IN THIS ISSUE

  EMPLOYMENT-BASED POLICIES FOR AN ECONOMIC RECOVERY

Building a Full-Employment Agenda
As part of the Boston Review’s “New Democracy Forum” series, Robert Pollin examines the challenges inherent in creating and sustaining a full-employment economy in the United States. He considers why full employment should be a goal of a decent and egalitarian society, the potential definitions of full employment, and policy steps to move in that direction. Along with the many reasons for individuals, families, and the economy as a whole to seek full employment, Pollin describes how it can be joined with another fundamental policy aim: ending our dependence on fossil fuels and creating an economy powered by clean energy. Nine respondents--among them Jayati Ghosh, Eileen Appelbaum, and Ruy Teixeira--add their support, or critique of, Pollin's argument, and in turn, Pollin responds to them as well.
■ Read “New Democracy Forum: Back to Full Employment”

The Betrayal of Public Workers
As state budget crises worsen, policymakers are pointing to public workers’ salaries and pension funds as unreasonable burdens. In this article for The Nation, Robert Pollin and Jeffrey Thompson remind us that the recession was caused by Wall Street hyper-speculation, not the pay of school teachers or firefighters, and that public payrolls are a driver of our economy, not a burden on it. As lawmakers attempt to allow states to declare bankruptcy, effectively canceling obligations to public employees and their pension funds, Pollin and Thompson examine the reality behind these assertions, and present more appropriate routes to state fiscal health.
■ Download "The Betrayal of Public Workers"
■ Watch a video interview on this topic with Jeff Thompson and Robert Pollin

A Contract with Poverty in New Haven
In keeping with the trend of balancing state budgets on the backs of public workers, New Haven is considering outsourcing its public school custodial services to a private firm. Outsourcing would cut the cost of services in half, saving the city $8.1 million, or 19% percent of its deficit. But in “Pushing Working Families into Poverty,” Jeannette Wicks-Lim finds that the cost of that savings would be severe: the family of a custodian who continues to work in the New Haven Public Schools under the proposed contract would simply no longer be able to make ends meet.
■ Download "Pushing Working Families into Poverty: Assessing the New Haven Plan to Privatize the Public Schools’ Custodial Services"

Stop Blaming Immigrants for High Unemployment
In his most recent Economic Prospects column for New Labor Forum, Robert Pollin considers the charges made by some policymakers and segments of the population—including some Tea Party activists—that immigrants are to blame for the high rates of unemployment and that immigrants are soaking up government social spending budgets. The evidence he reviews finds that both charges are unsupportable. In an accompanying technical note focusing on the current recession, Pollin and Jeannette Wicks-Lim present data showing that, as with the years prior to the recession, there is no evidence supporting the idea that immigrants are to blame for the unemployment crisis.
■ Download "Economic Prospects: Can We Please Stop Blaming Immigrants?"
■ Download the technical note, "Did Immigrants in the U.S. Labor Market Make Conditions Worse for Native Workers During the Great Recession?"
■ Read previous Economic Prospects columns

Debunking the Structural Unemployment Story
In this cover article for Dollars & Sense, John Miller and Jeannette Wicks-Lim examine the argument being promoted by economists, policymakers, and the media that persistently high unemployment levels are due to a gap in skills and education on the part of workers. Miller and Wicks-Lim look carefully at the data, and conclude that the reality of the situation—widespread job losses and the long, fruitless job searches of experienced workers—is that today’s employment problem is due to a jobs deficit across the economy. The authors recognize that this clarification puts the onus back on the federal government, which could help to remedy the problem if it had the political will to do so.
■ Download "Unemployment: A Jobs Deficit or a Skills Deficit?"

The Dynamics of Employment in the U.S. and Japan
The global integration of economies under neoliberal polices has had a fundamental impact on employment worldwide, although in distinct ways in different countries. In this paper, prepared for the Japan Society of Political Economy, James Heintz explores the intersections between the trajectories of globalization, changes to the structure of employment, and policies aimed at protecting decent work opportunities from a comparative, global perspective. Heintz examines changing patterns of employment in Japan and the U.S. in recent years, looking in particular at the effects of financialization, the formation of asset price bubbles, and the subsequent crises in each country.
■ Download "The Structure of Employment, Globalization, and Economic Crises: Rethinking Contemporary Employment Dynamics with a Focus on the U.S. and Japan"

Regulating Wall Street: Exploring the Political Economy of the Possible
In "Regulating Wall Street: Exploring the Political Economy of the Possible," Gerald Epstein and Robert Pollin ask: under what conditions is the Dodd-Frank financial reform law capable of succeeding in controlling speculation and promoting stability? The legislation lays out merely a broad framework for a new financial regulatory system, with little specificity, leaving its implementation contested terrain. Yet supporters of real financial regulation can still achieve significant victories, and Epstein and Pollin offer three central areas where they believe these efforts should be focused: 1) proprietary trading, 2) oversight of credit rating agencies, and 3) regulation of commodities futures derivative markets.
■ Download "Regulating Wall Street: Exploring the Political Economy of the Possible"

Commentary on Dodd-Frank and the Evolution of the Law
In this series of policy briefs, SAFER (A Committee of Economists and other Experts for Stable, Accountable, Fair and Efficient Financial Reform) economists, among them James Crotty, Jane D'Arista, Gerald Epstein, James Heintz, Michael Konczal, Arjun Jayadev, Iren Levina, Robert Pollin, and Jennifer Taub, discuss a range of issues which were integral to the debate over the Dodd-Frank financial reform bill, and respond to federal agencies' requests for comments on rule-making in response to the final law. The themes covered remain critical in the current context of implementation of the law, and for consideration of future regulation of the financial industry and institutions.
■ Read the SAFER commentary on implementation of the Dodd-Frank financial reform law

Jeffrey Thompson Awarded National Tax Journal's Musgrave Prize
Jeffrey Thompson and his co-author, Katie Fitzpatrick, were recently awarded the National Tax Journal’s prestigious Musgrave Prize for the best paper published in that journal in 2010. The journal describes the prize as recognizing “new research contributions with strong analytic underpinnings, rigorous argument buttressed by empirical evidence, a respect for the history of research and practice, and the promise of improving public policies.” The paper recognized, "The Interaction of Metropolitan Cost-of-living and the Federal Earned Income Tax Credit: One Size Fits All?," explores the interaction between the federal Earned Income Tax Credit and the reality of daily expenses faced by single mothers.
■ Download "The Interaction of Metropolitan Cost-of-living and the Federal Earned Income Tax Credit: One Size Fits All?"

James Boyce Awarded The Common Heritage Award from the Media Freedom Foundation and Project Censored
James K. Boyce has been named the 2011 recipient of the Fair Sharing of the Common Heritage Award, presented by Project Censored and the Media Freedom Foundation, which recognizes work "that express the ideas behind the original economic and social theories of Alfred Frederick Andersen...that every sentient being – human and non-human – has a right to the fair share of the material and economic benefits of the Common Heritage Wealth."
■ Read Boyce's acceptance speech, in which he expands on the proposition that the environment belongs in common and equal measure to us all

Engel’s Law Around the World 150 Years Later
Richard Anker
Anker looks at the extent to which Engel’s law is relevant in today’s world by looking across countries at the relationship between the share of household expenditure spent on food and national income per capita, facilitating analysis of this relationship, especially by development level.

Dynamics of Output and Employment in the U.S. Economy
Deepankar Basu and Duncan K. Foley
Basu and Foley investigate the changing relationship between employment and real output in the U.S. economy from 1948 to 2010. They offer insights into deeper structural changes that have taken place in the U.S. economy over the past few decades.

Financing Peace: International and National Resources for Postconflict Countries and Fragile States
James Boyce and Shepard Forman
In this background paper for the World Bank’s World Development Report 2011, Boyce and Forman discuss financing arrangements for postconflict countries and fragile states, with a focus on official development assistance. They consider how international aid can more effectively help build resilient states and durable peace.

Outsourcing, Demand and Employment Loss in U.S. Manufacturing, 1990 – 2005
James Burke, Seung-Yun Oh and Gerald Epstein
Burke, Oh, and Epstein consider new measures of foreign outsourcing to track changes in the offshoring of manufacturing activity and to explore how offshoring, along with other factors, is related to the dramatic dislocation of workers in the U.S. manufacturing sector in recent years.

Achieving Ethical Trade through Social Tariffs: The SITS Regime
George DeMartino, Jonathan Moyer and Kate Watkins
The authors explore the construction of a hypothetical Social Index Tariff Structure (SITS) at the corporate level, estimate the effects of such a regime on bilateral trade flows; and generate estimates of the development funds that SITS would make available to promote human development in low-income countries.

Financial Economists, Financial Interests and Dark Corners of the Meltdown:
It’s Time to Set Ethical Standards for the Economics Profession
Gerald Epstein and Jessica Carrick-Hagenbarth
Epstein and Carrick-Hagenbarth analyze the conflict of interest that exists when academic financial economists, acting in their roles as presumed objective experts in the media and academia on topics such as financial regulation, fail to report their private financial affiliations.

Regaining Control? Capital Controls and the Global Financial Crisis
Kevin Gallagher
Capital controls have re-emerged as legitimate tools to promote financial stability in the context of the transformation in thinking and practice regarding the role of government in managing international capital flows, triggered by the global financial crisis. Gallagher traces and evaluates their effects in Brazil, South Korea, and Taiwan.

Promising Avenues, False Starts and Dead Ends:
Global Governance and Development Finance in the Wake of the Crisis
Ilene Grabel
Grabel addresses three related questions: How is the crisis affecting the governance of the IMF and the influence that developing countries have within the institution? What policy space is available to developing countries? And what are the prospects that alternative financial architectures will emerge as competitors or complements to the Fund?

Supporting Africa’s Post-Crisis Growth: The Role of Macroeconomic Policies
Léonce Ndikumana and Zuzana Brixiová
The authors discuss macroeconomic policies that would help African countries, especially the low-income countries, reach strong, sustained and shared growth in the post-crisis world, and discuss factors behind the continent’s overall good performance during the crisis and relatively fast recovery.

Quantitative Easing: A Keynesian Critique
Thomas I. Palley
Keynesian economists have generally supported quantitative easing (QE) on grounds it increases aggregate demand. This paper argues that QE may backfire with respect to demand stimulus, create potentially significant future dangers, and is supportive of a plutocratic political economy based on “asset market trickle-down” that obstructs needed policy change.

Financialization and the Global Economy
Engelbert Stockhammer
Stockhammer discusses financialization, highlighting: changes in household behavior, changes in the behaviour of non-financial businesses, and changes in the financial sector. He examines how financialization has interacted with a polarization of the income distribution to generate the structural imbalances that led to the crisis of 2007-09.

Costly Migration and the Incidence of State and Local Taxes
Jeffrey Thompson
Thompson shows that the pre-tax wages of highly-educated and experienced workers are relatively unresponsive to tax changes, while the wages of young and highly-educated workers – those facing the lowest costs of migration – are quite responsive.

Financial Stress and Asymmetric Financial Decisions
Christian E. Weller and Amy Helburn
Weller and Helburn examine the link between stress due to the lack of financial security and financial decisions. They find that the asymmetric effect of financial stress on financial decisions may cause exogenous asset shocks to result in a reduced focus on long-term wealth building among households.

On Uneven Ground: How Corporate Governance Prioritizes Short-term Speculative Investments,
Impedes Productive Investments, and Jeopardizes Productivity Growth
Christian E. Weller and Luke Reidenbach
Weller and Reidenbach examine policy goals that would promote a better economic equilibrium between short-run and long-run goals at the corporate level, by defining long-term performance measures and finding a better balance in the incentives of short-run and long-run oriented corporate stakeholders.