Relevant and even prescient commentary on news, politics and the economy.

Low inflation concern continues in Europe

http://2.bp.blogspot.com/-BvYnL4qzrKY/TsRCzsZ709I/AAAAAAAAA_M/aIBsDqo6MrE/s1600/DSCN3517.JPG

The Euro-zone inflation rate rose less then expected for April at a pace of 0.7%. It was expected, or hoped, to rise to 0.9%.

Germany’s inflation rate stayed low at 1.1%, which makes cost adjustments more troubling for the periphery countries of Europe like Spain and Greece.

Finding a cure for low inflation is imperative just like finding a cure for inequality.

The knee-jerk response to lower inflation is to lower nominal rates and increase Quantitative Easing. Sooner or later Europe and other advanced countries will have to channel liquidity more broadly to society than just the financial sector. And if the Fisher Effect is stable this time, then lowering the nominal rates will be counter-productive.

Now we wait for the inflation data of the United States.

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Real State Per capita Income

The Bureau of Economic Analysis has been working on creating state and metro cost of living indices for several years and they have just published a new set of them that can be used to create real per capita income comparisons between states.

In their press release they show a map comparing real growth in 2012 that ranged from plus 12.7% in North Dakota and minus -2.3% in South Dakota.

http://www.bea.gov/newsreleases/regional/rpp/rpp_newsrelease.htm

But I found the ranking of the states real per capita income much more interesting.

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It’s the Political Economy, Stupid!

by Peter Dorman    Re posted from Econospeak

It’s the Political Economy, Stupid!

Sometimes living in the world of ideas makes it harder to understand the real one. If you happen to be an economist, and the time is now, that is true in spades. Take Paul Krugman, for instance. After bemoaning the terrible policy choices of the last two years, he writes, “I’m still trying to make sense of this global intellectual failure.” It’s as if the core problem is that political leaders didn’t learn their macroeconomics well enough.

But Keynes was wrong about the power of “academic scribblers”. Idea-smiths provide language, narratives and tools for those in control, but the broad contours of policy depend on who the controllers happen to be. We are not living through an epoch of intellectual failure, but one in which there is no available mechanism to oust a political-economic elite whose interests have become incompatible with ours.

This is not some sudden development, much less a coup d’etat as is sometimes claimed. No, the accretion of power by the rentiers has been systematic, structural and the outcome of a decades-long process. It is deeply rooted in modern capitalist economies due to the transformation of corporations into tradable, recombinant portfolios of assets, increasing concentration of and returns to ownership, and the failure of regulation to keep pace with technology and transnational scale. Those who sit at the pinnacle of wealth for the most part no longer think about production, nor do they worry very much about who the ultimate consumers will be; they take financial positions and demand policies that will see to it that these positions are profitable.

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A Wisconsin federal judge today struck down as unconstitutional that state’s voter-ID law, ruling that the appearance of voter fraud, just like the appearance of political corruption, can’t justify impeding the First Amendment right to vote.

In a close and insightful  reading of Chief Justice Roberts’ opinion in McCutcheon, reproduced here with his permission from the election law listserv, Marty Lederman has called attention to this first paragraph:

“There is no right more basic in our democracy than the right to participate in electing our political leaders. Citizens can exercise that right in a variety of ways: They can run for office themselves, vote, urge others to vote for a particular candidate, volunteer to work on a campaign, and contribute to a candidate’s campaign. This case is about the last of those options.”

— Former Obama White House Counsel and eminent Washington election-law attorney Bob Bauer, on his blog moresoftmoneyhardlaw.com, Apr. 24

Bauer sums up:

While disclaiming “naiveté” about the Roberts Court’s commitment to the interests of voters, Marty asserts that if “taken seriously,” this freshly minted right to participate could “be the source of a new flourishing of voting rights and other election-related rights.”

Eminent and esteemed though they are, Bauer and Lederman are late to a party.  Specifically, my party. On Apr. 3, a day after McCutcheon was issued, I pointed out right here on this popular and acclaimed blog what “the REAL news from the McCutcheon opinion” is:

“There is no right more basic in our democracy than the right to participate in electing our political leaders.”  That’s how Roberts began the opinion.

So I guess we can now assume that the Court will strike down all those voter-ID laws that so clearly impact that most basic of rights, and will do so by unanimous vote of the justices.

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Justice Scalia’s Curious Memory Lapse. NO, not the one everyone’s talking about. [Post typo-corrected]

Clarification appended below.

—-

During oral arguments in a freedom-of-speech case out of Alabama, several justices challenged the notion that public employees who testify truthfully about an issue of significant public concern aren’t shielded from retaliation by the First Amendment.

“What kind of message are we giving when we’re telling employees, you’re subpoenaed in a trial, go and tell a falsehood because otherwise you can be fired?” Justice Sonia Sotomayor asked attorneys in the case.

The Fifth Amendment protects state employees against self-incrimination on the witness stand, but “it doesn’t protect the department he works for from being incriminated,” Chief Justice John Roberts said.

Justices suggest public employees’ testimony is protected, Mary Orndorff Troyan, USA Today, today

It’s nice to know that the Fifth Amendment doesn’t protect the department he works for from being incriminated.  It would be nicer still to know that the First Amendment, so vaunted these days by the Supreme Court as allowing the purchase of legislative votes as long as there’s no formal purchase receipt issued by the legislator/seller, that that Amendment protects the truthful speech of public-employee whistleblowers, and not just the speech of public employees who don’t want to speak in support of big government by being compelled to pay a fee to the union that is negotiating the terms of their employment (pay, benefits, working conditions) and that will represent them in disputes with the employer.  (Okay, the last part of that compound sentence is based on a comment by Alito during argument in January in a case called Harris v. Quinn.  The opinion in the case hasn’t been issued yet.)

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Recovery in Europe?

by Joseph Joyce (is a Professor of Economics at Wellesley College and the Faculty Director of the Madeleine Korbel Albright Institute for Global Affairs.  His book, The IMF and Global Financial Crises: Phoenix Rising?, was published in 2012 by Cambridge University Press.)

Recovery in Europe?

Greece has returned to the bond market, issuing $4.2 billion of five-year bonds at an interest rate of 4.95%. The government’s ability to borrow again is a “reward” for posting a surplus on its primary budget (although the accounting that produced the surplus has been questioned).  This has been viewed as a sign, albeit fragile, of recovery. Portugal has also sold bonds and hopes to exit its bailout program this spring. But what does recovery mean for these countries, and is it sustainable?

Growth” for these countries reflects a rise from a brutally harsh downturn. Greece has an unemployment rate of 26.7%, with much higher rates for its youth. Portugal’s unemployment rate of 15.3% was achieved in part by emigration.

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Living with Water Scarcity

David Zetland just published Living with Water Scarcity.  Ed Dolan at Economonitors reviews the book…(the review is re-posted with permission of the author).

Living with Water Scarcity: A Refreshing Take on a Hot-Button Issue

by  Ed Dolan   (is an economist and educator with a Ph.D. from Yale University. Since 2001, he has taught at several universities in Europe, including Central European University in Budapest, the University of Economics in Prague, and the Stockholm School of Economics in Riga.  During breaks in his teaching career, he worked in Washington, D.C. as an economist for the Antitrust Division of the Department of Justice and as a regulatory analyst for the Interstate Commerce Commission)

Review of David Zetland, Living with Water Scarcity, Aguanomics Press, 2014

Whether it’s cowboys facing off over a muddy water hole in an old Western, or the dirty looks you get if you fill your supermarket basket with bottled water, no one ever denied that people feel strongly about water. David Zetland’s new book, Living with Water Scarcity, explores hot-button water issues in a refreshingly pragmatic way. There are no “-isms,” no blanket condemnations of government or capital. Zetland does care about water—he cares passionately—but he keeps his rhetoric cool while he explains how government water managers have too often failed to do their job while markets, which have worked where they have been tried, need to be used more widely.

The right price

Zetland begins with a simple distinction between scarcity and shortage. Water is scarce in the sense that different people have different purposes for it—drinking, growing crops, sustaining flows to streams and wetlands—but there is not enough to meet all of them all in full. Water is not unique in that regard. We spend our time and money in pursuit of scarce goods every day. We would always like to have more time and money, but we live with what we have.

Shortage is different. A shortage means you can’t get the water you want no matter how much time and money you have. A shortage is a sign of failure to manage scarcity.

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America’s First Fracking Trial

Re-posted from Naked Capitalism (with permission from the author) comes a well written piece on an important court case concerning damages to health and property from fracking operations in Texas (hat tip Run75441):

Texas Family Awarded $3 Million in America’s First Fracking Trial

by Lambert Strether of Corrente

$3 Million? More like this, please. Here’s some background on the suit, from Natural Gas Intelligence:

In a first-of-its-kind hydraulic fracturing (fracking) nuisance lawsuit, a Dallas Jury Tuesday awarded a North Texas family $2.95 million for physical and mental pain as well as loss of property value due to activities by Barnett Shale producer Aruba Petroleum Inc.

Plaintiffs Robert and Lisa Parr had sought $9 million in damages and alleged that 22 wells operated by Plano, TX-based Aruba within two miles of their land, about 15 miles west of Denton, TX, exposed them to toxic gases and industrial waste. The Parrs said they were forced from their home at certain times and had to live in Robert Parr’s office. The lawsuit said that exposure to volatile organic compounds from fracking made them sick and that the family’s well water had been polluted. …

The award, in Dallas County Court, did not include any exemplary damages as the jury did not find that Aruba had acted with malice.

The [Parr] family experienced chronic migraines, rashes, dizziness, nausea and chronic nosebleeds, including an incident when their daughter awoke in the middle of the night covered in blood, according to plaintiffs attorneys. Livestock and pets on the family’s ranch were also affected with nosebleeds and other illnesses. A dwarf calf was born of a cow that had delivered healthy calves before the fracking operations started.

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