Martin Feldstein påminner oss om fundamentala skillnader och varför en valuta fungerar over there och inte alls här:
The key argument made by European officials and other defenders of the euro has been that, because a single currency works well in the United States, it should also work well in Europe. After all, both are large, continental, and diverse economies. But that argument overlooks three important differences between the US and Europe.
First, the US is effectively a single labor market, with workers moving from areas of high and rising unemployment to places where jobs are more plentiful. In Europe, national labor markets are effectively separated by barriers of language, culture, religion, union membership, and social-insurance systems …
A second important difference is that the US has a centralized fiscal system. Individuals and businesses pay the majority of their taxes to the federal government in Washington, rather than to their state (or local) authorities … There is no comparable offset in Europe, where taxes are almost exclusively paid to, and transfers received from, national governments …
The third important difference is that all US states are required by their constitutions to balance their annual operating budgets. While “rainy day” funds that accumulate in boom years are used to deal with temporary revenue shortfalls, the states’ “general obligation” borrowing is limited to capital projects like roads and schools …
None of these features of the US economy would develop in Europe even if the eurozone evolved into a more explicitly political union …
The most likely effect of strengthening political union in the eurozone would be to give Germany the power to control the other members’ budgets and prescribe changes in their taxes and spending. This formal transfer of sovereignty would only increase the tensions and conflicts that already exist between Germany and other EU countries
As yours truly has commented on earlier, walked-out Harvard economist and George Bush advisor Greg Mankiw is having problems with explaining the rising inequality we have seen for the last 30 years in both the US and elsewhere in Western societies, that says it . He writes:
Even if the income gains are in the top 1 percent, why does that imply that the right story is not about education?
I then realized that Paul is making an implicit assumption–that the return to education is deterministic. If indeed a year of schooling guaranteed you precisely a 10 percent increase in earnings, then there is no way increasing education by a few years could move you from the middle class to the top 1 percent.
But it may be better to think of the return to education as stochastic. Education not only increases the average income a person will earn, but it also changes the entire distribution of possible life outcomes. It does not guarantee that a person will end up in the top 1 percent, but it increases the likelihood. I have not seen any data on this, but I am willing to bet that the top 1 percent are more educated than the average American; while their education did not ensure their economic success, it played a role.
This is, of course, nothing but really one big evasive action trying to explain away a very disturbing structural shift that has taken place in our societies. And change that has very little to do with stochastic returns to education. Those were in place also 30 or 40 years ago. At that time they meant that perhaps a CEO earned 10-12 times what “ordinary” people earns. Today it means that they perhaps earn 100-200 times what “ordinary” people earns. A question of education? No way! It is a question of greed and a lost sense of a common project of building a sustainable society. A result of stochastic returns to education? No, this has to do with income and wealth increasingly being concentrated in the hands of a very small and privileged elite.
Mankiw has stubbornly refused to nudge on his libertarian stance on this issue. So, rather consistently, this week he links – on his blog – to a PBS-interview with libertarian professor of law, Richard Epstein:
RICHARD EPSTEIN: What’s good about inequality is if, in fact, it turns out that inequality creates an incentive for people to produce and to create wealth, it’s a wonderful force for innovation.
PAUL SOLMAN: Aren’t many of the top 1 percent or 0.1 percent in this country rich because they’re in finance?
RICHARD EPSTEIN: Yes. Many of the very richest people in the United States are rich because they are in finance.
And one of the things you have to ask is, why is anyone prepared to pay them huge sums of money if in fact they perform nothing of social value? And the answer is that when you try to knock out the financiers, what you do is you destroy the liquidity of capital markets. And when you destroy the liquidity of those markets, you make it impossible for businesses to invest, you make it impossible for people to buy home mortgages and so forth, and all sorts of other breakdowns.
So they should be rich. It doesn’t bother me.
PAUL SOLMAN: Are you worried that a small number of people controlling a disproportionate share of the wealth can control a democratic system?
RICHARD EPSTEIN: Oh, my God no.
Mankiw does not in any way comment on Epstein’s amazing stupidities or gives us a hint of why he has chosen to link to the interview. But sometimes silence perhaps says more than a thousand words …
Der Spiegel ger oss den här bilden (och glöm inte att man kan klicka på bilden för att göra den större) av storleken på statslån som förfaller till betalning i några euroländer:
The prospects for the future do indeed look bleak according to the OECD:
Decisive policies must be urgently put in place to stop the euro area sovereign debt crisis from spreading and to put weakening global activity back on track, says the OECD’s latest Economic Outlook.
The euro area crisis remains the key risk to the world economy, the Outlook says. Concerns about sovereign debt sustainability are becoming increasingly widespread. If not addressed, recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption. Pressures on bank funding and balance sheets increase the risk of a credit crunch.
Another serious downside risk is that no action would be agreed to offset the large degree of fiscal tightening implied by current law in the United States. This could tip the economy into a recession that monetary policy could do little to counter.
Better late than never – or as Paul Krugman has it:
That’s all perfectly sensible. But how did we get here? In large part, by listening to people like … the OECD, which demanded both fiscal austerity and interest rate hikes back in early 2010. And yes, it was the same people now running scared of the consequences of those spending cuts and rate hikes.
Lena Sommestad skriver åter klokt om vinstdrivande bolag i skattefinansierad offentlig verksamhet:
Idag står vi där vi står, med en borgerlig regering som under fem års tid har släppt vinstintressena fullständigt fria i offentlig sektor. Vem anser idag att vinstmaximering i offentlig sektor inte kan skapa problem? Borgerlighetens valseger blev jackpot för välfärdens entreprenörer.
Mest märkligt är dock att Socialdemokraterna i opposition inte skärpte analysen av välfärdsföretagen. Istället blev det tvärtom. I valrörelsen 2010 drev Socialdemokraterna inte någon tydlig linje för non profit i välfärdssektorn. Istället hade partiet faktiskt anammat samma paroll, som Friskolornas riksförbund använde år 2006 i kritiken mot Ibrahim Baylan: Fokusera på skolans kvalitet istället för vinst. En strålande framgång för välfärdens vinstdrivande entreprenörer, deras PR-firmor och fristående, (s)-märkta lobbyister.
Borde inte Lena Sommestad vara ett namn att ha i åtanke när Håkan Juholt svajat färdigt?
Neoklassiska nationalekonomer brukar ofta – i linje med Milton Friedmans metodologiska instrumentalism - säga att det inte har någon betydelse hur realistiska de antaganden modellerna man laborerar med är. Huvudsaken är att prediktionerna blir riktiga.
Om det nu är så kan vi bara dra en enda slutsats – kasta skiten på soptippen! För oj vad fel de har haft!
Simon Potter har analyserat de prediktioner Federal Reserve Bank of New York gjort över utvecklingen av real BNP och arbetslöshet under åren 2007-2010. Det visar sig att prediktionerna slog fel med respektive 5.9% och 4.4% (vilket motsvarar 6 miljoner arbetslösa):
Economic forecasters never expect to predict precisely. One way of measuring the accuracy of their forecasts is against previous forecast errors. When judged by forecast error performance metrics from the macroeconomic quiescent period that many economists have labeled the Great Moderation, the New York Fed research staff forecasts, as well as most private sector forecasts for real activity before the Great Recession, look unusually far off the mark.
One source for such metrics is a paper by Reifschneider and Tulip (2007). They analyzed the forecast error performance of a range of public and private forecasters over 1986 to 2006 (that is, roughly the period that most economists associate with the Great Moderation in the United States).
On the basis of their analysis, one could have expected that an October 2007 forecast of real GDP growth for 2008 would be within 1.3 percentage points of the actual outcome 70 percent of the time. The New York Fed staff forecast at that time was for growth of 2.6 percent in 2008. Based on the forecast of 2.6 percent and the size of forecast errors over the Great Moderation period, one would have expected that 70 percent of the time, actual growth would be within the 1.3 to 3.9 percent range. The current estimate of actual growth in 2008 is -3.3 percent, indicating that our forecast was off by 5.9 percentage points.
Using a similar approach to Reifschneider and Tulip but including forecast errors for 2007, one would have expected that 70 percent of the time the unemployment rate in the fourth quarter of 2009 should have been within 0.7 percentage point of a forecast made in April 2008. The actual forecast error was 4.4 percentage points, equivalent to an unexpected increase of over 6 million in the number of unemployed workers. Under the erroneous assumption that the 70 percent projection error band was based on a normal distribution, this would have been a 6 standard deviation error, a very unlikely occurrence indeed.
Med andra ord – dessa tvärsäkra mainstream-ekonomer med sina rigorösa, precisa och matematiska modeller, hade fel. Och vi andra får betala för det.
Back in 1994 Laurence Ball and Greg Mankiw argued that
although traditionalists are often called ‘new Keynesians,’ this label is a misnomer. They could just as easily be called ‘new monetarists.’
That is still true today. New Keynesianism is a gross misnomer. The macroeconomics of people like Greg Mankiw has a lot to do with Milton Friedman, Robert Lucas and Thomas Sargent – and very little, or next to nothing, to do with the founder of macroeconomics, John Maynard Keynes.
In a more recent paper on modern macroeconomics, Greg Mankiw writes:
The real world of macroeconomic policymaking can be disheartening for those of us who have spent most of our careers in academia. The sad truth is that the macroeconomic research of the past three decades has had only minor impact on the practical analysis of monetary or fiscal policy. The explanation is not that economists in the policy arena are ignorant of recent developments. Quite the contrary: The staff of the Federal Reserve includes some of the best young Ph.D.’s, and the Council of Economic Advisers under both Democratic and Republican administrations draws talent from the nation’s top research universities. The fact that modern macroeconomic research is not widely used in practical policymaking is prima facie evidence that it is of little use for this purpose. The research may have been successful as a matter of science, but it has not contributed significantly to macroeconomic engineering.
So, then what is the raison d’être of macroeconomics, if it has nothing to say about the real world and the economic problems out there?
The final court of appeal for macroeconomic models is the real world, and as long as no convincing justification is put forward for how the inferential bridging de facto is made, macroeconomic modelbuilding is little more than “hand waving” that give us rather little warrant for making inductive inferences from models to real world target systems. If substantive questions about the real world are being posed, it is the formalistic-mathematical representations utilized to analyze them that have to match reality, not the other way around. As Keynes has it:
Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world. It is compelled to be this, because, unlike the natural science, the material to which it is applied is, in too many respects, not homogeneous through time.
If macoeconomic models – no matter of what ilk – assume representative actors, rational expectations, market clearing and equilibrium, and we know that real people and markets cannot be expected to obey these assumptions, the warrants for supposing that conclusions or hypothesis of causally relevant mechanisms or regularities can be bridged, are obviously non-justifiable. Macroeconomic theorists – regardless of being “New Monetarist”, “New Classical” or ”New Keynesian” – ought to do some ontological reflection and heed Keynes’ warnings on using thought-models in economics:
The object of our analysis is, not to provide a machine, or method of blind manipulation, which will furnish an infallible answer, but to provide ourselves with an organized and orderly method of thinking out particular problems; and, after we have reached a provisional conclusion by isolating the complicating factors one by one, we then have to go back on ourselves and allow, as well as we can, for the probable interactions of the factors amongst themselves. This is the nature of economic thinking. Any other way of applying our formal principles of thought (without which, however, we shall be lost in the wood) will lead us into error.
This one is for you, Jeanette Meyer.
Frågan om Sverige ska ansluta sig till EMU dyker då och då upp i debatten. I Tillämpad makroekonomi (SNS, 4 uppl 2011) har exempelvis ekonomiprofessorn Harry Flam ett kapitel som diskuterar huruvida Sverige skulle förlora eller vinna på att gå med i EMU. Här radas de vanliga argumenten för (ökad utrikeshandel och investeringar, minskad valutaväxling, mer integrerade finansiella marknader m m) och mot (dålig penningpolitisk anpassning till enskilda länders behov, premiering av kortsiktig och oansvarig finanspolitik m m) upp. Efter att ha vägt dessa för- och nackdelar mot varandra kommer sedan Flam fram till bedömningen att
det är oklart om de makroekonomiska kostnaderna av att vara med i den monetära unionen kan förväntas vara större eller mindre än de makroekonomiska kostnaderna av att stå utanför, och att de mikroekonomiska vinsterna – i form av ökad handel med varor, ökade investeringar och ökad finansiell integration – överväger.
Jo man tackar! Fördelar med finansiell integration? Låt oss titta lite på hur det ser ut där ute i verkligheten och inte bara hänge oss åt lek med tankemodeller:
Källa: Der Spiegel
Source: Der Spiegel
Ja, men då behövs enligt The Economist en vidare tolkning av ECB:S penningpolitiska mandat:
Can anything be done to avert disaster? The answer is still yes, but the scale of action needed is growing even as the time to act is running out. The only institution that can provide immediate relief is the ECB. As the lender of last resort, it must do more to save the banks by offering unlimited liquidity for longer duration against a broader range of collateral. Even if the ECB rejects this logic for governments—wrongly, in our view—large-scale bond-buying is surely now justified by the ECB’s own narrow interpretation of prudent central banking. That is because much looser monetary policy is necessary to stave off recession and deflation in the euro zone.
Fears of moral hazard mean less now that all peripheral-country governments are committed to austerity and reform. Debt mutualisation can be devised to stop short of a permanent transfer union. Mrs Merkel and the ECB cannot continue to threaten feckless economies with exclusion from the euro in one breath and reassure markets by promising the euro’s salvation with the next. Unless she chooses soon, Germany’s chancellor will find that the choice has been made for her.