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If the amount of press ink used to report a study is any indicator of its contribution to public understanding, the National Institute on Retirement Security’s (NIRS) 2013 report, “The Retirement Savings Crisis: Is It Worse than We Think?” might be the gold standard on the subject of retirement security. The report concludes that 84% of Americans are falling short of reasonable retirement savings targets and, even when total net worth is considered, two-thirds are at risk of an inadequate retirement income. The total “retirement savings gap,” NIRS claims, may reach trillion. According to…

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As Congress mulls over a temporary patch for the Highway Trust Fund, President Obama is addressing infrastructure construction with his Build America Investment Initiative. The initiative is not the ordinary big government program. Instead, the Build America Investment Initiative is intended to be a “public-private partnership” or “PPP” for the acronym-loving Washington crowd. A “public-private partnership” may sound like an oxymoron to individuals who work in the private sector. Partnership is an ancient and venerable institution. For millennia, individuals have formed partnerships to…

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In congressional testimony last week, newly minted Fed Chairman Janet Yellen ably revealed why the central bank she runs is often such an imposing barrier to economic progress. While it will be explained later in the piece why Yellen will ultimately have a successful Fed tenure in a debased, “soft bigotry of low expectations” sense, her testimony makes clear that she’ll succeed despite her impressive weakness as an economic thinker.
Responding to Sen. Tom Coburn’s skepticism about the Fed’s zero rate policies, Yellen said “The reason we have low interest rates is to deal with a very real…

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Paul Samuelson, in a long ago policy debate, noted that a cat that jumps on a hot stove once never jumps on a hot stove again; of course, it never jumps on a cold stove either. Today, Samuelson’s image applies to the long running complaint that expansionary policies are courting dangerous inflation.Apart from the years immediately following World War II, when wartime controls on wages, prices and production were lifted, the one notable period of inflation in the modern US economy came in the 1970s. CPI inflation reached double digit rates in the mid-70s and again in the late-70s and…

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In Congressional testimony this week, Federal Reserve Chair Janet Yellen pointed to several economic maladies warranting continued activism by the central bank. But what ails the U.S. economy cannot be fixed by monetary policy.
This has been an exceptionally weak recovery when gauged by the labor market. About half of the decline in the unemployment rate can be accounted for by “discouraged workers,” who have dropped out of the labor force and are no longer actively seeking jobs. For that reason, the unemployment rate is increasingly becoming a misleading gauge of the labor market.
In…

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Across his remarkably successful presidency, Ronald Reagan repeatedly made the link between the U.S. economy and U.S. international security and defense. He consistently argued that weakness at home leads to weakness abroad.
Reagan was aiming at the dismal Carter years. But he understood for all times that economic strength at home sends a powerful signal for international security overseas.
When Reagan went to Reykjavik to meet with Gorbachev, he believed the resurgent American economy would hammer the nails on the coffin of Soviet communism. And he explained to Gorbachev that if the Soviets…

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Janet Yellen has been in the spotlight for much of this past week, only perhaps removed one step from the brightest center by events yesterday in the Ukraine. On an economic whirlwind, her goal over the past few months has been to convince anyone and everyone that the economy has nearly healed, the trajectory thus brightened enough to allow the Fed to gracefully exit and take full credit for it. While that is certainly the broad stroke of what looks to be “forward guidance”, for now, there is more than a little complication between here and there - without even factoring the here and…

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Most people want to help the poor, but that doesn’t mean intentions yield results. To illustrate, let’s take two Californians, Ashley and Betsy. Ashley is 18, working retail, about to go off to UCLA, and both of her parents are educated professionals living in Santa Monica. Then, there is Betsy, a 32-year old single mother from San Bernardino, who only has a high school diploma and works full-time as a waitress.
Both Ashley and Betsy are earning the minimum wage and on July 1, they received a raise, not because of their employers’ generosity or because they are doing better at their job, but…

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Federal Reserve Chair Janet Yellen, in her semi-annual monetary policy report to Congress on July 15, did her best to put some lipstick on the pig that is the US economy. She started with the relatively bright side - that the labor market had added 230,000 jobs per month over the first half of the year while the unemployment rate had dropped to 6.1 percent in June. It was all downhill from there.First, Yellen noted that real GDP was, “estimated to have declined sharply in the first quarter.” The first quarter’s negative 2.9 percent growth rate is truly troubling. In the post-World War II…

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When President Obama signed Dodd-Frank into law four years ago, there was a widely acknowledged hole in the legislation-housing finance reform was left for later. Given the role that mortgages, Freddie Mac, and Fannie Mae played in the crisis, this omission was significant. But omitting housing finance spared an important issue from being tainted by Dodd-Frank’s government-centrism. Alas, in the intervening four years, Dodd-Frank-style dysfunctions have worked their way into many housing reform proposals. Rather than relying on subsidies and regulations to counteract their effects, we should…

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The Highway Trust Fund, which has a projected 10-year deficit of $172 billion, is due to run low in July, and if nothing is done the administration will have to reduce funding for states for transportation projects beginning August 1. Congress is considering replenishing the fund from general revenues.
This would be misguided. It is time for drivers pay for the roads that they use, either by charging for miles driven, or by raising the gas tax. Even better, the Highway Trust Fund should be devolved to the states, which can use whatever means they choose to raise revenue.
But with the House…

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Economists have long argued that there is such a thing as a market for spouses. The old theory, associated with University of Chicago Nobel laureate, Gary Becker, is that people marry for the same reason that nations trade with one another: comparative advantage. If men are better at earning money in the labor market and women are better at taking care of home and children, it makes sense for them to combine forces within marriage so that they can then specialize in what they each do best. The problem with Becker’s theory is that with the expansion of labor market opportunities for women,…

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An article headline in Saturday’s Wall Street Journal read “Rate Talk Heats Up Within The Fed.” As Journal reporters Jon Hilsenrath and Michael Derby explained, “A debate is intensifying among the Federal Reserve’s regional bank presidents about whether to push interest rates up from near zero sooner than planned…”
Notable here is that in the late 20th century an informal and surely unplanned debate between central planning and free markets was staged, and the contest wasn’t even close. Ignoring for the purposes of this piece the often bloody governance that revealed itself inside…

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We have not saved enough for the retirements that we have promised people, public or private. Moreover, that problem is greatly understated by current reporting methods. This may seem an undramatic candidate for addressing one of our biggest problems, but that’s part of my point. Unlike hurricanes or wars or debt ceilings, we don’t have to deal with retirement funding today. However, this problem grows and eventually will metastasize. Until the looming pension crisis is dealt with, one way or another, no one’s retirement is secure, no government fiscal projections are fully credible, and no…

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Nobody knows what the total value is of all the tax breaks given by state and location governments as incentives to attract or keep businesses within their borders. A 2012 estimate by the New York Times placed the sum somewhere above billion per year. All these incentives create three problems: states over-compete against each other, local communities become hostages to large employers, and small, perhaps innovative companies are placed at a clear disadvantage.Economists have used game theory to show that pro sports teams pay athletes more than their standard worth because signing an…

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