You are browsing the archive for 2014 April 16.

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Fed Can Print Money, But It Can't Print Jobs

April 16, 2014 in Economics

By Alan Reynolds


Alan Reynolds

We have all been watching a long mystery with no ending: What the Federal Reserve governors are trying to do, how they intend to do it and why they imagine their efforts will work.

The key questions boil down to two: (1) What target should the Fed aim at, and (2) what policy instruments should it use to hit that target?

The Fed’s only explicit target — an unemployment rate of 6.5% — was shrewdly discarded as “outdated” as that target grew near. Actually, the idea of focusing on unemployment is outdated, since it presumes that high unemployment guarantees low inflation — as though stagflation in 1975 or 1982 could not have happened.

Why not simply target inflation? Ben Bernanke advocated inflation targeting before 2002, when he became Fed chairman. On Nov. 21, 2002, he gave a speech warning that inflation was too low, threatening deflation.

Today, as in 2002 or 1998, many are again warning that inflation is too low — just 1.1% last year when gauged by the deflator for personal-consumption expenditures (PCE), or 1.5% over the past 12 months, according to the March consumer price index.

But the trouble with basing future policy on past inflation news is that inflation is always lower before it moves higher. PCE inflation rates of 0.8% in 1998 and 1.3% in 2002, for example, were followed by 2% inflation in 2003, 2.4% in 2004, and 2.9% in 2005.

In the end, economic growth depends on incentives to expand and improve labor and capital.”

Many other central banks do set inflation targets, but the Fed encourages the popular delusion that central bankers, like central planners, possess the knowledge and skill to boost real economic growth and employment.

Fed officials thus speak of their “dual mandate” to promote growth of the economy and jobs while keeping an eye on inflation.

Prominent economists of all stripes have proposed that the Fed should focus instead on keeping the growth of nominal GDP (NGDP) growing at a steady rate. But growth of NGDP is simply the inflation rate added to the real GDP growth rate. So how does an NGDP target differ from a dual mandate?

The graph above shows that before 2010, the Fed moved the federal funds rate up whenever nominal GDP growth picked up, and also reduced the fed funds rate when it slowed.

The Fed often reacted to NGDP data with a lag — easing …read more

Source: OP-EDS

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Ready to Join the International Community?

April 16, 2014 in Economics

By Doug Bandow

Doug Bandow

The United Nations Human Rights Council angered Iran by renewing the mandate of monitor Ahmed Shaheed, who has criticized Tehran’s abuses. His work remains vital as long as Iran violates its citizens’ most basic rights.

At the same time nuclear negotiations continue. Dealing with Tehran could turn into the Obama administration’s greatest foreign policy success or another disaster. If the interim Geneva agreement leads to permanent denuclearization of the Islamic Republic of Iran, President Barack Obama can claim an achievement nonpareil. If the effort collapses, he will look dangerously naïve.

Everything depends on whether Tehran, and not just President Hassan Rouhani, is serious. No surprise, many analysts — and more importantly, paladins of Capitol Hill — remain skeptical. And that doubt has fueled efforts to impose new sanctions, which would impede if not kill efforts to reach a final accord.

If Iran is serious about joining the community of nations, it should demonstrate that commitment in practical ways. One of the most important symbols of Iranian irresponsibility today is its ruthless persecution of religious minorities.

Many authoritarian regimes suppress political opponents — the one shared value among governments worldwide is staying in power. Far fewer seek to suppress the most basic exercise of human conscience. With an overwhelming Muslim majority, roughly 90 percent Shia, Iranian institutions will inevitably have an Islamic character. The government should not fear allowing those of other faiths to worship and live freely. There would be no more powerful reassurance for other nations of Tehran’s good intentions than for the Iranian authorities to respect religious liberty.

The most celebrated case of persecution today is Saeed Abedini, an American citizen born in Iran and sentenced to eight years in prison last year for “undermining national security” by the Iranian government. The idea that the 33-year-old father of two threatens the regime is ludicrous.

A Muslim convert to Christianity, he had been arrested and released on prior trips. His “crime” in Tehran’s view apparently was aiding house churches. He went to Iran in 2012 to set up an orphanage, with the government’s approval. Since then he was abused and tortured while held at Iran’s notorious Evin prison, and then transferred to Rajai Shahr prison, which may be even more dangerous. President Obama called for Abedini’s release. President Rouhani responded that he could not “interfere in the judicial process,” but left hope that the government might be able to “assist.”

Unfortunately, Abedini is merely the …read more

Source: OP-EDS

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What Made the Chicago Teachers' Strike a Success? Their Commitment to the Community

April 16, 2014 in Blogs

By Emily Wilson, AlterNet

The dramatically victorious strike showed it's possible for unions to fight back and to win.

In a newly published book, Strike for America: Chicago Teachers Against Austerity, Micah Uetrich offers a gripping profile of what has been called, “the most important domestic labor struggle so far this century.”

In just 130 pages, Uetrich makes the case that, after a successful strike in 2012, the Chicago Teachers Union (CTU) achieved victory with their new contract through the powerful combination of thoughtful militancy, community engagement and massive member outreach. Public support for the strike was so high that the red solidarity T-shirts became hot items; independent polls found a majority of parents supported the teachers—despite having to deal with the personal inconvenience of finding care for their children while schools were closed.

Uetrich, a contributing editor for In These Times and an assistant editor for Jacobin, lays out how the Caucus of Rank-and-File Educators (CORE), which won leadership of the CTU in 2010,fought back against school closures and helped shift the narrative away from one where teachers are seen as primarily concerned with advancing their own interests. On a book tour stop in San Francisco, Uetrich talked to AlterNet about how the CTU combined militancy with community outreach to stand up neoliberal education reforms; the gains they won in the contract; and the need for unions to reposition themselves as part of a broader social justice movement in order to realize victories of this kind. (The interview has been edited for clarity and length.)

AlterNet: What made you decide to write this book?

Micah Uetrich: It’s a very dramatic story that won’t sound real. It was, I believe, the third day of the CTU strike, and I was downtown [in Chicago] at a mass protest the union did almost every day during the strike. I was there with my friend, [journalist] Danny Postel, and I had written an article for Jacobin that had come out that day. We were marching, and all of a sudden, Danny stops in the middle of the street, and says, “Micah, this tale of the CTU must be chronicled and …read more


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Speech on Public College Campuses Liberated in One State

April 16, 2014 in Economics

By Nat Hentoff

Nat Hentoff

On April 4, Virginia Gov. Terry McAuliffe signed into law a bill unanimously passed by the House of Delegates and the Senate, which turns outdoor areas on the state’s public college and university campuses into what the Foundation for Individual Rights in Education, or FIRE, calls “public forums.”

In other words, student speech will not be limited to the tiny “free speech zones” that, as FIRE documents, restrict student speech in “1 in 6 of America’s 400 top colleges” in this land of the free and home of the brave.

This is America? In these places of higher learning?

As Greg Lukianoff, president of FIRE, keeps revealing, these tightly squeezed campus speech zones often result in “banishing student protests, leafleting and other basic expression (political or otherwise) to tiny areas far away from the students the speech is intended to reach” (“Virginia Legislature to Campuses: Down With Free Speech (Zones)!” Greg Lukianoff, Huffington Post, April 7).

Of course, FIRE was deeply involved in this historic unleashing of Virginia students’ First Amendment rights. But what about the state’s private colleges and universities? The pressure will now be on them, too, to allow their students to be fully American by speaking freely on those campuses.

It’s important to emphasize that, as FIRE does while it now goes on to give the First Amendment a home on other college campuses, “restricting student speech to tiny ‘free speech zones’ diminishes the quality of debate and discussion on campus by preventing expression from reaching its target audience” (“Virginia Bans Unconstitutional Campus ‘Free Speech Zones,’”, April 7).

“Often, institutions that maintain these restrictive policies also employ burdensome permitting schemes that require students to obtain administrative permission days or even weeks before being allowed to speak their minds.

“Even worse, many of these policies grant campus administrators unfettered discretion to deny applications based on the viewpoint or content of the speakers’ intended message.”

Are students on those campuses learning to be active, knowledgeable participants in this self-governing republic?

Virginia’s law, which FIRE is determined to extend to other states’ schools where it’s needed, “prohibits public institutions of higher education from imposing restrictions on the time, place and manner of student speech that occurs in the outdoor areas of the institution’s campus and is protected by the First Amendment to the United States Constitution …”

However, there are restrictions. Watch for these exceptions, because they’re why FIRE always stays on and protects its victories: “the restrictions …read more

Source: OP-EDS

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Five Libertarian Ideas #13 – Star Wars, organized crime and POLITICAL CORRUPTION

April 16, 2014 in Blogs

By Political Zach Foster