By Karen Petrou
- Judging U.S. rulemaking by its benefits to the public good, not just by its impact on private wealth, is transformational and, with a new CBA methodology, also more than possible.
- Equitable rules can be both effective and efficient.
- Maximizing the public good is not synonymous with redistribution or reverse discrimination.
In 1993, President Bill Clinton issued Executive Order (EO) 12866, creating hurdles ahead of federal rules that are “economically significant.” This was measured by a cost of $100 million or more. On January 20, President Biden began a long-overdue rewrite, stipulating that federal rules are henceforth to be judged not just by their impact on private wealth, but also by what becomes of the public good.
Continue reading “Rules We Can Really Live By”
By Karen Petrou
- Pre-COVID inequality evidenced itself instantly in post-COVID consumer-finance extremis.
- A unique construct of ground-up recovery policies is an essential, urgent response.
- Regulatory revisions would help and long-overdue equitable liquidity facilities would do still more.
- New public guarantees are critical.
Ever since the U.S. economy crept out of recession, the Fed has represented its slow, inequitable recovery as a “good place.” Its own 2018 economic well-being survey contradicted this and the latest data released on May 14 are no better before COVID came and a lot worse thereafter. These data make it still more clear that the Fed must quickly reorient its trickle-down rescues to move money starting at ground level, but even that won’t be sufficient given the magnitude of COVID’s economic impact. The combination of macroeconomic harm and financial-system hurt also requires a reset in which new public guarantees for prudent private financing fully recognized by new rules play a major part. Continue reading “Bad Things about the Good Place and How to Pretty It Back Up”
By Karen Petrou
In our last blog post, we chronicled the continuing demise of the American middle class. Now, we turn to the equality disaster evident in the most recent U.S. demographics. A new General Accountability Office (GAO) study confirms that millennials (those aged 18-37) are rapidly losing any chance of doing better than their parents and trends are extraordinarily inauspicious for NextGen followers. Inter-generational economic mobility was once as much a hallmark of America as its robust middle class – in 1970, 92 percent of 30-year-olds made more money in inflation-adjusted terms than their parents did at similar ages even though the 1970 economy was considerably weaker than the prewar boom. Now, millennials are far, far behind their parents. Looking at wealth share,* baby-boomers owned 21 percent of U.S. net wealth when they turned 35 (1990 on average). Continue reading “American Millennials: The Generation the Recovery Left Behind”
By Karen Shaw Petrou and Matthew Shaw
Janet Yellen, Ben Bernanke, and Jerome Powell have each bemoaned U.S. economic inequality and then asserted that it’s everyone else’s fault. On the blog and in our speeches, we counter that post-crisis monetary and regulatory policy had an unintended but nonetheless dramatic and destructive impact on the income and wealth divides. In doing so, we often point to just how much worse and how much faster inequality became as post-crisis policy took hold. Demographics, technology, and trade policy didn’t change anywhere near that much that fast. Now, a new study from the Federal Reserve Bank of Minneapolis takes the story forward with a trove of data evaluating U.S. economic inequality from 1949 through 2016. For all the recovery and employment the Fed cites in its equality defense, these data tell a far different tale. Continue reading “It’s Worse Than You Thought”