Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
- Published on Monday, April 21, 2014
Many commentators believe that exponential increases in computing power will lead to tremendous improvements in human welfare and living quality at almost no cost per unit or "marginal" cost. In their new book "The Second Machine Age" Erik Brynjolfsson and Andrew McAffee (BM hereafter) express this view confidently, and give many fascinating examples of new technologies that are only possible thanks to recent and ongoing advances in information technology: self-driving cars, real-time translation software, and smart robots that can be taught movement routines by users.
While the innovations the authors describe are truly breathtaking in their technological sophistication, the authors are wrong to assert that these products and services come at "almost zero marginal cost of reproduction" (BM p. 62). For information technology (IT) and the "information economy" based on it are not energy-neutral; they use costly energy, much of it generated by fossil fuels that continue to supply 80% of the world's energy and emit greenhouse gases when used.
So these technologies are costly also in the sense that their electricity use contributes to climate change that is now widely agreed to have adverse consequences for human welfare (IPCC 2014, and Tony Bonen's blog; Duncan Foley (2013) examines the growth trajectory of IT from a classical political ecoomy perspective in his paper). Economists and policy makers need to re-examine the claim that life-improving digital technologies - except for the initial development costs - are almost cost-free.
The growth of IT is explained by "Moore's law", an assertion that computing power becomes cheaper at a constant rate, in particular that after every eighteen months a chip's price falls by half. It has held up well over the past several decades (BM, p. 41).
- Published on Wednesday, April 16, 2014
SCEPA Faculty Fellow Rick McGahey's opinion piece on CNN.com today, "How Paul Ryan's Budget Fails," calls out the House-approved budget for using 'voodoo economics' to pose as 'balanced' while calling for tax cuts for millionaires.
In short, McGahey notes, the math fails, which leaves a budget meant more for political posturing than for the health of the nation's economy.
"How can Ryan claim that his budget is balanced? By invoking what used to be called "voodoo economics" -- assuming budget cuts and unfair tax cuts will unleash economic growth and generate enough tax revenue.
Former Reagan administration economist Bruce Bartlett has criticized this approach as "just another way for Republicans to enact tax cuts and block tax increases. It is not about honest revenue-estimating; it's about using smoke and mirrors to institutionalize Republican ideology into the budget process."
Of course, Paul Ryan isn't stupid, so why the phony budget math and the return of voodoo economics? Because it serves his presidential ambitions."
- Published on Monday, April 14, 2014
This week's Worldly Philosopher, Anthony Bonen, writes on economists' contribution to efforts to mitigate against climate change.
On Sunday, the IPCC Working Group III, Mitigation of Climate Change, released its latest report, and the news isn’t good. The report says (to no one’s surprise) that governments around the world have failed to act against climate change. The result has been rapid increases in greenhouse gas (GHG) atmospheric concentrations and rising temperatures around the world (see figure). The silver lining (silver sliver?) is that climate change mitigation is eminently affordable if – a big if – governments start to invest now.
It is time for economists to step up and help politicians take this supremely reasonable and moral action to invest. This can be done by improving economic models of climate change and, even more importantly, clearly communicating the limitations of our models.
The Financial Times reports that the costs of “an ambitious fight against climate change will reduce annualised economic growth by somewhere between 0.04 and 0.14 percentage points” versus a scenario of zero mitigation efforts. This compares to a welfare loss of between 0.2% and 2.0% of global GDP if average global temperatures rise by a further 2°C (IPCC, WGII SPM, p. 19). A finance degree is not necessary to decide between these two investment choices.
Yet, these two headline costs, -0.14% (maximum loss if mitigation) versus -0.2% (mininimum loss if no effort), are generated from extremely different data, which leaves the latter open to charges of, at best, uncertainty and, at worst, fantasy. The cost of investing in renewable energy, carbon capture and green transportation are based on real, observable markets and technologies. But the cost of unmitigated climate change? This comes from integrated assessment models’ estimates of the social cost of carbon (SCC).
The SCC metric is the net present value cost of an additional ton of CO2 emissions (tCO2). That is, how much welfare society stands to lose from a marginal increase in carbon emissions, translated into current U.S. dollars. Undoubtedly, there is an enormous degree of uncertainty regarding the nonlinear and variegated impacts of temperature increases on the environment, economy and society.
Although we don’t like to admit it, monetizing the cost of climate change involves a lot of guesswork. We already know that unabated climate change will bring devastating consequences for many peoples and communities around the world. So, are economists adding anything by putting a price tag on these impacts? Put another way: is it worthwhile for economists to compute the social cost of carbon?