CBS's MoneyWatch is closely monitoring the interest rates set by the Fed and is eager to see what will happen at the September meeting of the Federal Reserve. TCF fellow Mark Thoma explains that if the rates are increased too soon, job market might remain below the full employment level for much longer than if rates remained low, but if raised too late, there is the fear of inflation.
"Yet with interest rates already as low as they can go, this mechanism is broken, and the consequence is a level of aggregate demand that is insufficient to support full employment. In such a situation, the last thing you want to do is raise interest rates and make the situation worse," says Thoma.
Read the rest of Thoma's interest rate predictions from CBS Moneywatch.
The longtime quest to reduce income inequality is still a mystery to many politicians. The Republican ideal that hints at “you’re on your own no matter what bad luck comes your way” remains popular among the wealthy elite that don' believe they should share their income with their lower income counterparts. Despite what some believe to be the best designed fiscal policy, TCF fellow Mark Thoma says that the root of today's economic issues lies in inequality and lack of income redistribution.
Economists must come up with a solution to the inequality problem. That doesn’t mean taking a position on whether a particular redistribution, education, or other policy to reduce inequality is good or bad. No matter what we do, there will be winners and losers, and economists can help to determine the most effective, least distortive means of accomplishing the goal of a more equal society, both in terms of opportunity and outcomes, without taking a position on which alternative to pursue.
Thoma's article can be read in the Fiscal Times.
Florida's newspaper, the Tampa Bay Times, wrote about TCF's report, Architecture of Segregation, in a recent article, citing the report's finding that the increased frequency of police shootings in the news of late is no accident. The report specifies Jargowsky's findings:
The first is that "federal and state governments must begin to control suburban development so that it is not cannibalistic: new construction must be roughly in line with metropolitan population growth."
Second, "every city and town in a metropolitan area should be required to ensure that the new housing reflects the income distribution of the metropolitan area as a whole. To some, this suggestion may seem like a massive intervention in the housing market. In fact, exclusionary zoning is already a massive intervention in the housing market that impedes a more equitable distribution of affordable housing."
Read the full article here.
Hillary Clinton's recent speech at the New School focused on economic issues, some of which could be addressed by reviewing the policy proposals cited in a TCF task force report.READ MORE
TCF fellow Mark Thoma outlines the pros and cons of living in a government regulated economy, explaining that competitive markets to not always equate to free markets. He concludes in saying that, either way, the government must intervene in some capacity in order to regulate goods and services and have consumers make good choices.
To begin, there must be numerous participants on both sides of the market. When, for example, there are only a small number of sellers the price will be too high and the quantity too low relative to the competitive outcome. If the good is a necessity – suppose a single firm has a monopoly on the supply of water – the price could be very high indeed. To combat this problem, the government tries to prevent firms from pursuing strategies to monopolize markets, and regulators break up markets that become monopolized anyway.
Read Thoma's full article from The Fiscal Times.
In recent decades, and especially since 2000, the richest Americans have enjoyed soaring income and wealth while the rest of the population's living standards have stagnated. The Century Foundation was one of the first institutions to raise serious concerns about these trends and propose ideas for improving economic conditions for all Americans- not just the fortunate few.
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