Open thread June 15, 2012 Dan Crawford | June 15, 2012 7:30 pm Tags: open thread Comments (4) | Digg Facebook Twitter |
dani rodrik with coming attractions:
The End of the World as We Know It – Consider the following scenario. After a victory by the left-wing Syriza party, Greece’s new government announces that it wants to renegotiate the terms of its agreement with the International Monetary Fund and the European Union. German Chancellor Angela Merkel sticks to her guns and says that Greece must abide by the existing conditions. Fearing that a financial collapse is imminent, Greek depositors rush for the exit. The Greek government institutes capital controls and is ultimately forced to issue drachmas in order to supply domestic liquidity. With Greece out of the eurozone, all eyes turn to Spain. Germany and others are at first adamant that they will do whatever it takes to prevent a similar bank run there. The Spanish government announces additional fiscal cuts and structural reforms. Bolstered by funds from the European Stability Mechanism, Spain remains financially afloat for several months. But the Spanish economy continues to deteriorate and unemployment heads towards 30%. Violent protests against Prime Minister Mariano Rajoy’s austerity measures lead him to call for a referendum. His government fails to get the necessary support from voters and resigns, throwing the country into full-blown political chaos. Merkel cuts off further support for Spain, saying that hard-working German taxpayers have already done enough. A Spanish bank run, financial crash, and euro exit follow in short order. In a hastily arranged mini-summit, Germany, Finland, Austria, and the Netherlands announce that they will not renounce the euro as their joint currency. This only increases financial pressure on France, Italy, and the other members. As the reality of the partial dissolution of the eurozone sinks in, the financial meltdown spreads from Europe to the United States and Asia…
He misses what followed hard on the heels of the other Great Depression – a descent into World War.
It’s hard to imagine that his scenario would not lead to a similar outcome. Wars are always about economics.
Unclear on the concept alert:
This small item in Business Insider covers the NAB lobbying the FCC to prevent simple online disclosure of political ad budgets: http://www.businessinsider.com/why-nbc-cbs-fox-and-the-washington-post-want-election-ad-spending-data-kept-secret-2012-5
“The broadcasters hate the new rule because they believe it would make TV ad buying more transparent. By law, stations must give their lowest ad rates to political candidates—and they don’t want corporate advertisers finding out just how low those rates can go.”
I guess if corporations want the cheapest ads they should just go the NASCAR route. Let Coke pay Mitty Mitt to drink Dasani water in their ads – it’s win win!
EMAILED YESTERDAY MORNING to about half he Chicago City Council and about fifty journalists at the Tribune and Sun-Times:
Before Chicago’s Republi-crat mayor adds too many hours to public school days he might ponder what economist/political scientist Sánchez-Jankowski says about why ghetto schools don’t work in his book “Cracks in the Pavement” after spending nine years on the ground in five New York City and Los Angeles poverty neighborhoods: the schools there did not work because too many students – and teachers – did not expect the job market to pay them enough to work when they got out. Ergo, many feel it not worth making extra effort.
What the good professor was unaware of and what the Chicago City Council is unlikely aware of – nobody else in America seems to know – is that, as average income doubled over the last two generations due to advancing technology and management skills, the federal minimum wage by now has sunk $3.28/hr from a high of $10.53/hr in 1968 ($1.60/hr nominally).
It took more than inadequate teaching to put 100,000 gang members on Chicago streets (per Dean Renolds). In my reading of Venkatesh’s American Project the Taylor Homes became gang infested hell only as the minimum wage dipped below 63% of LBJ’s minimum ($5.15 nominally) in 2000).
I am not expecting Chicago’s City council to straighten out what I call America’s “post apocalyptic” labor market. I’m just trying to point out the deep labor market sickness at the bottom of most of America’s worst troubles. Least of all do I expect a Republi-crat to care.
FWIW; jumping to a federal minimum wage to $15/hr would add about 4% direct inflation – easily computed:
[70 million (half the workforce); $3.75/hr average raise ($15 is today’s median wage, optimistically) X 2000 hours (work year)] + [3.5 million * extra half raises for those now at or below the minimum (2009) X $3.75 X 2000 hours] = $551.25 billion altogether — out of a GDP of $14 trillion = 3.9% direct inflation.] * http://www.bls.gov/cps/minwage2009tbls.htm
If a McDonald’s union could hold out for double pay they would add 33% to the price of a burger: fast food labor costs being 33%. If McDonald’s union could do that a Target union could hold out for a raise from $10/hr (don’t know exact figure) to $15 which would add only 5% to Target’s […]