South By North Strategies, Ltd.

Be Ashamed

Free Exchange looks at the federal budget compromise and is not impressed.

Everyone involved should be embarrassed. But few journalists seem to think that this absurd sequence of events will in anyway reduce the likelihood of an even greater mess down the road when it comes time to raise the federal debt ceiling. The case for raising the debt ceiling is incredibly strong. For one thing, not raising the debt ceiling could be end up being really bad; the government would have to engage in major gymnastics to avoid a default. For another, not raising the debt ceiling would not address the government’s deficits; deficits and debts are residuals. If you want to actually limit them you have to identify spending that should be cut and taxes that should be raised. What’s more, the leaders of both parties say that the debt ceiling should be raised. Most everyone wants to do something which most everyone agrees should be done.
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And yet, the government will likely be pushed to the edge of crisis. These fights are risky and counterproductive. Sadly, I suspect that the reaction of most of the Washington press corps will be to—once again—get so caught up in the tick-tock of the dramatic showdown that they’ll neglect to point out just how magnificently the elected leadership in Washington is failing its citizenry.

Digital Learning In Schools

The PBS News Hour reports on the use of digital learning in the public schools of Wake County, North Carolina.

Around The Dial – 4/11/11

Economic policy reports, blog postings, and media stories of interest:

• Robert Kuttner channels “Keynes’ Ghost.”
• Free Exchange asks “what the economists knew.”
• Economix notes that 18% of men ages 25-54 aren’t working.
• Ezra Klein is unimpressed by the policy and politics of the budget deal.

SBN In the News: April 2011

Anything But Normal

Christina Romer, the former chair of the Council of Economic Advisers, argues that there is nothing “normal” about an unemployment rate of almost nine percent.

Regardless of the cause of extended high unemployment, it is a disaster for families, the economy and government budgets. Thus, if I am wrong, and more unemployment is structural than the current evidence suggests, this is no excuse for washing our hands of the problem. Only the nature of the needed policy response would change. Instead of focusing on increasing demand, we would need policies to help workers and jobs find one another, measures to move workers to where the jobs are (or vice versa), training programs and better education.
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And even though today’s unemployment appears mainly cyclical, it could turn structural. The longer that unemployment remains high for cyclical reasons, the more likely that job prospects for unemployed workers will be permanently damaged. In a number of European countries in the 1980s, for example, prolonged recession appears to have caused normal unemployment to rise sharply. Getting cyclical unemployment down quickly is the surest way to prevent that from happening in the United States.