Economy

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include the economy, inequality, government assistance, and financial services.

By Jay Pelosky

This op-ed originally appeared in Reuters and is based on the recent World Economic Roundtable Paper, "Building a Bridge to a Tri-Polar World Economy: An American Growth Strategy."

[Download the full paper here].

The American social contract is in crisis. Even before the Great Recession exposed its inadequacy, it was clear that the existing American social contract — the system of policies and institutions designed to provide adequate incomes and economic security for all Americans — needed to be reformed to meet the challenges of the twenty-first century. What is needed is not mere incremental tinkering, but rather rethinking and reconstruction. Policies that have worked should be expanded, while others that have failed should be replaced.

This past Saturday, March 16, 2013 marked an extraordinary moment in Pakistan’s history, as this is the first time that a civilian government has served its entire five-year term (from 2008 to 2013). And, for the first time in its history, the Pakistani military appears both unwilling and unable to mount a coup against any civilian government. The military has mounted four coups since Pakistan’s independence in 1947.

The trade normalization process between India and Pakistan will undoubtedly open new trade opportunities. This study assesses trade possibilities between the two countries, examines the physical and regulatory impediments to realizing the trade potential, and suggests how the trade potential can be realized. The main findings and recommendations are summarized below.

The recent deliberations in Washington about the fiscal cliff have triggered a national debate in the United States about the nature, extent and future sustainability of key elements of the U.S. social safety net: Social Security, Medicare, Medicaid, support for education, the unemployed and the poor.

If there is to be any durable hope for a social contract that transcends left-right partisanship, that contract must rest upon a majority consensus about policies that are efficient, fair, and sustainable. Once the smoke has cleared from this November’s battle over the role of government, what will endure are several policy prescriptions kept alive by an objective reading of economic history and a general consensus among economists.

In some respects, America’s market for beer has never looked healthier. Where fewer than a hundred brewers operated a generation ago, we now can count more than 2,000, producing a mind-boggling variety of beers. Yet just below this drinkers’ paradise, we see a market that has never been more closed. Two giant firms — Anheuser-Busch Inbev and MillerCoors — now control some 90 percent of production. At the same time, a few giant retailers — led by Costco — are rolling up control over sales. This concentration is already diminishing real variety in much of the country.

A top government economist has concluded that the high-speed trading firms that have come to dominate the nation’s financial markets are taking significant profits from traditional investors.

The chief economist at the Commodity Futures Trading Commission, Andrei Kirilenko, reports in a coming study that high-frequency traders make an average profit of as much as $5.05 each time they go up against small traders buying and selling one of the most widely used financial contracts.