President Obama and Secretary of Education Arne Duncan claim that the poor achievement of African-American students is the “civil rights issue of our time.” Yet there is little chance that the achievement gap between white and black students will be narrowed significantly, as long as large numbers of disadvantaged children are concentrated in racially segregated and economically bereft urban neighborhoods. In these (to use William Julius Wilson’s term) “truly disadvantaged” neighborhoods, teachers are overwhelmed by the impediments to learning that children bring to school, and that reinforce each other in racially and economically isolated classrooms. None of this can change substantially until metropolitan areas are residentially desegregated.

An investigation by Nikole Hannah-Jones for ProPublica, “Living Apart: How the Government Betrayed a Landmark Civil Rights Law,” published this week, demonstrates that the Obama administration and its predecessors have done little to promote residential integration.

Specifically, Hannah-Jones exposes the contempt with which the federal government, for 45 years, has ignored its obligation under the 1968 Fair Housing Act to “affirmatively further” the goal of racial desegregation. Read more

A recent blog post by the Heritage Foundation’s Derek Scissors claims that my estimates of the number of jobs lost due to growing trade deficits with China “are demonstrably wrong.” Scissors then fails to demonstrate how they’re wrong.

That’s because he can’t. The economic models used in our report (Scott 2012, 9, Appendix and note 15) are the gold standard for research on the employment effects of trade, and “all but identical models” have been used in similar studies by the Federal Reserve Bank of New York, by Martin Bailey and Robert Lawrence of the Brookings Institution, and in a U.S. Commerce Department study that represents the work of more than 20 government economists including the chief economists from that agency and the Office of the U.S. Trade Representative.

At its core, our model is based on a straightforward application of Keynesian economics and national income accounting, which show that exports stimulate the domestic economy while imports reduce demand for domestic products. Scissors (and many others before him, such as Dan Griswold at Cato and the U.S. China Business Council) claims that imports are good for the economy, in part because they are correlated with growth. But this assertion ignores two fundamental questionsRead more

It’s hard to improve upon Dean Baker’s response to Robert Samuelson’s deeply confused column about government jobs, but I’ll just add briefly here.

It’s entirely clear that the whole discussion over “government creating jobs” sparked by President Obama’s closing statement in the second presidential debate is really about the role of public-sector hiring or cutbacks as something that either cushions or exacerbates the current problem of chronically high unemployment rates.

This debate just can’t be about anything else, because it would just be too silly. And it surely can’t really be about what Samuelson spends most of his column doing: wondering whether or not government jobs are really jobs.

Government jobs are jobs, period. Nothing about the fact that they require “money to support [them]” or that public hiring can lead to “substituting public-sector workers for private-sector workers” changes this. As Baker notes, private-sector jobs “require money” to support them, and, there are plenty of times when rising private employment in one sector drives declining private employment in another. This all just seems too obvious to need pointing out.

No, the issue is whether or not cutbacks to public-sector employment when the economy has lots of productive slack lead to net economy-wide job loss, and just how much. The answers to this are “they do,” and, “a lot.” Around 2.3 million is our estimate, cited by the New York Times.

Samuelson notes that government spending during times of economic slumps can boost net job creation, but then notes that the idea of fiscal stimulus is “fiercely debated” and says he doesn’t “intend to settle this debate either.”

That’s too bad, and I wonder why not? After all, that particular debate (i.e., is contractionary fiscal policy really contractionary?) really isn’t particularly hard.

But then again, I didn’t think that it was so hard to recognize what a “job” is, either.

The impact of each presidential election on the makeup of the Supreme Court receives plenty of media attention and is analyzed extensively by experts and court watchers—and deservedly so. During the vice presidential debate, Vice President Biden predicted that the next president is likely to appoint “one or two” justices to the nation’s highest court. Although this prediction may have spooked a few of the Supreme Court justices, given that they would either have to die or retire to open a seat on the court, the election’s impact on the judiciary is a crucial consideration. Lifetime appointments for Supreme Court nominees mean they are sometimes the most enduring legacy of a president’s administration. Given that the Supreme Court is currently comprised of five conservative and four moderately progressive justices, the next administration could realistically tip the ideological balance of the court.

Some of the Supreme Court’s decisions in the past few terms, on Citizens United, the Affordable Care Act, and Arizona’s SB1070 immigration law, for example, were monumental decisions that will impact the everyday lives of citizens, and even the framework of American democracy. But the mainstream media, for the most part, have paid little attention to the potential impact of the election on federal regulationsRead more

Here’s some reading material for you from items EPI’s research team skimmed through today:

• “More People Eschew Jobless Benefits Than Scam System” (Wall Street Journal)
• “Protecting the Child Tax Credit at the Fiscal Cliff” (TaxVox)
• “Starting salaries: How can women catch up with the guys?” (Washington Post)
• “The Dark Side of Bipartisanship” (New York Times)

Here’s a sampling of links that EPI’s research team found insightful today:

• “The Ten Biggest Differences between the Romney and Obama Tax Plans” (TaxVox)
• “The Economic Consequences of Mr. Osborne” (Paul Krugman)
• “Labor unions, liberal groups fear lame-duck betrayal by Obama” (The Hill)
• “Americans don’t want ‘grand bargain’” (Politico)
• “Report Details Massive Chemical Investments in Lobbying and Campaigns” (ENews Park Forest)

My colleague Josh Bivens and I recently published a briefing paper analyzing the near-term macroeconomic impacts of the Obama and Romney budget proposals based on prevailing actionable evidence. (Short summary of findings here.) Our verdict was that Obama’s budget plans would lead to increased employment of 1.1 million jobs in 2013, relative to current policy, whereas Romney’s proposals would lead to small job gains of 87,000 in 2013 if all his proposed tax cuts were deficit-financed, but lead to job losses of 608,000 in 2013 if only some of his tax cuts were deficit-financed.

This latter estimate assumed Romney’s proposed 20 percent reduction in individual income tax rates and alternative minimum tax (AMT) elimination would be revenue-neutral, whereas his earlier proposals—notably cutting the corporate tax rate and eliminating the corporate AMT, taxes on foreign profits, the estate tax, and Affordable Care Act taxes—would be deficit-financed. While regressive tax cuts are really inefficient at boosting growth, enough money plowed into inefficient tax cuts will modestly boost demand and, short of “base-broadening,” (none of which has been concretely specified) Romney is proposing a lot of costly tax cuts. Read more

Paul Krugman and others have recently claimed that Chinese currency manipulation is “an issue whose time has passed.” There are two fundamental problems with these arguments. First, China’s global trade surplus appears to be perhaps three to four times larger than has previously been reported. Second, productivity in China is growing much faster than in the United States and other developed countries and therefore, China’s exchange rate likely needs to appreciate at least 3 to 5 percent per year just to keep its trade surplus from growing. On the first issue—what the size of the Chinese current account surplus and its recent movement tell us about the need for currency realignment—it’s worth noting that most of the decline in China’s global trade surplus since 2008 is explained by the great recession and the sluggish recovery, especially in Europe. However, the U.S. bilateral deficit with China has increased by a third since it bottomed-out in 2009, which has slowed the U.S. recovery.

Further, China’s trade data likely understates its global trade surplus by a significant amount, a problem that has been ignored by officials in the United States, the International Monetary Fund and other international agencies. The IMF relies on self-reported data from each member country. Analysis of trade data from the United Nations shows that China is massively under-reporting its exports. Read more

A number of commenters declare that currency management by our trading partners is an issue “whose time has passed.” At the risk of violating Brad DeLong’s wise rules (Paraphrased: “Mistakes are avoided if you follow two rules: (1) Remember that Paul Krugman is right, and (2) If your analysis leads you to conclude that Paul Krugman is wrong, refer to rule No. 1”), I’m not convinced by claims—even Krugman’s—that this is a dead issue.

Look at one key piece of evidence Krugman presents: the real (inflation-adjusted) appreciation of the yuan in the last year. But, as Krugman himself has said in previous writings on this:

“Notice that I didn’t mention the value of the renminbi at all in this account [ed: of China’s currency management]. … You want to keep your eye on the ball: it’s the artificial capital exports that are the driving force here.

We know that the renminbi is grossly undervalued … on a PPE (proof of the pudding is in the eating) basis: the current value of the renminbi is consistent with massive artificial capital export, and that’s that.” [Edited for clarity; I’m pretty sure I haven’t done any (much?) damage to his argument].

So, have the artificial capital exports from China continued? Read more

Every once in a while, someone will write a column so densely packed with deception and misinformation that it truly astonishes me. Last week, U.S. News and World Report published such a column about government regulation of business by John Allison of the Cato Institute. I feel compelled to respond.

Let’s start with Allison’s use of a thoroughly discredited study that estimated the annual cost of regulation to be $1.75 trillion in 2008. This report, by Nicole and Mark Crain of Lafayette College, has been shown to be based on flimsy data, a flawed methodology based on a misuse of polling data, and an equally discredited estimate of the costs of OSHA regulation whose original data are untraceable. The Small Business Administration funded the research, but the Chairman of the Council of Economic Advisers has condemned it:

“The Council of Economic Advisers has looked at those claims and the $1.75 trillion figure is utterly erroneous. In fact, their [Crain and Crain’s] own data (which come from the World Bank) show that countries with smarter regulations have higher standards of living, and the United States has one of the best regulatory systems in the world.” Read more