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By Tim Price, originally published on Next New Deal

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Creating an Economics for the 21st Century (Yahoo! Finance)

Roosevelt Institute Senior Fellow Rob Johnson argues that the problem with much of modern economics is that it offers no useful guidance for society, instead treating messy human decisions and interactions as if they could all be performed on a graphing calculator.

How the Case for Austerity Has Crumbled (NYRB)

Paul Krugman writes that the revelations about Reinhart-Rogoff's research errors wouldn't have been so embarrassing to so many proponents of austerity if they hadn't been looking for intellectual cover like a UFO believer searching the night sky with a telescope.

U.S. Budget Deficit Shrinks Far Faster Than Expected (NYT)

Annie Lowrey notes that the CBO estimates the deficit will be $200 billion lower than projected this fiscal year and could shrink to just 2.1 percent of GDP by 2015, allowing Washington to shift focus and get serious about jobs. Just kidding; who wants a tax cut?

Why Washington scandal-mania may save Medicare and Social Security (WaPo)

Greg Sargent writes that President Obama may give up on a Grand Bargain to avoid alienating the core progressive supporters he'll need to see him through the furor over the IRS's Tea Party targeting, the AP's phone records, and something something Benghazi.

Warren asks regulators to justify not taking Wall Street to trial (The Hill)

Peter Schroeder reports that Elizabeth Warren has sent a letter to the SEC, the Fed, and the Justice Department asking for any analysis they have to back up their strategy of settling out of court. Unlike the banks, they may just have to answer for their decisions. 

Student Loan Debt Horror Stories, Revealed (U.S. News & World Report)

Jim Lardner notes that the 28,000 personal statements about student loan debt published by the CFPB express something about the human costs of the crisis that statistics alone can't, though nothing's quite as frightening as those bills waiting in the mailbox.

Mending factory conditions after Bangladesh (WaPo)

Harold Meyerson writes that American companies like Walmart have been reluctant to sign onto a plan to commit to improving factory safety, partly because they've worked so hard to ensure that consumers can only afford to buy the most cheaply made products.

Everyday Socialism, American-Style, Is Happening Now (Truthout)

Gar Alperovitz writes that, beyond the right treating Obama as the reincarnation of Chairman Mao, the U.S. is filled with real examples of publicly owned resources, from utilities to railways to pension systems, that democratize wealth and efficiently meet public needs.

Tim Price is Editor of Next New Deal. Follow him on Twitter @txprice.

Originally posted to Daily Kos Economics on Wed May 15, 2013 at 06:58 AM PDT.

Also republished by Daily Kos.

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Comment Preferences

  •  I think it will be very interesting to see what (1+ / 0-)
    Recommended by:
    Odysseus

    if any, response Senator Warren receives to her letters. She has no power, except the bully pulpit, to demand anything. My guess is that each of the agencies will politely refuse to respond with any specifics, citing prosecutorial discretion and confidentiality agreements with the parties.

    "let's talk about that"

    by VClib on Wed May 15, 2013 at 07:13:29 AM PDT

    •  Elizabeth Warren for President! (0+ / 0-)

      I think as she keeps up this barrage of uncomfortable questions, she's eventually going to provoke a reaction that gives these injustices real publicity- at present, that's what will really count.

      Once she's President, of course, she'll have more power on her side.

      •  nils o - will she be a candidate in 2016? (0+ / 0-)

        She seems to be a lone wolf in the Senate and isn't making any friends among the other politicians. I wonder if she can attract the money needed to run a viable primary campaign? Maybe she can do it all with small donations.

        "let's talk about that"

        by VClib on Wed May 15, 2013 at 03:19:33 PM PDT

        [ Parent ]

  •  Krugman schooled the policymakers (2+ / 0-)
    Recommended by:
    gulfgal98, RichM

    on following recommendations based on dubious research, and rightly so.

    The real mystery, however, was why Reinhart-Rogoff was ever taken seriously, let alone canonized, in the first place. Right from the beginning, critics raised strong concerns about the paper’s methodology and conclusions, concerns that should have been enough to give everyone pause. Moreover, Reinhart-Rogoff was actually the second example of a paper seized on as decisive evidence in favor of austerity economics, only to fall apart on careful scrutiny. Much the same thing happened, albeit less spectacularly, after austerians became infatuated with a paper by Alberto Alesina and Silvia Ardagna purporting to show that slashing government spending would have little adverse impact on economic growth and might even be expansionary. Surely that experience should have inspired some caution.
    (from your link above)

    "If you can't take their money, eat their food, drink their booze and then vote against them, you have no business being up there."

    by Betty Pinson on Wed May 15, 2013 at 03:04:31 PM PDT

    •  The only criticism I have... (0+ / 0-)

      Is he sort of answered his own question later on in the article: He stated that the 1% are doing just fine, maybe even better, thank you very much.  Why is austerity so popular?  Because the wealthy like it.

      'Where free unions and collective bargaining are forbidden, freedom is lost' - Ronald Reagan, Communist

      by RichM on Wed May 15, 2013 at 03:48:51 PM PDT

      [ Parent ]

      •  He did a good job of explaining (0+ / 0-)

        the psychology behind the counter-factual push for austerity - it's because political leaders and the 1% all like a good morality play.  

        When applied to macroeconomics, this urge to find moral meaning creates in all of us a predisposition toward believing stories that attribute the pain of a slump to the excesses of the boom that precedes it—and, perhaps, also makes it natural to see the pain as necessary, part of an inevitable cleansing process. When Andrew Mellon told Herbert Hoover to let the Depression run its course, so as to “purge the rottenness” from the system, he was offering advice that, however bad it was as economics, resonated psychologically with many people (and still does).
        But Keynes (and the Great Depression) proved recovery doesn't have to be painful to work, in fact, the less pain, the more likely an economic recovery.  The pain has to come when the economy is good, when it becomes necessary to shore up regulations and punish the ones who helped facilitate the crash.

        "If you can't take their money, eat their food, drink their booze and then vote against them, you have no business being up there."

        by Betty Pinson on Wed May 15, 2013 at 03:54:38 PM PDT

        [ Parent ]

    •  Reinhart's home page hasn't gotten the memo (0+ / 0-)

      ...but still proudly lists the Reinhart & Rogoff paper "Growth in a time of debt" as one of her contributions, touted along with statements such as "Her work has helped to inform the understanding of financial crises for over a decade." However, the link from her home page to her Bloomberg feed details the errors in this paper.

      There is a "response" to the errors that turns on technicalities and that does not address the very real damage this paper has done to public policy in the US and abroad.

      I don't expect they will retract this paper, but I think they should. Even if the mistakes are due to innocent error, continuing to push this discredited paper is certainly sloppy enough that one should not trust anything that comes from this source, and in my opinion, borders on scientific misconduct.

      "Patriotism is supporting your country all the time and your government when it deserves it." - Mark Twain

      by Patience is Not a Virtue on Wed May 15, 2013 at 04:48:21 PM PDT

      [ Parent ]

  •  If I may provide a response to Sen. Warren's (0+ / 0-)

    interrogative to the SEC, DOJ, etc.  "Because it will absolutely screw our chances for cushy jobs after we (finally) resign."  Honestly, do you think Republicans could do much worse that this current crew?  I ask that as a life-long Democrat, a REAL Democrat, a New Deal Democrat.

    You have the right to remain silent. If you waive that right you will be accused of class warfare.

    by spritegeezer on Wed May 15, 2013 at 05:53:04 PM PDT

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