South By North Strategies, Ltd.

Setting Facts Straight About Corporate Taxes

Policy Shop recently published a nice chart summarizing key facts about the federal corporate tax.

An Economic Red Flag

Heidi Shierholz of the Economic Policy Institute explains why “the lack of improvement in [voluntary] quits is a bright red flag in the sea of optimism about recent labor market indicators. ”

The low level of voluntary quits provides yet more evidence that the key issue behind today’s persistent high unemployment is a lack of job opportunities rather than workers not having the right skills for available jobs. By the very fact of their employment, employed workers have demonstrated that they have skills that are needed in today’s economy. The fact that these workers too are unable to find new job opportunities shows that it is not that today’s unemployed workers don’t have the right skills, it is that the job opportunities just aren’t there….

Around The Dial – February 22, 2012

Economic policy reports, blog postings, and media stories of interest:

• Policy Shop looks at the importance of work-study jobs.
• Jared Bernstein thinks about the latest employment projections.
• Working Economics noted that unemployment is high by any measure.
• Naked Capitalism finds more wrong with the mortgage settlement.

The Wages Of Fiscal Austerity

James Fallows of The Atlantic contemplates the consequences of fiscal austerity.

Main point: for the past two years, private-sector employment has in fact been recovering. It fell by almost 8 percent from its pre-crisis peak, and it has now regained a little less than half of that loss. But during that same period of recovery, public-sector employment has headed downward. As the Rockefeller [Institute] data suggests, the main “jobs, jobs, jobs” headwind for the economy now comes in the form of teachers, police and fire departments, and other state- and local-government employees. Of course in the long run any economy’s health depends on robust private-sector employment. But during recovery from a recession, a job is a job is a job, with all the multiplier effects of families who either have, or lose, their paychecks — not to mention the impact on school children, public safety, maintenance, and so on from the cutbacks.

Of Good And Bad Deficits

Robert Skidelsky explains the differences between “good and bad deficits.”

Government deficits incurred on current spending for services or transfers are bad, because they produce no revenue and add to the national debt. Deficits resulting from capital spending, by contrast, are – or can be – good. If wisely administered, such spending produces a revenue stream that services and eventually extinguishes the debt; more importantly, it raises productivity, and thus improves a country’s long-run growth potential.
…
From this distinction follows an important fiscal rule: governments’ current spending should normally be balanced by taxation. To this extent, efforts nowadays to reduce deficits on current spending are justified, but only if they are fully replaced by capital-spending programs. Indeed, reducing current spending and increasing capital spending should be carried out in lock step.