Daily Archives: November 26, 2012

Two Ideas for Promoting Multi-Sectorial Analysis

By Thornton (Tip) Parker

This discussion goes beyond MMT and MS, and advocates of those ideas may or may not agree.  Much written here is prefaced with “I think”.

Wealth and income concentration:  The claim that money in the hands of the wealthy trickles down through the economy is just backward.  Money is like cream—it rises to the top.  In 2007, the ten percent with the highest incomes received nearly half of all personal incomes in the country.  This concentration was not just due to merit, much of it was  structural, institutional, and rent seeking.  In part because of Occupy, the public is gradually becoming aware of this fundamental problem.        Continue reading

William Black on HuffPost Live

NEP’s William Black appeared on Huff Post Live’s Sound Off hosted by Mike Sacks. The topic was tax hikes on the middle class. You can view the clip below or if you want to go to HuffPost Live – click here.

Ecuador: Bank Spreads, Taxes, Executive Compensation and Growth

By William K. Black
(Cross Posted at Benzinga.com)

One of the distinctive features of banking in scores of developing nations is the very large spreads between the rate of interest they pay their depositors and the rate they charge borrowers.  Academics have frequently focused on the exceptionally high spreads in Latin America in articles published over the last three decades.  Economic theory predicts that these spreads should impose a major drag on development.  The high interest rates charged to lenders should lead to very large “hurdle rates” for prospective borrowers’ projects.  The two obvious implications of high hurdle rates, sometimes discussed in the literature, are that fewer worthwhile investments will be made by prospective entrepreneurs and more of the loans in Latin America are likely to go to high risk borrowers.  High risk investments should be, if financial markets are efficient, more likely to produce higher returns exceeding the hurdle rate.  The standard neo-classical economic assumption is that financial markets are efficient.

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