Preaching to the choir? Beyond the People’s Climate March — Christopher Knittel

MIT Sloan Prof. Christopher Knittel

From WBUR Cognoscenti

Huge crowds recently descended on New York City to demand action on climate change. While it was an important event, I’m not sure what the march accomplished, beyond calling more attention to this critical issue. But there is a way to harness this kind of people power in a way that can have a real impact: Organize a string of high-profile marches and other activities right in the congressional districts of politicians who continue to deny undeniable science.

True political change doesn’t necessarily happen by marching in front of world leaders and others who already largely agree with you. But there can be a real impact if some of these same marchers would be willing to demonstrate in less friendly political territory to directly take on some powerful people who stand in the way of meaningful efforts to combat climate change.

Take, for example, the U. S. House of Representatives Committee on Science, Space and Technology. Shockingly, some members of the panel bearing that prestigious title are among Washington’s biggest science deniers. Jon Stewart recently pilloriedsome of those congressmen on The Daily Show, including Larry Bucshon, Steve Stockman and Dana Rohrabacher.

Read the full post at WBUR Cognoscenti. 

Christopher Knittel is the William Barton Rogers Professor of Energy and a Professor of Applied Economics at the MIT Sloan School of Management.

The importance of being boring — Simon Johnson

MIT Sloan Prof. Simon Johnson

From Business Day

The International Monetary Fund is an immensely useful organization, able to deliver substantial amounts of financial and technical assistance at short notice to almost any place in the world. It also has the great advantage of almost always being perceived as incredibly boring.

Unfortunately for the IMF, it now needs a slightly higher public profile to convince the US Congress to agree to some important reforms. The Ukrainian crisis may prove helpful, though that appears less likely now – which may be a good thing to the extent that one unintended consequence could be a loan to Ukraine that is larger than it really needs.

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Dropping the Ball on Financial Regulation — Simon Johnson

 

MIT Sloan Prof. Simon Johnson

From the New York Times

With regard to financial reform, the outcome of the November election seems straightforward. At the presidential level, the too-big-to-fail banks bet heavily on Mitt Romney and lost; President Obama received relatively few contributions from the financial sector, in contrast to 2008. In Senate races, Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio demonstrated that it was possible to win not just without Wall Street money but against Wall Street money. Read More »

Antoinette Schoar: The case for unwinding Fannie and Freddie

MIT Sloan Prof. Antoinette Schoar

From CBS News

Today Fannie Mae and Freddie Mac–two government-sponsored enterprises originally designed to increase the availability of loans and thereby raise levels of home ownership–dominate the US mortgage lending market. Fannie Mae, which was established in 1938 as part of Franklin Delano Roosevelt’s New Deal, provides local banks with federal money to finance home mortgages. Freddie Mac, created in 1970, underwrites mortgages that fall below a certain size threshold with the intention of helping homeowners get access the housing market. These mortgages are cheaper since they implicitly–and after 2008 explicitly–benefited from a government guarantee.

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Defaulting to big government—the unintended consequences of not raising the debt ceiling

MIT Sloan Prof. Simon Johnson

From CNN World

Leading United States congressmen are determined to provoke a showdown with the Obama administration over the federal government’s debt ceiling. Ordinarily, you might expect House Republicans to blink at this stage of the negotiations, but there is a hardline minority that actually appears to think that defaulting on government debt would not be a bad thing.

These representatives – with whom I’ve interacted at three congressional hearings recently – are convinced that the US federal government is too big relative to the economy, and that drastic measures are needed to bring it under control. Depending on your assessment of “Tea Party” strength on Capitol Hill, at least a partial debt default does not seem as implausible as it did in the past – and recent warnings from ratings agencies reflect this heightened risk.

But the consequences of any default would, ironically, actually increase the size of government relative to the US economy – the very outcome that Republican intransigents claim to be trying to avoid.

See the full post at Global Public Square

Simon Johnson, a professor of global economics and management at MIT Sloan, is the former chief economist at the International Monetary Fund and co-author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown