Decoding 'Natural' Rate of Unemployment
Neil Shah. September 7, 2012.
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Neil Shah wrote this article which briefly covers the topics of unemployment and the natural unemployment rate. The way our economy has been on a downward slope has led to the need to write about the natural unemployment rate. There are more and more people losing their jobs. Not only do they lose their jobs, but the longer that they are out of the job market, the more uninterested future employees are at hiring them, thus putting them out for a long period of time. The article focuses on how the natural rate was 5%, but has increased more recently. It tries to determine what the underlying cause of the increase is. The natural rate is healthy because it leaves room for the ebb and flow of the economy. However, increasing this natural rate only means that there are more people than should be out of work. Neil Shah believes that the reason for the higher rate of unemployment is due to a weak demand for workers. The main issue with the higher unemployment rate is that the higher it gets, the Federal Reserves would like to join in an effort to help the economy, but by doing so it leaves a risk for a higher inflation.
Shah believes that instead of raising the natural rate of unemployment that we need to figure out where normal unemployment ends and find where irregular unemployment begins. He says this because due to unemployment insurance, some people are staying unemployed longer than they should and then it starts to mess with the figures of the natural rate. This therefore would be the unintended consequence. Too much unemployment will only bring the economy down further, and then when the Feds try to step in they will raise inflation which in turn will continue to hurt the economy.
It's Still Possible to Cut Spending: Here's How; The obvious place to begin is the repeal of ObamaCare. We also need to empower the states, streamline the federal government and modernize Medicare and Social Security. Glenn Hubbard. November 23, 2011.
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FEDERAL GOVERNMENT SPENDING
Glenn Hubbard wrote this article because he realized the need for cuts in the federal government spending. When this article was written, Obama was working hard to enforce his ObamaCare. Hubbard points out that Social Security, Medicare, taxes, and scientific research have been a huge factor in the spending of the government.
Hubbard in short reveals that government spending needs to be cut. Obama’s answer is higher taxes, but as we all know, that will never work. If we were to raise taxes, over the next 25 years, taxes would have to increase by 60%. Instead, Hubbard suggests a few areas that could be cut back. His first area is ObamaCare. He believes that it needs to be repealed and one reason is because it is costing so much to fund. He also suggests that rather than have a “one size fits all” policy across the board that each state should determine things on their own terms.
As it is right now, federal government spending is a full 25% of the GDP. The healthier number would be around 20%. The only way to cut it back towards the 20% mark would be to cut spending on social security, Medicaid, and ObamaCare.
One of the consequences associated with this subject is debt. It is not new news that our country is currently drowning in debt. If our federal government does not cut back on its spending, it is only going to put us in more debt. Also, it is not setting a good example for spending money. The answer to debt is not to pay it off by borrowing more money, yet this seems to be happening. Hubbard knows this and wrote this article as a way to let America know.
Treasury Needs a Better Long Game; Today's low interest rates are a rare opportunity to buy time for a fiscal housecleaning. John Cochrane....
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