Thursday, March 3, 2011

So much news, so little time...

Sorry for the blogging hiatus. I've been playing catch-up for a couple of weeks now.

There's a lot going on in the world that relates to our class, so let's dig in.

Big stories:

Unrest in the middle east and north Africa continues. What are the implications for those nations and for the rest of us? I'll post links to related stories and analysis soon. Feel free to send me links to what you're reading.

An obvious market connection is that gas prices are rising quickly. What are the implications of energy prices for economic growth and development? Read about it here at the WSJ, here at The Press (New Zealand), and here at the San Francisco Chronicle (note the estimate of a "fear premium" in a linked Business Week story).

In what some are labeling a "Cairo moment", attempts at union-busting are causing a stir in Wisconsin and Ohio. One side of the argument is that state's obligations to public union workers (pensions, health care) are exacerbating budget shortfalls. Curtailing collective bargaining will therefore rein in spending, they say, and help states climb out of severe budget shortfalls.

The other side argues that without unions, the working class will have little political power and will be taken advantage of, resulting in a shrinking middle class and more inequality (among other things). Unions provide a needed balance to the political power of corporations, they say, especially in light of the Supreme Court's recent ruling on political contributions. From this perspective, union busting is simply an attempt at knee-capping the principle contributor to one party's interests. One side says differentiating between private sector and public sector unions is at the heart of the matter, the other side downplays the distinction.

Whether the arguments of 2011 are for budget austerity or simply a political power-play, what role does collective bargaining play in economic growth and development? Read about the issues here at the NYT, here at MSNBC, and here at Fox News.

Here is a pro-union look at income, equality and unions by Ryan Witt at The Examiner. Interesting, but we have to be careful jumping from correlation to causation. Read more on the pro-union perspective here from the Center for American Progress Action Fund. You can also check the AFLCIO for their perspective.

Here is a paper from Holcombe and Gwartney presenting a detailed and non-technical look at the effect of unions on economic growth via their effect on labor laws. The paper provides great information and a thought-provoking thesis. But we have to keep in mind that CATO is a conservative think tank, so as with the links above, you sort of know the conclusions before starting the paper.

Here's a piece from two economists at LSE suggesting the effect of unions is negative, but can be offset.

Here's a link to an old blog post from Greg Mankiw on the subject. Here's a YouTube video of Krugman providing a different perspective and an excerpt from a Krugman interview at AFL-CIO.

Interesting related aside: Matthew Kahn (environmental econ prof at UCLA) has some interesting research related to unions and manufacturing firms' location decisions (and associated pollution).

Taking it one step further, if this is about politics then we have to think about how (and if) political regimes are related to economic growth.

OK, that's a ton of reading... I don't expect you to get through it all in one sitting, by try to consider both sides of the arguments and give thought to what we know and what we don't know. Like most of the issues under study this semester, these are complex and opaque relationships, and there are strong opinions on both sides.

1 comment:

  1. The recent Middle East uprisings have contributed to 2 year high rise in oil prices, leaving consumers who are comfortable with relatively cheap/moderate energy prices feeling a little tight around the belt. As far as development goes, it seems like countries with high energy prices/ lower energy use tend to be more well-off economically (more concerned with conservation) while low-energy price, oil-producing countries have slower growth rates. Cool stat from Oxford research-an increase in energy prices by 10 percent increases the growth rate by 0.4 percentage points. Cheap energy discourages savings and the production of energy-efficient goods. It also seems that food prices and fuel are so highly subsidized in emerging markets that consumers are price insensitive. So it doesn’t even matter what fuel prices are, their consumption is probably out the roof in Arab countries. Even though it stinks for us now in the short-run, I think it will allow the US to become more innovative in the int’l market in conservation/sustainability sectors.

    Cool Economist article about inflation and issues with supply shocks-