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    <title>Robert Samuelson</title>
    <category>Robert Samuelson</category>
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    <description>Latest local news from The Durango Herald.</description>
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        <link>https://tj.durangoherald.com/we-already-have-a-welfare-state-so-whats-next/</link>
        <title>We already have a welfare state. So what’s next?</title>
        <description>WASHINGTON – It seems unavoidable. Like it or not, the U.S. welfare system is bound to play a big role in the 2020 election. The recent Democratic debate on health care is just a prelude to a broader discussion. The...</description>
        <pubDate>Mon, 05 Aug 2019 23:33:09 -0600</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – It seems unavoidable. Like it or not, the U.S. welfare system is bound to play a big role in the 2020 election. The recent Democratic debate on health care is just a prelude to a broader discussion. The battle lines are clearly drawn. Democrats deplore rising inequality. They see a revitalized welfare state – with universal health coverage and more college subsidies – as making the system fairer. By contrast, President Trump favors more tax cuts, which, he argues, would accelerate economic growth and increase jobs. Who’s right? Is anyone? The unfolding campaign is an obvious opportunity to examine the state of economic inequality and the condition of the welfare state. Fortunately, the Congressional Budget Office has just issued a report that tackles both subjects. Let’s start with income inequality. There’s lots of it, and there’s little doubt that it’s gotten significantly worse over the past three or four decades. Just why is unclear. There is no consensus among economists. Explanations include rapid technological changes, the decline of well-paid manufacturing jobs, and globalization. On the other hand, the CBO analysis (and other studies as well) doesn’t justify the popular view that, except for the 1% and some others in the richest quintile, hardly anyone has gotten ahead. Here are some numbers from the CBO. From 1979 to 2016, the average income of the poorest fifth of Americans based on wages, salaries, dividends and Social Security benefits, grew only 33%, less than 1% annually. The middle three-fifths of Americans by income had similarly scanty gains. Meanwhile, the average incomes of the richest fifth of Americans – the upper-middle class and the wealthy – increased 99% over the same years. That’s a doubling. These figures seem to vindicate the stagnation theory. For millions of Americans, living standards have stopped growing. Or so it seems. The reality is more complicated. When the CBO adjusts these raw figures for taxes and “means-tested” programs – that is, benefits for the poor whose eligibility is determined by income limits – the picture changes. Instead of rising only 33% from 1979 to 2016, the income of the poorest fifth of Americans increases 85%, though it is still low in 2016 at $35,000. Americans dislike the concept of the welfare state. That’s for Europeans. We prefer the “safety net.” But we are deluding ourselves. Our safety net is their welfare state; the differences are those of detail, not fundamental principle. There are routinely massive transfers of income, mainly from the richest quintile to the poorest. About 40% of the income of the poorest fifth of Americans comes in these government transfers: Medicaid, Children’s Health Insurance Program, food stamps, housing subsidies and Supplemental Security Income. These programs have grown rapidly. From 1979 to 2016, the number of Medicaid and CHIP recipients quintupled to 101.8 million, up from 20 million. The wealthiest Americans pay most of the resulting taxes. In 2016, the richest quintile received 54% of the income and paid 69% of federal taxes. As for the top 1%, its income was 16% of the total, and they paid 25% of federal taxes. The conclusions from this morass of numbers are familiar, yet daunting. Despite significant anti-poverty spending, somewhere between a quarter and a third of Americans – roughly speaking – are struggling economically. It’s true that the poor are getting richer along with the rich, but they are doing so at a slower rate. So the gaps have grown over time and, what’s worse, there seem to be few fresh ideas as to how to reverse course. The proffered solutions have been tried for years without, it seems, notable success. The Democrats are practiced in spending more money on education and health care, while the Republicans are wedded to tax cuts. Surely these ongoing efforts have done some good, but not enough to make the bottom third of the economic distribution a much better place to be. Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/heres-how-the-internets-tentacles-grabbed-me/</link>
        <title>Here’s how the internet’s tentacles grabbed me</title>
        <description>WASHINGTON – I got hacked. It was scary. In this age of cybereverything, we all live in dread that we’re going to be attacked by the internet. Nearly everyone seems vulnerable. The internet is changing how we work, play, socialize,...</description>
        <pubDate>Thu, 25 Jul 2019 23:33:10 -0600</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – I got hacked. It was scary. In this age of cybereverything, we all live in dread that we’re going to be attacked by the internet. Nearly everyone seems vulnerable. The internet is changing how we work, play, socialize, shop – and what we love and fear. Your data is for sale. If there is a saving grace, it is this: We assume that “bad stuff” always happens to somebody else. Well, not always. My encounter with bad stuff began a few weeks ago when I received a letter from the Social Security Administration, via “snail mail.” By itself, this was neither alarming nor threatening. If you’re 65 or over (I am 73), you receive regular notices from Social Security and its first cousin, Medicare. The letter looked authentic – and was. “Thank you for using Social Security’s online services,” it said. “On June 28, 2019, you successfully created an online account with the Social Security Administration.” This, too, seemed innocuous, except for one troubling detail: I DIDN’T CREATE AN ONLINE ACCOUNT WITH THE SOCIAL SECURITY ADMINISTRATION. True, I already receive my monthly Social Security benefit through electronic deposit into my bank. But that had been going on for years. It was the only contact I desired with the Social Security Administration. Perhaps SSA was quietly expanding its bureaucratic reach. Or not. I decided to call the 800 number in the letter. (The 800 number seemed legitimate, because the same number appeared on many SSA sites.) The wait was about an hour. I was tempted to hang up. I’m glad I didn’t. The woman who answered was courteous and helpful. Yes, my personal data had been altered, so that my monthly benefit would be diverted to someone else’s bank account, not mine. She reinstated the correct address and put a “block” on the account, meaning that unless I visited an SSA office, my personal information could not be changed. “You will continue to receive your monthly payments,” the SSA promised. That’s reassuring, if true. (Note: Anyone familiar with my policy views knows that I favor benefit cuts for the affluent elderly. Accepting benefits now may seem hypocritical. Not so. I would gladly cut mine as part of an overall program.) Just how my personal data was altered remains a mystery to me and, perhaps, to the SSA. “It’s hard to know how identity thieves obtain personal information used to commit this type of fraud,” said SSA Inspector General Gail Ennis in an email. We do know some things, however. The existing approach to creating reliable identification numbers (say, Social Security cards or driver’s licenses) is known as “knowledge-based verification.” To prove you are who you say you are, you’re asked questions to which, presumably, only you know the answers: for example, your birth date, home address or Social Security number. But the KBV “model has fallen apart online,” asserts The Better Identity Coalition, a group searching for more accurate approaches. KBV is hobbled because data breaches have made a lot of “secret” information widely available to cybercriminals on the internet. The number of reported data breaches – hostile penetrations of computer networks – has soared from 421 in 2011 to 1,579 in 2017, according to the Identity Theft Resource Center. Each breach in turn may contain data on millions of people. The breach in 2017 of Equifax, a major credit bureau, is widely regarded as a bonanza for cyber-thieves, because it contained personal data on more than 147 million people. Against this backdrop, I surmised that the SSA must be swamped with complaints like mine: benefits that were digitally hijacked. Wrong. Their number peaked at about 12,000 in 2013. For the first half of 2018, that number was down to about 200, estimates the OIG’s office. Compared with the roughly 63 million Social Security recipients, that’s virtually nothing. One explanation is that some transfers are done more securely through electronic networks than by checks, which can be stolen in the mail or lost. In 2013, the Treasury required that virtually all benefits be paid electronically. Another safeguard, which was important in my case, was the requirement that recipients receive by mail any notice of a change in address. If the change is legitimate, it’s routine. But if the address change is bogus, as it was for me, then the beneficiary can contact the SSA before any serious fraud takes place. So, be forewarned. This is the internet’s new normal. It expands our choices but compromises our freedom. It encloses society in a permanent cocoon of suspicion. There’s no escaping its grasping tentacles. Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/bernie-the-30s-called-and-wants-its-decade-back/</link>
        <title>Bernie, the ’30s called and wants its decade back</title>
        <description>WASHINGTON – Vermont Sen. Bernie Sanders, a leading candidate for the Democratic nomination for president, is a man from the 1930s. If you didn’t believe that before, you certainly should now. Sanders last week gave a powerful speech at George...</description>
        <pubDate>Mon, 24 Jun 2019 23:33:28 -0600</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – Vermont Sen. Bernie Sanders, a leading candidate for the Democratic nomination for president, is a man from the 1930s. If you didn’t believe that before, you certainly should now. Sanders last week gave a powerful speech at George Washington University defending his identity as a “democratic socialist” and endorsing Franklin Roosevelt’s 1944 promise to create an “economic bill of rights.” Roosevelt died before he could make good on that. “We must take up the unfinished business of the New Deal,” Sanders said. Meanwhile, he expects “massive attacks” from those who attempt to use the word “socialism as a slur.” Sanders is surely right to object to this: We long ago passed the threshold of having a socialist society that reorders its spending to help those who we think deserve help. It’s true that Sanders’ socialism doesn’t fit the traditional definition, which is government ownership of the “means of production” and major corporations. But we do already have a vast system of “entitlements” – Social Security, Medicare, Medicaid, food stamps and the like – that eventually subsidizes most Americans. At any one moment, roughly half of U.S. households receive benefits, reports Danilo Trisi of the Center on Budget and Policy Priorities. Over time, the proportion rises. We are all socialists now, as I wrote a few weeks ago. But we deny this obvious reality and stigmatize socialism as an alien phenomenon that is automatically un-American. In a recent post on his blog, The Conversable Economist, Timothy Taylor made a similar point. “I’ve been coming around to the belief that most modern arguments over ‘socialism’ are a waste of time, because the content of the term has become so nebulous,” he wrote. Many “’socialists’ are really just saying that they would like to have government play a more active role in providing various benefits to workers and the poor, along with additional environmental protection.” This may explain why support for socialism is surprisingly strong. Gallup periodically asks whether Americans think socialism is a “good” or “bad” thing. Earlier this year, 43% said a good thing, 51% a bad thing, reported Taylor. In 1942, the responses were 25% a good thing and 40% a bad thing (most of the remainder had no opinion). What should count are actual proposals, not the associated slogans and soundbites. Not unexpectedly, Sanders’ economic vision is sweeping. “We must take the next step forward and guarantee every man, woman and child in our country basic economic rights,” he said in his speech. These include, in his words: The right to quality health careThe right to as much education as one needs to succeed in our societyThe right to a good job that pays a living wageThe right to affordable housingThe right to a secure retirementThe right to a clean environment“We must recognize that in the 21st century, in the wealthiest country in the history of the world, economic rights are human rights,” he added. “That is what I mean by democratic socialism.” All these are worthy goals – and utopian. Inevitably, they raise practical and philosophical questions. The practical issues involve costs, which are bound to be large. More spending would add to budgets that, according to estimates by the Congressional Budget Office, are already running annual deficits of $1 trillion, equal to roughly 4% of gross domestic product. Moreover, the CBO projections may be conservative, because they assume slowdowns in discretionary spending that may not occur. The philosophic questions revolve around “rights,” which is how Sanders frames his proposals. A “right” is open-ended. How much more medical care is needed? How clean does a clean environment have to be? How much education is justified? Because Sanders casts his proposals as “rights,” they may disappoint both supporters and opponents – being too stingy for supporters and too generous for opponents. Listening to Sanders’ speech, it was almost possible to imagine him during the Great Depression of the 1930s. Because the crisis then was mostly economic, virtually all of Sanders’ major proposals today deal with economics. In his talk, Sanders barely mentioned climate change, foreign policy or defense spending. (His campaign website contains some discussion of these issues.) This is not the 1930s. For better or for worse, we have moved on. Society is aging with pervasive consequences for most Americans. Economic growth has slowed. The world has become more hostile. We need to engage with these realities. The trouble is that our leaders are ill-prepared to adopt this sort of hyper-honesty. We cannot prepare for the future if we are stuck in the past. Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/maybe-theres-something-we-can-do-on-warming/</link>
        <title>Maybe there’s something we can do on warming</title>
        <description>WASHINGTON – On global climate change, I’ve changed my mind – just slightly. I’ve written about this issue for more than two decades, and my theme has been monotonously consistent. As a starting point, I’ve accepted the prevailing scientific view...</description>
        <pubDate>Mon, 21 Jan 2019 17:33:09 -0700</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – On global climate change, I’ve changed my mind – just slightly. I’ve written about this issue for more than two decades, and my theme has been monotonously consistent. As a starting point, I’ve accepted the prevailing scientific view that man-made greenhouse gases contribute to global warming. But I’ve been routinely pessimistic and skeptical that we can do much about it. We have yet to discover or create some low-cost fuel that would replace fossil fuels, which provide roughly 80 percent of the world’s energy. Most nations aren’t willing to scrap the energy status quo – the very basis of modern civilization – before having a practical substitute. Despite the enthusiasm for non-fossil fuels, global greenhouse-gas emissions are higher today than, say, in 1990. The emissions continue. Poorer countries (China, India, Indonesia, etc.), where most energy growth now occurs, won’t condemn their populations to perpetual poverty to satisfy hard-to-attain environmental goals. Many governments resist inflicting pain on today’s voters for imprecise future gains. I’ve been critical of much media coverage, which has portrayed the climate-change story as a struggle between good guys and bad – climate-change believers versus deniers. The real story is our relative helplessness. Still, we should do something. Last week, a large group of economists, including 27 Nobel Prize winners, 15 former chairs of the White House Council of Economic Advisers and two former Treasury secretaries issued a manifesto endorsing what’s been called a “carbon dividends” plan. Here’s how it would work. The government would tax CO2 emissions. The idea is to prompt Americans to use less of fossil fuels and to prod businesses to focus on renewables and energy efficiency. That’s a standard carbon tax. What defines the “carbon dividend” plan is that all the money collected would be rebated to households. Under one proposal, the government would slap a $43 tax on each ton of CO2. That would equal about 38 cents on a gallon of gasoline, says economist Marc Hafstead of Resources for the Future, who studied the plan. It would raise about $180 billion in the tax’s first year, he says. If the “dividend” – the tax rebate – were distributed evenly, that would be about $1,400 per household. Meanwhile, if the tax were increased 3 percent annually, there would be (according to the estimates) a dramatic reduction in U.S. fossil fuel use and greenhouse gases. Without the tax, projected CO2 emissions would be 5.4 billion metric tons in 2035. With the tax, the total would be 3.6 billion metric tons, a 33 percent decline. Still, this would hardly eliminate greenhouse gas emissions. Assuming the tax works this way, the lesson would be that we can, up to some point, curb emissions without hugely disrupting the economy. As Hafstead notes, the initial increase in gasoline prices of 38 cents a gallon is within normal market fluctuations. The rebate would sweeten the tax. Consumers who cut fossil fuel use would come out ahead. The tax has another advantage. It decentralizes decision-making to individual companies and people. The alternative of regulations would centralize more power in Washington. This would be complicated, costly and potentially corrupting. Given President Trump’s hostility toward anything “climate change,” it’s unlikely that major legislation will pass this Congress. We will have to wait until at least 2021. None of this has changed my long-standing skepticism that, without some major technological breakthrough (safer nuclear power?), it will be exceedingly hard to halt the increase in atmospheric concentrations of greenhouse gases. The required changes in lifestyles and economic activity are simply too great. But something less grandiose than “solving” the problem is plausible. It may be possible to slow the increase in greenhouse gases. We need first-hand experience with these problems rather than repeating an increasingly futile and familiar debate. (For the record: I have long favored a carbon tax without a dividend. Revenues would go to cut budget deficits. But I recognize the dividends’ political appeal.) All in all, my thinking on global warming has shifted slightly, as I said. I haven’t gotten more optimistic. But I am less pessimistic. Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/what-sears-and-ge-declines-say-about-capitalism/</link>
        <title>What Sears and GE declines say about capitalism</title>
        <description>WASHINGTON – General Electric and Sears have fallen on hard times, and that tells us a lot about U.S. capitalism. Both were once great enterprises -– symbols of American ingenuity and imagination. The temptation will be to blame their troubles...</description>
        <pubDate>Thu, 17 Jan 2019 17:33:10 -0700</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – General Electric and Sears have fallen on hard times, and that tells us a lot about U.S. capitalism. Both were once great enterprises -– symbols of American ingenuity and imagination. The temptation will be to blame their troubles on mismanagement. The real lesson is starker. It is that no business, no matter how historically innovative or powerful, is guaranteed immortality. Sears entered bankruptcy in October. It will either go out of business or a much-smaller store chain will survive. Although GE doesn’t face bankruptcy, its profits have dropped sharply, and it is considering selling more of its business. Both firms helped weave America’s economic tapestry. The mail-order catalogs of Sears and its main rival, Montgomery Ward, created national markets for consumer goods, from clothes to tools. Sears issued its first catalogue in 1894. It was the Amazon of its time. By the new century, it was fulfilling 100,000 orders a day, reports economist Robert J. Gordon in his book “The Rise and Fall of American Growth.” GE promoted electrification, which reached 96 percent of urban dwellings by 1940. These glory days are long gone. GE’s stock is trading at about $9 a share, down from its peak of more than $30 in the summer of 2000. For both companies, economic pressures changed the terms of competition. Sears ultimately could not adapt to a world that included Walmart, other “big box” stores, and the internet. GE tried to diversify from its traditional industrial base of appliances, lighting, electric generators and jet engines. There is a life cycle that applies to almost all firms, especially large successful firms. If they have introduced some important or popular product, these firms can grow rapidly for some period, often decades. But sooner or later, their market will become mature. What do they do with their present profits, which flow from their past success? Corporate executives may hoard present profits and defend their existing markets as best they can. This might succeed for a while, but all the spare cash hides firms’ underlying weaknesses and encourages wasteful spending, including excessive corporate compensation. Firms can pay high profits to shareholders through dividends or share repurchases. This minimizes the dangers of wasteful spending but doesn’t provide a path for future growth. Companies can find some new growth businesses to offset their mature businesses, either by investing profits in research and development or by merging with some other company. This seems the most responsible path, but it is littered with practical obstacles. Countless billions have been wasted on mergers that didn’t succeed and R&D spending that led to dead ends. Sears couldn’t compete against more modern retailers. GE’s cardinal mistake was maintaining its conglomerate structure. For nearly two decades, former CEO Jeff Immelt sold businesses and bought others to shift the firm’s product mix. And yet, his successor as CEO said concluded “that we were running too many businesses at once to do them all justice. We had to admit we didn’t have the financial and management bandwidth.” What this suggests is that, even in good times, American capitalism exacts a considerable human toll. To survive, Sears has already shuttered 1,700 stores involving more than 200,000 jobs. There is an ebb and flow to business, based on shifting technologies, consumer tastes and competition. Success in one business doesn’t guarantee success in another. Last year, GE was removed from the Dow Jones Industrial Average. It was the last of the original 12 firms to go. The others included enterprises making shoes, refining sugar and producing lead – all mature industries. Would we be better off if they were still our leading firms? Hardly. Capitalism’s vices are also its virtues. We pay a high price for economic flexibility but benefit enormously from the rising living standards it produces. Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/hike-defense-spending-and-maybe-cut-welfare/</link>
        <title>Hike defense spending (and maybe cut welfare)</title>
        <description>WASHINGTON – The most uncovered story in Washington these days is the loss of U.S. military power – a lesson particularly important in light of recent events: the resignation of Defense Secretary Jim Mattis; President Trump’s rash decision to withdraw...</description>
        <pubDate>Mon, 24 Dec 2018 17:33:28 -0700</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – The most uncovered story in Washington these days is the loss of U.S. military power – a lesson particularly important in light of recent events: the resignation of Defense Secretary Jim Mattis; President Trump’s rash decision to withdraw U.S. troops from Syria; North Korea’s announcement that it will keep nuclear weapons after all; and alleged massive computer hacking by Chinese nationals. After the Cold War, Americans assumed that no other country could match the United States in its military might and technological leadership. The reality, long known in the military, is that defense-modernization programs in Russia and China, as well as advances in Iran and North Korea, threaten to leap frog U.S. capabilities. The military plays two essential roles in defending U.S. international goals. The first is to deter aggression that would jeopardize American interests, because potential adversaries believe their chances of prevailing are slim to none. The second is to fight – and to win – wars to protect those same interests. In both cases, America’s military is on a downward trajectory. Read the recent report of the congressionally created National Defense Strategy Commission, a group of civilian experts and retired military officers. Here are a few quotes: Russia and China “possess precision-strike capabilities, integrated air defenses, cruise and ballistic missiles, advanced cyberwarfare and anti-satellite capabilities.”“If the United States had to fight Russia in a Baltic contingency or China in a war over Taiwan, Americans could face a decisive military defeat.”“America has reached the point of a full-blown national security crisis.”My fellow Washington Post columnist, Max Boot, has done a great favor by publicizing the report. (Boot’s two columns can be found at www.washingtonpost.com/people/max-boot.) Writes Boot: “Air superiority, which the United States has taken for granted since World War II, is no longer assured. And, without control of the skies, U.S. ships and soldiers would be vulnerable.” The slippage in our military power has at least three causes, only two of which we can influence. The first is other countries’ decisions to beef up their militaries; we can’t change that. The second is the shifting nature of warfare, with the rise of cyberwarfare and other new technologies (communication satellites and the like). We can do better here by addressing the third cause: unwise cuts in defense spending. Look at the numbers. From fiscal 2010 to 2015, defense spending fell 26 percent, from $794 billion (in inflation-corrected 2018 dollars) to $586 billion, says the NDSC report. Excluding the costs of Iraq and Afghanistan, the decline is 12 percent, from $612 billion to $541 billion over the same years. The time has long passed since the Pentagon was the driving force behind the federal budget. In 1960, defense was 52 percent of federal outlays and 9 percent of overall economic activity (gross domestic product). In 2017, the comparable figures were 15 percent of outlays and 3 percent of GDP. In truth, military spending is in a quiet competition with the American welfare state – Social Security, Medicare, Medicaid, food stamps and the like – which now represents roughly 70 percent of budget outlays. The Pentagon is losing badly. Welfare programs have vast constituencies of voters. Defense has fewer. Politicians straddle the conflict. They vote for welfare, while insisting that the U.S. military is still the world’s most powerful. This rationalizes inaction on defense but conveniently forgets that the military’s margin of superiority has dramatically shriveled. Meanwhile, potential adversaries are arming themselves. The U.S.-China Economic and Security Review Commission – another congressionally created watchdog group – reports that China has recently introduced a new stealth fighter (the J-20) and its “growing ballistic and cruise missile inventory ... can target U.S. bases and surface ships, including aircraft carriers.” Does all this seem familiar? Well, yes. It’s hard to miss the parallels with the period before World War II, when England, France and the United States allowed Hitler to rearm Germany, altering the global balance of power. The delusional complacency recalls John F. Kennedy’s book, “Why England Slept.” This is not a call for war. It is a call for stopping many self-inflicted wounds. We need to stop underfunding the military, especially on research and cyberwarfare, even if that means less welfare. We need to keep our commitments – Trump’s abrupt withdrawal from Syria devalues our word. And we need to repair our alliances. War is changing, and we need to change with it. Otherwise, we may drift into a large war impossible to win. Surely we don’t need a book called “Why America Slept.” Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/great-recession-worse-than-great-depression/</link>
        <title>Great Recession worse than Great Depression?</title>
        <description>WASHINGTON – Here’s today’s economic quiz: Was the 2007-09 Great Recession more damaging than the Great Depression of the 1930s? Surely the answer is “no.” In the 1930s, unemployment reached 25 percent. By contrast, the recent peak in the jobless...</description>
        <pubDate>Thu, 29 Nov 2018 17:03:12 -0700</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – Here’s today’s economic quiz: Was the 2007-09 Great Recession more damaging than the Great Depression of the 1930s? Surely the answer is “no.” In the 1930s, unemployment reached 25 percent. By contrast, the recent peak in the jobless rate was 10 percent. Case closed. Not so fast, objects economist J. Bradford DeLong of the University of California, Berkeley. “Fifty years from now, historians will ... write that President Franklin Roosevelt, Congress and the Federal Reserve provided a collective policy response that was, if not optimal, at least respectable. ... By contrast, they will [argue] that the responses of President Barack Obama, Congress and the Federal Reserve did not come up to the standard [set by] the mid-1930s policy-makers.” Could DeLong be correct? The answer matters, because if he’s right, the economy -– despite its present strength -– faces a future of long-term sluggishness. Writing in The Milken Institute Review, DeLong accepts that the rapid response of the Federal Reserve and Congress to the Great Recession prevented a second Great Depression. But his praise stops there. We are now 11 years after the start of the crisis in 2007, and income per worker has risen only 7.5 percent. It had risen 10.5 percent 11 years after the 1929 crash. What explains the gap, he argues, is a psychological hangover: “We are haunted by our Great Recession ... No unbiased observer projects anything other than slow growth, much slower than the years during and after World War II.” “We seem to have fumbled the recovery from the recession,” he adds, blaming bad policy. I’m sympathetic to DeLong’s analysis, but I think private caution may have some public virtue. It can dampen financial speculation and boom-bust cycles.. The slowdown has two main causes: first, reduced growth of the labor force, as baby boomers retire; and second, slower growth in productivity -– the economic efficiency that raises wages, salaries and profits. In the 1950s, productivity growth averaged nearly 3 percent a year; in the last decade, the average is less than 1 percent. The slowdown in productivity growth – reflecting technology, management and worker skills – is not well understood but may also be independent of the Great Recession. What’s particularly misleading is the contrast with the decades after World War II. Fifteen years of depression and war had left a huge backlog demand for cars, homes and appliances. The onset of the postwar baby boom further inflated demand. New technologies (television, plastics, air-conditioning, jet travel) boosted productivity. All these developments triggered a strong expansion. The circumstances today are much different. Households are trying to restore their savings after the excesses of the housing bubble more than a decade ago. The demographics – mainly aging – have also moved against a stronger recovery. The lesson of history remains that the World War II economic boom played an essential role in ending the Depression. It wasn’t that policy-makers were smarter then than they are now. In fact, the opposite may be true. In 1940, the unemployment rate still exceeded 14 percent. It’s doubtful that many Americans would trade today’s economy for its pre-war predecessor. Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/solving-climate-change-may-well-be-impossible/</link>
        <title>Solving climate change may well be impossible</title>
        <description>WASHINGTON – If there were any doubt before, there should be none now. “Solving” the global climate change problem may be humankind’s mission impossible. That’s the gist of the latest report from the Intergovernmental Panel on Climate Change (IPCC), the...</description>
        <pubDate>Mon, 15 Oct 2018 17:03:22 -0600</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – If there were any doubt before, there should be none now. “Solving” the global climate change problem may be humankind’s mission impossible. That’s the gist of the latest report from the Intergovernmental Panel on Climate Change (IPCC), the United Nations group charged with monitoring global warming. Unless we make dramatic reductions in greenhouse gas emissions (carbon dioxide, methane, others), warns the IPCC, we face a future of rapidly rising temperatures that will destroy the world’s coral reefs, intensify droughts and raise sea levels. We need to take action immediately, if not sooner. The IPCC says that emissions need to be cut 45 percent from present levels by 2030 and virtually eliminated by 2050. This would keep the projected increase in global temperatures since the early 1800s to 1.5 degrees centigrade, or 2.7 degrees Fahrenheit. We would escape the worst consequences of global warming. It’s not clear how this would be done. The reality is that global carbon emissions are rising, not falling. Emissions today are about 60 percent higher than in 1990, according to the World Bank. There are at least three obstacles frustrating the IPCC’s agenda. First, we don’t have the technologies to reduce and eventually eliminate emissions from fossil fuels (oil, coal and natural gas). Yes, solar and wind power have made advances, but they still provide only a tiny share of the world’s total energy, about 4 percent. Electric vehicles don’t solve the problem, because natural gas and coal are the underlying energy sources for much of the electricity. Second, even if we had the technologies to replace fossil fuels, it’s doubtful that we have the political will to do so. Democracies – or, for that matter, dictatorships – have a difficult time inflicting present political pain for future, hypothetical societal gains. Voters abhor higher gasoline and heating-oil prices, which are an integral part of most proposed solutions for global warming. They would dampen demand for fossil fuels and spur investment in substitutes. The clearest proof of America’s political bias against the future is the treatment of Social Security and Medicare. For decades, we have known that an aging population would significantly boost spending for these programs. What did we do to prepare for this inevitability? Not much. Finally, assuming (unrealistically) that today’s advanced societies – led by the United States – overcome these obstacles, it’s unclear whether poorer and so-called “emerging market” countries would follow suit. These countries represent the largest increases in fossil-fuel demand, as they attempt to raise living standards. Already, China is the world’s largest source of carbon dioxide emissions, nearly twice as high as the United States. Economic and population increases boost energy demand. Consider air conditioners. The world now has 1.6 billion air conditioning units, reports the International Energy Agency. By 2050, that could triple to 5.6 billion units. People in advanced societies won’t abandon air conditioning, and people in poorer countries won’t surrender the chance to enjoy it. Much of future demand will come from three countries – China, India and Indonesia. What is to be done? Maybe nothing. This seems to be the choice made by many Republicans and the Trump administration, which is withdrawing from the Paris agreement’s commitments to reduce emissions. Trump’s hostility is not as crazy as it sounds. If suppressing global warming is as hard as I’ve argued, one likely response is a series of half measures that don’t much affect global warming but do weaken economic growth. The politicians’ real aim is to brag that they’ve “done something” when all they’ve really done is delude us. Trump would skip this stage. My own preference is messier and subject to all the above shortcomings. I would gradually impose a stiff fossil-fuel tax (not a 10 or 15 percent tax but a doubling or maybe a tripling of prices) to discourage fossil-fuel use and encourage new energy sources. In addition, some of the tax revenues could reduce budget deficits and simplify income taxes. With luck, a genuine breakthrough might occur: perhaps advances in electric batteries or storage. That would make wind and solar power more practical. There are risks. It can be argued that this sort of policy, aside from relying on unpopular energy taxes, would represent a triumph of hope over experience. Combating global warming is a noble crusade, but it’s much harder than the rhetoric implies. If we were serious about cutting greenhouse gases, we could adopt comprehensive wartime controls that empower the government to mandate changes. Or we could accept a worldwide depression as a way to quash job growth and greenhouse gases. Obviously, neither is in the cards. Robert Samuelson is a columnist for The Washington Post.]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-why-we-dont-prepare-for-the-future/</link>
        <title>Samuelson: Why we don’t prepare for the future</title>
        <description>Robert Samuelsondu1-i-syn WASHINGTON – More than 20 years ago, I wrote that Americans would solve their most pressing problems through either consensus or crisis. We would debate the country’s controversial issues until we reached agreements that, though not fully satisfying...</description>
        <pubDate>Mon, 10 Sep 2018 17:11:19 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=625BCBD6-CEAC-4A1A-B11F-A5455004CA7B&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[Robert Samuelsondu1-i-syn WASHINGTON – More than 20 years ago, I wrote that Americans would solve their most pressing problems through either consensus or crisis. We would debate the country’s controversial issues until we reached agreements that, though not fully satisfying to everyone, would enjoy grudging majority support. If consensus failed, we would wait for some crisis – ill-defined and disruptive – to force us to do what we don’t want to do. The jury, I think, is in: We’re relying on crises. We hope that they don’t occur and pretend that they’re not inevitable, whatever they might be. As a society, we’ve failed to confront some of the major social, political and economic realities of our time: immigration, globalization, health spending, global warming, federal budget deficits, the aging of society and stubborn poverty, among others. What almost all of these issues have in common is that the remedies they suggest are unpleasant. They demand, in the political vernacular, “sacrifice.” To close federal budget deficits, taxes must go up and spending must come down. To deal with an aging society, people must work longer. (Also, eligibility ages for Social Security and Medicare must rise and benefits for the affluent elderly fall.) To resist global warming, fossil-fuel prices must go up, either through taxes or regulations. The paradox is this: Although many of these measures would, initially at least, involve a loss of income for individuals, the country would be better off, because we would have responded collectively to collective threats. It is also true that, on paper at least, some problems are amenable to compromise. Take immigration. The bargain that could be struck has long been clear: Most of today’s roughly 11 million “illegal” immigrants would be granted legal status; in return, border security (yes, including the dreaded “wall”) would be strengthened, and legal immigration would be overhauled to emphasize skills, not family ties. Had some of these problems been tackled years ago – when they were already evident – the needed changes would have been modest. But time was squandered, and manageable issues became less so, federal budget deficits being a case in point. As estimated by the Congressional Budget Office, today’s deficits are approaching $1 trillion, which (if closed entirely through taxes) would require tax increases of about 30 percent, or (if closed entirely by spending cuts) would reduce spending by about 25 percent. There is no gentle way to do this. People, including some readers of this column, clamor for “solutions.” We need to “fix” this problem or that, it’s said. But some problems have no solutions, only better and worse ways of dealing with imperfection. Consider: Curing poverty has eluded us for decades, despite trillions of dollars of anti-poverty spending. Health care is frustrating, because most Americans regard it as an open-ended “right” whose spending should somehow not be open-ended. Eliminating greenhouse-gas emissions is difficult, perhaps impossible, because four-fifths of the world’s energy still comes from fossil fuels (oil, coal, natural gas). Rather than tangle with these complications, our political leaders have preferred procrastination to action. They create agendas that they know are anathema to their adversaries, prompting each side to vilify the other. Politics focuses increasingly on “keeping your base happy,” as opposed to governing. The seeds of stalemate are planted. Political theater triumphs over policy. Nastiness and polarization increase. Congressional Republicans and Democrats vote along party lines, making bipartisan support for major measures impossible. Politicians revert to familiar behaviors. Democrats create new entitlements (aka the Affordable Care Act), Republicans cut taxes. President Donald Trump is the logical conclusion of these tendencies. With his tweets, he has devalued political discourse and aggressively divided, rather than unified, voters. There is a larger point. Democracies, it turns out, are creatures of the present because the public focuses on the here and now, not some future, hypothetical problem. To be fair, all these tendencies predated Trump’s election – and will, almost certainly, survive his leaving. Our political system makes us vulnerable to distant crises because we don’t try to anticipate and defuse them. Just what kind of crisis is hard to know. A financial crisis – not unlike the 2008-09 financial collapse – seems plausible. Other possibilities: war, pandemics and cyberattacks, to mention a few. There is one common denominator: We lose some control over our future. Robert Samuelson is a columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-the-triumph-of-downward-mobility/</link>
        <title>Samuelson: The triumph of downward mobility</title>
        <description>du1-i-syn WASHINGTON – It’s an axiom among many Americans that each future generation will live better than its predecessor. New technologies, greater efficiencies and a can-do spirit will reward us with higher living standards. There might be periodic stumbles, but...</description>
        <pubDate>Mon, 06 Aug 2018 17:09:00 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=5F0F2380-8828-4BFB-9886-2AED6CB4B035&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[du1-i-syn WASHINGTON – It’s an axiom among many Americans that each future generation will live better than its predecessor. New technologies, greater efficiencies and a can-do spirit will reward us with higher living standards. There might be periodic stumbles, but the long-term trajectory is up. And the people most guaranteed to enjoy this bountiful future are the children of today’s upper-middle class. They have all the advantages: attentive parents, good schools, a college education and job-market connections. That’s the conventional wisdom. Ditch it. If you are an upper-middle class parent, as I am, you must have noticed that the real world isn’t playing according to script. Among many young Americans, there is downward mobility. The children aren’t achieving what they (and their parents) expected. Even when they have (and many have), the gains could be eroded in the future. The trajectory is not inevitably up. Parents worry about their children’s fate. Partly, this reflects the memory of the 2007-09 Great Recession and its huge job losses. But it’s more than that. Compared with their elders, many younger Americans are doing worse. Despite today’s strong economy, they’re falling behind. We know this from an important study by Raj Chetty and fellow economists from Stanford, Harvard and the University of California-Berkeley. By merging various databases, which had been stripped of names and identities, they could measure the pre-tax family earnings of children and parents when they were both about 30 years old. What they reported is fascinating. About 90 percent of children born in 1940 ultimately exceeded their parents’ incomes. That is, almost everybody. This makes sense; the babies born in 1940 were affected by both the 1930s’ Great Depression (which reduced incomes) and the post-World War II economic boom (which raised incomes). However, for children born in 1970, only 61 percent earned more than their parents, and for those born in 1980, only 50 percent did. That’s a sea change. It suggests that we’re already at the point where many in the present and next generations of younger Americans won’t live as well as their predecessors. If current trends continue, that certainly will be true. You can see the consequences among millennials, those born from 1981 to 1996. Their squeezed incomes have forced them to rearrange their lives. They’re marrying later, buying homes later, having children later and – to save money – living longer with their parents. What’s also surprising is that the biggest losers seem to be the children of the middle and upper-middle classes, precisely those who are supposedly most protected against adverse changes, according to a new study by Brookings Institution scholars Richard Reeves and Katherine Guyot. “For many people, (economic success) does consist of doing better than your parents did,” they write. “This seems to have become steadily harder to achieve for those born into middle-class families in particular from 1950 onward.” Their explanation is simple. Those in middle and upper-middle classes have more to lose than, say, the poor. The incomes of the poor can’t drop much lower; indeed, with small gains, they can pass their parents’. The result: the higher the parents’ incomes, the less likely that their children will match it. This is even true for the richest 1 percent of families, says economist Aparna Mathur of the American Enterprise Institute. The children born in 1980 in the richest 1 percent have only a 1 percent chance of themselves being in the top 1 percent, she says. (Of course, this hardly means they’re impoverished. It just means they have less income than their parents. The same lesson applies to the middle and upper-middle classes.) Just what has caused the slowdown in incomes is a tangled tale with the usual suspects: poor schools that produce poor workers; income inequality that stifles consumption spending; weak housing construction; inadequate innovation; over-regulation. With so many confusing sources, it’s hard to design a program that will automatically reverse existing trends, though President Donald Trump says he’s trying. It’s also true, as Mathur notes, that the data need to be qualified. Some incomes are underreported because they exclude fringe benefits (employer-paid health insurance) or in-kind government benefits (food stamps, Medicaid). Taxes are ignored. Age 30 may be too young for generational comparisons. Income figures haven’t been adjusted for shrinking family size. There may be other causes of delayed marriage. Still, the broad trends seem reliable. The paradox is apparent. Today’s strong economy notwithstanding, there’s an underlying worry about the future. Economic anxiety is increasingly an equal-opportunity affliction. No one can escape it. The poor worry about staying poor. The lower-middle class worries about paying bills or losing jobs. Now upper-middle class parents have joined the crowd, because their own well-being is often judged by how well their children are doing. That is the stubborn source of their angst. Robert Samuelson is an economist and a regular columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-get-ready-for-the-coming-welfare-wars/</link>
        <title>Samuelson: Get ready for the coming welfare wars</title>
        <description>du1-i-syn WASHINGTON – The Trump administration may have declared it over, but a new War on Poverty is coming anyways. It will be fought largely over the concept of a “work requirement.” Should the government require welfare recipients either to...</description>
        <pubDate>Thu, 19 Jul 2018 21:57:00 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=0340855D-14CB-4819-B10D-6FBCCAF8415C&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[du1-i-syn WASHINGTON – The Trump administration may have declared it over, but a new War on Poverty is coming anyways. It will be fought largely over the concept of a “work requirement.” Should the government require welfare recipients either to get a job or to train for one? It’s a philosophical as much as a practical question. A work requirement addresses a dilemma of all welfare programs. If you make eligibility and benefits too generous, you destroy the incentive to work. People will just collect their welfare checks. But if the program is too stingy and strict, many genuinely needy people may lack support. A work requirement tries to disarm this dilemma by conditioning welfare benefits on having a job or training for one. There’s already a work requirement for TANF (Temporary Assistance for Needy Families). That’s traditional welfare; it mainly assists single mothers and their children. Now, the Trump administration proposes work requirements for two huge programs: Medicaid, health insurance for the poor; and food stamps, now known as SNAP (Supplemental Nutrition Assistance Program). A little background. First, these programs are huge. According to a new report by President Trump’s Council of Economic Advisers (CEA), Medicaid had 71 million recipients in 2016 and cost $566 billion, counting both federal and state contributions. (The program is jointly funded.) SNAP spending in 2016 totaled $71 billion for 44 million beneficiaries. TANF is the smallest program of the group, with spending of $31 billion for 3.9 million recipients. Second, the debate over the work requirement excludes older and disabled Americans. No one is suggesting that the elderly or disabled be forced to work. The focus would be on able-bodied and non-elderly people between 18 and 64. Disability status would be determined by classification under two major disability programs: Social Security Disability Insurance (SSDI) or the Supplemental Security Income program (SSI). In 2013, reports a new CEA study, there were about 17.2 million adult Medicaid recipients who were neither disabled nor elderly. The comparable figure for SNAP was 18.6 million beneficiaries. In both cases, about half the recipients didn’t work at all and nearly another 20 percent worked fewer than 30 hours a week. This strikes Trump officials as bad and unfair. It’s bad because it isolates low-income workers from the labor market and makes it less likely that they’ll develop the skills that will enable them to improve their living standards. It’s unfair because it violates popular norms. “Society generally expects ... non-disabled working-age adults” to work, the CEA report says. At another point, the report notes: “As women’s role in the workforce [has grown], so [have] social expectations of work for single mothers on welfare.” Although the report doesn’t propose a detailed work requirement, it provides enough information to imagine what one would look like. Suppose, for example, Medicaid and SNAP recipients were required to work at least 30 hours a week. Crude calculations suggest that about 25 million recipients would fall under the work requirement, though there would be some double-counting between programs. Hold it, say critics. In practice, an expanded work requirement would hurt the poor. The complexities of any program would result in people not satisfying the requirement and, as a result, losing benefits. Studies of the TANF work requirement also raise doubts about how much long-term employability of the poor improves. The CEA report, says LaDonna Pavetti of the Center on Budget and Policy Priorities, a liberal research and advocacy group for the poor, “says nothing about the realities of the low-income labor market. There’s a lot of movement in and out of jobs. Workers don’t get benefits. They can’t control their hours.” The CEA study “doesn’t acknowledge what it takes to get into the market,” she says. Workers need child care and job training – both are expensive; neither is broached extensively in the report. Moreover, some critics argue that the number of welfare beneficiaries who don’t work is overstated because the economy has improved since 2013, when the survey data was collected. So let the political wars over welfare begin. The House of Representatives has already passed legislation imposing new work requirements for SNAP; the Senate has not. There’s plenty to argue about. Is this a problem in search of a solution? Or a solution in search of a problem? Robert Samuelson is an economist and columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-why-our-neo-isolationism-will-not-work/</link>
        <title>Samuelson: Why our neo-isolationism will not work</title>
        <description>du1-i-syn WASHINGTON – As we near July Fourth, America has taken a turn for the worst. The great delusion of Donald Trump’s presidency is that we can thrive by embracing nationalism even though major economic and political events are increasingly...</description>
        <pubDate>Mon, 02 Jul 2018 17:41:06 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=96EC1C58-7359-4984-AB04-33EC1D333173&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[du1-i-syn WASHINGTON – As we near July Fourth, America has taken a turn for the worst. The great delusion of Donald Trump’s presidency is that we can thrive by embracing nationalism even though major economic and political events are increasingly driven by international forces. Trump is an isolationist in an era of globalism. It won’t work. Keep this in mind on the Fourth. Let us assume – for the sake of argument – that Trump is everything that he isn’t: thoughtful, considerate, open-minded, kind, generous, civil, truthful and respectful of his adversaries. Let us further assume that this imaginary Trump is such a nice guy that his character is widely admired. Still, a big problem would remain: his policies. It’s inaccurate to say that Trump doesn’t have an agenda. In many ways, his agenda resonates with his campaign promises. “Make America Great Again” is a brilliant slogan that captures a nostalgic urge to resurrect an allegedly more glorious past. The trouble is the actual past doesn’t resemble Trump’s rhetorical past, which is widely taken to be America in the late 1950s and early 1960s. The country was much poorer then. Since 1960, the average income (gross domestic product per person) has roughly tripled after adjusting for inflation. In 2017, that was $59,484. Many staples of modern life didn’t exist or were in short supply. Jet travel began in 1958. Color television became widespread only in the 1960s. In 1955, only 2 percent of American homes had air conditioning. There were more important deficiencies: African-Americans throughout the South remained segregated by law and custom; the situation was better in the North, but blacks still faced discrimination. Similarly, most women remained at home; career jobs for them were only slowly expanding. One accomplishment that did make America “great” then was its active international engagement, through military alliances and trade policies. These helped Europe and Japan rebuild after World War II and resist communist political pressures. This is precisely the sort of international cooperation – protecting our long-term interests despite some short-term costs – that qualifies as enlightened self-interest. It is doubtful that most Americans, when confronted with the tangible conditions of early post-World War II life, would choose to hop on a time machine and re-establish themselves in this bygone era. Meanwhile, Trump is enthusiastically repudiating, or trying to repudiate, the American-led international cooperation that was a hallmark of the period. The underlying lesson was that our power and influence are enhanced when they are exercised in conjunction with countries that, granting differences and disagreements, share our basic values and interests. We cannot isolate ourselves from the rest of the world. To the contrary, power is being drained from nation states to “market forces” or other global mechanisms that are difficult to control. This has been going on since at least the mid-19th century and reflects new communication and transportation technologies: the telegraph, the telephone, television, the internet, automobiles, planes and containerization. Obviously, no one is going to uninvent these technologies. But the globalized world that those technologies have helped foster understandably makes many, possibly most, people uneasy and fearful, because there is a loss of sovereign control over our future. Think of all the interconnections. Millions of migrants cross national borders annually (in 2017, 258 million people lived outside their country of birth, reports the Organization for Economic Cooperation and Development). Supply chains straddle the globe. Threats of worldwide epidemics are ever-present. Cyberattacks are already common. Billions of dollars of investment funds routinely shift from one country to another. Climate change cannot be dealt with unilaterally. The prospect of a major shooting war cannot be dismissed. To this anxious litany Trump brings a reassuring antidote: more nationalism. It’s a false remedy. Some of Trump’s efforts to control globalization have already backfired. To wit: Harley-Davidson’s decision to move some production to Europe – in response to Europe’s higher tariffs on Harley bikes, which in turn were a reaction to Trump’s higher tariffs on European steel and aluminum exports. As before, our global power and influence benefit when we cooperate and respect our allies, not vilify them. Trump cannot deconstruct globalization. It is too big and well-entrenched. But as noted by Wall Street Journal columnist Greg Ip, Trump can damage it and weaken it by prescribing protectionism. It’s not just Trump. Albeit without his vicious rhetoric, many Democrats share the same nationalism, proof that it represents a potent political symbol. Foreigners are convenient scapegoats. There is also a deeper problem: Economics, which is increasingly global, has outpaced politics, which is mostly local. What we had more of in the 1950s is hope and confidence. But they cannot be restored by reverting to a destructive neo-isolationism. It may be popular, but it’s not practical. As noted, we’ve taken a turn for the worst. Robert Samuelson is a columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-history-of-1930-tariff-legislation-is-haunting/</link>
        <title>Samuelson: History of 1930 tariff legislation is haunting</title>
        <description>Samuelsondu1-i-syn WASHINGTON – The ghost of Smoot-Hawley seems to haunt President Trump. You will recall that Smoot-Hawley was the sweeping tariff legislation that Congress passed and President Hoover signed in mid-1930. Most economists have exonerated the legislation as a major...</description>
        <pubDate>Thu, 28 Jun 2018 17:45:01 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=81D7BF92-9B3C-46E5-B025-4CC7C25A033E&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[Samuelsondu1-i-syn WASHINGTON – The ghost of Smoot-Hawley seems to haunt President Trump. You will recall that Smoot-Hawley was the sweeping tariff legislation that Congress passed and President Hoover signed in mid-1930. Most economists have exonerated the legislation as a major cause of the Great Depression, but it certainly didn’t help. It contributed to the deep economic downturn and fed the public’s fatalistic mood. Trump is falling into a similar trap. Smoot-Hawley’s significance was as much psychological as economic. “Because the Depression followed so closely on the heels of the tariff increase, many people at the time believed that [Smoot-Hawley] was responsible for the economic disaster,” writes Dartmouth economist Douglas Irwin in his recent history of U.S. trade, Clashing Over Commerce. One crucial lesson of Smoot-Hawley is to leave trade policy alone – that is, don’t resort to protectionism ‑– in any economic crisis that doesn’t automatically involve trade. Protectionism may make things worse and, possibly, much worse. The Trump administration hasn’t absorbed this history. Its obsession with “trade wars” risks souring the public mood and weakening the world economy. The stock market – to take a clear example – has reacted badly to adverse trade news. But there is an even larger connection through global debt markets. Contrary (perhaps) to popular wisdom, global debt – the borrowings of consumers, businesses and governments of all major countries – has grown substantially in the past decade, from $97 trillion in 2007 to $169 trillion in 2017, reports a new study by the McKinsey Global Institute. This debt consists of $43 trillion of household debt (including home mortgages), $66 trillion in loans to non-finance businesses (mostly bonds and bank loans), and governments’ debt of $60 trillion. Many of these debts are denominated in a country’s own currency; that’s largely true of China. But many debts of other countries (say, Brazil) are made in dollars. Interest and principal must be repaid in dollars. Here’s the connection with protectionism. Anything that limits debtors’ ability to earn the dollars they need to cover their debt payments makes defaults more likely. Protectionism does just that; it discourages trade (that’s the point) by raising tariffs and the price of traded goods. Exports and imports suffer. Too many defaults – especially unexpected defaults – could trigger a panic. According to many analysts, the greatest dangers lie with bonds issued by non-financial corporations. There were $11.7 trillion of these bonds outstanding at the end of 2017, up from $4.3 trillion in 2007, McKinsey estimates. Many borrowers are so strong financially – they have ample cash reserves to repay – that the risks are concentrated among weaker companies, especially firms in “emerging market” countries (India, Brazil and the like). McKinsey estimates that as much as a quarter of bonds issued by Brazilian companies could default, as might a fifth of bonds issued by Indian firms. By contrast, only 6 percent of bonds issued by American firms were rated at risk of default. What’s worrisome is that many of these bonds will mature in the next five years – at least $1.5 trillion annually. They need to be repaid or refinanced. Higher interest rates and protectionism make this harder. The good news is that McKinsey doubts there will be a major financial crackup. “While individual investors in bonds may face losses, defaults in the corporate-bond market are unlikely to have significant ripple effects across the [economy],” writes McKinsey’s Susan Lund in a post on Project Syndicate. Let’s hope this optimism triumphs. The bad news is that no one really knows. What’s eerie is that Trump’s embrace of protectionism is now assuming the same role as Smoot-Hawley in the 1930s. By slowing economic growth, it darkens the outlook and reduces the ability of debtors to repay their lenders. So much for the lessons of history. Robert Samuelson is a columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-consequences-of-unraveling-trade-rules-unclear/</link>
        <title>Samuelson: Consequences of unraveling trade rules unclear</title>
        <description>Robert Samuelson, The Washington Postdu1-i-syn WASHINGTON – The escalating trade war between the United States and China poses crucial, though unanswerable, questions: Is this the beginning of the end of the post-World War II international trading system or will the...</description>
        <pubDate>Fri, 22 Jun 2018 08:52:48 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=3A31B976-40CE-4D6D-8876-8A0E3FF58BE4&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[Robert Samuelson, The Washington Postdu1-i-syn WASHINGTON – The escalating trade war between the United States and China poses crucial, though unanswerable, questions: Is this the beginning of the end of the post-World War II international trading system or will the present arrangements survive, as they have for 70 years? Almost certainly, historians will judge favorably the postwar expansion of trade (it has never been completely “free” but has been liberalized substantially by removing many tariffs and quotas). It helped lift hundreds of millions of people from abject poverty and cemented the Cold War alliance of democratic societies against communism. Now, however, two problems cloud its future. First, global economic growth has slowed considerably, while inequality has increased. International trade and investment – aka “globalization” – are now blamed (often unfairly) for these setbacks. Second, China has burst onto the global economy, rising from a backward country four decades ago to the world’s second largest economy. But its ascendancy, aside from challenging the United States (still No. 1), has been controversial, because China practices mercantilism: government policies intended to give its companies an advantage on global markets. President Trump portrays these policies – subsidies, trade preferences and the illicit acquisition of foreign technologies – as monstrously unfair to U.S. workers and firms. Unless China overhauls its economy to make competition more even-handed, Trump vows to do the job himself by imposing stiff tariffs on Chinese exports to the United States (in effect: taxes on China’s U.S.-bound exports). That’s where we are now. Trade negotiations between the two countries have broken down, and Trump has announced 25 percent tariffs on a long list of Chinese exports, from soybeans to semiconductors to plastics. When fully phased in, the affected exports would total about $50 billion. The Chinese said they would retaliate with similar tariffs on the same amount of U.S. exports. Trump responded by asking the U.S. trade representative to prepare a further list of $200 billion of Chinese exports to be hit with 10 percent tariffs. If China retaliated, Trump threatened to add another $200 billion of Chinese exports. Nothing like this has happened since World War II. If this isn’t a “trade war,” what is it? Whether it portends an end to the postwar trading system is unclear. Many economists are skeptical. They also doubt the trade war will plunge the U.S. economy into recession. The direct effect of the tariffs, which will raise prices, inspire retaliation and dampen some production, is “tiny,” says Nariman Behravesh, chief economist for IHS Markit, a consulting firm. Do some simple arithmetic, he says. A 25 percent tariff (tax) on $50 billion of Chinese exports totals $12.5 billion; another 10 percent on $200 billion of exports is $20 billion. Together, that’s $32.5 billion, not much in a $20 trillion U.S. economy. Economist Mark Zandi of Moody’s Analytics agrees but warns that imposing tariffs on most Chinese exports (around $500 billion in 2017) could cause a recession. So could some of Trump’s other trade proposals. These include, a 25 percent tariff on car imports and a repudiation of the North American Free Trade Agreement with Mexico and Canada. The car tariffs alone could cost as many as 550,000 jobs, Zandi says. There is a real dilemma: China’s mercantilist policies are bad, but so are Trump’s proposed remedies. The view that the present trade war won’t become more destructive assumes that China and the United States will find a middle ground that allows both to declare victory. But this is hardly guaranteed. “Even though it’s an authoritarian country, public opinion [in China] matters,” says economist David Dollar of the Brookings Institution. China’s leaders can’t be seen as capitulating to Trump. Trump probably feels the same way toward China. The defining characteristics of the postwar trading system have been reductions in trade barriers and the adoption of jointly-agreed upon rules, now enforced through the World Trade Organization, about what’s fair trade and what isn’t. The United States played the leading role in this global project, though there has long been frustration with the rules’ complexity and their slow-motion operation. “The United States seems to be giving up on the WTO rules, which we helped create. Other countries may do the same,” says economist Douglas Irwin of Dartmouth College and author of Clashing Over Commerce: A History of U.S. Trade Policy. This would signal an unraveling of the postwar trading system and its replacement by a hodgepodge of bilateral and regional trading agreements – many already exist – with what consequences no one knows. The history of warfare is a long string of miscalculations by combatants on all sides. The same may also be true of trade wars. Robert Samuelson is a columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-trumps-trade-myths-about-politics-not-economy/</link>
        <title>Samuelson: Trump’s trade myths about politics, not economy</title>
        <description>Robert Samuelson, The Washington Postdu1-i-syn WASHINGTON – You cannot understand President Trump’s so-called “trade war” without acknowledging that it’s mostly about politics and not about economics. Trump has embarked on a giant marketing campaign to convince us that foreigners, and...</description>
        <pubDate>Mon, 11 Jun 2018 17:04:24 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=6EA159B4-84DF-459D-89C2-4B14910D4348&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[Robert Samuelson, The Washington Postdu1-i-syn WASHINGTON – You cannot understand President Trump’s so-called “trade war” without acknowledging that it’s mostly about politics and not about economics. Trump has embarked on a giant marketing campaign to convince us that foreigners, and their exports, are to blame for our economic problems. It’s a seductive appeal to nationalism whose main defect is that it’s mostly untrue. To be fair, Trump’s message has been consistent since the early days of 2016. He said he would slap our trading partners with high tariffs, and so he has. The campaign continues. Here’s a recent tweet: “The U.S. has been ripped off by other countries for years on Trade, time to get smart!” The standard anti-trade narrative is that U.S. officials have botched trade negotiations, giving too much to foreigners and getting too little for U.S. exporters. Massive trade deficits result and destroy American jobs. The employment loss is aggravated by U.S. multinationals relocating factories to developing countries with their dirt-cheap wages. Low-cost products are then exported back to the United States. Now, all these statements contain some truth. After World War II, the United States was generous in granting trade concessions to Europe and Japan to help revive their economies. Similarly, many U.S. multinationals do locate factories abroad. These statements are not blatantly false, but their effects are hugely exaggerated. Take the connection between trade deficits and job loss. Obviously, this occurs for individual factories. But it doesn’t exist for the entire economy. Consider: From 2009 to 2017, the annual U.S. trade deficit for goods and services rose from $384 billion to $568 billion. Over the same years, the number of private U.S. payroll jobs increased by 15.5 million, and the unemployment rate fell from 9.3 percent to 4.4 percent. If trade deficits created huge job losses, this would be impossible. The main explanation for the apparent paradox is, as I’ve argued for years, that the dollar is the main international currency. Foreigners and investors want dollars to conduct global trade and investment. This keeps the dollar’s exchange rate high, making U.S. exports costlier and imports cheaper. The resulting trade deficit is structural; but Americans’ spending for domestic products is still the main determinant of U.S. employment. Or take the notion that U.S. multinationals move factories abroad to exploit cheap labor, say, car plants in Mexico. This clearly happens and is routinely reported by the media. But it is not the main reason that U.S. multinationals invest abroad: 71 percent of their foreign investments occur in developed countries “where consumer tastes are similar to those in the United States,” reports James Jackson of the Congressional Research Service. Europe alone accounted for 59 percent of these investments. Presumably, it’s less expensive to service these foreign markets from local factories, warehouses and offices than to export from the United States. According to Jackson’s report, about 60 percent of the sales of foreign affiliates of U.S. multinationals go to local markets – say, France. (The other 40 percent go to exports to other foreign countries or to the United States.) None of this means that we don’t have serious trade problems with some of our partners, most obviously China. But the idea that trade issues lie at the core of our economic shortcomings is somewhere between wild exaggeration and sheer fiction. Trump’s policies and rhetoric are meant to turn foreign countries – via their exports and trade practices – into a hateful scapegoat. It’s their fault. The cost of this misguided exercise in misinformation is, as headlines remind us, steep. It has alienated our closest historical allies (including Canada, Mexico, Japan, the United Kingdom, France and Germany) and created enough uncertainty about trade policy to jeopardize worldwide economic growth. At its best, the imposition of these politically motivated tariffs would raise domestic prices and trigger widespread retaliation against U.S. exports. At its worst, it might result in the collapse of the post-World War II trading system and usher in an era of reconstruction that would be dominated by China as the world’s biggest trading nation. Robert Samuelson is a columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/samuelson-the-threat-from-italys-economic-turmoil/</link>
        <title>Samuelson: The threat from Italy’s economic turmoil</title>
        <description>Samuelsondu1-i-syn WASHINGTON – If you’re nostalgic for the 2008-09 financial crisis, you can cheer up. Another debacle may be on its way. Its epicenter would be Italy, which may threaten the rest of the world economy. Under the worst-case assumptions,...</description>
        <pubDate>Thu, 31 May 2018 18:03:52 -0600</pubDate>
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        <media:thumbnail url="https://imengine.public.prod.dur.navigacloud.com/?uuid=0DF59BC4-DA0D-40F4-9F3A-FCA84AFF79FB&#038;function=thumbnail&#038;type=preview&#038;source=false&#038;width=600&#038;height=400" />
        <content:encoded><![CDATA[Samuelsondu1-i-syn WASHINGTON – If you’re nostalgic for the 2008-09 financial crisis, you can cheer up. Another debacle may be on its way. Its epicenter would be Italy, which may threaten the rest of the world economy. Under the worst-case assumptions, Italy could abandon the euro – the single currency now used by 19 countries – and experience a full-blown financial meltdown that would end in a deep recession. Other countries might well be caught in the economic downdraft. Already, that’s roiled global markets in stocks, bonds and currencies. Recall that Italy’s government debt now equals roughly 130 percent of its economy (gross domestic product). If investors fear they won’t be repaid, they’ll rush to sell Italian bonds to limit their losses. That, perversely, would lower bond prices, raise interest rates and possibly trigger a panic. Although this logic has long been true, it has taken on new urgency since the Italian election in March, when – unexpectedly – the two leading populist parties, the leftish Five Star Movement and the far-right League, scored huge gains. It’s an unholy alliance, “as if Bernie Sanders and Donald Trump got together,” says Jacob Funk Kirkegaard of the Peterson Institute for International Economics, a think tank. The result was a joint economic agenda that, if enacted, would explode Italy’s debt, say critics. The plan includes tax cuts, a minimum guaranteed income and higher old-age pensions. The Peterson Institute estimates the package’s cost between 6 percent and 7 percent of GDP. To prevent Italy from abandoning the euro, President Sergio Mattarella rejected the populists’ proposed government and effectively mandated a new election, which could occur as early as summer. It’s a risky strategy, given widespread Italian hostility toward Brussels, the capital of the European Union. “If the League wins the election,” says Kirkegaard, “it would be interpreted that Italians want to leave the euro.” Even so, Italians would be big losers if the economy nose-dived. Two-thirds of Italy’s bonds, reports the Peterson Institute, are held by Italians – individuals, banks, pensions, insurance companies. Italy’s larger problem is that it has too much government debt and not enough economic growth to reduce it. “Remarkably, Italy’s per-capita income is lower today than it was on the eve of the country’s euro adoption in 1999,” writes economist Desmond Lachman of the American Enterprise Institute. In recent years, annual economic growth has been virtually non-existent; from 2010 to 2017, it averaged annually two-tenths of 1 percent, according to figures from the International Monetary Fund. As Lachman points out, only Greece has a higher debt-to-GDP ratio among countries in the eurozone. But the big difference is that Italy’s economy is 10 times as large as that of Greece, while its outstanding government debt of $2.5 trillion is the third largest in the world, just behind Japan’s and the United States’. If Italy defaulted, it would almost certainly lead to “a full-blown European banking crisis,” writes Lachman, as banks wrote off bad debts. No one, of course, knows what will happen. But Italy’s present turmoil is a sobering reminder of the shortcomings of the euro itself. It deprives its member countries of the flexibility of devaluing their individual national currencies as one way of restoring their international competitiveness. Robert Samuelson is a columnist for The Washington Post. © 2018 The Washington Post Writers Group]]></content:encoded>
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        <link>https://tj.durangoherald.com/our-new-capitalism-strikingly-resembles-the-old/</link>
        <title>Our new capitalism strikingly resembles the old</title>
        <description>WASHINGTON – We flatter ourselves into thinking that we live in a time of exceptional economic upheaval. The truth is that the present resembles the past. What we learned – and forget – is that a dynamic economy is inherently...</description>
        <pubDate>Mon, 21 May 2018 17:03:10 -0600</pubDate>
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        <content:encoded><![CDATA[WASHINGTON – We flatter ourselves into thinking that we live in a time of exceptional economic upheaval. The truth is that the present resembles the past. What we learned – and forget – is that a dynamic economy is inherently destructive. But the periodic convulsions often create long-term benefits. That has been true for most of our history. To be sure, economic change now abounds: The internet; vast U.S. budget deficits; high private and public debt levels in both affluent and developing nations; the rise of China; growing income and wealth inequality; immigration; an aging population; “globalization” – not just trade in goods and services but huge cross-border money flows. And so on. The very nature of the economy seems to be shifting, to what we do not know. Our sense of security is shaken. It’s all true. But it’s always been true. The same contradictory mix of awe and anxiety applies to most, if not all, previous economic eras. Indeed, by comparison to some, today’s economy seems placid. A few years ago, a friend gave me a copy of a book called Recent Economic Changes, published in 1890 and written by David A. Wells, one of the leading American economists of the late 19th century. Browsing through the book, it’s hard not to be struck by the parallels between then and now. Here’s how Wells opens the almost 500 pages of his commentary: “The economic changes that have occurred during the last quarter of a century – or during the present generation of living men – have unquestionably been more important and varied than during any former corresponding period of the world’s history.” Sound familiar? In Wells’ time, there had been astonishing advances in transportation, communications and manufacturing. Steam had replaced wind as the main energy source for water-borne transportation. The railroad had displaced carriages and wagons. In 1869, the Suez Canal opened; coincidentally, so did the first transcontinental railroad in the United States. In 1800, it took an average of 42 days for a traveler to go from New York to the then tiny outpost of Chicago; by the eve of the Civil War, the transit time had dropped to two days, according to the Historical Statistics of the United States, Millennial Edition. Faster trains and more tracks lowered transportation costs. From 1859 to 1890, railroad mileage grew almost 20 times, from 9,021 miles to 166,703 miles. This was the era when America urbanized and industrialized. In 1860, four out of five Americans lived in rural areas; by 1900, the population had almost tripled to 76 million, and 40 percent lived in urban areas. Manufacturing exploded. By comparison, many of today’s economic advances seem mild. The rise of great cities was surely more important to daily life than the advent of Facebook or Instagram. For all the amazing, frustrating and infuriating things that digital technology can do, its effects are overshadowed by the social and economic cataclysms of the last half of the 19th century. Of course, there was a backlash then, just as today. These advances have resulted, wrote Wells, “in the absolute destruction of large amounts of capital through new inventions and discoveries and in the impairment of even greater amounts through extensive reductions in the rates of interest and profits (and) in the discontent of labor and in an increasing antagonism of nations.” Sound familiar? One downside of this progress was chronic instability. There were financial panics or depressions in 1873, 1882, 1893 and 1907, among other years. Labor strife often disintegrated into violent protests when firms cut wages. Some economic dynamism spawned stock market speculation and fraud. In the post-World War II era, we thought we were modernizing and improving this raw capitalism. Active monetary and fiscal policy – the government’s use of credit and the federal budget – would smooth business cycles. The social safety net (unemployment insurance, food stamps and the like) would mitigate human suffering caused by unavoidable slumps. There was an historic break. The old and cruel capitalism was giving way to a new and gentler capitalism. Or was it? The further we get from World War II, the more that the new capitalism seems to resemble the old. Advances in productivity and living standards come in unpredicted spurts; severe business cycles endure; economic inequality increases. It is an exaggeration to say that the new capitalism has entirely reverted into the old. The social safety net and modern monetary and fiscal policy remain. Still, the past is slowly catching up with the future. Robert Samuelson is a columnist for The Washington Post. © 2018 The Washington Post Writers Group.]]></content:encoded>
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