Economist Nicole Gelinas, a fellow at the Manhattan Institute, explains the recent financial crisis in this brief video. Did banks fail us? No, she says. The problem is that the U.S. government has become too closely tied to banks, enabling their bad financial practices.
Want to help the working poor this Christmas season? Nicole Gelinas has a free-market suggestion: Don’t shop on Thanksgiving.
More than half a decade on, we’re still missing 976,000 jobs — and we’re missing 12 million jobs if you figure that jobs should grow as the population grows.
But it’s one thing to be economically afraid. It’s another to be cut off from fully celebrating America’s all-race, all-religion family holiday because you and your fellow Americans are fearful economically.
That’s what’s happening to millions of retail workers who’ve had to work on Thanksgiving for the past half-decade.
Stores aren’t opening on Thanksgiving because they’re doing well. Just the opposite: They’ll open because they’re not doing well.
My editorial, “Intergenerational Ethics and Economics,” appears in the latest issue of the Journal of Markets & Morality (more details about that issue here). In this short piece I explore some of the implications and intergenerational consequences of public debt. For this I take my point of departure with the much-discussed “A Call for Intergenerational Justice,” but I also point out the importance of considering opportunity cost and how that concept has been applied in an analogous conversation about climate change. Focusing particularly on the current generations of workers, however, I observe:
Younger workers have not had as much time in the workplace to earn wages, collect benefits, and save, as those who have been working for decades and are nearing or have already entered retirement. As we learn from what has been called the “miracle of compounding interest,” small deductions of available capital at earlier points in time have major consequences for long-term growth.
In a recent piece for City Journal, Nicole Gelinas reflects on the federal government’s move to take on troubled securities from private firms. She writes,
The politicians we elect have three choices—the same choices they had four years ago. They can admit that this debt isn’t worth much and allow the financial sector to bear the consequences. They can hope that the Fed tries to use inflation to raise the price of everything else, making the debt seem a lighter burden in comparison. Or they can maintain their silence, letting the financial sector take another half-decade or more to make enough money on new ventures so that it can finally admit what it should have admitted back in the fall of 2007: bad debt is never good. At least the Fed acknowledges this strategy: it says that it’s using “time” to manage toxic securities and “minimize disruption to the financial markets.” But prolonging government control of financial markets just prolongs investors’ uncertainty.
Her conclusion underscores what I contend in the editorial about the importance of opportunity cost and the intergenerational effects of (in)action: “As the Fed notes, the cost of this policy isn’t measured in dollars but in something more precious: time. Washington’s refusal to confront the debt problem is costing millions the most productive years of their lives.”
Also in the current issue of the journal, James Alvey explores “James M. Buchanan on the Ethics of Public Debt and Default.” Buchanan has a good deal of interest to say on these questions, and Alvey concludes that “Buchanan’s favorite policy agenda, constitutional/legal limitations on public spending, deficits, and debt, needs to be revisited.”