- On Capitol Hill
- On Wall Street
- In the Press
- 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.
In a May 17, 2012, New York Review of Books blog, "The Eurozone Crisis: An End to Austerity?," SCEPA Senior Fellow Jeff Madrick deconstructs the political and economic policy that led German Chancellor Angela Merkel to open the door for stimulus policies in Europe.
Madrick also proposes a road to economic growth:
"Once one can admit that serious compromise is needed by the eurozone north, however, a workable solution begins to emerge. Such a solution will require an immediate easing of austerity in the peripheral nations: Greece, Spain, Portugal, and Italy. The richer nations must also augment the safety nets of the periphery to enable them to still cut government spending some without extreme and socially unstable sacrifice for their populations. In turn, the stronger nations should help finance the repayment of the weak nations' debt by issuing a new jointly guaranteed Eurobond and with more aggressive sovereign debt purchases by the European Central Bank. They should also develop industrial policies to invest constructively themselves in these nations. Finally, the ECB could loosen its outright resistance to inflation, a step that would allow it to pursue more expansive monetary policy.
The main cause of the crisis—high trade surpluses by Germany combined with high trade deficits in peripheral nations—can be addressed if Germany allows itself to grow faster through stimulus, lets wages rise, and tolerates higher levels of inflation. This will introduce a Keynesian stimulus to the eurozone. The peripheral nations need not reduce wages as much as has been demanded through austerity policies, but they will have to be somewhat restrained about them. Over time, such policies would allow weak nations' exports to become more competitive."
Lauren Schmitz, a SCEPA Research Assistant, presented her cutting-edge research on new growth theory and arts funding at a high-profile symposium on "The Arts, New Growth Theory, and Economic Development."
The May 10, 2012 event, hosted by the Brookings Institution and the National Endowment for the Arts (NEA), examined new growth theory as a tool for assessing the impact of art and culture on the U.S. economy. New growth theory argues that, in advanced economies, economic growth stems less from the acquisition of additional capital and more from innovation and new ideas.
Schmitz's research was part of a panel on case studies on the arts and economic development. Her paper, Do Cultural Tax Districts Buttress Revenue Growth for Budding Arts Organizations?, questions the role government should play in financing the arts by analyzing Denver's Scientific and Cultural Facilities Districts (SCFD). Her results find that, rather than public funds 'crowding-out' private dollars, there is evidence of a 'crowding in' that increases private investment.
The symposium featured papers commissioned by the NEA Office of Research and Analysis and Michael Rushton, the co-editor of the Journal of Cultural Economics. The presentations were moderated by experts from Brookings, the Department of Housing and Urban Development and the Department of Commerce.
Jeff Madrick, SCEPA Senior Fellow, posted a blog as part of the Roosevelt Institute's "Rediscovering Government" project that uses the $2 billion in trading losses announced by J.P. Morgan Chase as the quintessential example of why strong regulation is needed. Below is an excerpt.
"(Jamie) Dimon, among the most cautious of executives, couldn’t control this trading animal with a life of its own, either. That’s the important conclusion. A Volcker rule to limit speculative trading for banks is necessary. They are using federally insured money to finance much of their banking operations, enabling them to leverage other facets of the company. They are using shareholder money, not their own, to take risks, yet they take enormous bonuses when all goes right. And they are implicitly using taxpayer money, because if they lose too much, they will be bailed out by the federal government. They remain too big to fail.
Serious capital requirements must be implemented against such trading, and banks must also change banker compensation procedures further. For traders, it’s a heads I win, tails you lose proposition. And so it is with the bank CEO as the firm’s overall earnings rise and are socked with a blow only every once in a while. These compensation plans have changed under pressure from the federal government to some degree. But probably not enough. The firms’ partners and employees have to be on the line for losses over time.
All this is a case study in why finance needs more government rules and regulations than most other industries. The omnipresent claim that such rules undermine liquidity in markets is almost laughable. In truth, we have a lot of liquidity when we don’t need it and little when we do—such as after the Lehman Brothers catastrophe in the fall of 2008. As regulations were eliminated and weakened after the 1970s, finance became more unstable, crises more frequent, and trillions of dollars were invested down the rat holes of speculation and fantasy, while Wall Street employees made countless millions. Yes, finance is important to economic growth, but only if government controls it properly. Otherwise it can be and has been damaging."