Thursday, May 30, 2013

Leading Economist Gives Up On Putin’s Russia

Sergei Guriev has left Russia. Guriev, the Dean of Moscow’s New School of Economics, is Russia’s most respected economist with a deserved international reputation for his publications on contract theory and political economy. The New Economic School, which he heads, is the leading school of economics in Russia and remarkably among the best in Europe. Its small MA and BA programs attract Russia’s best young minds, and its graduates teach in top economics departments in the United States and Europe and occupy leading positions in government and business.  The New Economic School has the beginnings of the Russian Harvard – a private institution in a sea of state universities that has made its own way through hard work, brilliance, and a superior educational program.

Sunday, May 26, 2013

‘Austerity’ To Blame? But Where’s The Austerity?

Die-hard Keynesians bemoan that, with a few exceptions, the world’s economies are drowning in the quicksand of austerity. They preach we need more government spending and stimulus, not less. Northern Europe should bail out its less-fortunate neighbors to the South so they can pay their teachers, public employees and continue generous transfers to the poor and unemployed. If not, Europe’s South will remain mired in recession. In America, Keynesians entreat the skinflint Republicans to loosen the purse strings so we can escape sub par growth. They advise Japan to spend itself out of permanent stagnation and welcome recent steps in this direction.

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Sunday, May 5, 2013

Why Obama Cannot Match Germany's Jobs Miracle

In 2002, Chancellor Gerhard Schroder appointed a jobs council headed by Volkswagen’s Peter Hartz to solve Germany’s high unemployment. In 2011, President Barack Obama similarly appointed a jobs commission headed by General Electric's Jeffrey Immelt to achieve the same goal.  (At the time, Schroeder headed the SPD, the equivalent of America’s Democratic Party.)

Germany’s labor market turned around in a dramatic fashion after Schroeder implemented the Hartz Commission’s sweeping reforms between 2002 and 2005. In contrast, Obama’s Immelt Council quietly disbanded without making substantive proposals, and America’s worst jobs recovery of the postwar period continued.

Obama cannot duplicate the German reforms. They reject his Keynesian belief that jobs are created by government stimulus.  Instead, the Hartz reforms rest on the common sense notion that people take jobs when work, rather than welfare, pays. Such an approach violates Obama’s core belief that government must make the lives of the unemployed as comfortable as possible. No, the Germans say. If the state gives too much, the unemployed will have no incentive to take jobs, even when they are available.

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