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The Ledger 02/14/14

The Ledger 02/14/14

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A weekly snapshot of news, views, and economic cues from AEI's Economic Policy team
A weekly snapshot of news, views, and economic cues from AEI's Economic Policy team

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Categories:Types, Brochures
Published by: American Enterprise Institute on Feb 14, 2014
Copyright:Attribution Non-commercial


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Subject: Debt limit deal, cost of an iPhone, and the Dalai Lama visits AEI If you have trouble reading this message, click here to view it as a web page. 
Economic benefits of a clean” debt limit deal. 
 Aparna Mathur : “Evidence suggests that the costs of protracted negotiations and the shutdown, as well as the economic uncertainty surrounding these talks are extremely high, and likely outweigh any benefits that might come out of such deals. Because of these costs, and even though long-term solutions are certainly warranted to reduce spending and debt levels, the debt ceiling hike should not be used as a threat point to force policy reforms.”
 A shrinking labor force
Why Obamacare is bad for growth. 
Stan Veuger: “The president and his acolytes in media and academia [have] pivoted to leisure. Why? The CBO now projects that the Affordable Care Act will reduce employment by the equivalent of 2.5 million jobs over the next decade. In an economy that over the past few years has seen millions of jobs disappearing, and millions of workers leave the labor force, that is economically harmful and politically poisonous news, requiring the development of new spin.”
Challenges facing Yellen
 Financial regulation and low-income Americans. 
 Abby McCloskey: “Since the passage of the Dodd-Frank Act and other related financial reforms such as the CARD Act, prices of basic financial products and services have increased, consumer choice has been restricted, and millions of low-income consumers have been priced out of the market or forced to turn to alternative financial products. There may be several reasons for these trends, but the cost of regulation appears to be a significant factor.”
The Fed ignores emerging markets at its peril. 
Desmond Lachman: “At a time of increased emerging market turbulence, the Fed seems to be blithely oblivious to the risks that those developments might pose to the U.S. economy. Indeed, in last week’s FOMC policy statement, there was not as much as a mention of the emerging market currency crisis. There was no mention despite the many reasons to believe that troubles in the increasingly important emerging market economies could have a significant bearing on the U.S. economy.”
The trouble with myRA retirement accounts is the Fed. 
 Alex Pollock: “The small retirement savings accounts or ‘MyRAs’ announced in President Obama’s State of the Union address are a tax-advantaged variation on the old, established theme of using government debt for small long-term individual savings: think of venerable US Savings Bonds. Leaving aside the political question of autocratic executive behavior, the big financial problem with this idea is that, under current conditions, they offer a zero to negative real interest rate to the people trying to save— they won’t be making any progress at all, or indeed losing ground, when inflation is taken into account.”
 Around the world
Presidential leadership needed on trade. 
Claude Barfield: “Failure of the US to continue to lead in a successful conclusion of the TPP will likely destroy the possibility of a broader US-led and anchored Trans-Pacific regional economic structure. In its place, the Chinese are already assiduously pushing for a narrower intra-East Asian architecture that does not include the US.  And well beyond the economic consequences, future US diplomatic and security leadership and alliances in Asia will be severely jeopardized as US regional allies come to doubt our ability to overcome local forces in order to pursue vital national interests.”
Keep watching Greece. 
Desmond Lachman: “European policy-makers are right in thinking that Europe is in a much better position now to weather another major Greek crisis than it was in 2010. However, risks of contagion to the rest of the periphery would remain. Any hint that Greece might again consider leaving the euro would have major reverberations.”
Indian business leaders face good conditions. 
 Aparna Mathur: “Only 10 percent of entrepreneurs reported that business conditions in their state were poor. The majority, 72 percent, reported that they were good. However, when questioned more specifically about factors like infrastructure, corruption and taxes, a familiar story emerged.”
Questions and Answers
What would an iPhone have cost in 1991? 
Bret Swanson: “Today’s iPhones have the same capabilities (and more!) than 13 distinct electronics gadgets, worth more than $3,000, found in a 1991 Radio Shack ad. . . . To see why, let’s do a very rough, back-of-the-envelope estimate of what an iPhone would have cost in 1991. In 1991, a gigabyte of hard disk storage cost around $10,000, perhaps a touch less. (Today, it costs around four cents ($0.04).) Back in 1991, a gigabyte of
flash memory
, which is what the iPhone uses, would have cost something like $45,000, or more. (Today, it’s around 55 cents ($0.55).)”
Read more from AEI’s Center for Internet, Communications, and Technology Policy at www.techpolicydaily.com 
Why are there so many potholes in America? 
Richard Geddes and Brad Wassink: “Americans already pay $67 billion in extra repairs due to poorly-maintained roads, and weather is partially to blame. But mostly it's Washington itself-where an outdated funding approach and political inaction ensure the continued deterioration of roads, bridges, and tunnels.”
What are Americans actually
concerned about? 
Jim Pethokoukis: “Forget about the 1 percent versus the 99 percent. It’s really more like the 0.000001 percent versus everybody else. A tiny group — mostly comprising the Obama White House, a bunch of Washington Democrats, progressive economists, and the media elite — continues to fixate on income inequality as  America’s greatest challenge. Most everybody else, the 99.999999 percent, sees things differently. Surveys continue to show Americans most worried about jobs and economic growth, not the income gap between the top and bottom.”
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