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我对这次的“速度练习”进行了小小的改革：五个速度练习我选择了五篇不同的文章，每篇文章截取了其中的一段来作为练习的内容。有时间、有兴趣的童鞋可以阅读所有内容，时间比较紧张的童鞋可以只阅读截取的部分~（我认为我截取的部分可以被单独阅读而不影响理解）
如果大家喜欢这种模式，那么我以后就会按照这种方式来发练习。大家有任何意见或者建议，欢迎直接跟帖告知或者直接发站内信给我~~
另外，这次我增加了“Further Reading”部分，topic是美国最近的热点话题——The Sequester。一共选择了七篇文章，有兴趣的童鞋也可以阅读一下~~
祝阅读愉快~
【SPEED】
【Article One】
Work-Family Guilt Is Wasted Energy
by Avivah Wittenberg-Cox
Most of the women I meet in the US are torn between familiar female twin guilts — not enough time with their kids, and not enough time for their work. Men are increasingly sharing in this guilt. Much of the Anglo-Saxon debate about "women in leadership" is framed as an issue of women's "choices." The implication is that women "choose" to gear down their careers in favor of work-life balance. This is nonsense. The reality for most women — indeed most parents — is that there is no choice. And a growing number of voices are now, thankfully, saying so.
There are three levels at play here, which are often unhelpfully confused with one another. I call them the three C's: countries, companies and couples. And there are some short-cut metrics at each level to evaluate how we're doing. The three are interdependent, but they each require specific actions and the involvement of different players.
【160 Words】
【Time One】
1. Countries — Public Policy. What is the public policy context in your country? Has it recognized, like Norway, China or France, that 21st century parents both work and that infrastructure, day care and tax systems ought to recognize this basic fact? Or has it, like the U.S., ignored the consequences of women's massive arrival into the labor force and framed the issue of dual incomes and childcare as a matter of individual "choice"?
The problem is, of course, that in many countries there is no real choice. As Stephanie Coontz wrote recently in the New York Times, "Today the main barriers to further progress toward gender equity no longer lie in people's personal attitudes and relationships. Instead, structural impediments prevent people from acting on their egalitarian values, forcing men and women into personal accommodations and rationalizations that do not reflect their preferences."
Given no way of conciliating work and parenthood, people feel like perpetual failures. They somehow can't live up to a rather normal human goal of being able to both earn a living and procreate, which is recast as some kind of ridiculously utopian myth of "having it all." Yet in other countries, policies have adapted more quickly to the consequences of women's massive educational and economic rise.
Key Metric: birth rates. Countries that facilitate and recognise the need for parents to work enjoy higher birth rates. Those that don't see their birth rates fall below replacement ratios and their populations shrink, as in Germany and Japan.
【248 Words】
【Left】
2. Companies — Corporate Culture & Policies. The national frame affects how business leaders perceive female ambition and motivation. In countries without policies that facilitate conciliation, managers overwhelmingly think that women "choose" family commitments over work. When companies in these countries seek to gender balance, they often over-focus on this analysis and ignore the bigger issue that underlies the challenge facing the private sector: That the dominant group in companies is men, and that this group sets the rules, the norms and the expectations for how leaders look and behave.
Anne-Marie Slaughter points to this issue of the still-unquestioned dominance of historical male norms in an Atlantic article. "Until we change the norm itself, learn to reshape our workplaces and our expectations around a different image of what normal is, those differences will still be penalized."
This is, I would argue, the problem with many current diversity approaches to gender. "Diversity and Inclusion" efforts focus on making the various "out" groups comfortable by organizing them (or allowing them to organize themselves) into affinity groups or employee resource groups. That way they can talk to each other and feel better. They are happy and feel cared for. And the "in" group feels happy too, as they are being nice and "inclusive" of the "out" folk.
The real issue is to develop the corporate leadership skills to manage a feminizing talent pool and a feminizing customer base. This requires managers who are fluent and familiar with the differences between genders and able to manage both. These skills are still scarce. And diversity training that focuses on 'self-awareness' and 'inclusion' isn't enough. This isn't about being nice, it's about being skilled. You need to learn something about the Chinese to work with them. And you need to learn something about women to be able to work effectively with them too.
Key Metric: the ratio of men and women (and nationalities) on the Executive Committee is the clearest indicator of a company's openness to 21st century realities. More than the much-publicized debates around boards, the executive team is the result of years of talent development. Today, most companies are still far from any level of balance at this level. (See our 2013 Global Gender Balance Scorecard.)
3. Couples — Personal Priorities. There is an irreconcilable conflict between the personal and professional in countries that have not built the infrastructure to manage the products of our unions: children. This is a peculiarly Anglo-Saxon and German omission. Coontz's article presents an embarrassing graphic showing that the US is the only developed country on the planet with no paid maternity leave, let alone more modern European innovations like parental leave for both parents. No wonder American parents are increasingly unhappy.
So why is this always framed as an issue of personal choice? For our species, having children is about as much of a choice as breathing is. Survival is more the issue. Most women in the U.S. don't have anything like what your average European woman would call a choice (without even getting started on whether men do — see my earlier post on Norway). Judith Warner starts her book on American motherhood, Perfect Madness, with the line, "I used to live in paradise and I didn't even know it." She was referring to the working woman's pleasure of having children in France.
Focusing the blame on women is so common it isn't even conscious. That's what Sheryl Sandberg does writing books telling women to "lean in." That's what companies do when they focus all their gender initiatives on "fix the women" programs (networks for women, conferences for women, training for women), reinforcing the idea that the reason there aren't more women in senior roles is because women aren't trying or wanting it enough.
This creates an enormous amount of individual guilt, something that is remarkably absent in countries and companies that have addressed the issues above. It causes conflict in couples who then need to battle it out over who does what at home and whose career takes precedence at work. Yet this is not a personal problem. It's a political, economic and social one.
It seems essential in 2013 to recognize the difference. When 60% of university graduates are women, does it make any sense to make the majority of the educated talent feel guilty about leveraging their skills in the economy? We need to stop blaming women and start designing policies to create more sustainable countries, companies and couples.
Key Metric: the divorce rate. If the divorce rate is too high in a country, it suggests there is still a lot of stress being put on individuals. It can also be too low, suggesting that women don't have a choice of leaving (the majority of divorces are initiated by women).
It would help all of us, men and women, to recognize the need for good policy design at each of these levels. The objective of every life is to work and love. That shouldn't be a cause for guilt. It should be our shared mandate for change
【840 Words】
【Article Two】
Your Credentials Are Holding You Back
by Daniel Gulati
"I can't leave now. I don't want to waste the 50 grand I paid for my master's degree."
Susan mulled over her second-year experience at a large consulting firm. She was hardly experiencing flow but didn't despise her job either. When I pressed further, she maintained a steely resolve: "Be damned if I'm going to quit the job I spent my entire school life trying to get, at the firm all of my classmates wanted to break into." Perennially caught between the dream of pursuing her true passions and the responsibility of generating a direct return on her education, she once again decides to grin and bear her current role.
In researching Passion & Purpose, I met many talented young professionals boasting unlimited potential but finding themselves handcuffed in low-impact, high-paying corporate jobs. The limiting factor? Credential overhang. Defined simply, it's the perverse way in which our university schooling limits our career options, rather than enhancing them. If you're skeptical, then in the words of JoJo, here's some numbers: 58% of Millennials now have college degrees (compared to 36% of Boomers), driving total student loan debt past $1 trillion. As unemployment continues to hover around 8% and average college salaries remain stagnant, the unfortunate economic reality begins to take shape. We're now literally unable to put our credentials to work.
Student debt is hardly a new phenomenon, but the negative impact of over-credentialing on our professional lives has never been greater. Here's why:
【252 Words】
【Time Two】
1. Rising debt cripples our career choices. Feel a slight pang of terror as you access your end-of-month loan balance? You're not alone. As college tuition continues to surge, more of us are forced to turn our careers into financial equations. One interviewee lamented: "I wouldn't have done an MBA if I knew about the economic baggage and what I'd need to earn after graduation." He may be disappointed but shouldn't be surprised. As it turns out, the number one career regret we face is taking a job for the money. Although external accreditation can open doors, the sheer cost of those same credentials are inhibiting the pursuit of individually meaningful careers.
2. We suffer from Rubber Stamp Syndrome. Today's university looks more like well-oiled corporation instead of a socially valuable academic institution, as we continue to demand degrees in droves. One business school professor actually quipped to his students, "You're not the customer, you're the product." As social affirmation theory predicts, we yearn for the external validation that degrees and certificates confer. But following the herd into school and funneling off into supposedly desirable companies afterwards can be a strategy that eventually leads to a profound sense of professional emptiness. Voice laced with regret, one individual said, "I feel like I've lived my whole life on guardrails." Remarked another: "I want to stop doing what I should be doing and start doing what I want to do."
【238 Words】
【Left】
3. We make career moves based on ever-increasing sunk costs. As any microeconomist will tell you, there is no surer path to bad outcomes than incorporating retrospective expenses that cannot be recovered into your decision making. But as the cost of accreditation rises, the temptation to "use" our degrees and certificates to land high-paying (but ultimately dissatisfying) jobs has never been greater. The more credentials you have, the worse the problem gets. One interviewee remarked, "I've done a bachelor's degree in accounting, a master's in accounting, and a certificate of public accounting. I can't just leave accounting." Another said, "I think of my degree firstly as a cash-generating device." By force fitting your past education into your current vocation, you're incorrectly counting sunk costs and might be closing doors to exciting professional paths as a result.
If any of these traps sound familiar, you can take two steps forward. First, eliminate your debt load. Huge student loan balances can cause suboptimal career decisions in the long run, so do everything you can to get out of the red as quickly as possible. Then, once you're above water, change your mind-set toward credentials. Instead of mindlessly following the well-worn path into the next prestigious program, see whether alternative forms of learning and experience, like online classes or internships, can get you to your goals. When individuals from even the most traditional backgrounds focus on mastery, rather than accumulated awards, they feel liberated. And when all's said and done, if you still see true value in a credential, then chase it. But let it broaden your professional life instead of bogging you down.
【271 words】
【Article Three】
【Time Three】
Use Doctrine to Pierce the Fog of Business
by Mark Bonchek and Chris Fussell
The "fog of war" describes the uncertainty faced by soldiers in the field of battle. In today's markets, business leaders face a similar challenge: how to pierce through the "the fog of business."
The traditional tools of management — strategy and planning — are no longer sufficient. Strategy and planning are like high beams on a car; they just bounce off the fog. Strategy doesn't give employees enough guidance to know how to take action, and plans are too rigid to adapt to changing circumstances. In rapidly changing environments, you need fog lights to get closer to the ground.
Business leaders recognize the importance of pushing decision-making down the organization and out to the front line. But delegation can lead to invisibility, inconsistency and even chaos. When driving, fog lights work best when there are lines on the road to follow. Similarly, leaders must create mechanisms that keep everyone aligned to the mission and coordinated in the field.
Doctrine is the military's mechanism for managing the fog of war, pushing decision-making closer to the ground while providing the lines to guide decision-making and action. Doctrine creates the common framework of understanding inside of which individuals can make rapid decisions that are right for their circumstances. We believe doctrine offers a powerful model for executives looking to pierce the fog of business and find new ways of exerting influence without centralized control.
【243 Words】
【Left】
NATO defines doctrine as "Fundamental principles by which the military forces guide their actions in support of objectives. It is authoritative but requires judgment in application." If strategy defines objectives, and plans prescribe behavior, then doctrine guides decisions.
Consider one example from U.S. Special Operations teams trying to get the most use out of their helicopters, assets with high demand and limited supply. One approach would be to centralize all of these decisions, but that would be too slow. Another would be to have a computer automate the process, but there would be no way to feed enough data into the system in real time. So Special Operations went with a third option ... let the human network figure it out and create solutions.
This network became the fog lights, pushing decision-making closer to the ground. But how to ensure the human network made the right decisions? What were the lines to paint on the road?
Military leadership created a common doctrine to frame the organization's understanding of how helicopters would and wouldn't be employed, their range, their maximum load capacity, their refueling requirements, etc. With these principles and shared understanding, the network could quickly coordinate across silos and create collaborative solutions.
One of the most powerful qualities of doctrine is its scalability. Like a Russian matryoshka doll, doctrine can be nested inside other doctrine. For example, the doctrine related to helicopters is nested inside doctrine related to the military's network-centric approach to warfighting. This higher-level doctrine has four core tenets:
? A robustly networked force improves information sharing;
? Information sharing enhances the quality of information and shared situational awareness;
? Shared situational awareness enables collaboration and self-synchronization, and enhances sustainability and speed of command; and
? These, in turn, dramatically increase mission effectiveness.
One can see how the distributed approach to managing helicopters flowed from this higher level doctrine, especially in how to achieve self-synchronization. Doctrine provided the many units spread around the battlefield with a shared framework in which they could operate. Units were free to move and take action within that framework. In turn, results were fed back to leaders, who evolved the doctrine to improve performance, enabling a true learning organization.
The media company TED would seem to have little in common with Special Forces units in Iraq. But in fact, TED's approach to scalable growth echoes the same doctrine-based approach.
Founded in 1984 by Richard Saul Wurman, TED became famous for its exclusive conferences and compelling talks. The world discovered TED when Chris Anderson posted videos of the talks online. But how to give more people the experience of TED events, not just the content? The solution was TEDx, which launched in 2008 to extend the TED mission of "ideas worth spreading." In only a few years, TEDx has grown to 1,300 events in 134 countries with only a handful of employees.
What most people don't know is that TED has no direct control over TEDx events. Instead, TED authorizes and empowers local organizers to create TED-like events in their own communities. How does TED ensure consistency instead of chaos? With what amounts to doctrine.
On its web site, TED publishes clear guidelines for organizers on how to run a TEDx event:
1. RULES, e.g. "Your event must maintain the spirit of TED itself: multidisciplinary, focused on the power of ideas to change attitudes, lives and ultimately, the world."
2. RESPONSIBILITIES, e.g. "Early on, you'll need to decide who your event is for: Work colleagues? Friends? Kids? This decision will help guide all the decisions that follow."
3. RESOURCES: Best practices from the community on designing, promoting, and sponsoring TEDx events
These guidelines are consistent with the definition of doctrine: "Fundamental principles by which [TEDx organizers] guide their actions in support of objectives." These principles are "authoritative but require judgment in application." As another sign of the doctrine-based approach, TED recently had a problem with some of the TEDx events. Rather than step in to micromanage, they clarified and reinforced the doctrine.
How can you apply doctrine to your company?
1. See where you might already have some elements of doctrine. Do you have principles that guide decision-making throughout the organization? Sometimes these are informal precepts that are passed along as part of the culture. Other times they get codified, as Reed Hastings did for Netflix.
2. Identify areas conducive to doctrine-based approaches. It might be where the front line is calling for more authority, but where you are afraid to give up control. Or where centralized operations can't keep up with the amount of information or the variety of local conditions (as in the case of the helicopters.)
3. Involve your broader team in creating the doctrine. When the military rewrote its doctrine on counter-insurgency, it brought together a cross-functional team of soldiers, civilians, experts and leaders while gathering feedback from hundreds of front-line personnel. When IBM rewrote its values, it engaged 50,000 employees around the world.
4. When developing doctrine, focus on principles not policies. Don't be too specific in telling people what to do, but also not so broad that it doesn't help them make the right decision. What information do you need from them, and what information do they need from you, in order to create rapid, independent, and effective action?
One way to put these steps into practice is to convene a "Constitutional Convention."
After all, a constitution is essentially doctrine for democracy, providing the enduring principles by which to govern a nation. The Agile software movement started with such a gathering.
Ultimately, good doctrine becomes embedded in the culture. Touring a command post in Baghdad, a general came across this sign: "In the absence of guidance or orders, determine what they should have been and execute aggressively." Good doctrine provides the empowerment, autonomy, and direction to make this not only possible, but effective. For business leaders operating in fast-moving and uncertain environments, doctrine dispels the fog of business.
【990 Words】
【Article Four】
The Economic Closet: The Business Case for Gay Marriage
Posted by Amy Davidson
Three hundred sixty-three thousand and fifty-three dollars was the amount that Edith Windsor was assessed in federal estate taxes when her wife, Thea Spyer, died in 2009. Zero dollars, everyone agrees, would have been the amount she owed if the federal government had recognized their marriage, as the state of New York already did. There are other numbers that are more relevant to their story—like forty-four, the number of years they spent with each other; or twenty-two, the share of those years during which Spyer lived with a diagnosis of multiple sclerosis, the disease that eventually killed her—and that Windsor gave up her own job to nurse her through. There were the numbers Windsor worked while getting a graduate degree in mathematics in the nineteen-fifties, and those in the early computer codes that she wrote for the Atomic Energy Commission’s UNIVAC and at I.B.M., where she was, at the time, one of very few women programmers. But the difference between zero and three hundred sixty-three thousand and fifty-three is what gives Windsor standing to bring a case challenging the Defense of Marriage Act. The Supreme Court will hear her case on March 27th, and, the day before, it will hear another one challenging Proposition 8, California’s ban on same-sex marriage.
How much does money matter when thinking about same-sex marriage, or about marriage at all? The essence of the debate—and certainly its emotional heart—lies with words like family and respect, honor and honesty, and, above all, love. But those words, and even more so others—security, protection, sickness and health, home and career—are not divorced from finances. This is particularly true when any one of them is used in the same sentence as “children.” Another number to add to the equation: eleven hundred and thirty-eight, which is the number of federal laws that rely on a definition of marriage. Many more of them are about money, in one way or the other, than about love. Nor is the concern simply that of the family involved: companies have an interest, too, as does the larger business world, in not having families live in what might be called an economic closet.
That there is a business case for marriage equality was confirmed this week with the news that at least sixty major corporations will file an amicus curiae brief in support of overturning Prop. 8—a move, depending on how the Court writes the decision, that could establish a right to same-sex marriage not only in California but in the country as a whole. (Some leading Republicans are also submitting a brief.) More may sign on before the filing deadline on Thursday. The companies range from Apple to Xerox, with everyone from Levi Strauss, Cisco, Morgan Stanley, Nike, and Panasonic in between. Fortune got a draft of the brief, which reads in part
By singling out a group for less favorable treatment, Proposition 8 impedes businesses from achieving the market’s ideal of efficient operations—particularly in recruiting, hiring, and retaining talented people who are in the best position to operate at their highest capacity. Amici are competing domestically and internationally with companies inside and outside the United States in places where all couples, regardless of whether they are of the same sex, are afforded equal access to marriage.
【564 Words】
【Time Four】
If one believes that protecting children is a priority, then so is same-sex marriage. A third of lesbian couples and a fifth of gay couples who live together already have children, according to the Census, and a lack of access to marriage takes both social and economic security away from them. A widow or widower with a minor child whose income falls below a certain level can get social-security benefits based on the deceased spouse’s earnings—but not if the spouse is of the same sex. The same is true of tax laws, like the one affecting Windsor, that might cost families their homes. Some opponents of same-sex marriage have turned this on its head and wondered if it will cost the government too much money. The answer, according to a Congressional Budget Office study, is that it most likely will not, both because the amounts, though large in the life of, say, a widow with a child, are not so large in terms of the federal budget. The government will also make money from things like imposing the income-tax marriage penalty on more couples, and from some people losing eligibility for benefits when their combined income is calculated. (There are harder-to-answer questions, like how much it might save Medicare if, earlier in life, a person had access to preventive care through a spouse’s insurance.) Marriage equality does not inflate budgets; it removes irrational distortions from them.
【237 Words】
【Left】
And that is why, if one believes in protecting free markets, then same-sex marriage should be a priority, too. This is the point that the amicus brief made with regard to recruiting. It hurts companies and the economy when the choice in taking a job at one firm or the other is not based on its salary offer or a belief in its prospects, but by whether it is based in a state the recognizes the employee’s marriage. It hurts, too, when a spouse who is a foreign citizen is not welcome here. And—something the corporate brief also mentions—there is the wedding business to consider, too. Last summer, New York City estimated that it gained two hundred and fifty-nine million dollars from same-sex marriages in the first year that they were legal in the state. “Marriage equality has made our city more open, inclusive, and free—and it has also helped to create jobs and support our economy,” Mayor Bloomberg said.
But there are less obvious ways that a failure to recognize same-sex marriage can reduce the transparency that helps the private sector thrive. For example, the Windsor brief notes that DOMA has the effect of exempting same-sex spouses of politicians and public officials from financial-disclosure requirements. It also denies them the protection of laws that, for example, make threatening the spouse of a federal agent a crime.
I.B.M. didn’t know it at the time, but it came close to losing Edith Windsor when, as her brief recounts, it “unwittingly ran afoul” of an executive order that forbade companies with federal contracts from having gay or lesbian employees—the order was issued in 1953, the year before the computer pioneer Alan Turing, who had faced similar barriers in Great Britain, killed himself by eating a poisoned apple. Luckily, the F.B.I. didn’t ask Windsor about the women in her life when interviewing her for a security clearance (to work on that UNIVAC), and I.B.M. didn’t find out, either; she wore a diamond pin, rather than a ring, as a symbol of her long engagement to Spyer. And then she left the company to care for a woman who, for many years, she could only say was a friend.
【370 Words】
【Article Five】
Air trade
Can trade restrictions be justified on environmental grounds?
CARBON markets look green around the gills. The price of carbon on Europe’s emissions-trading system, the world’s biggest, has slumped. Barack Obama’s hope of getting a cap-and-trade proposal through Congress seems as distant as ever. There is no sign of action in places like India and Brazil. But it is easy to forget how far carbon markets have come. They exist or are on their way in Europe, Australia, California, China and South Korea. One day, carbon prices will vary greatly between countries.
When they do, those with higher carbon prices will be at a competitive disadvantage because the cost of emitting carbon will be embodied in the overall price of goods, raising them relative to goods produced in countries with no or low carbon prices. A new study* by Aaditya Mattoo of the World Bank and Arvind Subramanian of the Centre for Global Development, a think-tank in Washington, DC, looks at how big this disadvantage might be. They reckon that, if rich countries were to impose unilateral restrictions upon themselves to reduce their carbon emissions in 2020 to 17% below what they had been in 2005, the measure would cut exports of energy-intensive manufactured goods by 12% in America, and boost US imports of those goods by 4%
【222 Words】
【Time Five】
Would a border tax be justified to offset this competitive disadvantage? The idea, the two economists argue, would not necessarily be protectionist. If domestic producers are required by law to purchase carbon allowances—ie, to pay a carbon price, which is incorporated into prices of the final product—then this is like a consumption tax. Trade law permits consumption taxes to be levied on imports to level the playing field between importers and domestic producers (though, admittedly, the World Trade Organisation has not yet decided whether carbon tariffs are permitted).
In addition, says Paul Krugman, a professor at Princeton University and a columnist for the New York Times, border taxes on carbon can be justified on the ground that they align incentives behind the goal of cutting carbon emissions. “If you only impose restrictions on greenhouse-gas emissions from domestic sources,” he has argued in his blog, “you give consumers no incentive to avoid purchasing products that cause emissions in other countries.” If the makers of those products are dirtier and more polluting, the result would be an increase in emissions.
So the idea might be defensible in theory. In practice, though, carbon tariffs could be abused for protectionist purposes, so how they are imposed matters a lot. The obvious way would be to set a tariff based on the carbon content of imports. If America had a carbon price of $10 a tonne and if 20 tonnes of carbon were emitted during the production of, say, a Malaysian car, then America could impose a carbon tariff of $200 on cars imported from Malaysia. But there are two problems with this approach.
【271 Words】
【Left】
The first is that a tax of this sort would be extremely hard to implement. Knowing what the carbon content of imports actually is would be tough. Worse, a car from Malaysia made of steel imported from energy-efficient Brazil should presumably be taxed at a different rate from the same Malaysian model made of steel from energy-inefficient Russia. That would be bizarre.
The second problem is that the tariffs would be punitive. Emerging markets like China and India use a lot of carbon in their manufacturing: more than 500 tonnes for every $1m of output. By comparison, America uses 200 tonnes and Europe and Japan less than 100 tonnes. So the tariff required would have to be huge: rich countries would impose a 21% tariff on Indian manufactures and 26% for goods made in China, reckon Messrs Mattoo and Subramanian. This would hammer the giants’ manufacturing: the economists calculate that such a tax would mean a 20% cut in Chinese manufactured exports and a 16% fall for India. Environmentalists might applaud. But such a drastic reduction would produce a slump in world trade—the two economists reckon global welfare would fall by 1%. And that is to say nothing of the unfairness of penalising China and India so heavily for making products whose end-users are mostly Europeans and Americans.
This is not the only sort of carbon tariff, however. The authors suggest that it would be better to impose a tax on imports which is based on the carbon content of domestic production (ie, by assuming that imports contain an amount of embedded carbon equal to that in goods made in America or Europe). This approach would tax imports uniformly, applying the same rate to goods from dirty India as from greener Brazil. But it would be easier to calculate, and has the advantage of not slashing trade. Manufactured exports would decline by 3% in China and India, the economists calculate. That strikes a better balance between taxing emissions and not wrecking the world economy.
C sweet
There is a final twist. Trade theory says a tax on imports is equivalent to a tax on exports because it changes the relationship between domestic and foreign prices in the same way. So a carbon tariff would penalise exporters twice: once when they pay the domestic carbon price and again, indirectly, through the border tax. The authors suggest an import tax based on the carbon content of rich countries’ production but with a rebate for exporters. This reduces the competitive losses of American and European energy-intensive manufacturing and moderates the impact on Chinese and Indian manufactured exports without changing the cut in global carbon emissions. Their analysis is bitter-sweet, however. Messrs Mattoo and Subramanian provide an answer to how a system of carbon tariffs might be designed. But in so doing, they show the practical and political complexities involved.
【477 Words】
【Obstacle】
Learning to forecast the exchange rate: Two competing approaches
by Paul De Grauwe, Agnieszka Markiewicz
Exchange rate economics has been dominated by the rational expectations efficient market theory (REEM). This theory, however, has not been empirically validated. First, survey evidence indicates that traders’ expectations strongly deviate from rational expectations (Frankel and Froot, 1987, 1990; Ito, 1990; Taylor and Allen, 1992 and Sarno and Taylor, 2002). Second, technical trading rules appear to make risk-adjusted excess returns, violating the efficient markets hypothesis (Sweeney, 1986; Pilbeam, 1995; Neely et al., 1997; LeBaron, 1999). As this empirical evidence against REEM theory has accumulated, researchers have increasingly looked for alternative modeling approaches. One of these approaches challenges the assumptions about the way the agents form their expectations.
First, in line with strong survey evidence, a number of studies have modeled the agents in the foreign exchange markets as chartists and fundamentalists. Frankel and Froot (1987, 1990) were the first to emphasize the impact of the trading strategies on the dynamics of the exchange rate. They argued that swings in the US dollar are due to the shifts in weights that markets give to different trading techniques. Subsequently, many studies demonstrated that the introduction of heterogenous investors into the exchange rate models can generate features observed in the data (See Goodhart, 1988; Frenkel, 1997; De Grauwe and Grimaldi, 2006a and 2006b).
Second, numerous studies, instead of assuming full rationality introduced adapting mechanisms into agents’ behavior. Arifovic (1996) develops a two countries’ overlapping generations (OLG) model where agents update their decisions using a selection mechanism based on a genetic algorithm. She finds that, in this model, the stationary rational expectations equilibria are unstable and result in persistent fluctuations of the exchange rate. Elaborating on the paper by Arifovic (1996), Lux and Schornstein (2005) find that the OLG model under genetic learning can generate fat tails and volatility clustering in the exchange rate series. Mark (2009) finds evidence that adaptive learning about Taylor rule fundamentals sheds some light on the real US dollar-DM exchange rate dynamics. Chakraborty and Evans (2008) propose a resolution of the Forward Premium Puzzle assuming that agents use perpetual learning. Kim (2009) and Lewis and Markiewicz (2009) demonstrate that learning about the monetary model can generate excess volatility of the exchange rate.
All these studies demonstrate that a departure from the Rational Expectations (RE) assumption can help in replicating the data features. It is not clear, however, what type of departure from RE is the best in explaining the dynamics of the foreign exchange market. Thus, the modeling choice of expectations formation in the foreign exchange markets remains an open question.
In this paper, we analyze this question. As in the related literature, we depart from RE and
assume that heterogeneity prevails in the foreign exchange market. Deviating from RE creates the risk of introducing ad hoc assumptions, the number of which can be multiplied ad infinitum. We avoid this risk by imposing selection mechanisms that ensure that only the best performing forecasting rules survive. Thus, as in the spirit of RE-models, we impose a modeling discipline on agents, in that they continuously test and revise their expectation formation. Next, we compare the abilities of two different selection (learning) mechanisms in replicating features of the exchange rate series.
We assume that agents can use two different forecasting rules and combine them to form their expectations about the future exchange rate. The first one will be called a fundamentalist forecasting rule, the second one a chartist rule (technical analysis).We specify two alternative selection procedures (learning mechanisms). The first one is the dynamic predictor selection in the spirit of Brock and Hommes (1997, 1998) that will be called fitness learning. This mechanism assumes that agents evaluate forecasts by computing their past profitability. Accordingly, they increase (reduce) the weight of
one rule if it is more (less) profitable than the alternative rule. In the second mechanism, agents learn to improve their forecasting rules using statistical methods as in the literature of adaptive learning in macroeconomics (see Evans and Honkapohja, 2001 for an overview). We investigate the behavior of the exchange rate within the framework of a standard asset pricing model. We examine which of the learning approaches is best in terms of replicating the exchange rate dynamics. We find that both learning methods reveal the fundamental value of the exchange rate in the equilibrium but only fitness
learning creates the disconnection phenomenon and only statistical learning replicates volatility clustering. None of the mechanisms is able to produce a unit root process but both of them generate non-normally distributed returns.
The remainder of the paper is organized as follows. In Section 2, we develop the baseline model of the exchange rate and we specify the way agents form their expectations about the future exchange rate. Section 3 introduces the learning mechanisms of the agents. In Section 4, we study the equilibrium properties of the models. Section 5 presents a numerical analysis of the dynamics of the exchange rate and confronts the statistical properties of the exchange rate under the two learning rules with those of the data. In Section 6 we carry out the sensitivity and robustness analysis and Section 7 provides some concluding remarks.
【866 Words】
【Further Reading】
# Today’s Topic: The Sequester
【Article One】
Just Explain It: How Will The Sequester Impact The Economy?
By ZELKADIS ELVI
Lately the news out of Washington has been dominated by “the sequester” or “sequestration.” Yet polling shows most voters don’t even know what the term means.
Sequester means to remove or withdraw. It’s most commonly used in our court system when a jury is sequestered during a highly publicized trail.
In this case, the adapted term refers to a package of automatic spending cuts that will take effect on March 1st -- if Congress and President Barack Obama can’t reach a better deal. The government will actually take back, or remove, some of the funds Congress has released.
Sequestration was part of the 2011 Budget Control Act Congress passed to stave off potential default on the federal debt. The cuts from the sequester – evenly split between defense spending and discretionary domestic spending -- would total $1.2 trillion over the next ten years.
Federal programs like, Social Security, Medicaid, Pell grants and veterans' benefits are exempt from the cuts. Spending on wars will also be spared, but many other Defense Department programs would face the axe.
The across-the-board cuts were intended to force compromise between Democrats and Republicans. Unfortunately there are few signs of progress on a broader deal. President Obama has asked Congress to pass a short-term package to postpone the March 1st deadline. But Republicans are pushing back and say they’ll allow it to be triggered if federal spending and tax reforms aren’t included.
How does sequestration impact federal spending? What departments will see cuts? And what’s the impact to the economy and specific industries?
According to the White House Office of Management and Budget, here’s what will happen if there is no resolution.
Law enforcement agencies, like the FBI and Border Patrol, would lose over 1,000 agents. At the same time, the automatic cuts will trim the Department of Defense budget about $500 billion over the next ten years.
Funds for education programs like Title One, special education and Head Start would take a big hit. Over 31,000 teachers and teachers’ aides could be laid off.
$1 billion would be cut from FEMA’s (Federal Emergency Management Agency) budget. Some of that money is earmarked for first responders who react to natural disasters like Hurricane Sandy.
Furloughs at the U.S. Department of Agriculture would lead to fewer inspections at food processing plants. The department would also have to drop about 600,000 women and children from its WIC (Women, Infants and Children) supplemental nutrition program. 1,600 jobs connected to the program could be at risk too.
Up to $540 million in loan guarantees to small businesses would be reduced.
Emergency Unemployment Compensation benefits would be decreased by up to 9.4%. And if the proposed cuts take effect, the Congressional Budget Office estimates 1.4 million jobs will be lost.
Parts of the economy are already showing signs of a slowdown due to uncertainty over the spending cuts. The Gross Domestic Product declined 1.3% in the fourth quarter last year. Some economists say that’s because defense spending dropped by an annual rate of over 22% that same quarter.
Sequestration is a mechanism used to reduce federal spending across the board. There’s a lot at stake and both sides need to come together to avoid the consequences of the proposed cuts.
【Article Two】
Sequester and the Economic Forecast: Not Much Impact
by BILL CONERLY
We avoided New Year’s fiscal cliff, but we probably won’t avoid the sequester. How am I changing my economic forecast? Not much.
(Background on the sequester for people who have been avoiding the subject: Sequestration is Washingtonian for automatic spending cut. Back in 2011, total federal debt was nearing its legal ceiling. Congress and the President had trouble finding common ground on the budget, and Congress refused to increase the debt limit without some move toward fiscal health. The deal was that a “Supercommittee” would be formed, which would find $1.5 trillion of deficit reduction over the ten-year planning horizon. The law stated that if a deficit plan was not enacted, then some budget cuts would automatically be implemented. The Supercommittee super-flopped, and we are now looking at those automatic budget cuts.)
For forecasting purposes, we ignore the cries of imminent disaster (as much as it’s possible to ignore a crying baby or a yelping puppy). First we put the size of the spending cuts into perspective. The total amount of spending to be cut is $85 billion. This sounds like a lot of money to people who watch dollars and cents. It’s actually not too much money in Washington DC. Total federal spending last year was about $3.5 trillion, so the spending cut is roughly 2.4 percent of total expenditures. Anyone who has had to cut 2.4 percent from the family budget knows how difficult that is. However, these are not across-the-board cuts. Within the categories that are being cut, such as defense, the percentage reduction is as high as 7.8 percent.
These will be real cuts, rather than reductions in the growth of spending. The Office of Management and Budget projects that this fiscal year, total federal outlays will rise $7.8 billion, with next year’s increase $80 billion. So an $85 billion budget cut will actually reduce spending.
The entire United States economy amounts to about $15.8 trillion, so the sequestration runs about one-half of one percent.
Our next issue is the fiscal multiplier: how big a ripple effect will the spending cut have on the rest of the economy? My old copy of Paul Samuelson’s classic textbook, 1970 edition, has a numerical example that results in a fiscal multiplier of three. With that example, we would multiply $85 billion by 3 to get a $255 billion reduction in the path of GDP, which would be about 1.6 percent. However, the textbook example was selected for ease of computation. Most estimates of the actual multiplier come out between 1.0 and 1.5, so maybe we are talking about less than a one percent decline from what GDP would otherwise have been.
Notice that the effect of sequestration by a multiplier calculation is relative to the path that GDP would otherwise have been on. Last year our inflation-adjusted growth was 2.2 percent. The consensus forecast for 2013 is 2.4 percent. Thus, sequestration is likely to slow our growth rate rather than trigger a recession, according to the mainstream multiplier estimates.
However, those multiplier estimates are pretty soft. Think about the common range of estimates mentioned above, 1.0 to 1.5. That’s a pretty wide range: 50 percent. It’s quite a measure of our ignorance. More recently, some economists have estimated that in our current slack economy, the multiplier might be over two. Using that larger multiplier, we still have a slower rate of growth and not an outright recession.
But maybe things are not so glum. A number of economists doubt that changes in government spending have such large effects. Some may be crackpots, but the list includes Nobel laureates (Gary Becker, Robert Lucas, Thomas Sargent) as well as other highly esteemed researchers (Robert Barro, John Cochrane, Eugene Fama, Greg Mankiw).
My own conclusion is that the multiplier is a little above one, but it’s pretty short-lived. After a quarter or two we’ll hardly notice the dent made by the sequester.
That does not mean that the sequester is ideal. If we were to cut $85 billion off the deficit in a manner that suggested we were on a long path toward fiscal balance, the total impact could well be positive, not negative. Millions of Americans fear impending budget deficits, and they are acting in accordance with those fears. Soothing the worries could unleash some consumer spending.
Allowing the sequester to take effect is different from a rational approach to getting the federal deficit under control. Most observers will interpret it as a leadership failure in Washington D.C. rather than the first step of a well thought out plan. Thus, I am taking it as a small, temporary negative rather than the positive step that a genuine step toward fiscal prudence would be.
【Article Three】
Don’t Be Seduced by the Sequester
By WILLIAM KRISTOL
It’s understandable that Republicans are tempted by the prospect of allowing the “sequester”—the automatic cut to defense and domestic discretionary spending agreed to as an enforcement mechanism for the 2011 debt ceiling deal—to go into effect on March 1. It’s understandable because Republicans are in favor of cutting domestic spending. It’s understandable because Republicans are desperate to secure what they think could be a political victory over Barack Obama and Harry Reid. It’s understandable because going to the trouble of fixing the sequester would be difficult, and the effort to do so will create strains within the Republican conference.
But what’s understandable isn’t always responsible. Allowing the sequester to go into effect would be deeply irresponsible.
It’s true that the sequester will cut domestic discretionary spending. On the other hand, it will do so ham-handedly, with no reforms to domestic programs, and with the big-ticket entitlements untouched. Far more important, the sequester will endanger national security—cutting the military abruptly and arbitrarily to levels far below what Republicans have ever thought desirable.
It’s also true that President Obama has been utterly unserious about dealing with spending, and that he’s now disingenuously criticizing a sequester he proposed and insisted on in 2011. This seems to be a chance to defeat and embarrass the president. He deserves defeat and embarrassment. There will be opportunities for both. But this is not the right one, not at the expense of national security.
But wait, say Republican tacticians, it’s a chance to gain leverage against the president.
Leverage for what? The GOP pols who talk about “leverage” never explain what they’re going to use that leverage for. The Republican House can and should prevent further tax increases, and for that matter domestic spending increases, regardless of how the sequester battle turns out. The sequester gives Republicans no leverage here. And the House will have no more ability to insist on needed entitlement reforms or on the shape of next year’s overall budget with the sequester in effect than if it’s not.
Meanwhile, there’s the small matter of defense and the national interest. The sequester would do real damage to both. So Republicans should resist seduction by the sequester, overcome the temptation of embracing it, and should instead take the lead in fixing it.
The Republican House, to its credit, did pass legislation in 2012 that would have fixed the sequester in a responsible way. The current Republican House should do so again, this month, before the sequester goes into effect. And it should then pressure the Senate, and the president, to come to the table and agree to an acceptable alternative to sequester, one that would avoid crippling reductions to a military that’s already suffered from large and arbitrary cuts imposed by the Obama White House.
Republicans—as well as Secretary of Defense Leon Panetta and defense experts across the political spectrum—have explained so many times how damaging the sequester would be to our military that there’s no need to restate the case here. But consider last week’s announcement by the Navy that, just 48 hours before its deployment from Norfolk to the Gulf, the USS Harry S. Truman would not sail but instead be put on alert to “deploy on short notice.” This will leave only the USS John C. Stennis in the Gulf, until it is replaced by the USS Dwight D. Eisenhower—meaning our aircraft carrier presence in the Persian Gulf will be reduced from two carriers to one. Christopher Harmer, naval specialist at the Institute for the Study of War, explains the consequences:
“ It’s a drastic move: The continuous deployment of two U.S. aircraft carriers to the Persian Gulf area guarantees an immediate and crushing military response to any provocation—especially to one coming from the Iranians. .??.??. The typical deployment pattern for two carriers in this area is to station one carrier in the Persian Gulf, inside the Strait of Hormuz, and one outside the Persian Gulf, patrolling the Arabian Sea, Somali Basin, Gulf of Aden, Red Sea, or Indian Ocean. .??.??. Maintaining one aircraft carrier inside and one outside the Strait of Hormuz ensures that the Iranian Navy is constantly aware that any attempt to close the Strait will result in an overwhelming military response. A two-carrier presence has a much greater deterrent effect than a single carrier would.”
Harmer continues:
“The cancelled deployment and permanent reduction in carrier presence is due exclusively to defense budget cuts and the uncertainty surrounding the defense budget. Sources on the Navy staff say that one of the reasons the Truman deployment was delayed was because it did not have the required number of trained personnel onboard. A carrier can train and conduct exercises off the American coast without a full complement of trained personnel, but it cannot deploy overseas without being fully manned, trained, and equipped. The Navy still has enough trained personnel to man the Truman, but the budgetary inflexibility prevents the service from transferring those personnel to the carrier.”
The failure to deploy the Truman will greatly strengthen the argument that the U.S. is not only in retreat, but also entering a terminal decline in power and influence. Perhaps it’s because of budget constraints, but the Iranians are much more likely to see proof of their thesis that America’s power is permanently waning. That belief is likely to strengthen their recalcitrance on the nuclear program and increase their willingness to support their violent proxies throughout (and, perhaps, beyond) the region. It is likely to encourage Iranian military adventurism.
The decision not to deploy the Truman is only the tip of the sequester iceberg—an iceberg that has been building thanks to previous cuts in the defense budget. One is reminded, reading the news about the Truman, of this passage from Churchill’s great March 24, 1938, speech to the House of Commons on “Foreign Affairs and Disarmament”: “For five years I have talked to the House on these matters, not with very great success. I have watched this famous island descending incontinently, fecklessly the stairway which leads to a dark gulf. It is a fine broad stairway at the beginning, but after a bit the carpet ends. A little further on there are only flagstones, and a little further on still, these break beneath your feet.”
Sequester is only one step down a stairway at the bottom of which the stones will break beneath our feet. But it’s an important step. It’s too important a step for the Republican party to be complicit in. Its likely negative consequences are far more important than any possible benefit that could come from a small and probably temporary cut in domestic discretionary spending, or from the satisfaction of highlighting the hypocrisy of Barack Obama and the irresponsibility of Harry Reid. Barack Obama and Harry Reid may be willing to sacrifice the national interest for petty and temporary political victories. Republicans shouldn’t be willing to do so. A great political party, on matters of great moment, puts national defense, and the national interest, first.
【Article Four】
A Bad Sequester Is Worlds Better Than No Budget Deal At All
By REP. BILL FRENZEL (RET)
Barring an unexpected breakthrough agreement between the Democratic Senate and the Republican House, the federal budget will be subjected to a sequester which will reduce discretionary spending by about $86 billion in calendar 2013.
That $86 billion is only a bit more than 10% of the “fiscal cliff” that faced the country at the end of the year. It’s a painful cliff, but not a large one. The American Taxpayer Relief Act resolved most the cliff problem, but the Congressional Budget Office (CBO) says that the sequester will reduce short-term growth in an already slow economy. On the other hand, no sequester at all would mean an even greater reduction in long-term growth.
The worst feature of the sequester is that it is the wrong way to reduce spending. The cuts are mandated across-the-board in most discretionary spending areas. The good programs will be cut along with the bad. The most hard-hit casualty will be the Defense Department (DOD). It can stand cuts, but they need to be carefully selected. The sequester does not select. The sequester meat-axe slices muscle along with the fat.
It is hard to believe that allegedly smart people could have agreed to such a device. The President and the leaders of both houses signed off on the sequester in the belief that because it was so bad it would force them into a compromise deficit/debt reduction plan despite their philosophic disagreements.
As it seems to be turning out, our representatives’ philosophic disagreements are more precious to them than the health of the nation’s economy. Republicans want to protect tax rates and Democrats want to protect entitlement programs. They would prefer the sequester, admittedly smaller than the tax cliff, to any form of compromise.
The moment of truth is only a week away. Most odds-makers believe the Sequester will actually occur. However, the policymakers do have other choices: (1) they could postpone it, in hopes of making a later deal (2); they could trash the sequester, and sacrifice long-term growth for another short-term fling; (3) they could give the Executive Departments leeway to make the cuts where best tolerated; or (4) they could live with the sequester for a few weeks or months, and then holler “uncle” and opt for (1) , (2), or (3) above.
This writer believes that the sequester will happen. However, when airport security lines triple, the national parks open later and close earlier, and our military tours abroad are extended, there is a good chance that Congress will begin to rethink the problem, particularly with respect to DOD. If so, at that point, it is critical that Congress replace a dumb cut with a smart cut of equal value, rather than deferring or repealing the sequester.
Our debt is already high. CBO sees it going higher rather than stabilizing under the most likely budget scenarios over the next 10 years. The President’s budget drives the debt ratio up around 80% in 10 years. That’s one reason why cancellation, or deferral, of the sequester would be unwise. Over 10 years, the sequester would save well over $1 trillion. Another reason is that it makes no sense to swap short-term faster growth for long-term reduced growth.
If no comprehensive compromise (one with total 10-year reductions of Bowles-Simpson proportions) is in sight, it is better to accept the stupid cuts of the sequester than to postpone deficit/debt reduction plans again. The best plan would be smart cuts. The sequester is a distant second choice, but, clearly, it is better than nothing.
【Article Five】
Will the Sequester Be an Economic Disaster?
By BECKER
My short answer is “no”, and the longer answer follows.
The Transportation Secretary and other government officials have claimed on television that government cutbacks would have catastrophic effect on airline travel, various other government programs, and overall employment if no deal with Congress is reached prior to March 1 when the so-called “sequester” starts. At that time, a series of cuts in government spending will automatically begin according to a schedule laid out over a year ago.
Although the set of agency cuts in spending mandated by the sequester is far from the best way to cut federal spending, as I discuss later, a few calculations show that in the aggregate the spending cuts will not have disastrous consequences. The Congressional Budget Office estimates that if the sequester goes into effect, actual federal spending, which lags appropriations, would decline by about $44 billion over the next seven months. Budget authorizations would decrease by about double that amount, to $85 billion, in the fiscal year ending in September. That is a huge amount of money to you and me, but even the authorized cuts are only a little over 2% of the projected federal budget during this fiscal year. Officially, government spending would continue to be cut for several years under the sequester plan, but no one expects the plan to be continued even for a year, let alone for several years.
The federal government is not the most efficient spender of taxpayers’ money, so slight improvements in efficiency of spending would easily compensate for much of the mandated decline in appropriations in most agencies. Even without improved efficiency, the 2 per cent decline in overall spending by different agencies would not have a major impact on most government services-I discuss possible exceptions later on. For comparison, a similar cut to families with $60,000 annual income would require them to get by for a year with $58,800. Adjustments would be required to be sure, but spending would not fall catastrophically. Of course, for political reasons, federal agencies might intentionally cut activities that would cause the most inconvenience to consumers in order to create the most complaints against the cuts, and put pressure on House Republicans.
The federal budget was already quite large in 2008, and spending has grown by many hundreds of billions of dollars since then. This implies that even after the first year of the full implementation of these budget cuts, the federal government would still be spending far more than it did a mere 4 years ago. Of course, the increase in spending since then has not been uniform across agencies, with Medicare and Medicaid, and government welfare programs expanding more rapidly than most other forms of spending.
The best way to cut overall government spending is to reduce spending on those programs that can be done almost as well, or even better, by the private sector, and maintain, or even increase, those programs where private spending would be poor substitutes for government spending. The latter include defense, spending on infrastructure, such as roads and good teachers, safety nets for low-income persons, and basic research, such as trying to find ways to sequester carbon emissions, and trying to find cures for various cancers and Alzheimer’s disease. The sequester program requires half the cuts to come from national security and military operations. I do not know if too much or too little is spent on the military, but government spending in these areas obviously cannot be effectively replaced by private spending on protection against terrorism and other threats. Yet even spending on the military would only fall by 3.8% during the next 7 months.
Various other activities of the government can be done much better by the private sector without government subsidies, such as production of ethanol, fossil fuels, and alternative energy sources, such as solar and wind power. It also suggest scaling back some of the welfare programs that expanded rapidly during past few years, programs that contributed greatly to the sharp decline in the labor force of lower skilled and younger workers (see Casey Mulligan, The Redistribution Recession).
The sequester-mandated cuts in spending exclude social security and Medicaid, and requires senseless cuts in Medicare. In light of the greater health and life expectancy of older Americans, one effective way to cut spending on social security and Medicare would be to raise the eligibility age gradually over the next decade to 70. Additional savings on Medicare can also be achieved if a voucher program replaced the current system. The richer elderly should get smaller vouchers, and everyone should be allowed to top up their vouchers with private spending, presumably most of that covered by private insurance.
Some economists have argued that the mandated cuts in government spending are particularly inappropriate at this time since the US is not fully recovered from the financial crisis. Since reduced government spending of $44 billion over the next seven months only a little over ¼ of 1 percent of GDP, this is not likely to have a major effect on the economy, even without any replacement of reduced government spending by greater private investment and other spending. The $85 billion decline in appropriations would be more disrupting, but still would not amount to a lot, especially since the private sector appears to be picking up more steam.
【Article Six】
The Sequester
By POSNER
The “sequester” is an ingenious (though, it seems, unlikely to be successful) device for forcing a compromise between President Obama (and Democratic legislators) and the Republican members of the House of Representatives. The federal deficit is too large—everyone agrees about that. Obama wants to cut it by a combination of tax increases and spending cuts. The Republicans want to cut it by spending cuts alone—larger spending cuts than Obama wants, larger because the cuts must do all the work, with no assist from higher tax revenues. The Republicans can’t make up their minds whether they hate taxes more, or deficits more, though taxes and deficits are interrelated.
The sequester imposes steep cuts across the board, though not proportional cuts—for example, the military cuts are the steepest, and the entitlement cuts the shallowest. No effort was made to distinguish between essential federal agencies with no significant bloat, such as the Federal Aviation Administration and the Food and Drug Administration, and the federal agencies that either have unimportant functions or are overstaffed and the federal grant programs that are just interest-group handouts. But arbitrariness of the sequester is essential to its efficacy as a device for pressuring the opposing sides to compromise. The cuts would impose real hardship on government workers and beneficiaries of government spending. The sequester resembles a game of chicken.
A majority of House Republicans believe that the federal government is simply too large, must be shrunk radically, and realize that it will be shrunk by a dollar less every dollar in additional tax revenues. Suppose the government spends 10 percent more than it should. If there is no tax increase, government spending must simply be cut 10 percent to achieve the desired shrinkage. But if tax revenues are raised by 10 percent, government must be shrunk by 20 percent in order to achieve a net reduction of 10 percent in government expenditures, and a spending cut of that magnitude would undoubtedly produce a severe recession.
From a deficit standpoint, tax revenues are as good a device as spending cuts; a 10 percent increase in tax revenues has the same effect on the deficit as a 10 percent reduction in spending. But the radical Repulicans are less concerned about the deficit than about the size of government. Hence their adamant opposition to tax increases.
So I must consider whether the federal government is indeed too large. I don’t think so. Nor have the House Republicans, to my knowledge, provided evidence or reasons for thinking it is. We need to distinguish between two kinds of “excessive largeness” in government. One is excessive bloat—too many government employees and, what often goes with that, excessive regulation of the private sector. Bloat in the sense of overstaffing is characteristic of all large organizations, public and private, and reflects imperfect control of large organizations by their managers, or in short “agency costs.” There probably isn’t much that can be done about that. And although excessive regulation is a problem, the financial crisis of 2008, from which we are still suffering the aftershocks, was caused not by excessive regulation but by insufficient regulation by the Federal Reserve, other banking regulators, insurance regulators, the SEC, and private regulators such as the rating agencies and FINRA (Financial Industry Regulatory Authority).
The other kind of “excessive largeness” in government is spending. Major spending programs include Medicare, Social Security, Medicaid, and other welfare programs; support of research; subsidy programs such as farm subsidies and ethanol subsidies; the financing of infrastructure, such as the interstate highway system; environmental expenditures; the cost of the military; the cost of regulatory agencies such as the Food and Drug Administration, the SEC, and the EPA; the cost of law enforcement and the judiciary; tax expenditures (for example, the subsidization of charity); and national security intelligence (the CIA and the multiple other intelligence agencies). None of these programs is easy to cut. Many of them should not be cut; in that category I would put (along with environmental expenditures, including measures to deal with global warming, and basic regulatory functions) the military and national security intelligence. We live in a very dangerous world, in which the usual geopolitical threats have been enhanced by the rise of international terrorism; and our allies are of limited dependability and resources in dealing with security matters. Much that passses for “waste” in the defense budget is a rational response to profound uncertainties concerning current and future threats and current and future capabilities of potential enemies.
Medicare and Social Security are bound to grow as a function of increased longevity, and Medicaid as a function of increasing economic inequality. Some reforms seem attractive and even feasible, but the best and simplest would involve tax increases rather than spending cuts: higher Medicare and Social Security taxes for the affluent, and higher copays for Medicare (copays for government health insurance are a form of taxation). That are many subsidy programs, such as agricultural subsidies, that should be eliminated, but they are protected by powerful interest groups.
All in all, then, the opportunities for spending reductions are limited. Therefore if the deficit is to be reduced, it will have to be reduced mainly by imposing higher taxes, whether in the form of higher rates on income tax or—what is a superior solution because it is more efficient than higher marginal tax rates, which are distortionary—tax reform mainly in the form of reducing deductions from income tax. The problem is that the main deductions, such as mortgage interest, charitable contributions, and state and local taxes, are extremely popular. And so there may be no feasible alternative to higher rates. Fortunately, slight percentage increases in marginal rates can generate large increases in tax revenues; and the negative effects of slightly higher marginal rates— effects on emigration, work effort, investment choices, movement of money overseas, concealment of income, and schemes of tax avoidance—are likely to be modest. An increase in the marginal income tax rate from 35 to 75 percent would have dramatic negative effects; an increase from 35 to 40 percent on high-income taxpayers (say $200,000 and up), coupled with taxing capital gains, dividends, and interest at the same rate as ordinary income, probably not
【Article Seven】
The Strange Behavioral Logic of the Sequester Stalemate
by Francesca Gino
Imagine you've just returned from your annual physical, and it didn't go well. Your doctor informed you that you're overweight and are likely to have health problems if you don't drastically change your diet and exercise routines. To make things worse, she set a hard deadline by scheduling a follow-up appointment with a specialist. You can avoid this follow-up, but only if you make some hard decisions and change your habits in meaningful ways. So why, when you have just days to go before the appointment, will you find yourself sitting on the couch, chip bag in hand?
Now, swap "you" with "the U.S. government" and you can begin to understand the psychology of the sequester.
A little background: Last year, amid quite a bit of negotiating, U.S. politicians could not come to an agreement regarding taxes and spending. Thus, they agreed to agree on a sensible budget by a certain deadline. As a result, Congress and the president must find some way to agree on meaningful fiscal changes before March 1, or the U.S. budget faces arbitrary and automatic cuts across the board.
The hope was that by setting up these arbitrary cuts — something that would seem unacceptable and would negatively impact a whole host of U.S. citizens — Congress would be motivated to come to some reasonable compromise in the allotted time. And yet here we are, with no solutions.
Now we're all left asking: how did this happen?
Aside from the usual banter about a dysfunctional government, behavioral science research can help explain the reasons behind the current stalemate. We know from hundreds of research studies that goals do motivate people: specific, difficult goals make people strive harder to accomplish what they set out to do. One example, ironically, comes from government: In 1961, president John F. Kennedy gave a speech that set the goal of getting people to the moon and safely back within a decade. At the time, the U.S. had only launched an astronaut 115 miles above the earth. Going to the moon was a much more difficult goal: astronauts would travel 270,000 miles from home. Of course, you know the rest of the story: less than 10 years later, the U.S. landed on the moon.
We also know that people who set goals for themselves consistently perform better and more effectively on tasks (and particularly on onerous ones) than people who set no goals. These specific, difficult goals are intended to motivate us to do things that we do not like to do, like negotiating over budget issues with a counterpart who does not share our views. Or, in the case of your imaginary appointment, eating vegetables.
But research also suggests that goals are not always beneficial. When people violate their goals (eating that bag of chips), they experience further delays in task completion and tend to perform poorly. So if you only have five pounds to go, you're more likely to try hard to lose it. But if you fail to accomplish your goal, or think that reaching it is nearly impossible, you're more likely to experience negative emotions and resignation.
Making goals realistic also matters. In a 2004 study, participants were asked to complete a proofreading task within 30 days, and received payment upon task completion. In one condition, participants chose a difficult deadline for themselves. In another condition, they chose a realistic deadline for task completion. And in a third condition, they had no specific deadline. Over 83% of participants who identified a reasonable deadline completed the task in the allotted 30-day timeframe, while only about 62% of the participants in the other two conditions with no goal completed the task within the allotted time.
In the case of the U.S. fiscal cliff negotiations, let's first make two important assumptions: that the parties at the table actually want to come to some agreement, and that coming to this agreement is incredibly difficult. With this in mind, it is likely that the March 1 deadline may have been demotivating rather than motivating. Knowing that avoiding the sequester is nearly inevitable, or is going to include a lot of work, may have led to resignation rather than high motivation. And such resignation led us to the current stalemate in negotiations.
It's also important to consider the way time plays into solving problems. It was easy for the government to make plans to fix the budget crisis, but it's unclear as to whether its goals were actually within reach. And because the commitment involves a large group of people, members of Congress may have felt that additional time afforded them the opportunity convince the other side to see the issues their way. This, of course, is a problematic assumption. In fact, research by my Harvard colleagues Mike Norton and Todd Rogers indicates that people have an overly optimistic view of the future when it comes to wants and preferences.
In one study, they asked respondents to indicate their political orientation and then answer the following question: "In twenty years (by 2031) how do you think the electorate in the United States will be different? Will it be more conservative than today, more moderate than today, or more liberal than today?" The results? Conservatives were more likely to believe that the future will be more conservative than the other two groups, moderates were more likely to believe that the future will be more moderate, and liberals were more likely to believe that the future will be more liberal.
Similarly, in my own research, I find that when we experience disagreements or conflict in negotiation and decide to meet at a later time to discuss further, we believe that the additional time will help the other party realize that our perspective is the right one. But the problem is that both parties share this belief, and thus the additional time turns out to be unhelpful to reaching a compromise or any other form of agreement.
When they agreed to the sequester deadline, both sides may have believed that the future would magically solve any disagreements. But such wishful thinking, as the budget debate is now showing, is often a good predictor of failure. |
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发表于 2013-2-28 21:39:18
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