Unemployment and Labour Force Participation in the US – Reliable Statistics?

The unemployment rate in the United States is currently 4.4 percent and is at a ten-year low. Naturally, the Trump administration has been trying to interpret low unemployment numbers as a sign of their successful job-creating policy. This stands in strong contrast to comments that Trump made during his election campaign, alleging that the “real unemployment rate” was as high as 42 percent. But pre-inauguration Trump is not the only one who is concerned that the official unemployment rate does not fully capture the gap between the US economy’s current state and its full potential, often refered to as “slack”. Despite low unemployment numbers and a still very low interest rate, inflation has been timid, giving rise to theories that the slack in the US economy is higher than the unemployment rate might suggest. I take a brief look at falling labour force participation rates and underemployment to investigate the amount of truth in these theories and discuss implications and some potential remedies. Continue reading “Unemployment and Labour Force Participation in the US – Reliable Statistics?”

The Crisis of Social Liberalism – And Why We Need More of It

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This article reflects my personal opinion.

On Friday was the inauguration of the new US president, Donald Trump. His speech, invoking a homogenous movement of the people, bore testimony to the threat that his presidency will constitute to a liberal society. He is the spearhead of a multifaceted right-wing movement that is on the rise in most Western countries. Many narratives have been conceived to explain this uprising. One states that modern social media tend to promote fake news and right populist explanations for complex problems. Others include rising nationalist sentiments and aggravating economic inequality. However, while all of these narratives have a true core, what unites all of these new political movements is their promise of change, their promise of overthrowing the existing order. The condemnation of “the liberals” and “the elites” has been commonly looked down on as only appealing to the bigots, the ill-educated, the “deplorables”. What is often ignored are the real inconsistencies and weaknesses of the established system and the fact that in many countries, there is no real political alternative addressing these issues. Make no mistake, most movements representing the “New Right” exhibit an appalling lack of cogent concepts, many disgustingly coquet with racism and use the calculated breach of taboo as their main means of advertisement and all of them have a distasteful style. But their political attacks can only be as rewarding as the systems they are aimed at are frail. Unfortunately, modern Western societies, frequently characterised by the term “Social Liberalism”, are neither very social nor exceptionally liberal. Continue reading “The Crisis of Social Liberalism – And Why We Need More of It”

Inflation, Growth and Monetary Policy – A Case Study of the United States

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Central bank target rates (%); data sources: FRED, ECB, Bank of England

Ever since the Great Recession, central bank rates in all major developed economies have been on historic lows. The European Central Bank (ECB), whose official sole mandate is to maintain price stability, has lowered its rate even further to 0.00 percent in March in response to consistently low inflation rates across the Euro area, and the Bank of England (BoE), whose mandate combines maintaining price stability and supporting economic growth, has lowered its rate down to 0.25 percent in August, in response to the Brexit decision. Meanwhile, the Federal Reserve of the United States (Fed), whose objectives are maximum employment and stable prices, has increased its target rate to 0.375 percent in December for the first time in several years. However, at its most recent meeting in mid-September , the Fed has been reluctant to further increase its target rate due to an ongoing slow economic recovery and inflation rates below its 2-percent target (Inflation measures the yearly increase in consumption good prices). Consistently low inflation rates despite lengthy phases of expansionary monetary policy, even in countries that appear to be back on economic growth paths, are a concern for central bankers around the globe and puzzle many observers. In this article, I take a look at the case of the United States (simply because it provides by far the best data), derive the main two possible causes and argue in favour of a rate hike in combination with additional monetary and fiscal measures. Continue reading “Inflation, Growth and Monetary Policy – A Case Study of the United States”

The 2016 US Presidential Election and the Military Industrial Complex

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This article reflects my personal opinion.

With the first presidential debate on Monday, the 2016 race to the White House has entered its final phase after what has already been an extraordinary shrill and eventful election year. Many observers are puzzled by the fact that a blunt, populist ex-reality star faces a realistic chance to become the most powerful man in the world. They do not understand it for the same reason they have not understood Brexit. And while every US American voter with a shred of rationality left should suck it up and vote for four more years of the same in Hillary Clinton over a narcissistic madman spreading nothing but hate and dangerous half-truths,  there is one issue that most likely will not change and those who have to bear it have no say in the matter anyway, as they do not live in the United States. Regardless of whether the next commander-in-chief will be called Clinton or Trump, the US will continue to forcefully protect their interests by means of the world’s dominant military force and intelligence network and the support of shady allies around the globe. Even if the candidates wanted to, they would not have the power to stop the military industrial complex that has taken on a life of its own. Continue reading “The 2016 US Presidential Election and the Military Industrial Complex”

No Farewell to Arms: The Violence Will Continue

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This article reflects my personal opinion.

The recent events in Dallas, Minnesota and Louisiana and all the other places, where gun violence tears the American society apart on a regular basis, were likely caused by three issues. First, by a racial problem that the United States never managed to fully overcome and that once again shifted into the focus of media attention. Second, by growing inequality that increasingly disfigures the American dream. And third, the shootings fundamentally are symptoms of a problem that is rooted in the American identity, namely that the history of the United States has been to a large extent a narrative of violence, both regarding foreign affairs as well as internally. None of these issues and developments have been conclusively come to terms with by the American public and as long as this will not happen, the spiral of violence will keep on spinning. And only a miracle would allow this year’s presidential election to be the trigger for this desperately needed redefining of the American identity. Continue reading “No Farewell to Arms: The Violence Will Continue”