Archive for August 8th, 2013

Why conventional theories on the crisis are inadequate..Justin Lin’s view

August 8, 2013

An interesting interview of Justin Lin. ex-chief econ of World Bank.

Justin Lin talks to Viv Davies about his new book, ‘Against the Consensus: Reflections on the Great Recession’. Lin presents his thoughts on the cause of the crisis and argues that conventional theories provide inadequate solutions, suggesting that the crisis originated in global imbalances arising from the wealth effect of excess liquidity created by US financial deregulation and loose monetary policy.They discuss Lin’s recommendation for a Global Marshall Plan and a new supranational global reserve currency. Lin also presents his views on industrial policy.

It is in a mp3 file as of now..

India vs US: Rights to XYZ Nation vs Safety-Net Nation

August 8, 2013

There has been a huge criticism on India’s new rights program – food. It brought two of the leading economists to war of words.

However, India has company and a developed one at that. Case Mulligan of UChicago has written this book called – Redistribution Recession. I came to know of the book via this review by Brian Domitrovic, chairman of the department of history at Sam Houston State University.

The book argues how Obama’s redistribution polices have distorted the labor markets and helped in keeping the unemp higher.

University of Chicago professor Casey Mulligan’s shocking book,The Redistribution Recession, makes clear, going on food stamps is hardly unusual any more. With their loosened eligibility requirements and expanded benefits, food stamps and a host of other federal and state programs are undermining traditional incentive structures—and keeping the nation’s unemployment rate stubbornly high. A preeminent labor-market economist, Mulligan presents extensive research into these labor-market “distortions”—the way that policy interposes itself between prospective employers and employees—since 2008. Ordinarily, such heavily quantitative research is the province of economics journals. In this case, the findings deserve a broader audience.

Mulligan contends that since the Great Recession hit in 2008, the government has paid people not to work to an unparalleled degree—producing the weakest economic recovery since World War II. He calculates that benefits from federal, state, and local programs for those newly unemployed or suffering other misfortunes are now so lucrative that regular monthly wages often cannot compete. After 2008, average households began to collect anywhere from $227 to $2,190 per month from new welfare programs and from expansions of existing programs; most recipients qualified for benefits at the higher end of that range. The maximum, $2,190 per month, adds up to $26,000 a year, or 75 percent of what the average head of household, working for an hourly wage, earns working full-time. And this amount is added to the existing social-safety net.

Interesting comparisons to the India story..

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