- On Capitol Hill
- On Wall Street
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- Policy Reform Work
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.
This week's Worldly Philosopher, Anthony Bonen, writes on the economic and social costs of unmitgated climate change.
A heated debate was sparked last week after Robert Pielke, Jr. wrote an article for Nate Silver's fivethirtyeight.com arguing that the rising costs of natural disasters are driven not by climate change, but by the world's increasing wealth. Pielke's spurious assertions have already been picked apart by ThinkProgress and Salon. But what strikes me is the bizarre narrowness of his argument.
For example, in a misleading statement on the IPCC's recent findings Pielke says: "There have been more heat waves and intense precipitation, but these phenomena are not significant drivers of disaster costs." Well sure, heat waves and intense precipitation are only minor aspects of disaster costs. But the economic costs of unmitigated climate change are far more wide-ranging than disasters alone.
In a recently released SCEPA report, my co-authors and I examine how the three integrated assessment models (IAMs) used by the US government translate climatic change into economic impacts. The report focuses on the formal mechanisms by which the DICE, FUND and PAGE models convert temperature increases, sea level rises and more intense storms into a dollar figure. These mechanisms are known as damage functions.
Although the IAMs use very different damage functions, they all base the impact of climate change costs on comparative scenarios. This only makes sense. The cost of climate change is not just the destruction of structures and objects; it comes from lower food production, worse health outcomes, higher indoor cooling costs and lost land to higher sea levels. While big storms and earthquakes capture the media's attention, incremental changes will have by far the greatest cumulative impact on our wellbeing.
Even among economists the consensus is that these costs will be profound. In fact, our report and an earlier article by our colleagues show these leading economic models, if anything, greatly underestimate the costs of climate change.
So don't be bamboozled by pseudo-climate skeptics like Pielke. Economists and climate scientists don't just add up the value of capital lost in storms like insurance agents. We are looking ahead and mapping out alternative options we, as a society, can take. That is how one assesses economic costs.
This week's Worldly Philosopher, Raphaele Chappe, writes on the increasing inequality in free-market dynamics.
Inequality is rising in most developed economies. At the peak of the housing bubble in 2007, the richest 1% held 34.6% of wealth in the U.S.1 The drop in household wealth following the crisis affected the median household more than the top 1%2 so that the wealth distribution is now even more unequal. Robert Reich points out that since the start of the recession, the share of total U.S. national income going to labor has plunged (while profits in the U.S. corporate sector are now at a 45-year high), and that 2013 has been the year of "the great redistribution."3 In 2012, the top 10 percent of U.S. earners took more than half of total income – the highest level recorded in a century.4
Thomas Piketty's new book, "Capital in the Twenty-First Century" (Piketty, 2013)5 suggests that these trends are the natural result of free-market dynamics – with the prosperous decades that followed the Great Depression and World War II are an exception to the rule and are unlikely to be repeated. In the tradition of the worldly philosophers, this ambitious work is nothing short of an attempt to characterize the laws of motion for the process of capital accumulation and income distribution for advanced capitalist economies.
Piketty's hypothesis is that the main driver of inequality is the tendency of returns on capital6 to exceed the rate of economic growth (this is Piketty's key inequality relationship r>g), producing high capital/income ratios (β).7 If r is to remain at its historical rate of 4-5% p.a., while advanced economies continue to experience low growth rates8, we are headed back to the 19th Century in terms of inequality -- a time where inheritance was so important that it arguably made more sense for the ambitious and talented to marry well than to work hard.9
A recent study by SCEPA Faculty Fellow Willi Semmler and the Centre for European Economic Research's Frauke Schleer analyzes dynamics between economic downturns and financial stress for several euro-area countries.
Using a newly constructed financial condition index that includes banking variables, the authors examine leadership changes in countries that have high and low levels of financial stability and the ripple effects on the economy. They found that strong rippling effects appear to be related to large, but rare events, such as the financial crisis, and to a short business cycle. Prior to the financial crisis, economic shocks could be self-adjusting, even if the financial sector shock took place during a time of instability.