The I-word

Professor Rogoff does not make a persuasive case that all of us will be better off in the long run if inflation is allowed to rise to 6% per year (The I-Word, Ideas: Boston Globe, August 28, 2011: K1, K3.

It seems to me that two groups will be experience significant collateral damage. Poor people who have had stagnant real wages for over a decade will probably experience stagnant money wages for the next few years so will have to buy more expensive (due to inflation) necessities.

At an inflation rate of 6%, seniors see their assets depreciate by about 30% over the next six years. Many of these are the people whom Professor Rogoff hopes will engage in accelerated discretionary spending to help the economy out of its slump.

I would suggest that, after being battered by the Stock Market, these people will be more likely to increase savings to maintain their assets in real terms. Thus the foundation upon which Professor Rogoff builds the engine of recovery is flawed.

Sent to Boston Globe

Fairies, Witches, and Supply and Demand

Another way for Motoko Rich to frame the analysis of children's stories would be in terms of inculcating motivational tendencies in young readers (Fairies, Witches And Supply And Demand, New York Times Week in Review. August 21, 2011: 5).

David McClelland and his associates looked at themes in children's stories over a long period of time and showed that economic growth in a country followed several decades after that country's children were socialized using stories with themes reflecting high need for achievement.

My favorite achievement theme story is "The Little Engine that Could" by Watty Piper.

Sent to New York Times

Analyzing the Monteiro case

Op-Ed in Cambridge Chronicle

Politics and the Contingencies of Life

Op-Ed in MetroWest Daily News

The Supercommittee: Jockeying

So there is jockeying around who is to be appointed to the deficit reduction committee (Republicans and Democrats begin Jockeying Anew in Next Phase of Budget Fight. New York Times, August 4, 2011: A1, A14).

We know that many Republican legislators have taken Grover Norquist's No Tax Increase pledge. This should automatically disqualify them from serving on the supercommittee.

For the sake of the Nation, I would hope that all members of the Committee would sign a pledge that between now and the end of November they will not meet with, talk with, read e-mails and text messages from, or receive legislative suggestions from lobbyists.

Sent to New York Times

The Debt Deal

The time has come for the business owners and managers of America to stand up and prove that the "confidence fairy" skeptics like Paul Krugman are wrong. In his latest column, Professor Krugman says "Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record." The President Surrenders. New York Times, August 1, 2011).

We all know that at present we are still on a continuing downward spiral. As the economy fails to improve -- microscopic increases in GNP and employment -- there is little consumer demand therefore firms are unwilling to hire new employees or take back those that have been laid off.

The economic cycle is however under our joint control. If, despite the lack of current demand, the businesses of America took a risk and started hiring, the income earned by these employees would trickle into the market and would result in increased demand. That would halt the downward spiral and soon result in the cycle reversing into an upward spiral of increased demand, increased employment, and rising GDP.

I can think of no better cause for the right to embrace than to "prove" the Keynesians wrong and that their model of improving confidence would result in improved economic performance.

How about it American business? It is time to hire.


Sent to New York Times

Leaders' Wives in NH.

I read with interest your piece about the Presidential and Vice-Presidential spouses visiting the homecoming of NH National Guard troops in Concord NH (Leaders’ wives urge support for military families, Boston Globe, July 25, 2011).

Then I wondered why one of them was not at the MA National Guard homecoming yesterday at the armory on Concord Avenue in Cambridge.

Then I remembered: NH is politically competitive, MA is not.


Sent to Boston Globe