G-20 Leaders Meet and Decide...Nothing Important

            This week, the G-20 Leaders met in Pittsburgh to discuss the economic crisis for the third time in a year. Unfortunately, it was more of a symbolic meeting than an actual solution.

            For those who don’t know, the G-20 is a group of leaders from 20 countries around the world who get together to discuss economic policies. These 20 countries comprise a huge portion of the world’s economy and population, so the G-20’s discussions and decisions have a big impact.

            At their most recent meeting, Yahoo! News reports that they made several big decisions. The first was to keep stimulus plans, such as the one currently being carried out in the United States, in place. They decided to hold each other to a peer review process concerning their economic decisions, which is supposed to make sure that each member is doing what is right for everyone. They also decided to enforce stricter financial regulation, remove protectionist policies, and combat global warming economically.

            While all of these ideas sound nice, the G-20 didn’t seem to think it was necessary to come up with actual policies or ways to regulate these decisions. For example, there is no actual requirement for participation in the peer review process. Even more irritating is the call for anti-protectionism, when the U.S. and China have both recently enacted protectionist policies against each other. Just last week, the United States placed a 35% tariff on Chinese car tires, and the Chinese government responded by placing a tariff on American chicken. It was a dumb move by both parties, since tariffs have been proven to do nothing except raise prices and make people angry at each other.

            It’s nice that the G-20 decided to meet and make important decisions that would affect the world economy in a positive way. I think people would be a little bit more pleased if these leaders took the extra time to figure out how they were going to make these changes. The world economy is suffering a huge loss that needs immediate fixing. Now isn’t the time to take a break or make indefinite plans.

Obama Opposes Wall Street Wage Constraints

            In case you’ve been living under a rock for the past year, there’s been a financial crisis! The crisis has become the talk of the nation, and now that Obama’s put his plans to fix it in motion, it’s a more popular topic than ever.

            Recently, he’s announced that there will be no second stimulus package. Good news, since we can’t afford it. Also, many economists think the first stimulus package may have come too late to fix the major economic downturn, so a later stimulus package would have the same effect as throwing billions of dollars in the garbage. It’s scary to think that the U.S. may just have to wait this out, but it’s a definite possibility.

            Also, as reported by Bloomberg, he is opposed to policies that would constrain the salaries of financial industry executives, “even in the face of public outrage over some of the multimillion-dollar bonuses and salaries Wall Street companies are still handing out.” As Obama puts it, “Why is it that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or NFL football players?” Of course, there are more important principles behind it, but he’s got a good point.

            Wages really aren’t the problem. Paying financial executives less may make Americans feel better, but it wouldn’t positively affect their behavior. In fact, constraining wages could make financial executives engage in more dangerous, secretive behavior. It’s simple economics. Creating a wage ceiling creates a shortage of labor in the financial industry, which leads to a black market for financial services. A “black market” in the financial sector would probably appear as low reported profits to the government and behind-the-scenes, unregulated behavior.

            Obama has said that he would prefer creating a major regulatory agency to examine the behavior of financial firms more closely. This clearly benefits the U.S. consumer far more than wage regulation. It’s easy for the average American to get pissed off about the financial industry’s outrageous actions and compensation. After all that’s happened, firms really should show some restraint with their salaries and bonuses. But really, it’s America. It’s all about profit, and that’s not necessarily a bad thing.

I Heart Paul Krugman

            America’s new favorite topic: economics. To most Americans, it’s a matter of opinion and ideology. To those who’ve studied it, it’s a matter of mathematics, models, and, well…opinion and ideology.

Economists love to interpret models to fit with their own political leanings. Conservative economists claim that government spending is evil and tax cuts are the route to utopia. When speaking to us lowly Americans, they state that their ideas are based on models, and are therefore absolute. There's no arguing with them, because they know better than everyone else. While economic models support some conservative ideas, many economists seem to forget that models don’t accurately predict everything in the real world. They’re just models. They can show trends, they can try and reason things out, but in the end, things just happen.

            Nobody has helped me understand this more than my absolute favorite economist, Paul Krugman.

            Paul Krugman is the man.

            He’s a prize-winning economist, Princeton professor, and author/editor of 20 books and over 200 papers. But then again, many economists have similar credentials, and who really cares? It’s all about how they reach people. Krugman does this better than the average economist. He takes the usually boring subject of economics, which is complex enough to be beyond the understanding of the average American, and makes it understandable. He puts it in the hands of people who would otherwise be uninformed. He is a greatly influential public intellectual.

            Some would say that’s uncommon. Stephen Mack posted on his blog an essay titled “The ‘Decline’ of Public Intellectuals?” It quoted John Donatich in asking how American intellectual work reconciles itself with “the venerable tradition of American anti-intellectualism.” Donatich wonders how our culture, filled with people convinced that they can self-govern (a crazy idea), responds to the experts who try and reason with them.

Well, in Krugman’s case, we respect them and ask for their opinion. Krugman doesn’t separate himself from the average man or woman. He doesn’t brag about his education or his accomplishments. He writes because he wants to express his opinion, and he writes the way he does because he wants people to listen. There’s no difficult-to-understand language, and no holier-than-thou attitude. He is a public intellectual, and the American public definitely doesn’t ignore him.

            Krugman is featured as a columnist for the New York Times, and has a blog on the New York Times website titled “The Conscience of a Liberal.” He makes daily posts outlining the current economic situation, and discusses political issues from an economic perspective. His blog speaks to the average citizen about important issues, is a useful tool for those who are seriously interested in economics and want to learn more, and is a way for him to engage in discourse in his field. In no way does his blog discredit him among fellow economists, or cheapen his ideas to others in his field.

           Paul Krugman shows that intellectuals can speak in a meaningful way to both average people and fellow intellectuals. If certain public intellectuals think that nobody’s listening, they need to reevaluate the way they do what they do. People listen when they hear something of worth, and that’s what Krugman’s ideas are. He is a liberal, and he uses economics in his arguments. However, Krugman uses economic models in a useful way, rather than considering economic principles exact and basing all his opinions on them. That’s why readers (including myself) keep reading.