Editor’s Note

courtesy of NASA

Published January 21, 2019


JG, our tenacious correspondent in Passadumkeag, Maine, asks, “Does living on an ordinary planet orbiting an undistinguished star that is just one of 250,000,000,000 in our galaxy — which is just one of at least 200,000,000,000 galaxies in the universe — make you feel insignificant? And if we are just insignificant blips in the vastness of existence, what's the point of reading the Milken Institute Review?”

Stop channeling Camus, JG. To distract from your existential crisis, I’ve worked extra hard to bring you a stellar (pun intended) issue. To wit:

Gene Steuerle, co-founder of the Urban-Brookings Tax Policy Center, explains how Washington exacerbates wealth inequality. But he has bigger fish to fry. “Often lost in the outrage is the threat to growth and democracy posed by government policies that, on the one hand, give the already affluent an easy path to accumulating capital, while on the other placate the rest of us with policies that encourage us to consume at the expense of personal savings and self-improvement.”

Ramona Bajema, a historian specializing in modern Japan, writes about issues ranging from Japan’s ominous introduction to climate change to new economic realities in the teeth of China’s ascent and America’s decline. And don’t forget, of course, Japan’s trials with the White House.

“On occasion, Trump likes to talk about Japan’s ‘samurai spirit.’ But he has refused to give Japan a get-out-of-jail-free card on his steel tariff, which is being imposed on friends as well as foes, ostensibly for reasons of national security. And he has threatened to take another whack at Japan with a new tariff on cars. While Prime Minister Abe can brush aside the steel levy, a tariff on vehicles would be a major blow.”

Jonathon Adams-Kane, an economist at the Milken Institute, explains the role commercial real estate played in the last financial meltdown — and may play in the next. “Ask a hundred economists to explain the causes of the 2008 financial crisis and, chances are, 99 of them will point to the bubble in residential real estate. … But the severity of the crisis and the deep recession that followed hint that other sorts of lending played a significant part, too. And in planning to avoid the next financial crisis, we ignore them at our peril.”

Barry Eichengreen, an economist at the University of California (Berkeley), offers some perspective to the question of whether the United States can continue to run trillion-dollar deficits while the economy is running full tilt. “There is no magic numerical threshold where growth falls off a cliff,” he concludes. But, he warns, “there is considerable evidence that heavy debts slow economic growth. Simple supply-and-demand logic also suggests that heavy debts lead to higher interest rates.”

Tom Lenard, a senior fellow at Technology Policy Institute, and Larry White, an economist at NYU’s Stern School, offer a novel approach for breaking the logjam in spectrum that is holding up progress in 5G mobile telecommunications. “Realizing the potential for gee-whiz mobile applications will require that large amounts of spectrum be diverted from other uses,” they conclude. But, “much of the spectrum needed is controlled by federal agencies, ranging from the National Weather Service to the Defense Department, which pay nothing for it and therefore have no incentive to give up their stranglehold.”

Bill Gale, the co-director of the Urban-Brookings Tax Policy Center, offers a no-tears primer on how Social Security really works — and, as important, how to repair its deteriorating finances. “Social Security is the federal government’s largest (and, arguably, most successful) program, spending close to $1 trillion in 2018 to support the incomes of roughly 50 million retirees, dependents and survivors, along with some 10 million disabled Americans,” he writes. “But Social Security is financially unsustainable as it’s currently constituted.”

“That’s not surprising: policymakers haven’t attempted to narrow the fiscal gap since 1983, when it was facing an imminent financing crisis. But the system will need an overhaul to address the coming shortfall — and, hopefully, to modernize its features to reflect changes in demographics.”

Christopher Ruhm, a professor of economics and public policy at the University of Virginia, outlines the case for paid parental leave, the social program almost everybody wants but never gets anywhere in Congress. Any program in the United States “is bound to be modest compared to those in most other industrialized countries, where generous family benefits are typically supported by both the left and right. … Arguably, this is as it should be: paid parental leave is just one of many social programs competing for public funds in a political culture that abhors taxation and is suspicious of using government to redistribute income. But it also highlights the importance of challenging dogma about the virtues of very limited government in a society in which the burdens faced by ordinary households seem to be multiplying.”

Last but hardly least: check out the excerpt from Ken Rogoff’s book, The Curse of Cash, an eye-opener on why the $100 bill is not your friend.

Happy perusing, all you inhabitants of the Milky Way.

Peter Passell