Posts Tagged ‘Martin Feldstein’

an alternative to Obamacare

Sunday, November 3rd, 2013

Harvard economist Martin Feldstein dislikes the design of Obamacare, and fears that its failure “could lead to renewed political pressure from the left for a European-style single-payer health-care system”. To his credit, he acknowledges that the current system is also fatally flawed. It is very expensive, and leaves 15% of the population without public or private health insurance.

Feldstein has a better idea. He would like government to

eliminate the current enormously expensive tax subsidy for employer-financed insurance and use the revenue savings to subsidize everyone to buy comprehensive private insurance policies with income-related copayments. That restructuring of insurance would simultaneously protect individuals, increase labor mobility, and help to control health-care costs.

Martin Feldstein, “Obamacare

Mitt Romney, tax reformer?

Monday, September 3rd, 2012

Columbia University economist Joe Stiglitz dares Mitt Romney to seize the moment, to reform the income tax code of the federal government of the United States, to make it more equitable.

There is an old adage that a fish rots from the head. If presidents and those around them do not pay their fair share of taxes, how can we expect that anyone else will? ….

The billionaire investor Warren Buffett argues that he should pay only the taxes that he must, but that there is something fundamentally wrong with a system that taxes his income at a lower rate than his secretary is required to pay. He is right. Romney might be forgiven were he to take a similar position. Indeed, it might be a Nixon-in-China moment: a wealthy politician at the pinnacle of power advocating higher taxes for the rich could change the course of history.

Joseph E. Stiglitz, “Mitt Romney

the falling euro

Wednesday, July 25th, 2012

In the past year, the euro has fallen from US$1.44 to less than US$1.21. Harvard economist Martin Feldstein would like to see it fall further, to near parity with the US dollar. The euro would still be above its historic low of 84 US cents, and depreciation would provide a much needed boost for Spain and other troubled eurozone economies. I agree.

A lower value of the euro would reduce the prices of eurozone exports and raise the cost of imports, reducing or eliminating the current account deficits of the peripheral European countries, since about half of their trade is with countries outside the eurozone. The weaker euro would also boost Germany

the euro dream

Sunday, May 27th, 2012

Harvard economist Martin Feldstein reminds us that the euro was a French project from the beginning. Germany opposed creation of the euro, but was persuaded to join the monetary union in exchange for French support of German reunification.

Establishing the EEC [European Economic Community] had favorable economic effects, but, like the North American Free Trade Area, it did not reduce national identification or create a sense of political unity.

That was the purpose of the 1992 Maastricht Treaty, which established the European Union. The influential report

what is “universal pension”?

Friday, April 13th, 2012

Definitions matter. I have been giving considerable thought lately to the confusion surrounding use of the term “universal pension”. This concern surfaced again when I read a paper by Manchester economist Armando Barrientos that draws on work by Harvard economist Martin Feldstein. Barrientos writes

Feldstein (1987: 468

Feldstein on complaints of the French

Sunday, January 1st, 2012

I am not a great fan of Harvard economist Martin Feldstein, but enjoyed his recent holiday column. In it, Feldstein chastises the French for reacting to a possible credit rating downgrade by “lashing out at Britain”, a country which, unlike France, does not fear a rating downgrade.

French officials apparently don

Martin Feldstein on the euro

Wednesday, November 30th, 2011

I rarely agree with Harvard economist Martin Feldstein, but his writings always make me think. His latest Project Syndicate column is no exception. The essay is not original, but it is didactic, and for this reason useful. Feldstein explains in clear language why some countries who adopted the euro are in difficulty, although he stops short of offering them advice on how to get out of the mess they find themselves in.

Feldstein argues that a common currency works well in the United States, but not in Europe, because of three characteristics of the American union. First, US labour is very mobile across state borders. Unemployed Americans move easily from states with high unemployment to states where jobs are plentiful. Second, the US has a centralized fiscal system, with automatic transfers to states in recession: “… each dollar of GDP decline in a state like Massachusetts or Ohio triggers changes in taxes and transfers that offset about 40 cents of that drop, providing a substantial fiscal stimulus”. Third, US states are required by law to balance their budgets. “Even a state like California, seen by many as a poster child for fiscal profligacy, now has an annual budget deficit of just 1% of its GDP and a general obligation debt of just 4% of GDP.”

None of these features of the US economy would develop in Europe even if the eurozone evolved into a more explicitly political union. ….

The most likely effect of strengthening political union in the eurozone would be to give Germany the power to control the other members

Scott Sumner on Martin Feldstein on mortgage debt

Monday, October 17th, 2011

During the Great Depression prices fell by about 25%.

the US jobs crisis

Tuesday, July 26th, 2011

Harvard economist Martin Feldstein thinks that the crisis the US faces is a shortage of jobs, not the national debt.

The US unemployment rate reached 9.2 per cent in June, … double the 4.6 per cent rate in 2007 just before the recession began. ….

Labour market conditions are even worse than the unemployment rate implies. … [A]bout 3m Americans who would like to work but cannot find jobs are not officially counted as unemployed because they have not looked for work in the past month. And there are another 9m employees who would like to work full-time but are only able to get part-time work. Add together all of this and we find 29m Americans who cannot find the full-time work they want, a number equal to almost 20 per cent of the labour force.

The high unemployment reflects the lack of demand rather than any fundamental problems with the US labour market. ….

Since the central bank had not caused the downturn by raising interest rates, it could not cure the downturn by lowering rates. It focused successfully on fixing the credit markets but that was not enough to turn the economy around.

The policies of the Obama administration did not reverse the large initial fall in demand …. Although the

the weak US economy

Wednesday, June 29th, 2011

Harvard economist Martin Feldstein is worried about weak consumer demand in the US economy.

The American economy has recently slowed dramatically, and the probability of another economic downturn increases with each new round of data. ….

Businesses have responded negatively to the weakness of household demand, with indices maintained by the Institute of Supply Management falling for both manufacturing and service firms. ….

Monetary and fiscal policies cannot be expected to turn this situation around. The US Federal Reserve will maintain its policy of keeping the overnight interest rate at near zero; but, given a fear of asset-price bubbles, it will not reverse its decision to end its policy of buying Treasury bonds