World Politics News   Articles for World Politics Course

It seems as if there has been a radical reconsideration of the merits of austerity programs.  The reconsideration is due to a number of factors: the seeming failure of the poloicies in restarting economic growth in EUrope as well as the realization that much of the intellectual justification for the policies (the Rogoff-Reinhardt hypothesis) was flawed.  It doesn’t however, seem that support for the policies has really changed all that much.  Thus, we are thinking about alternative explanations for the political attractiveness of the policies.  Deborah Orr gives a chilling hypothesis in her op-ed piece in the Guardian: that the policies are actually designed to make the world much more comfortable for corporations who wish to reduce the size of government regardless of the social costs.

The US Bureau of Labor Statistics issued its compensation report for the first quarter of 2013 (January-March).  It found that “Unit labor costs in nonfarm businesses fell 4.3 percent in the first quarter of 2013, the combined effect of a 3.8 percent decrease in hourly compensation and the 0.5 percent increase in productivity. The decline in hourly compensation is the largest in the series, which begins in 1947. ”   Such a large reduction in real wages is exceptional, and suggests that, while corporations are indeed hiring, they are not offering high wage jobs.   This deficiency will make economic growth more difficult.  Ultimately, however, everyone pays for wages that are too low to cover the cost of living–those workers will receive government subsidies for food, education, and housing for which we all pay taxes.

Iran will hold its presidential election next week, and the leading candidates have very different positions on the question of Iran’s nuclear program.  In some sense, the election will offer a small window on how Iranians think about the program.  It is, however, a mistake to think that the nuclear program will be a high priority for most Iranians–like the US, elections in Iran are determined largely by local issues.  Additionally, the nuclear enrichment issue is non-negotiable for Iran.  The most the candidates can offer is a different degree of conciliation in the discussions with the West.