….America’s economic problems go far beyond rich bankers, too-big-to-fail financial institutions, hedge-fund billionaires, offshore tax avoidance or any particular outrage of the moment. In fact, each of these is symptomatic of a more nefarious condition that threatens, in equal measure, the very well-off and the very poor, the red and the blue. The U.S. system of market capitalism itself is broken. That problem, and what to do about it, is at the center of my book Makers and Takers: The Rise of Finance and the Fall of American Business, a three-year research and reporting effort from which this piece is adapted….. America’s economic illness has a name: financialization. It’s an academic term for the trend by which Wall Street and its methods have come to reign supreme in America, permeating not just the financial industry but also much of American business. It includes everything from the growth in size and scope of finance and financial activity in the economy; to the rise of debt-fueled speculation over productive lending; to the ascendancy of shareholder value as the sole model for corporate governance; to the proliferation of risky, selfish thinking in both the private and public sectors; to the increasing political power of financiers and the CEOs they enrich; to the way in which a “markets know best” ideology remains the status quo. Financialization is a big, unfriendly word with broad, disconcerting implications…..
From the press release:
American families overall reported continued mild improvement in their financial well-being in 2015 although many families were struggling financially and felt excluded from economic advancement, according to the Federal Reserve Board’s latest Report on the Economic Well-Being of U.S. Households.
The report, based on the Board’s third annual Survey of Household Economics and Decisionmaking, presents a contrasting picture of the financial well-being of U.S. families. Aggregate-level results show several signs of improvement. Sixty-nine percent of respondents said they are either “living comfortably” or “doing okay,” up 4 percentage points from 2014 and up 6 percentage points from 2013. Seventy-seven percent of non-retired adults without a disability are confident that they have the skills necessary to get the kind of job that they want now–an increase of 10 percentage points from the 2013 survey results….
States across the country are at war right now. A war over jobs. They are competing with each other to get companies to move within their borders. Politicians love to call this “job creation.”
States dangle incentives like tax breaks, training programs, freshly paved roads. According to one study, states all over the country are spending $70 billion a year to “create” jobs. But is it really creating a job if it came from a few miles away across the state border?…
Source: Thomas J. Miceli, Public Finance Review, Vol. 44 no. 4, July 2016
From the abstract:
This article examines the economic implications of the definition of public use advanced by the Supreme Court in the case of Kelo v. City of New London. In its ruling, the Court asserted that the Fifth Amendment public use requirement is satisfied if the taking in question, even if for private ends, promises enhanced jobs and tax revenues for the community. This article first reviews the law and economics of public use and then argues that the Court’s justification creates the potential for an alliance between local governments and developers that will increase the risk of overuse of eminent domain. Underlying this risk is the unobservability of landowners’ subjective values, which requires local governments to rely on market value as the basis for property taxation
This report considers the legal and economic implications of North Carolina’s HB2. After considering the size of the LGBT population in North Carolina, and the legal landscape and social climate they face, this report estimates that HB2 directly puts at risk almost $5 billion just in terms of federal funding and business investment. In addition, HB2 contributes to a challenging environment for LGBT people that potentially costs the state tens to hundreds of millions of dollars each year.
The Fiscal Impact of North Carolina’s HB2
Christy Mallory and Brad Sears, Williams Institute, May 2016
From the abstract:
North Carolina’s law restricting access to restrooms based on sex listed on an individual’s birth certificate impacts an estimated 37,800 transgender people in the state, and puts at risk $4.8 billion in federal funding to state and local government entities. The law is in conflict with the gender identity non-discrimination requirements under several federal laws including Title IX of the Education Amendments of 1972, Executive Order 13672, Workforce Innovation and Opportunity Act, the Violence Against Women Act, the Affordable Care Act, the Equal Access Rule, and Title VII of the Civil Rights Act of 1964. Federal agencies that enforce the laws are authorized to suspend or terminate funding if recipients violate the non-discrimination requirements, and the US Department of Justice has notified North Carolina that its law does violate these requirements. Loss of federal funding under the laws could impact schools, workforce development programs, law enforcement, health care programs, housing assistance, and programs for survivors of violence.
The Clean Water and Drinking Water State Revolving Fund programs are considered to be among the most successful infrastructure funding programs administered by the federal government and implemented by States. They have provided billions of dollars in low-interest loans for thousands of projects. This investment has improved public health and the environment and currently supports part of the needed continuing efforts by communities all across the United States to provide safe drinking water and wastewater treatment to millions of Americans. However, substantially higher investments are needed if we are to maintain and increase our infrastructure’s ability to keep up with the demands of our population and economic development.
The Water Environment Federation (WEF) and WateReuse Association recently conducted an analysis to estimate the economic impact of proposed increased SRF appropriation levels, including taxes that return to the federal government, and employment and economic output that the spending generates. This study shows that for every federal dollar of federal SRF spending, 21.4% is returned to the federal government in the form of taxes. The study also shows that federal SRF allocations account for approximately 23% of total SRF spending, which also includes state matching funds and funds from state program loan repayments. Thus, the proposed $34.7 billion federal allocation will leverage an additional $116.2 billion in state spending ($151 billion total). Therefore, together, the proposed federal allocations and state SRF program funds will result in $32.3 billion in federal tax revenue. Thus, when leveraged state program funds are taken into account, every dollar of federal SRF spending results in $0.93 in federal tax revenue. The study also shows increased employment and labor income as well as increases in total economic output. This report summarizes the study findings and output of the economic model.
From the summary:
….Most states’ policymakers walk a fine line and try to balance film production incentives in ways that limit forgone revenue, yet still reduce the chances of losing the state’s film industry to competing incentive programs. Since 2009, 10 states have ended their incentive programs. Most recently, growing budget deficits or unclear economic benefits caused Michigan, New Jersey, and Alaska to cut their incentive programs. No additional states have introduced programs since Nevada in 2014. However, Kentucky, Maryland, and California have expanded or extended their programs to better compete with other states’ film industries…..
Overall, states are increasing evaluation and oversight of film incentive programs. A number of states have performed a cost benefit analysis of their film incentive program, or require an audit before a production can receive a rebate or credit. At least 55 percent of all states offering incentives now require an audit or other verification from production companies. This percentage has increased from 38 percent in 2014…..
Source: Catherine Cullinane Thomas and Lynne Koontz, U.S. Department of the Interior, National Park Service and the U.S. Geological Survey, Natural Resource Report NPS/NRSS/EQD/NRR—2016/1200, April 2016
The National Park Service (NPS) manages the Nation’s most iconic destinations that attract millions of visitors from across the Nation and around the world. Trip-related spending by NPS visitors generates and supports a considerable amount of economic activity within park gateway communities. This economic effects analysis measures how NPS visitor spending cycles through local economies, generating business sales and supporting jobs and income.
In 2015, the National Park System received over 307.2 million recreation visits. NPS visitors spent $16.9 billion in local gateway regions (defined as communities within 60 miles of a park). The contribution of this spending to the national economy was 295 thousand jobs, $11.1 billion in labor income, $18.4 billion in value added, and $32.0 billion in economic output. The lodging sector saw the highest direct contributions with $5.2 billion in economic output directly contributed to local gateway economies nationally. The sector with the next greatest direct contributions was the restaurants and bars sector, with $3.4 billion in economic output directly contributed to local gateway economies nationally…..
Visitor Spending Effects
Source: U.S. Department of the Interior, National Park Service and the U.S. Geological Survey, 2016
This interactive tool is a collaboration between the NPS and the U.S. Geological Survey and displays results from the Visitor Spending Effects report series. Economic contributions of NPS visitor spending are displayed at the national, state, and local levels.
From the abstract:
That of the multiplier is a largely debated issue. Several studies propose estimates for it. This paper answers the question of how inequality affects the value of the multiplier. The proposed formulation is analytically derived from the Lorenz curve of income by means of Zanardi asymmetry index. Since the relationship between inequality and multiplier is found to be negative, it can be argued that greater inequality has depressive effects on GDP.
Calls for criminal justice reform have been mounting in recent years, in large part due to the extraordinarily high levels of incarceration in the United States. Today, the incarcerated population is 4.5 times larger than in 1980, with approximately 2.2 million people in the United States behind bars, including individuals in Federal and State prisons as well as local jails. The push for reform comes from many angles, from the high financial cost of maintaining current levels of incarceration to the humanitarian consequences of detaining more individuals than any other country.
Economic analysis is a useful lens for understanding the costs, benefits, and consequences of incarceration and other criminal justice policies. In this report, we first examine historical growth in criminal justice enforcement and incarceration along with its causes. We then develop a general framework for evaluating criminal justice policy, weighing its crime-reducing benefits against its direct government costs and indirect costs for individuals, families, and communities. Finally, we describe the Administration’s holistic approach to criminal justice reform through policies that impact the community, the cell block, and the courtroom.