Economic Growth

Germany and Europe at large have suffered from chronically high unemployment for all or most of the time since the 1980s. The conventional wisdom of American economists and media commentators alike offers a clear-cut diagnosis of this long-standing malaise. Often repeated and never questioned, the verdict is that European labor markets are too rigid, the old continent’s welfare systems overly generous, and wages too high. In short, European labor is simply too expensive, and employees are pricing themselves out of work as a result.

By Jay Pelosky

This op-ed originally appeared in Reuters and is based on the recent World Economic Roundtable Paper, "Building a Bridge to a Tri-Polar World Economy: An American Growth Strategy."

[Download the full paper here].

The American social contract is in crisis. Even before the Great Recession exposed its inadequacy, it was clear that the existing American social contract — the system of policies and institutions designed to provide adequate incomes and economic security for all Americans — needed to be reformed to meet the challenges of the twenty-first century. What is needed is not mere incremental tinkering, but rather rethinking and reconstruction. Policies that have worked should be expanded, while others that have failed should be replaced.

In his latest installment of global development wonkery for Business Week, our New America Fellow Charles Kenny (whom we share with the Center for Global Development) eloquently argues that the World Bank and IMF’s latest calls to all but rid the world of “extreme poverty” by 2030 are – to put it nicely – not nearly ambitious enough. This line is particularly clutch: “It seems wrong that most of the planet would subsist for a day on what many happily throw away on a [Starbucks Venti Caramel Frappuccino] and . . . that level of expenditure still doesn’t guarantee people a quality of life we should all deserve.” While I’d even argue that income itself as a measure of poverty and inequality falls flat in various and collective efforts to enable prosperity for all around the world – access to savings and asset building opportunities, in addition to income, is likely a much more powerful means of eradicating poverty over the long haul – I salute the audacity and optimism he conveys in this compelling piece and encourage others to check it out.

Executive Summary
The conventional wisdom about Social Security is profoundly misguided. According to today’s mistaken consensus, the U.S. as a society cannot afford to allocate the money to pay for the present level of Social Security benefits for retirees in future generations. The solution, it is widely argued, is to cut benefits – either directly by means-testing or indirectly by raising the retirement age or allowing inflation to erode their real value over time. In this narrative, tax-favored private savings vehicles like 401(k)s and IRAs should be expanded in order to compensate for the allegedly necessary cuts in Social Security.

Reniqua Allen and Hannah Emple explain how and why America's racial wealth gap became a gulf. Tara Maller reveals what makes sanctions a success - or failure - and what she expects from the ones targeting North Korea and Iran. Elizabeth Weingarten hosts.

If you've ever played Oregon Trail, you probably remember the part where you shot bears and squirrels more than the part where you learned about frontier families. Today, we live in the online age of instant gratification, where you can use real money to buy your digital bears and squirrels instead of hunting them. Can a new social game based on the Half the Sky movement actually educate players about the serious issues girls face in developing countries, or will it be a series of "bear-shooting" moments?

The last thirty years of American history have witnessed, at least rhetorically, a battle over the size of government. Yet that is not what the history books will say the next thirty years of American politics were about. With the frontiers of the state roughly fixed, the issues that will dominate American politics going forward will concern the complexity of government, rather than its sheer size.

A top government economist has concluded that the high-speed trading firms that have come to dominate the nation’s financial markets are taking significant profits from traditional investors.

The chief economist at the Commodity Futures Trading Commission, Andrei Kirilenko, reports in a coming study that high-frequency traders make an average profit of as much as $5.05 each time they go up against small traders buying and selling one of the most widely used financial contracts.