Should-Read: Larry Summers: Globalization Will Work If We Stop Catering To The Elite

Should-Read: Larry Summers: Globalization Will Work If We Stop Catering To The Elite: “A wage subsidy works like this… http://www.huffingtonpost.com/entry/globalization-larry-summers_us_594b0440e4b0312cfb616164

…I earn $8 an hour and the government pays an extra $4 for every hour I work. If I earn $10 an hour, the government gives me $3 dollars. In other words, because it is based on my wage rate, it doesn’t distort my level of effort. It is more complicated to enforce, but more attractive. It is a better alternative to universal basic income where no level of effort is required. I think people want to work. There are all kinds of important work in our society to do―such as elderly care, child care, practicing preventive medicine―for which there is not a readily apparent business model. If we are going to employ everybody, we’re going to have to find ways of making sure that that work can get done.

Another important thing to understand about wages and costs in this context is how the world has changed. If we assume consumer prices at 100 in 1983, the consumer price for a TV in 2017 is much, much less because the technology has improved and made it much cheaper. But the cost of a year of college has skyrocketed―it is 600 today to compared to 100 in 1983. So, there has been a huge change in relative prices of those two goods. It is hard to believe in that context that we shouldn’t have more spending by the government to help pay for one―college costs―and not the other….

I don’t think more regulation of finance is the foremost issue today…. Before 2008, yes, we should have had more regulation. Is there a fundamental principle around redefining the financial sector as a public utility? I don’t think so…