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At a Minimum

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There is little doubt that income inequality will become the Democratic Party’s big issue for 2014. While there is a good chance the problem will correct itself once there is upward pressure on wages again, it is still an important policy that the Federal Government can and should pursue. It’s very popular, too, with 58% of identified independents supporting some action.

Barataria has outlined a few ideas that will have a longer-term effect, but what can be done in the short term? The answer is something equally popular, raising the minimum wage to $10.10 an hour – a 39% increase. It seems like a longshot, given the Republican House, but if the recent budget deal forged by Sen Murray and Rep Ryan is an indication of the future there may be room for a grand deal. But there is little doubt that the Democratic position will include the minimum wage increase. It’s worth getting to know well.

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Inequality: A Feature of the System

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In his inaugural speech, New York Mayor Bill de Blasio returned constantly to the theme of “A Tale of Two Cities”. New York is big enough to be both of them at once – one a poor city where people barely get by and another that is wealthy beyond the imagination of most people. But it isn’t just his city that de Blasio wants to fix. “This inequality problem bedevils the entire country,” he intoned. “But it is not just a moral outrage, it is a horrible constraint on economic growth and on giving people the security they need to tackle problems.”

So starts 2014, the year when inequality is certain to be the big social, political, and economic issue. That is a given because after many years of intellectual stagnation the Democrats have a popular issue that they can run with. Where did it come from? A lot of credit has to go to a short video published in November 2012 that still lights up social media. And the reaction to it shows how far we have to go in order to tackle the problems of inequality.

After all, it’s not a matter of policy – inequality is a feature of the system we have.

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Chair(wo)man of the Fed

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Who will succeed Ben Bernanke as Chairman of the Federal Reserve?  It’s come down to two people as far as anyone can tell, Larry Summers and Janet Yellen.  Or, sometimes more accurately, Larry Summers and not Larry Summers.   This is a terrible shame because no person has done more to earn the post than Yellen.

Yet Summers seems to remain Obama’s choice for the job despite growing opposition.   On the other side, support is growing in the popular press for Yellen as an opportunity to break the glass ceiling for women.  It’s heating up as a battle that Obama may avoid by picking a third candidate that no one is concentrating on now, but the loss would be terrible if Yellen doesn’t get the nod.  Here’s why.

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Low Growth, the New Normal

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What does a future of low economic growth look like?  The Congressional Budget Office (CBO) economic forecast estimates a real growth (adjusted for inflation) of less than 2% for the foreseeable future.  We have discussed before how this pattern is likely to hold through the next generation and around the world as population growth slows and new opportunities will come only through technology improvements.

The implications are vast, if for no other reason than investing and saving for retirement are going to be very different concepts than we have come to expect.  Everything changes – and a few things may even change for the better.  It’s worth thinking through, and carefully.

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