Opinion

The Great Debate

Ryan and the code words of race

It’s official. The House of Representatives has passed the federal budget for fiscal years 2015 through 2023 that was submitted by the House Budget Committee — a.k.a. the Ryan budget, after the Budget Committee’s chairman, Representative Paul Ryan (R-Wis.) — and the troops are on the march.

The subject line of one e-mail from the Democratic Campaign Committee’s rapid response team is: “1,000,000 Strong Against the Ryan Budget.” They are soliciting signatures to demand rejection of “any Paul Ryan budget” that “puts Big Oil and billionaire tax breaks before the 47 percent.”  There will be an “important debate,” says Representative Chris Van Hollen (D-Md.), ranking member on the Budget Committee, about the Ryan budget’s “lopsided set of priorities.”

Van Hollen is right — there will be a debate. But as we saw in the recent eruption over Ryan’s remarks about the absence of a work ethic in the nation’s inner cities, the debate will be obscured and twisted by the issue of race — as it has been for the past 50 years. The conversation will be marked by familiar code words and formulas.  It will do nothing to heal the endlessly searing wound that the Ryan controversy exposed in the individuals who bear it or make the wound more real to those who don’t.

Earlier this month, Ryan’s committee accompanied the initial release of its budget resolution with a report, titled The War on Poverty: 50 Years Later. The document was — well, skeptical about the past 50 years of federal anti-poverty policies. Soon after the report was published, in an interview with conservative commentator Bill Bennett, Ryan remarked that Bennett’s “buddies Charles Murray or Bob Putnam over at Harvard” had written about a “tailspin of culture in our inner cities, in particular of men not working or even thinking about working.”

Representative Barbara Lee (D.-Calif.), a member of both the House Budget Committee and the Congressional Black Caucus, opened the assault on Ryan by calling his statement a “thinly veiled racial attack.”

from MacroScope:

Political economy and the euro

The reality of  'political economy'  is something that irritates many economists -- the "purists", if you like. The political element is impossible to model;  it often flies in the face of  textbook economics;  and democratic decision-making and backroom horse trading can be notoriously difficult to predict and painfully slow.  And political economy is all pervasive in 2010 -- Barack Obama's proposals to rein in the banks is rooted in public outrage; reading China's monetary and currency policies is like Kremlinology; capital curbs being introduced in Brazil and elsewhere aim to prevent market overshoot; and British budgetary policies are becoming the political football ahead of this spring's UK election. The list is long, the outcomes uncertain, the market risk high.

But nowhere is this more apparent than in well-worn arguments over the validity and future of Europe's single currency -- the new milennium's posterchild for political economy.

For many, the euro simply should never have happened --  it thumbed a nose at the belief that all things good come from free financial markets; it removed monetary safety valves for member countries out of sync with their bigger neighbours and put the cart before the horse with monetary union ahead of fiscal policy integration. But the sheer political determination to finish the European's single market project, stop beggar-thy-neighbour currency devaluations and face down erratic currency trading meant the  currency was born and has thrived for 11 years.

Who lost the dollar?

James Pethokoukis – James Pethokoukis is a Reuters columnist. The views expressed are his own –

The state of the dollar probably hasn’t been a first-tier political issue in the United States since, say, the presidential election of 1896. Back then, it manifested as whether or not America would stay on the gold standard or switch to a bimetallic one. (The William Jennings Bryan “cross of gold” speech and all that.)

The aftershocks of the global financial crisis may now be propelling the dollar back to the political forefront. The greenback’s continuing slide makes it a handy metric that neatly encapsulates America’s current economic troubles and possible long-term decline. House Republicans for instance, have been using the weaker dollar as a weapon in their attacks on the Bernanke-led Federal Reserve.

from Rolfe Winkler:

Krugman and the pied pipers of debt

Investors are celebrating an incipient "recovery," but the interventions responsible are sowing the seeds of a more violent contraction down the road. The problem, quite simply, is debt. We've accumulated record amounts, yet many economists tell us we need more.

Leading the charge is Paul Krugman. He exhorts us to borrow our way back to prosperity, but he doesn't acknowledge that his brand of Keynesian economics ignores debt's consequences. If you look at a chart of America's total debt burden, he's leading us over a cliff.

(Click chart to enlarge in new window)

public-and-private-debt-burden

The problem begins with the flawed way Krugman and other economists measure well-being. Primarily, they look at measures of activity, like GDP. These tell us how much people spend, but say nothing about where we get the money.

  •