South By North Strategies, Ltd.

Around The Dial – Feb. 15

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

• Bob Herbert worries about the future of American democracy.
• Naked Capitalism asks about the commodification of employees.
• Robert Reich maps out the federal budget debate.
• Calculated Risk think about the labor force participation rate.

Increasing Wireless Coverage

Austan Goolsbee of the Council of Economic Advisers outlines a plan for increasing the availability of high-speed wireless access.

Winning The Future

James Surowiecki of The New Yorker explains why calls for increased investments in infrastructure make eminent sense.

It’s hard to make a case for investing more when everyone believes we should be spending less, but there’s never been a better time. Interest rates are historically low, so borrowing is cheap. (Corporations have already realized this: they borrowed half a trillion dollars last year.) And the weak economy means that there’s less competition for labor and resources. Yet, instead of taking advantage of this, we’re too often doing the opposite. Only recently, a plan for a new tunnel under the Hudson River was killed. The tunnel would have reduced congestion, expanded commerce between New Jersey ports and New York, and created enormous long-term value for the entire region. But short-term budget constraints doomed it. This is a classic instance of eating your seed corn and of the way that fiscal “responsibility” can actually be irresponsible. At the moment, we’re spending too much on things that consume resources—like the military and earmarks—and not enough on things that create them.

Around The Dial – Feb. 14

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

• Felix Salmon analyzes the Treasury Department’s housing report.
• Nouriel Roubini sees a “G-Zero World.”
• Calculated Risk lists important sources of economic data.
• Paul Krugman asks what happened to the party of Lincoln.
• Jonathan Cohn summarizes the House Republicans’ budget cuts.
• Bruce Bartlett doesn’t like budget cutting with an axe.

Where Are The Workers?

The Economist looks at the troubling trends behind recent drops in the unemployment rate.

Not only is the population growing more slowly, the share of it in the labour force (that is, either working or looking for work), known as the participation rate, has also fallen. That rate commonly falls during recessions when some of the unemployed give up the search, go back to universities or training colleges or retire early. The decline usually reverses during recovery. Not this time: since the recession ended in mid-2009, the participation rate has kept on sliding (see chart). It has fallen most among the young, many of whom have stayed in education, and least among those over 55.
…
Most striking has been the drop for men aged 25-54, who have long had the highest participation rates. Some of these men will re-enter the labour market when the economy and job opportunities revive, but many will not. The participation rate of men has been declining for years, apparently because many who lost their high-paid, low-skilled jobs in manufacturing, transport and construction have retired or registered as disabled rather than retraining. Julia Coronado, an economist at BNP Paribas, reckons a wave of early retirements by state- and local-government staff and manufacturing workers may explain the latest downturn. If these men never rejoin the job hunt, it would, paradoxically, help to bring the unemployment rate down faster. That might look like good news; but it is not.