The Great Debate

Saving the economy from our brains

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

Our brains are wired for bubbles, it would appear, and regulation and tight external controls are the only way to save ourselves from ourselves.

Bankers, traders and investors effectively became addicted to the pleasure that comes from making money, while at the same time increasingly losing touch with just how much risk they were taking.

The result was a bubble in risk taking, debt and many financial assets and the inevitable crash and complete pull back in activity.

“The finance industry was adapting to the level of risk,” said Gregory Berns, a professor of neuroeconomics at Emory University in Atlanta who uses brain scanning technologies to try and decode the decision-making systems of the brain.

How Congress is harming the economy

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, is a senior fellow at the Hudson Institute and former chief economist at the U.S. Department of Labor. The views expressed are her own. –

At the very time that the Senate is debating whether to spend $800 billion or $900 billion to stimulate the economy, the government is considering other legislative and regulatory initiatives that would impede economic recovery.

Growing Protectionism

By inserting protectionist provisions that require some goods financed by the stimulus bill to be made in America, Congress is risking a trade war with important trading partners in Europe and Asia. A trade war would reduce exports, potentially destroying millions of American jobs.

First 100 Days: Do not marginalize small businesses

georgecloutier1– George A. Cloutier, a graduate of Harvard Business School, is the founder and CEO of American Management Services, one of the nation’s largest turnaround and management services firms specializing in small and mid-size companies. He is also the author of the upcoming book, “Profits aren’t Everything, They’re the Only Thing.” The views expressed are his own. –

Why are the Obama Administration, Congress, and the Senate marginalizing the nation’s largest industry in the new stimulus plan?

Small Business Inc. employs about 60 million people, accounts for 70 percent of new jobs each year, and clearly represents the backbone of almost every regional and local economy. For this vital industry, the administration has allocated less than 1 percent ($700 million earmarked vs. $1 trillion in proposals). The nation’s leaders continue the small business program of the Bush years: talk a lot and do practically nothing.

Play by the rules, close failing banks

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

Why not just play by the existing rules and rescue the economy, rather than the banks and their foolish shareholders and counterparties?

The choice for the Obama administration comes down to this: pay a subsidy to weak banks and reward failure and self-dealing or shut them down and start over again.

Arms control to start U.S.-Russia thaw

Paul Taylor Great Debate — Paul Taylor is a Reuters columnist. The opinions expressed are his own –

Arms control is back and will thaw icy relations between the United States and Russia this year, but how far the new detente goes depends on the truculent mood in Moscow.

The potential exists for a grand bargain encompassing cooperation on the global financial crisis, Iran, Afghanistan, nuclear disarmament, missile defense, conventional armed forces and NATO enlargement.

Uncle Sam pays for middle-class health care

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. –

On January 29, the U.S. Senate passed the reauthorization of the State Children’s Health Insurance Program (SCHIP), originally enacted in 1997 as an addition to Medicaid. It would have expired on March 31, potentially leaving over 7 million children without health insurance.

The bill passed 66 votes to 32, with several Republicans joining Democrats to pass the bill. The Republican leadership wanted to expand SCHIP spending by $5 billion over five years, an annual increase of 20 percent. In contrast, congressional Democrats succeeded in increasing SCHIP by $32 to $39 billion over five years, according to estimates by the Congressional Budget Office, almost tripling the program by 2013.

Obama and the Afghan narco-state

Bernd Debusmann - Great Debate– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own. –

To understand why the war in Afghanistan, now in its eighth year, is not going well for the United States and its NATO allies, take a look at two statistics.

One is Afghanistan’s ranking on an international index measuring corruption: 176 out of 180 countries. (Somalia is 180th). The other is Afghanistan’s position as the world’s Number 1 producer of illicit opium, the raw material for heroin.

Obama’s investment horizon for clean energy

John Kemp Great Debate– John Kemp is a Reuters columnist. The opinions expressed are his own –

Like a Byzantine emperor, a U.S. president’s every public move is scripted to send signals about his priorities to Congress, the electorate, business, and the vast federal bureaucracy that will actually be responsible for formulating and implementing decisions in his name.

Presidential politics is a theatrical performance in which the president takes a small number of important decisions personally, but is responsible for setting the tone and direction for many smaller ones that will never reach his desk. If he can reach out to voters and businesses he can also reshape national priorities.

Less social dialogue and more social change

stern_official_5x5a- Andy Stern is the president of the Service Employees International Union. His views are his own -

We are living through the third economic revolution. The first was the agricultural revolution, and it took nearly 3,000 years. The second was the industrial revolution, which took about 300 years. This revolution is going to take 30 years. As we move from an industrial economy based in factories to a knowledge and finance economy that lives on the Internet, no generation of people has ever witnessed so much change in a single lifetime.

And this revolution is televised, it’s Googlized, it’s digitized, it’s in your face, on your screen, 24/7. It is relentless and it’s unending and it’s far from over.

Is the executive pay bubble popping?

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

Signs are it won’t just be the salaries of bankers coming under fire.

An unusual array of forces are combining to make it very likely that top tier pay may be structurally falling, rather than simply taking a cyclical dip during a downturn.

Take it for granted that pay in the financial sector will fall. A combination of increased government ownership and a shrinking businesses taking fewer risks with other people’s money will see to that.