Economics Headlines for the Week: 3/28/2011
Economics headlines from this week’s news, blogs, and op-eds.
To see the week’s economics headlines click here:
In a very interesting policy move, G-7 countries decided to keep the value of the yen low to help Japan recover from the recent earthquake, tsunami, and now lingering nuclear fallout. As a way of providing aid, this policy seemed a bit bizarre to me. Why would countries “spend” all this money to keep Japan’s currency down when they could instead be giving direct aid? Is it that countries are too cash-strapped to provide direct aid and so instead are tapping into their foreign currency reserves, or is it something more sinister? This article argues that G-7 countries have an interest in keeping Japan in the position of a key exporter and that lowering the value of its currency will make the recovery more costly as Japan imports resources. I’m a bit unsure of what to make of the whole mess to be honest, and while Japan is an export oriented economy I’m perplexed about the logic behind such significant meddling in exchange rates.
Brad Delong shows why economist Greg Mankiw is a hypocrite. During his time as economic adviser to President Bush he approved a whole bunch of tax and spending policies and now somehow has the audacity to criticize the same programs he expanded as wasteful under the new president. I guess there isn’t any more accountability in the economics profession than there is on FoxNews. What a clown.
Paul Krugman uses basic economics to explain to the world, especially that of political pundits, that you can’t cut wages to raise unemployment. Basically the principle is that as wages decrease so too do prices, meaning that you don’t get the substitution effect that would lead to wages being cheaper than other goods in the economy.
Good news, just read the title! Isn’t great living in the U.S.A. With unemployment still near record highs and corporations just gobbling up profit like there is no tomorrow.
This blog even makes the argument that the two are connected. While I know that they are, the analysis presented is an oversimplification, but nonetheless the initial point is valid even if the relationship is somewhat more complex.
The Washington Post management is gutting the company to pay high salaries to connected insiders. This shouldn’t be a surprise of course that’s what corporate America has been doing the last 15 years. Unable to run a profitable business and pay their increasingly inflated desired salaries, CEO’s have been raising their salaries on the backs of their employees by cutting wages across the board (but not for those employees who sit on the board of directors or have meetings with the board).
RT: Out in Force: 300,000 to march in London anti-cuts protest