The passing of the original Glass-Steagall Act was considered a measure to help control the unpredictable costs associated with "shadow banking"—an early twentieth century borrowing scheme that offered major returns but risky loans. Presidential candidate and Vermont Senator Bernie Sanders has called for a rewrite of the Glass-Steagall Act to combat modern economic instability, thought he's facing some resistance, explains Cornell law professor Robert Hockett.
Her [Hillary Clinton] professed ground is that the original Glass-Steagall Act wouldn't have prevented our most recent crisis, which was caused mainly by shadow banking. This is a bit like objecting to the iPhone 6s because your flip phone had inadequate functionality. It suggests incomprehension of Sanders's, Warren's and McCain's proposals, for the whole point of these proposals is to regulate 21st-century shadow banking just as the original Glass-Steagall regulated 20th-century shadow banking.
Check out Hockett's full article featured in The Hill.
Despite having such a widespread impact on the lives of veterans, the GI Bill remains a mystery to many. Also known as the Servicemen’s Readjustment Act of 1944, the GI Bill was penned by a Topeka Lawyer by the name of Harry W. Colmery, who forever changed history. TCF's Suzanne Mettler cites the importance of educational benefits to veterans in her book, "Soldiers to Citizens," which is mentioned in the article in tribue to Colmery.
Colmery’s work with the American Legion gave him firsthand knowledge of how poorly many veterans had fared after World War I. Maimed from war, many had little help in returning to civilian life. The Great Depression only added to their struggles.
In 1932, 20,000 unemployed veterans had marched to Washington, seeking promised compensation for their service that had never materialized. President Herbert Hoover called out federal troops, led by Gen. Douglas MacArthur, and ran them off.
Read the original article from KansasCity.com.
Learn more about Suzanne Mettler's book Soldiers to Citizens.
TCF fellow Ed Kleinbard authored a piece on the intricacies of the growing debt ceiling nightmare that Congress has been unable to fix. The Huffington Post piece explaines the difference between a "debt ceiling" and a "government shutdown" and proposes "scrip" as the "least awful course of action":
Recipients [of scrip] could include defense contractors, Medicare service providers, federal employees, and social security recipients. The scrip would not pay interest (except in certain exotic cases where required to do so by virtue of a preexisting law). Most important, the scrip would explicitly disavow that it constituted debt of the United States. Instead, the scrip's operative language would provide that it constituted an acknowledgement of a preexisting debt that the Treasury was not currently able to pay, and that it would become immediately redeemable in cash only when the Treasury was able to certify that there was enough money available in the Treasury's general fund to cover it.
Read Kleinbard's full article on the debt ceiling via Huffington Post.
TCF fellow Jeff Madrick scolds the economists that have been directing today's economy, saying that their theories on austerity, inflation, growth, and free markets have done nothing to prevent another depression. Salon features an excerpt from his latest book, Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World, which was released in August 2015.
To call economists overconfident during the modern laissez-faire experiment understates their hubris. The susceptibility of economists to new fashions in thinking, their opportunistic catering to powerful interests, and their walking in lockstep with the rightward political drift of America are disturbing for a discipline that claims to be a science.
Read the full Salon article with the book excerpt here.
Learn more about the book, Seven Bad Ideas, and how to purchase it here.
General Electric jumped on the opportunity to make addtional profits (and not from worker intensive purposes) when the era of financial deregulation and the ascendancy of Wall Street hit in the 1980's. When the real estate market crashed in 2008 however, the company's success started to die off and lose steam in the regulatory environment. TCF fellow Jeff Madrick is quoted in the article, commenting on GE's trajectory of financial success.
“This was the light bulb that went off in Jack Welch’s head: ‘Why should be I be in the industrial business when I can make such a higher return on investment in finance with far fewer people?’” said Madrick.
Check out the Marketplace article featuring Jeff Madrick and citation of his books.
TCF fellow Mark Thoma explains the history of NAFTA and points out the specific effects that it has and has not had on the US economy. He says that historically, it has not had a very deep impact on either the US or Mexican economy, largely because of the rise of China as an economic power.
The biggest factor was the unforeseen rise of China. Much of the production and jobs that would have ended up in Mexico as a result of NAFTA went to China instead. If those jobs had gone to Mexicans, much of their new income would have been used to purchase goods produced in the U.S. thereby nullifying NAFTA's negative effects for U.S. workers.
Read Thoma's full article on the realities of NAFTA via CBS Moneywatch .
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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