Tag Archives: economic progress

Ben Bernanke

Are You Happy? Ben Bernanke Wants To Know

Ben Bernanke wants to know if you are happy.

The Federal Reserve chairman said Monday that gauging happiness can be as important for measuring economic progress as determining whether inflation is low or unemployment high. Economics isn’t just about money and material benefits, Bernanke said. It is also about understanding and promoting “the enhancement of well-being.”

Bernanke and Fed policymakers rely on reports on hiring, consumer spending and other economic data when making high-stakes decisions about the $15 trillion U.S. economy. The Fed’s dual mandate is to maintain low inflation and full employment.

“We should seek better and more-direct measurements of economic well-being,” Bernanke said Monday in a video-taped speech shown to a conference of economists and statisticians in Cambridge, Mass. After all, promoting well-being is “the ultimate objective of our policy decisions.”

Bernanke acknowledged that many people aren’t too happy right now. Unemployment rose in July to 8.3 percent, and economic growth has slowed sharply from the start of the year. He called the recovery “frustratingly slow” when he testified to Congress on July 17.

Aggregate statistics can mask important information about how individual Americans are faring, Bernanke says.

His speech Monday was the latest foray into a relatively new specialty in economics known as “happiness studies.” Bernanke attracted widespread notice when he spoke about the economics of happiness in a May 2010 commencement address at the University of South Carolina.

In that speech, he said research has found that once basic material needs are met, more wealth doesn’t necessarily make people happier.

“Or, as your parents always said, money doesn’t buy happiness,” Bernanke said then. “Well, an economist might reply, at least not by itself.”

In his remarks Monday, Bernanke turned to the more practical — and difficult — task of measuring a subjective emotion. So far, most efforts have involved surveys in which people are asked about whether they are happy and what contributes to their happiness.

Those surveys have found some consistent answers: physical and mental health, the strength of family and community ties, a sense of control over one’s life, and opportunities for leisure activity.

The Kingdom of Bhutan has been tracking happiness for four decades. The tiny Himalayan nation stopped tracking gross national product in 1972 and instead switched to measuring Gross National Happiness.

Bernanke on Monday sketched out a few other questions he would like to know: How secure do Americans feel in their jobs? How confident are Americans in their future job prospects? How prepared are families for financial shocks?

These indicators “could be useful in measuring economic progress or setbacks as well as in explaining economic decision-making,” Bernanke said.

It’s safe to say that Bernanke wouldn’t expect a great deal of optimism if those questions were asked now.

The Fed has said it plans to keep its key short-term interest rate near zero until late 2014, an indication that it expects the economy to stay weak for another two and a half years. And Fed policymakers appeared to signal after its two-day meeting last week a growing inclination to take further steps to lift the economy out of its slump.

Bernanke’s own definition of happiness might baffle some. He called it a “short-term state of awareness that depends on a person’s perceptions of one’s immediate reality, as well as on immediate external circumstances and outcomes.”

It’s not exactly how the classic comic strip Peanuts described it when it said, “Happiness is a warm puppy.” But perhaps Bernanke’s version can be measured more easily in surveys.

Polling Station

AZ 2010 Midterm Election Analysis

The best day to be the President of the United States has got to be Inauguration Day. You take the oath of office. You give a speech that the whole world stops to listen to and it is guaranteed to be recorded in history the moment you give it. It is all processionals, parties, and smiles. The next day you start working on your agenda, and two years later you face midterm elections.

Midterms are probably the worst day for a president!

It looks like the Democrats will end up losing more than 60 seats in the U.S. House and at least 6 in the Senate. Republicans now take control of the House, and while not gaining a majority in the Senate, they have a more workable margin.

While the economy seems to be the leading reason for voter discontent, it is more than a coincidence that 1994 and 2010 were both Democratic midterm disasters preceded by new Democratic Presidents (Clinton and Obama) that tried to radically reform health care with a national model. (The equivalent for Republican’s would have to be reforming Social Security. Regan tried that and had a 1982 midterm that saw the Senate handed back to the Democrats.)

While slow economic progress is blamed for the large losses to Democrats on the national level, it is a different story in Arizona. Republicans have been in control here for quite awhile. Besides Janet Napolitano’s time as Governor, Republican’s have controlled just about everything else. Arizona is facing a horrible economy with a massive budget deficit, and yet, voters rewarded the Republicans with gains in both legislative bodies, which they had already controlled. The Arizona Senate went from an 18-12 Republican majority to 21-9. In the Arizona House, the Republicans held 35 out of the 60 seats before this election. They have added at least 2 seats to their majority with 3 other seats leaning in their favor. They could get to 40 seats. That is a 2/3 majority, like the Senate now has.

It also appears that Republican’s will win all of the major Arizona statewide offices. Governor Brewer was reelected just months after she looked vulnerable in her own primary. She also had a terrible debate. (Told you the debate wouldn’t matter!)

As for Arizona’s initiatives, again a conservative voter attitude seemed to prevail. Voters said yes to a proposition that prohibits reforms in the President’s healthcare plan (106), yes to eliminating affirmative action programs (107), and yes to secret ballots being mandatory for union organizing (113).

Everything else voters said no to. This included changing rules regarding wildlife management and hunting (109), medical marijuana (203), and major changes in the state’s political process. This includes no to state land reform(110), no to a Lieutenant Governor (111), no to changing the amount of time to verify initiative petition signatures (112), and no to using funds voters already designated to a specific purpose in past elections (301 & 302). Remember Nancy Regan’s slogan; “just say no.”

Some of these proposition results aren’t final. For election results visit AZNow.Biz’s results post.

What to watch for in the coming two years:

President Obama will need to move more to the center to meet Republicans who now have a large say in policy. If he becomes a better diplomat between the parties watch his agenda move better. If not, look for a stalemate.

In Arizona, Republicans should be able to do anything they want. This may not happen. Arizona still has huge financial woes. If Republicans can’t get on the same page, inner-party conflict will become ugly. The big question is how well our Republican Governor, Speaker of the House, and Senate President get along. If they can’t work together and coordinate their agendas, they won’t be able to blame Democrats for being the problem.

The biggest part of this disaster for the Democrats may be the impact it has on redistricting. After the 2010 Census is complete, they will draw new district lines. Controlling this process gives a huge advantage to the party in power.