Thomas Kochan: U.S. Companies Versus the U.S. Economy

MIT Sloan Prof. Thomas Kochan

From Harvard Business Review

It’s obvious to anyone paying attention that the United States needs well-educated, technically skilled workers if it’s to remain competitive in the global marketplace. Just as obvious: We need a robust middle class with adequate disposable income and a sense that our economic system is working in a reasonably fair way. Yet business leaders and policy makers behave as if they don’t believe either of those things: Read More »

Kristin Forbes: Economists must bridge disciplines to find answers to financial crises

MIT Sloan Prof. Kristin Forbes

In 2009 when my colleagues at the National Bureau of Economic Research and I began planning a conference for a project we’re running on the global financial crisis, we were concerned that the material would no longer be timely when the symposium actually occurred. We needn’t have worried.

I’ve just returned from Washington, DC, where our symposium was held, and again financial crises were the topic of the day. Three years after cracks in the subprime mortgage market erupted into the most severe and synchronized global financial crisis and recession since the Great Depression, the world economy is once more in dangerous territory. What began as a singular sovereign debt problem in Greece has spread to the rest of Europe, and now threatens to become a second act to the first financial crisis. How did we get here? And how can we keep it from happening again?

Read More »

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