Magazine article Regional Economist

Letters to the Editor

Magazine article Regional Economist

Letters to the Editor

Article excerpt

This is in response to an article headlined "The Mismatch Between Job Openings and Job Seekers," which appeared in the July issue.

Dear Editor:

Your excellent July issue of The Regional Economist concludes that mismatch (structural unemployment) only accounts for a small part of the problem. I would urge you to check (whether) the influence of massive and growing inequality of income, wealth and opportunity might be a major cause. The latest New Yorker, in discussing a spectacularly successful hedge fund, suggests that the rapid growth of corporate salaries may have been accelerated by the competition with hedge fund salaries. If we had the data, I think we could find that prior to each major recession was a rapid increase in income inequality. The few very large incomes drain a lot of purchasing power and leave corporations with piled-up cash and no good markets for new investments.

With this "demand side" analysis, much of the current panic response to growing federal debt is cutting jobs, particularly at the state level. Tax cuts for the affluent never trickled down, but more income at the bottom would surely rapidly move up.

Jim Morgan, professor of economics, emeritus, University of Michigan, Ann Arbor

This is in response to "Commodity Price Gains: Speculation vs. Fundamentals," which appeared in the July issue.

Dear Editor:

I found your piece "Speculation vs. Fundamentals" very interesting. One thing that I did find missing was any mention of how futures contract margins are adjusted in response to higher/lower prices and how this, along with interest rates, impacts the cost of holding futures. I've attached the link to the CME web site which contains the historical margin rates for your reference: www.cmegroup.com/clearing/risk-management/ historical-margins.html

I also suspect that the terms and willingness at which banks extend credit to businesses, like that of the athletic apparel wholesaler cited in your piece, may have an impact on commodity prices. …

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