Women and the Great Recession

Nataliya is a single mother with two children. She runs a small business selling flowers in downtown Uzhgorod, Ukraine.

Nataliya is a single mother with two children. She runs a small business selling flowers in downtown Uzhgorod, Ukraine.

A colleague of mine sent me a link to the Levy Economics Institute of Bard College where they do a lot of research on Gender Equality and Economic Issues. The Institute’s Rania Antonopoulos has just released a very interesting study on The Current Economic and Financial Crisis:
A Gender Perspective
. It is an interesting addition to a growing field that finds that “widespread economic recessions and protracted financial crises have been documented as setting back gender equality and other development goals”.   Problems with development goals include food insecurity, poverty and increasing inequality.

I learned that women’s economic and social role in an economy is one of the primary indicators of when and if a country will every creep its way off the bottom of Human Development index when I began to study development economics way back in the late 70s and early 1980s.  Development economics spends a lot of time on institutions these days. I do a lot of my research into the depth and effectiveness of financial institutions. There are also legal institutions (like lack of government corruption and presence of an effective justice system) that make an important difference too.  But, overlying all of these institutional institutions is the society’s treatment of women.  Women’s access to education, birth control, and economic-self determination are essential to a country’s overall development.  This is especially true for developing nations but it holds true for industrialized ones as well.

Antonopoulos poses an interesting question for those of us interested in both eliminating poverty and achieving gender equality throughout the world.  She asks “what macroeconomic conditions must prevail for gender-equality processes to take root?”  and argues that women’s rights can only be achieved if economic development is “broadly  shared”.    I was particularly awed by her treatment of women in her study.

Hence, women in this analysis are not featured as passive recipients of gender-equality policies, but rather as full citizens participating at all levels of economic, political, and social life. As active members of the community, women have a stake in putting forward comprehensive, coherent, and consistent proposals instead of being content with a piecemeal agenda that targets the “poor” and “women.”

I like this definition of equality as ‘full participation’ in all aspects of a community although I would add that as stake holders women (and indeed GLBT and other minorities kept in an inequality gulag) not only should achieve full participation but also full rewards for that participation.

One of the most compelling arguments that she makes for Gender Awareness is that frequently women’s most important roles in the local economy are in nonpaying jobs.  She argues that you really can’t take any policy into full account unless you study the impact on all of women’s contributions to the economy.  That includes work that does not entail monetary compensation but is welfare-enhancing.

While the former (paid work) in the private and public sectors (under formal contracts or informal arrangement) is largely recognized, unpaid work, which includes unpaid family work contributions, subsistence production, collection of free goods from common lands and volunteer work, household maintenance, and unpaid care work for family members and communities, still remains hidden and, hence, outside policy consideration.

These contributions are still the dominant areas for women in traditional societies.  It has been shown that women who

Mrs. Som Neang, age 53, is married and lives with her two children in Phnom Penh, Cambodia. She and her husband, Mr. Ban Boeun, 59, have a small business selling eggs and a variety of vegetables in a busy market.

Mrs. Som Neang, age 53, is married and lives with her two children in Phnom Penh, Cambodia. She and her husband, Mr. Ban Boeun, 59, have a small business selling eggs and a variety of vegetables in a busy market.

understand health and nutrition issues as well as women who are educated and value education contribute a lot to an economy when they serve in these traditional capacities.  Educated women contribute through their children who are healthier and go on to achieve better outcomes in life.

There is also impact, however, on women who work outside the homes and women are concentrated in jobs that tend to suffer greatly during bad economic times.  Any time energy or food prices increase, development goals and gender equality goals suffer setbacks. Antonopolous forwards some broad areas where women tend to suffer most from any economic crisis.

“Among the emerging challenges of the current crisis, we now turn to the turbulence in the world of women’s work in four key areas: paid work (especially in textiles and agriculture); informal work; unpaid work; and fluctuations in remittances, including those from women migrant workers.”

Employment is always one of the slowest things to recovery from a macroeconomic downturn.  The last set of recessions resulting from the Asian Financial crisis as well as other country-specific downturns showed that employment recovery has been even more slow than recovery from recessions earlier in the post world war 2 years.  Current data is rich in information on how this impacts women’s equality goals.

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Social Security: Reform, Refund, or Opt Out? (Part 4)

elderly%20ladiesThe aging burden is upon us and solutions are required quickly.  People are living longer.  There are three responses households face: consume less and save more when young, consume more and have lower monthly benefits when older, or work longer.   They should make these decisions with a combination of their own savings and employer savings plans.  They should plan retirement based on their preference to work and their health.  They should also be able to rely on a minimal public pension plan so that no one fears dying a bag lady. 

Government should respond when the public pension system is out of balance.  There should be a mandated cycle of revision.  The plan should be evaluated at least every five years and changes should be recommended by professionals to policymakers. Responses include: cutting benefits, raising taxes or contributions, subsidizing the program from general revenues or by issuing some form of debt, and generating a higher rate of return on the Trust Fund’s assets.  There is still the question of generational risk-bearing and redistribution answered by the pre-funded or PAYG choice.  Will the bigger burden lie with future generations or current generations?  It appears we must deal with the PAYG choice made during the depression years one way or another.

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Social Security: Reform, Refund or Opt-Out? (Part 3)

Lessons from the World

One of the most interesting things about the large number of countries Osaka Asahi Shinbunreforming their public pension programs is how dissimilar many are to the United States.  A large number are in Latin America or are Asia countries that are not experiencing the demographic challenges faced by the United States.  Instead, they reform their systems because the old systems have lost their store of value function.  Privatization is required because the trust between recipients and their governments has broken down.  Chile (1981), Columbia (1993), Peru (1993), Mexico (1997), Bolivia (1997), El Salvador (1998) and Kazakhstan (1998)  have the least future demographic problems, are not developed countries, and have had the largest reforms.[1]  The expected retirement benefits in these countries are now derived from the income produced by an asset portfolio in individual accounts.

The most moderate reforms have happened in countries with high per capita incomes and severe demographic problems.  These countries include Switzerland (1985), the United Kingdom (1986), Denmark (1990), Australia (1992), Argentina (1994), China (1995), Uruguay (1996), Hungary (1998), Sweden (1998) and Poland (1999).  These developed countries have adopted systems that blend defined contribution accounts with a defined benefit.  Germany and Japan have serious demographic problems.  They are also highly developed countries.  They—like the United States—have passed minor reforms.  These countries have less suspicion that their government will not provide secure retirement resources somehow.  Traditional PAYG systems require a “social contract.”  Trust between workers of different generations is higher developed countries than in developing countries.  Trust between households and government is also higher.

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Social Security: Reform, Refund or Opt-out? (Part 2)

wanted a decent jobPublic Pension Concepts and Alternatives

Social Security reform combines three basic possibilities. It can raise contributions or it can cut benefits sometime in the present or future (pre-funding or pay-as-you-go (PAYG)). It can be private or public. It can be diversified or undiversified. The current system is public, has no diversification and is not pre-funded (PAYG). It features forced savings in that income cannot be spent before retirement. It pools social risk so that it can provide insurance against earnings loss, disability, inflation, and longevity. It redistributes income from high to low lifetime earners. The Social Security System is controlled and administered by the U.S. government and is a defined-benefit plan (DBP) .
“Pre-funding” is a plan to reduce the sum of the system’s implicit and explicit debt. As alluded to previously in the discussion of the vulgar error, the current system has inherited or legacy debt. This is something many politicians either willfully forget or ignorantly omit. Any analysis and reform must include provisions for the cost of inherited debt or it is a truly disingenuous and misleading discussion. Omitting taking care of this unfunded liability (which is estimated at around $10 trillion) is the vulgar error committed by the many politicians who compare returns from strictly switching to other assets. They do not mention deducting this debt from the alternate assets’ internal rates of returns (IRRs) to the IRRs of Social Security. The IRRs of the Social Security Trust fund for future generations account for the legacy debt.
The earliest cohorts received very high IRRs in real terms. An anecdotal and extreme example is that of my grandfather who worked for the Federal Reserve System which did not become part of the social security system until six months before his retirement in the mid 1960s. He actually deferred his retirement six months to buy into the social security system and qualify for benefits. He, and for awhile my grandmother, received nearly 15 years of monthly benefits for six months of his contributions. A truly amazing IRR and one for which his progeny will be paying for years to come.

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Social Security: Reform, Refund or Opt-Out (Part 1)

gdepression on the roadSeveral years ago, I did some research on Social Security.  I thought I’d share that with you now as we look to more possible reforms coming from the Obama administration.   This part is just introductory.  Part 2 will be on Public Pension Concepts and Alternatives.

One of the most successful and significant programs put into place by the Roosevelt administration’s “New Deal” has been the U.S. Social Security System.  It has met its goal of alleviating poverty among the elderly.  It has become known as the ‘third rail’ of politics because of its success and acceptance by the majority of the populace.  Elderly voters—an active and vocal voting constituency—do not take kindly to any discussion concerning social security reform.  While other countries around the world have been reforming and restructuring their public pension systems, the U.S. social security system remains firmly entrenched in its current form.  Any discussion of reduced benefit or increased contributions is political suicide.  Reform discussions are difficult at best.

Most recently, President G.W. Bush spent a large amount of time and taxpayer money being educated on third rail politics while trying to convince America that some form of privatization was the right vision for the future elderly.   While the highly selected audiences at these events was convinced that opting out completely was the way to go, the rest of America hit their panic buttons then phoned their congressional delegated.  These re-education forums are now part of America history.  The public reform debate has gone quietly into the night while discussion continues in the offices of institutions like MIT, Harvard, and the NBER.

Fortunately, many economists are still researching the efficiency of the U.S. Social Security System.  Additionally, they now have around 20+ years of experience from other countries’ public pension reforms to analyze.  This—at the very least—gives the United States the benefit of not going first so it can learn from the problems of the rest of the world.  Learning the lessons of others may still not be enough to bring sensible and truthful debate back to the public arena.  This must happen before reform or refunding actually occurs.

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Somethings You Can’t Make Up

Given the choice between posting my final grades and my morning coffee or perusing some of the latest presidential antics and my morning coffee, I chose the latter.  The latest front pager at the Confluence, Steven Mather started a great conversation on Obots and willful blindness.  Since I was following a tweetathon last night between Glenn Greenwald and Jack Tapper on the latest about face, it seems appropriate to start there.  This just comes under the heading of reality taking on dimensions of science fiction.

Every one is trying to figure out how Military Tribunals under Bush will be different the Military Tribunals continued by Obama.  Given I’ve been following the financial bailouts under Bush and the virtual continuation of the same policy under Obama, I’m thinking the progressive blogosphere should be blowing a few gaskets now.  After all, they were just told to lay off the torture photos and  any hope of prosecution of what can only be labeled the Cheney Torture Policy. What we appear to have is straight forward continuation of nearly all the major Bush policies with major re-framing.  It’s not going to be the old Nixon War on Drugs, it’s going to be the Obama “complete public-health model for dealing with addiction”.  Somebody seems to think just morphing the lexicon makes it seem less Republican.  Some one needs to tell Axelrod it’s the policies, not the labels.

So Greenwald is calling it  Obama’s kinder, gentler military commissions .

It now appears definitive that the Obama administration will attempt to preserve a “modified” version of George Bush’s military commissions, rather than try suspected terrorists in our long-standing civilian court system or a court-martial proceeding under the Uniform Code of Military Justice.  Obama officials have been dispatched to insist to journalists (anonymously, of course) that Obama’s embrace of “new and improved” military commissions is neither inconsistent with the criticisms that were voiced about Bush’s military commission system nor with Obama’s prior statements on this issue.  It is plainly not the case that these “modifications” address the core criticisms directed to what Bush did, nor is it the case that Obama’s campaign position on this issue can be reconciled with what he is now doing.  Just read the facts below and decide for yourself if that is even a plausible claim.

Oh, do go read the facts listed in the article. Don’t forget those koolaide goggles, because willful blindness is about the only way you’re going to see much difference.

deficitMeanwhile over on Bloomberg, I read up on the latest Obama-would-rather-not-be-held hostage- by-the-oval-office town hall meeting where Obama Says U.S. Long-Term Debt Load ‘Unsustainable’. I have to join Seth and Amy in a “Oh, really?” moment here.  I think you all will remember the graph on the left from earlier pieces that  I’ve done on the Obama stimulus package and budget.   Let’s just use the Bloomberg piece as a refresher.

President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

Earlier this week, the Obama administration revised its own budget estimates and raised the projected deficit for this year to a record $1.84 trillion, up 5 percent from the February estimate. The revision for the 2010 fiscal year estimated the deficit at $1.26 trillion, up 7.4 percent from the February figure. The White House Office of Management and Budget also projected next year’s budget will end up at $3.59 trillion, compared with the $3.55 trillion it estimated previously.

Two weeks ago, the president proposed $17 billion in budget cuts, with plans to eliminate or reduce 121 federal programs. Republicans ridiculed the amount, saying that it represented one-half of 1 percent of the entire budget. They noted that Obama is seeking an $81 billion increase in other spending.

Meanwhile, we’ve seen protests erupt as the Senate started discussing health care reform while leaving single payer solutions off-the-table.  No single payer is another Obama missive and another Republican-like policy.  On May 5th,  those most radical of all elements in this country, doctors and nurses, staged a protest at a senate hearing insisting single payer should be on the table.

I still can’t believe the Republicans are calling Obama a socialist.  The only thing we’ve socialized so far are those incredible losses coming out of the finance sector.  Everything else is Republican-lite.

All I gotta say is ya got played folks!   Maddoff is a small fry scammer by comparison.

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Heaven has Fjords

fjordWhen ever I hear folks rant and rave on the evils of European Social Democracies and how horrid they are, I always ask them to name the country that comes up consistently with the highest literacy rates in the world, lowest infant mortality, and much higher the the USA GDP per capita, and at the same time has  what you would probably call the world’s most complete cradle-to-grave welfare state.  Of course, no one knows the answer because so many folks here have been brainwashed into thinking productivity, budget surpluses, high standards of living, and great education and health care are not possible in socialist states.  Well, they are really wrong.

Without a doubt, the best country to live in the world these days going strictly by the statistics (and not the weather) is Norway.  Take a look at the CIA fact book for all the good stuff on Norway then take a look at  the United States.  Norway has bested the USA in standard of living for quite some time.  The United States keeps dropping on all lists and just in GDP per capita is now sitting at number 10.  Norway is ranked first on the Human Development index of 177 countries, so essentially they are number one country for living the good life.  It is second, only to Luxembourg, for GDP per capita.

Today’s New York Times covers the little country that can and its stellar economic performance in today’s global economic crisis.    A lot of credit is goes to Norway’s socialist finance minister Kristin Halvorsen.  She’s in charge of Norway’s $300 billion sovereign wealth fund that has been steadily buying stocks since March and is used to build a decent standard of living for every one in that country.  Norway likes its government and its government works well. The Times article contrasts the economics of the U.S. and Norway and the U.S. comes up way short.

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