Uber-conservative "Red State" blogger Erik Erickson spills the beans on his party:
"I’m just not sure what the Republican Party really stands for any more other than telling Obama no and telling our own corporate interests yes. That’s not much of a platform."
Saturday, June 28, 2014
Joseph Stiglitz @ NYT:
AN insidious trend has developed over this past third of a century. A country that experienced shared growth after World War II began to tear apart, so much so that when the Great Recession hit in late 2007, one could no longer ignore the fissures that had come to define the American economic landscape. How did this “shining city on a hill” become the advanced country with the greatest level of inequality?
One stream of the extraordinary discussion set in motion by Thomas Piketty’s timely, important book, “Capital in the Twenty-First Century,” has settled on the idea that violent extremes of wealth and income are inherent to capitalism. In this scheme, we should view the decades after World War II — a period of rapidly falling inequality — as an aberration.
This is actually a superficial reading of Mr. Piketty’s work, which provides an institutional context for understanding the deepening of inequality over time. Unfortunately, that part of his analysis received somewhat less attention than the more fatalistic-seeming aspects.
Over the past year and a half, The Great Divide, a series in The New York Times for which I have
served as moderator, has also presented a wide range of examples that undermine the notion that thereare any truly fundamental laws of capitalism. The dynamics of the imperial capitalism of the 19th century needn’t apply in the democracies of the 21st. We don’t need to have this much inequality in America.
Our current brand of capitalism is an ersatz capitalism. For proof of this go back to our response to the Great Recession, where we socialized losses, even as we privatized gains. Perfect competition should drive profits to zero, at least theoretically, but we have monopolies and oligopolies making persistently high profits. C.E.O.s enjoy incomes that are on average 295 times that of the typical worker, a much higher ratio than in the past, without any evidence of a proportionate increase in productivity.
If it is not the inexorable laws of economics that have led to America’s great divide, what is it? The straightforward answer: our policies and our politics. People get tired of hearing about Scandinavian success stories, but the fact of the matter is that Sweden, Finland and Norway have all succeeded in having about as much or faster growth in per capita incomes than the United States and with far greater equality.
|Source: The Atlantic|
So why has America chosen these inequality-enhancing policies? Part of the answer is that as World War II faded into memory, so too did the solidarity it had engendered. As America triumphed in the Cold War, there didn’t seem to be a viable competitor to our economic model. Without this international competition, we no longer had to show that our system could deliver for most of our citizens.
Ideology and interests combined nefariously. Some drew the wrong lesson from the collapse of the Soviet system. The pendulum swung from much too much government there to much too little here. Corporate interests argued for getting rid of regulations, even when those regulations had done so much to protect and improve our environment, our safety, our health and the economy itself.
But this ideology was hypocritical. The bankers, among the strongest advocates of laissez-faire economics, were only too willing to accept hundreds of billions of dollars from the government in the bailouts that have been a recurring feature of the global economy since the beginning of the Thatcher-Reagan era of “free” markets and deregulation.
The American political system is overrun by money. Economic inequality translates into political inequality, and political inequality yields increasing economic inequality. In fact, as he recognizes, Mr. Piketty’s argument rests on the ability of wealth-holders to keep their after-tax rate of return high relative to economic growth. How do they do this? By designing the rules of the game to ensure this outcome; that is, through politics.
Sunday, May 11, 2014
Jonathan Chait at New York Magazine exposes the intellectual and moral bankruptcy of "conservatism's" foremost alleged "intellectuals." "Conservative intellectual" has truly become an oxymoron:
There is no issue where educated ignorance is on more perfect display than Post columnists, and Fox News All-Star panelists. They numbered among the select conservative intellectuals chosen to dine with newly elected president Barack Obama in 2009.
On their Fox News All-Star Panel appearance this week, both men discussed the U.S. National Climate Assessment, which they dismissed with various irritable mental gestures. Their evasions and misstatements, clothed in faux-erudition, offer a useful entrance point to study the current state of the right-wing mind.
Krugman @ NYT on the shame - or should I say "shamelessness" - of too many in his profession:
The 2008 crisis and its aftermath have been a testing time for economists — and the tests have been moral as well as intellectual. After all, economists made very different predictions about the effects of the various policy responses to the crisis; inevitably, some of those predictions would prove deeply wrong. So how would those who were wrong react?
The results have not been encouraging.Brad DeLong reads Allan Meltzer in the Wall Street Journal, issuing dire warnings about the inflation to come. Newcomers to this debate may not be fully aware of the history here, so let’s recap. Meltzer began banging the inflation drum five full years ago, predicting that the Fed’s expansion of its balance sheet would cause runaway price increases; meanwhile, some of us pointed both to the theory of the liquidity trap and Japan’s experience to say that this was not going to happen. The actual track record to date:Tests in economics don’t get more decisive; this is where you’re supposed to say, “OK, I was wrong, and here’s why”.Not a chance. And the thing is, Meltzer isn’t alone. Can you think of any prominent figure on that side of the debate who has been willing to modify his beliefs in the face of overwhelming evidence?Now, you may say that it’s always like this — but it isn’t. Consider the somewhat similar debate in the 1970s over the “accelerationist” hypothesis on inflation — the claim by Friedman and Phelps that any sustained increase in inflation would cause the unemployment-inflation relationship to worsen, so that there was no long-run tradeoff. The emergence of stagflation appeared to vindicate that hypothesis — and the great majority of Keynesians accepted that conclusion, modifying their models accordingly.So this time is different — and these people are different. And I think we need to try to understand why. Were the freshwater guys always just pretending to do something like science, when it was always politics? Is there simply too much money and too much vested interest behind their point of view?
Wednesday, April 30, 2014
Kathleen Geier outlines "What Piketty’s Conservative Critics Get Wrong" @ The Baffler:
With his book Capital in the Twenty-First Century, Thomas Piketty has lobbed a truth bomb that has blown up several decades’ worth of received opinion about the way the economy works in capitalist societies. He makes a powerful, meticulously-argued, data-driven case that inequality is a feature of capitalist economies, not a bug. Let to its own devices, wealth tends to become highly concentrated. The only events likely to prevent our society from plunging into a dystopian spiral of inequity are, on the one hand, certain rarely occurring catastrophes, such as war or depression; or, on the other, dramatic government intervention in the economy, in the form of steep taxes on the wealthy.
You can see why conservatives are going to be enraged by this book.
A conservative backlash to Piketty was inevitable; the only surprise is that it’s taken so long to develop. But in the last week or so, responses from the right have finally begun to roll in. Send in the clowns!
Tuesday, April 29, 2014
Annie Lowrey @ NYT:
WASHINGTON — The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.
In essence, the poor economy has replaced good jobs with bad ones. That is the
“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”
The report shows that total employment has finally surpassed its pre-recession level. “The good news is we’re back to zero,” Mr. Evangelist said.
But job losses and gains have been skewed. Higher-wage industries — like accounting and legal work — shed 3.6 million positions during the recession and have added only 2.6 million positions during the recovery. But lower-wage industries lost two million jobs, then added 3.8 million.
Most of the jobs added during the recovery have been in lower-wage industries...
Tuesday, April 22, 2014
Political science Prof. Larry Bartels at WaPo:
The United States does less to redistribute income than virtually any other economically “advanced” democracy. So why does class conflict loom so much larger in U.S. public opinion about government spending than in other affluent democracies? The answer may have something to do with our peculiar system of taxation.
The claim that America is riven by class conflict may come as a surprise to people who like to think that “There are no classes in America,” as Rick Santorum put it during his 2012 presidential campaign. But the fact is that rich and poor Americans disagree about government spending to an extent virtually unmatched elsewhere in the world.
Monday, April 21, 2014
Saturday, April 19, 2014
More Krugman on The Crazy:
I can easily understand it when people don’t know the facts about economic statistics; you need a fair bit of background knowledge even to know how to look these things up. It’s more surprising when people don’t know what they don’t know — when they make confident assertions that can be proved false in a few seconds by anyone who does know these things.
I had a one-on-one encounter with Rand Paul over such a case; there our heads were, talking on TV, and he insisted that government employment had risen under Obama. (It has actually plunged.) At the very least, you’d think he would have learned a lesson from the experience.
But no. There he goes, saying, "When is the last time in our country we created millions of jobs? It was under Ronald Reagan … "
It’s not just that more jobs were created under Clinton, who raised taxes on the rich, than under Reagan; I wonder how many people know that more jobs were created under Jimmy Carter than under either Bush?
But I guess I really do understand it: according to right-wing theology, The Blessed Reagan’s tax cuts must have created far more jobs than the policies of evil redistributors. And so that’s what must have happened. Hey, Clinton was probably cooking the books.
Krugman @ NYTs on The Crazy:
“The facts have a well-known liberal bias,” declared Rob Corddry way back in 2004 — and experience keeps vindicating his joke. But why?
Not long ago Ezra Klein cited research showing that both liberals and
Just to be clear: Yes, you can find examples where *some* liberals got off on a hobbyhorse of one kind or another, or where the liberal conventional wisdom turned out wrong. But you don’t see the kind of lockstep rejection of evidence that we see over and over again on the right. Where is the liberal equivalent of the near-uniform conservative rejection of climate science, or the refusal to admit that Obamacare is in fact reaching a lot of previously uninsured Americans?
In what is beginning to sound like a "Dog Bites Man" story from the WSJ:
The rich got richer, the poor got poorer.
A recent article by Labor Department senior economist Aaron Cobet highlights the sharp disparity between the wealthiest and poorest Americans in the aftermath of the 2007-2009 recession.
“While average income has returned to pre-recession levels, income gains have been distributed unevenly,” Mr. Cobet said.
The economist mined Labor Department data to show that the top 20% of earners accounted for more than 80% of the rise in household income from 2008-2012. Income fell for the bottom 20%.
Martin Wolff reviews Thomas PIketty's opus @ The Financial Times. Read at link or below:
French economist Thomas Piketty has written an extraordinarily important book. Open-minded readers will surely find themselves unable to ignore the evidence and arguments he has brought to bear.
Robert Kuttner has an excellent appreciation of the great critic of free market fundamentalism, Karl Polyani and his essential book, The Great Transformation, @ American Prospect:
The Great Transformation, written for a broad audience, is witty and passionate
Contrary to libertarian economists from Adam Smith to Hayek, Polanyi argued, there was nothing “natural” about the free market. Primitive economies were built on social obligations. Modern commercial society depended on “deliberate State action” by and for elites. “Laissez-faire” he writes, savoring the oxymoron, “was planned.”
Libertarian economists, who treat the market as universal—disengaged from local cultures and historic time—are fanatics whose ideas end in tragedy. Their prescription means “no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system.”
Like Marx, Polanyi begins in England, the first fully capitalist nation. In Polanyi’s telling, the slow shift from a post-feudal to a capitalist economic system accelerated in the 18th century, when the enclosure movement (“a revolution of the rich against the poor”) deprived the rural people of historic rights to supplement incomes by grazing domestic animals on common land, and the industrial revolution began to undermine craft occupations.
This is an essential insight, given the dominant narrative about marriage, single-parenthood and poverty rampant not just among the usual suspects of the right but among many liberals.
Matt Breuning @ Demos:
I see it often claimed that the high rate of child poverty in the US is a function of family composition. According to this view, the reason childhood poverty is so high is that there are too many unmarried parents and single mothers, and those kinds of families face higher rates of poverty. The usual upshot of this claim is that we can't really do much about high rates of childhood poverty, at least insofar as we can't force people to marry and cohabitate and such.More here.
One big problem with this claim is that family composition in the US is not that much different from family compositions in the famed low-poverty social democracies of Northern Europe, but they don't have anywhere near the rates of child poverty we have.
A number of studies have tested this family composition theory using cross-country income data and found, again and again, that family composition differences account for very little of the child poverty differences between the US and other countries...
Economic Policy Institute:
(L)ong-term unemployment is elevated for workers at every education level… while there is considerable variation in long-term unemployment rates across groups—which is always true, in good times and bad—the long-term unemployment rate is substantially higher now than it was before the recession started for all groups. The long-term unemployment rate is between 2.9 and 4.3 times as high now as it was six years ago for all age, education, occupation, industry, gender, and racial and ethnic groups. Today’s long-term unemployment crisis is not at all confined to unlucky or inflexible workers who happen to be looking for work in specific occupations or industries where jobs aren’t available. Long-term unemployment is elevated in every group, in every occupation, in every industry, at all levels of education.
It’s not every day that you find a fan club for new taxes, especially among economists and legal experts.
But a burst of outrage in recent days generated by Michael Lewis’s new book about the adverse consequences of high-frequency trading on Wall Street has revived support in some quarters for a tax on financial transactions, with backers arguing that a tiny surcharge on trades would have many benefits.
“It kills three birds with one stone,” said Lynn A. Stout, a professor at Cornell Law School, who has long followed issues of corporate governance and securities regulation. “From a public policy perspective, it’s a no-brainer.”
Not only would the tax reduce risk and volatility in the market, Professor Stout said, but it would also raise much-needed revenue for public coffers while making it modestly more expensive to engage in a practice that brings little overall economic benefit.
David Dayen @ American Prospect:
Financial reformers in both parties have insisted for years that the largest banks remain too big to fail, and that Dodd-Frank did not cleanse the system of this reality. You can mark down this week as the moment that this morphed into conventional wisdom. In successive reports, two of the more small-c conservative economic institutions, without any history of agitating for financial reform—the Federal Reserve and the International Monetary Fund—both agreed that mega-banks, in America and abroad, enjoy a lower cost of borrowing than their competitors, based on the perception that governments will bail them out if they run into trouble. This advantage effectively works as a government subsidy for the largest banks, allowing them to take additional risks and threaten another economic meltdown. With institutional players like the Fed and the IMF both identifying the same problem, Wall Street grows more and more isolated, setting up the possibility of true reform.
Thursday, March 27, 2014
John Cassidy @ The New Yorker reviews the definitive new book on income inequality:
In the stately world of academic presses, it isn’t often that advance orders and
Piketty, who teaches at the Paris School of Economics, has spent nearly two decades studying inequality… The main task he set himself was exploring the hills and valleys of income and wealth, a subject that economics had largely neglected. At first, Piketty concentrated on getting the facts down, rather than interpreting them. Using tax records and other data, he studied how income inequality in France had evolved during the twentieth century, and published his findings in a 2001 book. A 2003 paper that he wrote with Emmanuel Saez, a French-born economist at Berkeley, examined income inequality in the United States between 1913 and 1998. It detailed how the share of U.S. national income taken by households at the top of the income distribution had risen sharply during the early decades of the twentieth century, then fallen back during and after the Second World War, only to soar again in the nineteen-eighties and nineties.
Monday, March 24, 2014
Atif Mian and Amir Sufi @ House of Debt:
If you must know only one fact about the U.S. economy, it should be this chart:
The chart shows that productivity, or output per hour of work, has quadrupled since 1947 in the United States. This is a spectacular achievement by an advanced economy.
The gains in productivity were quite widely shared from 1947 to 1980. Real income for the median U.S. family doubled during this time just as output per hour of work performed doubled. The rising tide was lifting all boats.
(But there has been a) remarkable separation in productivity and median real income since 1980. While the United States is producing twice as much per hour of work today compared to 1980, a small part of the gain in real income has gone to the bottom half of the income distribution. The gap between productivity and median real income is at an historic all-time high today.
Professor Krugman blogs this indictment of the Beltway, Business and Media Elites @ NYT. Millions of lives have been ruined by the cruelty of the Deficit Hawks, the willful ignorance or appalling timidity of insider DC elites - including many top Democrats - and the flaming idiocy of the TeaBaggers, who converged to force the country into an austerity discourse when the economy quite clearly needed a robust injection of federal spending:
(W)hat we’re learning from a number of sources: it’s really hard to get employers to look at people who have been out of work for an extended period, so any sustained increase in long-term unemployment tends to become permanent.
The best way to avoid this outcome, then, is to avoid prolonged periods of high unemployment.So let me make the obvious point, just in case anyone missed it: the “pivot” of
2010 — when all the Very Serious People decided that the danger from debt trumped any and all concern for job creation — was an utter disaster, economic and human. It was even a disaster in fiscal terms, because a permanently depressed economy will cost far more in revenue than was saved by slashing the deficit by a few percent of GDP in the short term.
From the Annals of Deadly Expert Advice
Now, you might think that this post should be titled The Mistake of 2010 — but that would only be appropriate if it were truly an honest error. It wasn’t. Some of the austerians were self-consciously exploiting deficit panic to promote a conservative agenda; some were slipping into deficit-scolding rather than dealing with our actual problems because it felt comfortable; some were just going along for the ride, saying what everyone else was saying. Hardly anyone in the deficit-scold camp engaged in hard thinking and careful assessment of the evidence.
Sunday, March 23, 2014
Mike Konczal @ TNR:
"Our problem today was not caused by a lack of business and banking
The Tea Party's theory of the financial crisis has absolved Wall Street completely. Instead, the crisis is interpreted according to two pillars of reactionary thought: that the government is a fundamentally corrupt enterprise trying to give undeserving people free stuff, and that hard money should rule the day. This will have major consequences for the future of reform, should the GOP take the Senate this fall.
On the Hill, it’s hard to find where the Tea Party and Wall Street disagree. Tea Party senators like Mike Lee, Rand Paul, and Ted Cruz, plus conservative senators like David Vitter, have rallied around a one-line bill repealing the entirety of Dodd-Frank and replacing it with nothing. In the House, Republicans are attacking new derivatives regulations, all the activities of the Consumer Financial Protection Bureau, the existence of the Volcker Rule, and the ability of the FDIC to wind down a major financial institution, while relentlessly attacking strong regulators and cutting regulatory funding. This is Wall Street’s wet dream of a policy agenda.
Saturday, March 15, 2014
Matthew O'Brian @ The Atlantic:
Are the long-term unemployed just doomed today or doomed forever?
That's the question people are really asking when they ask if labor markets are
In other words, they think that the financial crisis has made us permanently poorer. That the economy can't grow as fast as it used to, so inflation will pick up sooner than it used to—and we need to get ready to raise rates. (Notice how that's always the answer no matter the question).
There are only two problems with this story: There's not much evidence for it, and we should ignore it even if there is. It's pretty simple. If tighter labor markets were causing wage inflation, they'd have caused wage inflation. But they haven't, not really. Now, it's true that average hourly earnings ticked up in February, but, as Paul Krugman points out, that was probably a weather-related blip. All the snow kept 6.8 million people from working full-time like they normally do, and, historically-speaking, that tends to affect hourly workers more than salaried ones. So higher-paid people probably made up a bigger share of the workforce last month—and voilà, it looked like wages rose. But that was just statistical noise, and if you look at the bigger picture, wage growth is still far below its pre-Lehman levels.
Friday, March 14, 2014
“This isn’t a race based comment it’s a breakdown of families, it’s rural poverty in rural areas, and talking about where poverty exists — there are no jobs and we have a breakdown of the family. This has nothing to do with race,” he insisted.Paul Ryan can't be totally stupid. Which leaves the obvious conclusion that he's disingenuous to the point of total cynicism. The problem with his racial dog-whistling is that he doesn't have the courage to stand by it and ends up assuming we're as stupid as he wants us to believe he must be to see no racial connotation in his "generations of lazy inner city men" discourse.
Ned Resnikoff @ MSNBC:
In 1967, with the Civil Rights movement still in full swing and Jim Crow still looming in the rearview mirror, median household income was 43% higher for white, non-Hispanic households than for black households. But things changed dramatically over the next half century, as legal segregation faded into history. By 2011, median white household income was 72% higher than median black household income, according to a Census report from that year [PDF].
To say that economic inequality is still a heavily racialized phenomenon, even a generation after the end of the Civil Rights era, would be an understatement. Yet both major parties continue to discuss inequality in largely color-blind terms, only hinting at the role played by race.
The trend is even more startling when one looks at median household wealth instead of yearly income. In 1984, the white-to-black wealth ratio was 12-to-1, according to Pew Research Center. By 1995, the chasm had narrowed until median white income had only a 5-to-1 advantage over black income. But over the next 14 years the wealth gap began to grow once again, until it had skyrocketed up to 19-to-1 in 2009.Yet even a recent 204-page analysis of the federal War on Poverty, spearheaded by Rep. Paul Ryan, R-Wis., gives only passing mentions to racial disparity. In the first section of the report, which purports to explain the causes of modern poverty, Ryan and his co-authors bring up race only twice: Once to identify “the breakdown of the familiy as a key cause of poverty within the black community,” citing Daniel Patrick Moynihan, and again to applaud the narrowing of the “achievement gap” between white and black schoolchildren. Weeks later, during a radio appearance, Ryan said poverty is in part to blame on the fact that “inner cities” have a culture of “men not working.”
President Obama went a step forward in December’s major address on inequality, when he noted that “the painful legacy of discrimination means that African Americans, Latinos, Native Americans are far more likely to suffer from a lack of opportunity—higher unemployment, higher poverty rates.” Yet that amounted to a footnote in a speech that also included the line, “The opportunity gap in America is now as much about class as it is about race.”
“I think it doesn’t make for good politics,” said Color of Change executive director Rashad Robinson of the racial wealth gap. “It’s messy and requires us to be deep and think about much bigger and more long-term solutions than Washington’s oftentimes willing to deal with.”
Yet in a serious discussion about American inequality, the subject of race is essentially unavoidable. That’s because most of the pipelines to a higher economic class—such as employment and homeownership—are “oftentimes not equally accessible to black folks,” said Robinson.
Disparities in homeownership are a major driver of the racial wealth gap, according to a recent study from Brandeis University. According to the authors of the report, “redlining [a form of discrimination in banking or insurance practices], discriminatory mortgage-lending practices, lack of access to credit, and lower incomes have blocked the homeownership path for African-Americans while creating and reinforcing communities segregated by race.”
Many of the black families that have successfully battled their way to homeownership over the past few decades saw their nest eggs get pulverized by the 2008 financial collapse. The Brandeis researchers found that “half the collective wealth of African-American families was stripped away during the Great Recession,” in large part due to the collapse of the housing market and the subsequent explosion in the nationwide foreclosure rate.
Similarly, employment discrimination has done its part to ensure that black unemployment remains twice as high as white unemployment—a ratio that has stayed largely consistent since the mid-1950s. National Bureau of Economy Research fellows have found that resumes are significantly less likely to get a positive response from potential employers if the applicants have names that are more common in the black community. And an arrest for even a non-violent drug offense can haunt a job applicant for the rest of his life; combined with the fact that black people are nearly four times more likely to be arrested for marijuana possession than whites, despite using the drug at roughly the same rate, criminal background checks have helped to fuel racial inequity in job hiring...
Monday, March 10, 2014
Saturday, March 8, 2014
Harvard Business Review executive editor & author of "The Myth of the Rational Market," Justin Fox @ HBR:
Six days before the election, the Republican nominee for president attended a fund-raising dinner at a posh New York restaurant. Two-hundred of the country’s richest and most powerful men were on hand. The next day, they were confronted with this atop the front page of one of the city’s leading newspapers:
This particular scan is from the historical-cartoon site HarpWeek, but the drawing has long been in the public domain — it ran in the now-defunct New York World on Oct. 30, 1884. The candidate was James G. Blaine (the droopy-eyed fellow in the center of the picture who is about to dig in to some Lobby Pudding), and the man who subjected him to this harsh treatment was Joseph Pulitzer, who had bought the World the previous year and was rapidly building it into the most popular and powerful newspaper the nation had ever seen.
Friday, March 7, 2014
The comedian's version:
The economist's version:
The economist's version:
Suddenly, or so it seems, inequality has surged into public consciousness — and neither the one percent nor its reliable defenders seems to know how to cope.
Some of the reactions are crazy — it’s Kristallnacht, they’re coming to kill us — with the craziness quite widespread; notice how many billionaires, plus of course the Wall Street Journal, rallied around Tom Perkins. But even the saner-sounding voices evidently have a hard time wrapping their minds around the notion that anyone might find 21st-century finance capitalism a bit, well, unfair.
Saturday, March 1, 2014
Oxford economic historian Kevin O'Rourke dissects the economic mess driven by the Euro, which was clearly a terrible idea from the outset:
The euro area economy is in a terrible mess.
In December 2013 euro area GDP was still 3 percent lower than in the first quarter of 2008, in stark contrast with the United States, where GDP was 6 percent higher. GDP was 8 percent below its precrisis level in Ireland, 9 percent below in Italy, and 12 percent below in Greece. Euro area unemployment exceeds 12 percent—and is about 16 percent in Portugal, 17 percent in Cyprus, and 27 percent in Spain and Greece.
Europeans are so used to these numbers that they no longer find them shocking, which is profoundly disturbing. These are not minor details, blemishing an otherwise impeccable record, but evidence of a dismal policy failure.
The euro is a bad idea, which was pointed out two decades ago when the currency was being devised. The currency area is too large and diverse—and given the need for periodic real exchange rate adjustments, the anti-inflation mandate of the European Central Bank (ECB) is too restrictive. Labor mobility between member countries is too limited to make migration from bust to boom regions a viable adjustment option. And there are virtually no fiscal mechanisms to transfer resources across regions in the event of shocks that hit parts of the currency area harder than others.