The Washington Post does well today with a nice plain-English look at a contemporary conundrum:
The U.S. government debt is rising inexorably, according to the conventional wisdom in Washington, and the political system is too paralyzed to take unpopular actions to rein it in. Privately, many policymakers take it as a given that the situation will change only when the nation faces a Greek-style fiscal crisis.
But apparently nobody told the people who lend the U.S. government money. On Friday, they were willing to hand over their cash to the Treasury for 10 years for 3.3 percent interest, a level so low it implies they consider the United States among the safest investments in the world. Collectively, those investors — think mutual funds, pension funds and foreign central banks — could lose hundreds of billions of dollars if they’re mistaken and the United States has a debt crisis.
The Post’s Neil Irwin does a good job of explaining the many elements of this apparent paradox, including the inside-the-Beltway view that “serious efforts at reducing the deficit will come only when a crisis moment, such as steeply higher borrowing rates, forces the issue,” and the fact that the European debt crisis has so far—and against expectations—”led to an influx of money into the United States, driving rates down further.”
So what are bond market investors thinking? They are looking around the world in search of a safe place to park cash, and the United States seems like the safest — or perhaps the least unsafe.
It’s a smart piece, and a good reminder of the value of noticing what’s going on, especially when it’s not what you’d expect.
—The Center for American Progress does the business press a favor, posting a new comparison of House and Senate versions of financial reform.
As the CAP piece points out, Rep. Barney Frank, who’s running the conference committee, wants to get it all sorted out this month, so now is the time to pay attention.
—Meanwhile, at ThinkProgress, Jamelle Bouie takes aim at Robert Samuelson’s recent column, in which he complains about the Obama administration’s attempt to revise the government’s definition of poverty, used to calculate the poverty rate.
Samuelson points out that, “Although many poor live hand-to-mouth, they’ve participated in rising living standards. In 2005, 91 percent had microwaves, 79 percent air conditioning and 48 percent cellphones.”
With microwaves, air conditioning and cell phones, it’s clear that poor people aren’t nearly as poor as we think they are! I mean, it’s not as if poverty is concentrated in the nation’s two warmest regions — the South and the West — where air conditioning is a necessity, and it’s not as if cell phones are a cheaper alternative to landlines, and critical to navigating the world of low-wage service jobs. I guess you could call microwaves luxuries, but even that’s ignoring the fact that [they] are for more likely to consume frozen and prepared foods that need microwaving.”
This isn’t an argument that’s going to go away any time soon. As Bruce Bartlett notes in a post that helpfully reviews the history of this wonky debate:
The official definition has been largely unchanged since the 1960s and a variety of experts on the left and the right have suggested improvements. The central problem, historically, is that all reforms proposed by conservatives would tend to lower the official poverty rate, while those proposed by liberals would tend to raise it. This has led to a long-term détente between both sides to maintain the status quo.
—The FT’s Gideon Rachman reviews the recent—and widening—debate over how we measure human well-being.
As Rachman writes, Nicolas Sarkozy, the French president, has sponsored a commission “to re-examine ideas of human well-being” and, last September, the Stiglitz report “questioned the idea that gross domestic product is an adequate measure of human well-being. It insisted that other aspects of life, such as health, education, family life and the environment, must also be given due weight.” The move for a new way of looking at things is gaining steam in Britain, too.
Rachman seems nearly persuaded by these “happy warriors,” and the notion that, “once a certain level of comfort has been attained, there is no connection between greater wealth and greater happiness.” Then the policy implications give him pause:
But while taking a more relaxed attitude towards the pursuit of wealth may make sense as a personal philosophy, it is an uncertain guide to public policy. It is relatively easy for the comfortable middle classes to play down the need for economic growth. But absolute poverty still exists, even in western societies, and adjusting to a stagnant national income can be a painful process, as many European countries may soon discover.
Where does he end up? Shopping:
I am also thinking of buying a 42-inch plasma television to watch this month’s World Cup. Doubtless my giant TV will not bring me lasting happiness or spiritual fulfilment. But I think I might buy it all the same.Holly Yeager is CJR's Peterson Fellow, covering fiscal and economic policy. She is based in Washington and reachable at firstname.lastname@example.org.