January 27, 2023

Economix Blog: Weekend Business Podcast: Mortgage Crisis, the Euro and the Fed

The subprime mortgage crisis dominated the Weekend Business podcast when it started in 2007.

This is the podcast’s last waltz. We’re ending this series of weekly podcasts much as we started — with Gretchen Morgenson’s coverage of that crisis and its continuing consequences for homeowners, banks, the broader financial system and the overall economy. She covers this subject in her column in Sunday Business.

I also talked with Floyd Norris about the crisis in the euro zone. The European Central Bank has begun offering large-scale low-cost loans to European banks, easing the severity of their short-term liquidity problems. That may give leaders of the European Union some breathing room as they grapple with the fiscal and governance issues that threaten the Continent.

The euro crisis is likely to spill over to banks in the United States in the months ahead, in the view of Tyler Cowen, the George Mason economist, with whom I chatted in a third conversation on the podcast.

While American financial regulations are not yet adequate for the trials ahead, he says, the Federal Reserve has required financial institutions to maintain enormous reserves at the central bank. This is likely to provide an important buffer in 2012, he writes in the Economic View column in Sunday Business.

You can find specific segments of the podcast at these junctures: Gretchen Morgenson (31:10); Floyd Norris (17:33); Tyler Cowen (7:51).

As articles discussed in the podcast are published, links will be added to this post.

You can download the program from The New York Times’s podcast page or directly from iTunes.

Article source: http://feeds.nytimes.com/click.phdo?i=3a2af2d0f4bfecbf1d6544cc54bb8128

Economix Blog: Weekend Business Podcast: Europe, Pensions, Wealth and Phone Bills

For much of the past week, financial markets have fretted more about Italy than about Greece, which had been the main focus of worries for many weeks.

While the markets were calmer on Friday, the problems in the euro zone were hardly over.

In the new Weekend Business podcast, Floyd Norris, a veteran financial reporter, says that Italy’s sheer economic weight makes its problems quite threatening to the world’s financial system. An impending change in political leadership in Italy and a shift that has already occurred in Greece took some of the financial pressure off both countries temporarily. But the stability of the euro zone remains very much in doubt, he says.

In the United States, a Congressional “supercommittee” has been charged with reducing the fiscal deficit by $1.2 trillion. In a separate conversation in the podcast, and in her column in Sunday Business, Gretchen Morgenson says the committee might want to focus on the taxpayer financing of military contractor pensions, which, she says, are underfunded by some $30 billion. Since defined-benefit pensions have been reduced in other sectors, she suggests, it may be worth considering whether taxpayers ought to bear this burden for defense contractors.

Questions posed by the Occupy Wall Street demonstrations are the focus of the Economic View column in Sunday Business by Tyler Cowen, a George Mason economics professor, who says he has a libertarian and conservative perspective. While he says in the podcast that he’s sympathetic to the demonstrators’ targeting of abuses by the “top 1 percent,” he adds that the crucial distinction ought to be how you earn your money, not how much money you earn. The pursuit of wealth has long been valued in American society, he says, along with a culture of discipline and hard work, and in his view these values ought to be strengthened in the future.

Outrageous cellphone bills have raised the hackles of the Haggler, as David Segal calls himself in his Sunday Business column. On the podcast, he discusses his efforts to adjudicate a bill that amounted to more than $25,000 in long-distance charges plus more than $1,000 in recovery fees.

And Phyllis Korkki and Amy Cortese discuss the response of people in Saranac Lake, a small town in upstate New York, who realized that with the demise of a local store there would no longer be anyplace in town to buy underwear. They started a community-owned store, which sells assorted sundries, with the support of some local shopkeepers, who say that a variety of enterprises are needed to build customer traffic and keep the town’s businesses alive.

You can find specific segments of the podcast at these junctures: Floyd Norris on European debt (34:20); news headlines (25:37); Gretchen Morgenson on pensions (23:22); Amy Cortese on Saranac Lake (18:46); The Haggler on phone bills (13:14); Tyler Cowen on wealth (8:44); the week ahead (1:41).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.

Article source: http://feeds.nytimes.com/click.phdo?i=3a3d681194d14f9fa094fc77c63ee787

Economix: The Case for Having More Children

Book Chat

Bryan Caplan, an economist at George Mason, is the author of “Selfish Reasons to Have More Kids,” which will be released this week. Mr. Caplan doesn’t believe everyone should have a lot of children. But he does say many parents and future parents should consider having more children than they are currently planning.

Bryan Caplan, author of Kaitlin Caplan Bryan Caplan, author of “Selfish Reasons to Have More Kids,” with Simon, one of his three children.

The economists at Marginal Revolution — colleagues of Mr. Caplan’s — have debated some of the book’s arguments in recent posts. Mr. Caplan also wrote a related article for The Wall Street Journal last year and commented on the “Tiger Mother” book for EconLog.

Our conversation follows.

Q. My sense of the research on nature and nurture is that both matter. On the one hand, genes clearly matter. On the other, young children of college graduates, for instance, know hundreds and hundreds more words on average than young children of high-school dropouts. That difference is not mostly genetic.

You seem to have a different sense of the research. You write, “Adoption and twin research provides strong evidence that parents barely affect their children’s prospects.” What’s the brief version of how you try to persuade skeptics like me?

Mr. Caplan:
The central idea of twin and adoption research is that disentangling nature from nurture is hard. Our intuition isn’t very helpful. Yes, kids of college-educated parents know more words. But why? Maybe their upbringing is the reason, as you suggest. But babies from college-educated families might excel even if raised by high school dropouts, by learning a higher fraction of the words they hear, or spending more time reading.

So what does the twin and adoption data say? Language fits a standard pattern. Consistent with your skepticism, upbringing has a noticeable effect on the vocabulary of young children. But as children mature, this effect largely fades away. The Colorado Adoption Project found, for example, that 2-year-olds adopted by high-vocabulary parents had noticeably larger vocabularies. But as the kids grew up, their vocabulary scores looked more and more like their biological parents’. By age 12, the effect of enriched upbringing on vocabulary was barely visible.

Admittedly, there’s a sense in which upbringing is all-important: If a baby is raised by wolves, he won’t know any words. (There’s also a sense in which genes are all-important: If you had wolf DNA, you wouldn’t know any words either.) But twin and adoption research focuses on questions that are much more relevant for parents: how your child will turn out if you switch to another parenting style.

Basic Books

Q. One of the better-known findings of the happiness research is that having kids doesn’t make people happier. But you argue that this finding is somewhat misleading. Over the long-term, people do seem to enjoy being parents. You also offer some advice about how parents can improve their short-term enjoyment of being parents. Will you describe that advice?

Mr. Caplan: Happiness researchers consistently find that people with kids are less happy than otherwise identical people without. The result holds up, but there’s a lot more to the story. First of all, the “depressing” effect of kids, while consistent, is small. Married-with-kids is far happier than single-without-kids, but happiness researchers rarely bemoan the plight of childless singles. Second, kids do extremely well by another plausible standard: customer satisfaction. Over 90 percent of parents say they’d make the same decision if they had a “do over,” and over two-thirds of childless adults over 40 say they wish they had kids when they had their chance.

The finding that parents are slightly less happy is actually one of the main motivating facts behind my book. The problem isn’t that kids “ruin their parents’ lives,” but that parents need a little more tranquility and time for themselves. That’s why the evidence from twin and adoption research is such good news for parents: Parents can make their lives better today without making their kids’ lives worse tomorrow.

A few of my favorite specific suggestions:

1. While parents often lose sleep for years, getting kids to sleep through the night is not hard. Real experiments confirm that the Ferber method — let your baby cry in his crib for 10 minutes, briefly comfort him, leave, repeat — works wonders.

2. Improving kids’ behavior isn’t hard either. Experiments confirm that clear, consistent, mild discipline — like putting kids in the “Naughty Corner” — works even on difficult kids. The problem is that if parents stop imposing discipline, kids soon revert to their old tricks.

3. If neither you nor your child enjoys an extracurricular activity, stop doing it. If the alternative is a little more TV or Xbox, that’s O.K.

4. Supervise less. Lenore Skenazy’s Free-Range Kids makes the case better than I ever could.

Q. Yes, you seem to be pro-television, at least in moderation, saying that it can reduce “secondhand stress.” How, and what else can?

Mr. Caplan: In the Ask the Children survey, kids’ main complaint about their parents wasn’t lack of face time, but what I call “secondhand stress” — the fact that their parents were often tired and short-tempered. The upshot: One of the best ways to be a better parent is to give yourself a break. Electronic babysitters like television and video games definitely help: When they take your kids off your hands, they don’t just give you extra time to relax; they makes it easier for you to treat your kids well.

A few other tips for alleviating secondhand stress:

Avoid activities that sound good, but end up feeling like a chore. If you’re tired of soccer, and your kids aren’t dying to play, it’s O.K. to just play casually — or quit.

Make family vacations less ambitious — and don’t be afraid to leave your kids behind with willing grandparents. The “staycation” — taking time off to enjoy local activities — is undervalued.

If you’ve got more money than time, what are you saving it for? Spending a little money on a babysitter, maid, or gardener doesn’t just give you precious extra hours; it makes it easier to laugh at your kids’ funny questions instead of snapping at them.

Q. O.K., let’s end on the positive — what are the selfish reasons to the have more kids?

Mr. Caplan: The heart of my argument: There’s a close connection between how you raise your kids, and how many kids are best for you to have. Most people think that raising decent kids requires decades of unpleasant sacrifices. No wonder they’re tempted to keep their families small — or remain childless. The good news of twin and adoption research is that sacrifice is overrated. Parents are “overcharging” themselves for their kids. And what do economics and common sense tell you to do when prices turn out to be lower than you thought? Buy more. Stock up. Tell your friends.

Modern parents are far from miserable. But the parenting experience can and should be improved. Instead of fruitlessly playing Pygmalion, focus on enjoying your journey together. Raise your kids with kindness and respect. Find common interests. Use discipline not to teach lifelong lessons, but to persuade your kids to treat you and others decently here and now. If you use these strategies, parenting and bigger families really are a lot of fun.

My wife’s first twin pregnancy scared me. How were we going to cope? The next time my wife was pregnant, though, I hoped for twins. What had I learned? I knew about twin and adoption research long before I became a father. But once our first two sons were born, I took the science to heart. Being parents of twins didn’t have to be a chore — and we decided not to let it become one. This got me thinking: If others’ belief in the power of nurture made them want fewer kids, shouldn’t my disbelief in the power of nurture make me want more? It should, and it did.

Article source: http://feeds.nytimes.com/click.phdo?i=466d373f1fbd4f2eb89dde7f58744780