall is temporary, an artifact of the Great Recession. Maybe it is not happening at all. There is some evidence that the way experts measure labor productivity fails to capture some important improvements in the quality of the goods and services workers produce. Maybe.

But, there I another problem independent of measurement error. Even before U.S. labor efficiency slumped, American workers were not getting paid in line with what they were producing. Since 1973, U.S. workers have become 75% more productive, but average worker compensation (pay + benefits) grew by less than 10%! When liberals say rising inequality is unfair, this is what we mean. It’s not some philosophical judgement of how much people are “worth” to society. How well do you think regular people will fare if, on top of this unfairness, the productivity slump persists and the pie stops growing altogether?

So, this is not a dry topic about formulas and equations. It is about what makes our economy healthy and innovative and how we can ensure that regular Americans share in the wealth they produce.

To keep us focused, I will start us off on Monday with a quick summary of:

  1. What is meant in plain English by labor productivity and what really drives it (opinions differ on the latter); and
  2. The main theories of why it has stagnated recently and whether we have a long term problem.

Then, we can debate any aspect of this broad topic-of-everything we want to discuss. The main driver of productivity in the long-run is technological innovation, but other things matter, too, including public policies.  I hope we can devote a good chunk of time to discussing the growing divergence between worker compensation and productivity. But, keep in mind that any public policies to close that gap need to do so by raising the former, not reducing the latter.

DISCUSSION QUESTIONS –

  1. Measuring it: How do they measure labor productivity? Could it be growing faster than experts think?
  2. Ensuring it: What keeps U.S. labor productivity rising; e.g., healthy biz/entrepreneur climate, R&D/Universities, tech innovation, worker edu/skills, government action/inaction?
  3. Problem. Why has productivity suddenly cratered? The recession?
  4. Problem! Is something deeper afoot? Are we entering a prolonged period of “secular stagnation” like we talked about in 2013?
  5. Problem!! Why has pay not kept up with productivity for decades?
  6. Solutions: Which pubic policies might (a) goose worker productivity in the short-term and long-term, and (b) ensure American workers benefit from it? Left vs. right solutions.

SUGGESTED BACKGROUND READING –  

Productivity Puzzle –

Solutions?

Next Week: Do government anti-poverty programs really work?

Monday’s Mtg: Are Californians Environmentally Over-Regulated?

This topic is one that political conservatives worry about a lot. Every time California experiences a recession or the mildest growth hiccup, and every time a high-profile business leaves California for another state conservatives say it’s all because of over-regulation. To me at least, their rhetoric often sounds ideological and a cynical cover for corporate self-interest.

But, not so fast. I think there’s something to this topic, even after discounting for rhetorical excess and partisanship. California has a very dense web of environmental regulations. They affect every aspect of living and doing business in our state. No one serious is saying we should not have clean air and water, safe consumer products, and wetlands. But, perhaps Californians can be said to be over-regulated, especially if “over-regulated” is carefully and specifically defined.

One definition of excessive govt regulation involves marginal costs exceeding marginal benefits. I will explain this basic concept briefly in my opening framing remarks on Monday night. But, basically, the more stringent an environmental regulation is, the higher the costs of implementing it and (probably) the smaller the additional increment of benefits it provides. You can think of the marginal costs and benefit curves as being non-linear to reflect this. At some point the lines cross, and the reg does more harm than good.

This sounds simple, but it’s very hard to compare costs to benefits in a way that gives us confidence we have assessed them right. C/B analysis is not my field, nor is environmental policy. But I’ll explain this basic idea within the level of my competency.

A second type f over-regulation involves the bureaucratic process. The enviro law permitting process in California can be very time consuming and expensive, especially for big projects that require the full Monty environmental impact studies. There is a lot of talk right now in Sacramento about streamlining the processes. Process is one of those boring-but-really-important aspects of government that separates good government from bad, even if it’s hard for non-experts to discuss and gets very little media attention.

A third type is more like mis-regulation. Like the rest of government, enviro laws/regs can and do get manipulated by private interests for their own benefit, usually at the expense of their public good. As the links explain, below, the third party litigation allowed under the California Environmental Quality Act (CEQA) is vulnerable to this. (As is our initiative process, that big biz uses to bypass enviro laws they don’t like.)

Huge battles are brewing all over the country over the future of our environment and climate.  As always, Californians will be manning the front lines. At present, the Republican Party has virtually abandoned the environmentalism it used to embrace. That can’t last forever, though. Even if it does, it puts the Democrats in danger. Progressives risk getting too smug about their environmentalism and ceasing to listen to skeptics, businesses, and other good people who bear the brunt of good (and sometimes bad) policy.

I think an honest discussion of the limits of CA’s environmental regulation is very much needed now.

DISCUSSION QUESTIONS –

  1. What are CA’s main environmental laws? How do they get enforced?
  2. What is “over-regulation?” Can it have more than one meaning? How can we measure its extent and distinguish valid complaints from false/cynical ones?
  3. If we’re over-regulated environmentally, how did we get that way? How can we safely reverse any over-regulation?
  4. New areas: What do we think of the latest CA enviro laws addressing climate change, energy use, toxins, and groundwater?
  5. Is “technology forcing” regulation a good idea? How do we know if we’re overdoing it?

SUGGESTED BACKGROUND READING –  

[Update – Climate Policy – CA is moving very aggressively to reduce greenhouse gas emissions.  Here is a (very supportive) description of what’s bee done, and here is what to expect in the near future.]

Are we environmentally over-regulated?

Next Week July 18: Are native-American interests being neglected?

Monday’s Mtg: Should We Care About “Brexit?”

On June 23, the United Kingdom will decide in a national referendum whether to leave the European Union. Polls show the vote is too close to call, and the earthquake of a decision to exit the EU might actually happen.

[** Update:  Just today (TH) an MP that supports staying in the EU was assassinated on a street corner by a right-wing, anti-immigrant nut.  This event could turn the tide against Brexit in the close contest.]

If it does, the consequences could be profound for the UK, the EU, and the rest of the world (which includes us). A Brexit vote would trigger a complicated, multiyear process to divorce the UK from EU laws and rules at just about every level of interaction. The British government would have to change hundreds of British laws and thousands of regulations and formally renegotiate the terms of all of its commercial relations with the EU.

Why leave? The British would gain back some of the sovereignty and flexibility the country voluntarily gave up when it decided – by referendum – to join in 1975 1973 (although not its currency; the UK is not a Euro zone country). It would not have to pay what’s basically an annual membership fee of about $40 billion [update: The exact net amount of annual transfers is in dispute; an audit says about $7B]. It would be free of pesky EU regulations. These include EU requirements to admit a large number of refugees from the Middle East, which is a major driver of the pro-Brexit campaign in the Conservative (Tory) Party and right-wing parties.

But, there is also a huge potential downside, as the articles below brutally explain. There is a huge risk of economic and financial instability, at least in the early stages of a UK-EU decoupling. Great Britain could lose diplomatic and economic leverage. The future of the EU itself might be endangered if other member countries decide to follow Britain’s lead and/or if Brexit induces financial panic or economic recession. For these reasons and more, political and economic elites in and out of the UK pretty much universally oppose Brexit.

But, elites won’t decide this thing; British voters will. Six days from today. Think of this as our Populism, Part II: The Empire Strikes Back meeting.

On Monday, I will start our meeting with a brief description of why the Brexit referendum is even happening. Then I’ll list a few of the best-case/worst-case consequences of a Yes vote, including on the US economy and foreign policy.

DISCUSSION QUESTIONS –

  1. What is Brexit? Why is it happening?
  2. Who supports and opposes Brexit inside the UK? What are the main arguments they make? What do outsiders think?
  3. Impact if Brexit fails (“Remain” in EU wins).
  4. Impact if Yes (Leave the EU):
    1. On UK; e.g., econ and finance, immigration, regulatory, foreign policy?
    2. On EU.
    3. On rest of world, including USA.
  5. What are the Big Lessons here? Are any of them for us?

SUGGESTED BACKGROUND READING –

ABCs –

Pro-Brexit (Leave the EU) –

Anti-Brexit (Remain) –

Consequences of and Lessons for    the United States –

Next Week: Whatever happened to the Boat People?

 

Monday’s Mtg (2/15/16):What Does “Socialism” Mean Today?

Socialism lives. In the United States. At least as an abstract idea. Bernie Sanders’ no-longer-quixotic presidential campaign seems to be reviving the label’s popularity almost single-handedly. “Socialism” was the most searched for word at the Mirriam-Webster website in 2015, and surveys show public approval of “socialism” is rising fast, especially among Millennials. Go, Bernie, I suppose. And, yet…

A couple of yets. First, Bernie’s version of socialism seems to be more like European-style Democratic social democracy than any of the old-style forms of socialism, in which the government or workers own the means of production. Second, he has yet to flesh out a lot of the details of his version of socialism. Abstract ideas are often more popular than their detailed policies/programs version. (See “conservatism.”) Also, Bernie’s socialism has not yet been subjected to the white hot flame of full on news media scrutiny – or to the supernova of GOP attacks.

Finally, socialism is still a dirty word to most Americans, especially older ones that vote a lot.  Perhaps it even deserves to be or, at least, so many Americans’ objections to a large expansion of government need to be taken seriously by progressives.  (FYI, at the last debate Bernie repeatedly dodged the question of how much he would expand government)

Before any of this extended combat happens, I thought it might be a good time for us to explore what socialism could mean in the 21st century. Bernie’s isn’t the only possible version of socialism, to say the least. Europe alone has 2-3 different varieties of social democracy, not just the Scandinavian model. Asia has its own successful models of what today’s American conservatives would pan as “socialism” in Korea, Taiwan, and (gulp) China. Some socialists still believe that unless concentrated private power is abolished all versions of socialism are just window dressing (see link).

I’m hoping we have a good turnout on Monday, so I will not prepare any lengthy opening remarks. I’ll probably just briefly summarize Bernie’s vision of socialism and briefly compare it to other social democratic systems around the world.

Many of you are big Bernie fans. I urge you to read the links below to make sure you know what he actually stands for and how it differs from the socialism many of us remember from an earlier time.

DISCUSSION QUESTIONS –

  1. THEN: What did socialism used to mean?
  2. NOW: What models of social democracy exist around the world today? How “socialist” are they?
  3. BERNIE: What does he mean by socialism? How does it really differ from
    –>  The policy consensus within the Democratic Party?
    –>  Hillary’s platform?
  4. WHY has “socialism” gained popularity in America? What do you think people think it means?
  5. HOW do American conservatives define socialism and why do they despise it?
    –>  Do they have a point?
  6. FUTURE: What version of socialism in the 21st century could”
    1. Work to solve USA’s problems?
    2. Be popular enough with the public to actually be enacted and endure?

OPTIONAL/SUGGESTED BACKGROUND READING –

Next Week: Is our country’s safety really in danger?

 

Monday’s Mtg: Do We Need Universal National Service for Young Americans?

National service is an old idea that’s getting new life, including at some pretty high political levels. Requiring every young American to devote 1-2 years to a job helping their communities and their country was briefly considered after the military draft was ended in 1973. But, the idea never really got much traction, in large part because no one liked that it would be mandatory or could think of that many public service jobs to fill.

National service got new life in the 1990s. A 1994 law proudly signed by President Clinton created AmeriCorps. A small voluntary program, AmeriCorps finances and facilitates 75,000 public service jobs for young Americans. Other federal service programs. Like Teach for America, also were set up. Candidate Barack Obama made expanding national service opportunities a plank in his agenda in 2008. His Serve America Act authorized up to 250,000 jobs in AmeriCorps, but Congress refused to fund it. National service has been just one part of Obama’s ongoing – and little noticed – effort to resurrect the old-fashioned (and once-bipartisan) concept of citizenship. Emphasizing both the individual rights and mutual obligations of being an American is a theme he has returned to again and again throughout his presidency.

Now, Democratic presidential candidates hoping to succeed Obama have upped the ante, embracing expanded national service in one form or another. The most ambitious plan is Martin O’Malley’s, but Hillary Clinton wants to provide debt-free college education in exchange for national service. (Bernie Sanders has not matched these promises, specifically, but he surely favors federal support for full employment and public service jobs.) Just last month (12/15), Congress closed some of the funding gap for AmeriCorps and other national service programs, with some Republican support.

But, of course, most Conservatives HATE the idea of national service, even voluntary service. The GOP-controlled House of Representatives has tried repeatedly to abolish AmeriCorps and zero-out all national service funding. They argue that national service is potentially coercive of young people and that the programs add no value.

So, national service will be a campaign issue in 2016, especially if the GOP refuses to come up with any ideas for lowering college costs. I thought it would be useful for Civilized Conversation to go over the basics of the Dems’ national service proposals and pros and cons of the issue.

Discussion Questions –

  1. WHAT: What federal national service programs exist now? AmeriCorps, Teach for America, SeniorCorps, etc. What help do they give and for what kinds of jobs?
  2. HOW USFUL: How do we know whether these programs are worth their cosrs; i.e., that they add value without duplicating what’s already available to young people seeking service jobs?
  3. PROPOSALS: Who is proposing what kinds of expansions of national service? How would the programs work?
  4. PROS/CONS: Arguments for and against expanding the programs.
  5. POLITICS: Do people care enough about this to matter in 2016 election? Will it turn out young voters for the Democrats?

SUGGESTED BACKGROUND READING –

Next Week: Is American democracy at risk of unravelling?

 

Monday’s Mtg: Do We Need More or Less Regulation of Business In America?

This one was Dean’s idea, and I think it’s got a lot of potential. Dean said he wanted us to explore the arguments that having “more” or “less” government regulation of business would solve a lot of our problems because that is the simple way the right and left often talk about the topic. Fewer regs = good = more freedom. Or, More regs = good = control evil corporations. To be sure, it is hard to debate such vague, I-love-my-ideology slogans. But regulating business to ensure that markets function smoothly and t protect the public interest is a core function of govt. Not to mention, we’re living in a country where presidential candidates promise to build 3,000 mile fences and turn us into Denmark, so I don’t think any proposal is too simplistic to merit our attention.

Now, we all know that there is no such thing as a completely unregulated market. In any market the public sector is there to help set and enforce the rules; police fraud and protect the rights of consumers, workers, and owners; provide and maintain the public goods that markets rely on, etc. As an article I’ve linked to before put it, Markets Are Not Magic.

But IMO, even the simplest slogans for reduced less government regulation raise key and complicated issues. Regulations always impose costs on businesses and often on workers and consumers, too. Some of those costs are easy to measure and to compare to the regs’ benefits. But, other costs are hard to determine and much harder to predict, like when regulation stifles competition and innovation, protects the powerful at everyone else’s expense, distorts prices and investment decisions, and erodes our companies competitiveness internationally. The way I see it, our topic is more like two questions.

  1. How can we know the true benefits and costs of government regs and therefore whose interests they really serve?
  2. How can we make govt regulation flexible enough to be effective and efficient as our economy rapidly evolves in the future?

I’ll explain what I mean a bit more in my intro on Monday and then ask Dean for his thoughts. CivCon has had several recent meetings related to govt regulation. (Aug ‘15 Is Big Finance finally tamed? Dec. ’12: What’s holding back small businesses? Feb. ’13: Religious conscience exemptions.) So, I’ll be brief and non-industry specific. I will, however, take the time to highlight the above and a few other important problems/issues facing federal and state and local govt regulation going forward.

Discussion Questions –

  1. What justifies govt regulation of business? What should be the goals?
  2. How (and how well) do they calculate the benefits and costs of regs? What factors, other than the raw $$$, should be considered, and whose voices are heard and not heard?
  3. Which govt regs are the most and least popular with (1) the public, (2) workers and consumers, (3) entrepreneurs and small biz, and (4) big corporations? Any common villains or inevitable conflicts of interest?
  4. Which regs do Republicans/Democrats want to repeal/add/change? Why? Why really?
  5. What needs to be done to keep regulation effective and efficient as our economy evolves?

SUGGESTED BACKGROUND READING –

What Do People Want?

  • Public opinion: By a 2 to 1 margin, Americans favor the POV that there are “too many” govt regs on biz rather than “too few.”
  • But, notice that people like most specific regs and strongly approve of the their goals.

Asking the Right Questions

Benefits and Costs of Govt Regulations –

We Need FEWER Govt Regs –

No, We Need MORE Govt Regs –  

21st Century Regulation –  [longer and harder, but key]

Next Week: Trumpism – What is it and will It will outlast him?

Monday’s Mtg: Is Big Finance Finally Tamed?

After seven long years, the most destructive financial crisis since the Great Depression is beginning to fade into memory – and myth. We haven’t talked about it in a while (2010 bailouts, 2012 EU crisis). Most discussions these days still are focused on assigning blame. This is understandable as well as necessary for accountability and for moral and ethical reasons. But, it shortchanges, IMO, another more timely aspect of the financial crisis that gets way too little public attention: Are our governments doing enough to prevent or a least, better contain the next one? Is our fragile financial sector finally tamed and at an acceptable cost?

We have to know the answer because there’s always another crisis. Since 1980, the world has seen 6 major global financial crises; a dozen or so smaller, regional ones; and, by one count, close to 150 single-country banking crises. Crises are frequent, getting bigger, and are easily transmitted around the globe. Our global financial system has yielded many benefits, but it is bubble-prone, panic-prone, and seemingly inherently unstable.

Since 2008, governments put in place a smorgasbord of new regulations to try to better monitor global finance, fix the system’s worst vulnerabilities, and prevent or better respond to the next crisis. What’s been done is very complicated (maybe too complicated, as we’ll discuss). I read a lot on this subject, but I don’t know the whole lay of the new regulatory and macroeconomic land very well, especially some of the more arcane efforts.

So, I thought Monday we would focus our discussion on the most important actions taken in the United States to prevent future financial catastrophes. Most of them stem from the 2010 Dodd-Frank financial reform law, so I will open us up by describing the basics of what that law tried to do and the major regulations that have come out of it. I may also briefly outline some other governmental actions in this area that have gotten even less media coverage but will affect us all.

Of course, we cannot spend an entire evening discussing banking regulations. (Who would want to?) So, in discussion maybe we can focus on a few big macro-level issues, like the “too big to fail” problem, the benefits versus the costs of new regulations, and the obstacle of Wall Street’s vast political power.

Discussion Questions –

  1. Causes – Big Finance: How much blame do private financial actors deserve for causing the crisis? How big a factor was financial fraud and lawbreaking? Were the banksters “out of control?”
  2. Causes – Who else: Were deeper, structural causes the real problem? What did governments do wrong and why?
  3. Choices: After the crisis hit, what options did governments have to stem the crisis and reform the system? Why did they choose some (bailouts) and not others (nationalizing big banks, aid to homeowners)?
  4. Fixes: What was done in the end? What is in the Dodd-Frank law?  What else?
  5. Results: How can we know if these policies are either (1) working, or (2) working too well by burdening the financial sector/real economy?
  6. What do you think will happen in the next crisis? Same old same old, or something more radical?

SUGGESTED BACKGROUND READING –

Next Week: Is it time to change California’s ballot initiative process?