WASHINGTON, July 31, 2019 (Xinhua) — U.S. Federal Reserve Chairman Jerome Powell reacts during a … [+] press conference in Washington D.C., the United States, on July 31, 2019. U.S. Federal Reserve on Wednesday lowered interest rates for the first time since the 2008 global financial crisis, amid rising concerns over trade tensions, a slowing global economy and muted inflation pressures. The Federal Open Market Committee, the Fed’s rate-setting body, trimmed the target for the federal funds rate by 25 basis points to a range of 2 percent to 2.25 percent after concluding its two-day policy meeting, in line with market expectation.(Photo by Liu Jie/Xinhua via Getty) (Xinhua/Liu Jie via Getty Images)
Xinhua News Agency/Getty Images
At the Federal Reserve’s annual Jackson Hole symposium last week, Chairman Jerome Powell announced the results of the Fed’s monetary policy framework review. As expected, that review has resulted in the Fed adopting an average inflation target.
Sort of.
The twist is that they are going to target average inflation in a “flexible” way. What does that mean? In Powell’s own words:
In seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average. Thus, our approach could be viewed as a flexible form of average inflation targeting.
Talk about leaving yourself wiggle-room! There’s no credible commitment here.
In theory, making up for past misses is a good thing, but the flexible nature of this new policy makes it very difficult to know exactly what the Fed will do as economic conditions unfold. All that we really know is that the Fed will now try to make up for previous misses by shooting for higher (lower) inflation after inflation comes in below (above) target – when it’s convenient.
It is also rather disappointing because, after basically a decade of being unable to hit its inflation target, the Fed has essentially broadened its definition in a way that ensures it can’t miss. Even more disappointing is that the review they conducted really doesn’t seem to have been a scientific review of monetary policy as much as it was a political exercise.
The Fed’s new view of the employment portion of their mandate provides a clue:
… our revised statement emphasizes that maximum employment is a broad-based and inclusive goal. This change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities. In addition, our revised statement says that our policy decision will be informed by our “assessments of the shortfalls of employment from its maximum level” rather than by “deviations from its maximum level” as in our previous statement.
The change to “shortfalls” clarifies that, going forward, employment can run at or above real-time estimates of its maximum level without causing concern, unless accompanied by signs of unwanted increases in inflation or the emergence of other risks that could impede the attainment of our goals. Of course, when employment is below its maximum level, as is clearly the case now, we will actively seek to minimize that shortfall by using our tools to support economic growth and job creation. [Emphasis added.]
So, maybe things aren’t so different now?
Regardless, there is an undeniable nod here to those who want the Fed to do more than focus on just aggregate unemployment. Politico’s Victoria Guida links Powell’s statement directly to appeasing those who believe that “the central bank should help disadvantaged Americans,” and it seems like she’s on the mark. (Though I’d argue that the Fed isapolitical in name only, and I’m not the only one.)
Viewed through the lens that Guida uses, the new policy statement is a politically savvy move. It won’t satisfy the staunchest critics, but that’s irrelevant. The apparent policy shift lets the Fed appease any member of Congress even close to being on the fence about imposing a new racial inequality mandate on the central bank.
Powell clearly wants nothing to do with that sort of mandate, but he can’t ignore Congress. The fact that Congress can – and regularly does – ignore common sense when it enacts requirements on federal agencies only heightens the danger that harmful legislation will be passed.
It makes no sense, for instance, to pass a law that requires federal regulators to ensure financial stability knowing that the term cannot be objectively defined. And it defies common sense to hold lenders legally accountable for failing to accurately assess borrowers’ ability to repay a loan when there is no single metric (or set of metrics) that can measure such an outcome (see page 43).
But that’s exactly the sort of legislation that Congress passes because it provides them political cover while relieving them of actually having to fix something. Sen. Elizabeth Warren’s (D-Mass.) Federal Reserve Racial and Economic Equity Act does a great job of carrying on this tradition.
Warren’s bill would require the Fed, when conducting everything from monetary policy to regulatory policy, to “exercise all duties and functions in a manner that fosters the elimination of disparities across racial and ethnic groups with respect to employment, income, wealth, and access to affordable credit.”
The bill does not include a single word on how to define these disparities, much less how any policy is supposed to achieve these goals in the context of the Fed’s other mandates. But it would require the Fed to report to Congress on these disparities and to explain what they are doing to eliminate them. In other words, it would provide the perfect opportunity for Congress to act like they have done something to eliminate economic inequality among racial groups while having actually done nothing beneficial.
It would be refreshing if the Fed’s leadership stood up to this effort and refused to play identity politics. Doing so does not require a denial of America’s past mistakes, it only demands acknowledging that this sort of ill-defined mandate is unlikely to fix anything that those mistakes might have caused.
It would be very easy, for example, for the Fed to enumerate existing economic disparities in the U.S., while also explaining that monetary policy provides no cure.
Of course, the Fed would also have to point out that black women have individual earnings mobility close to that of white women – 29 percent of white women born into the lowest quintile remain in the same group when they are between 28 and 35, whereas the rate is 34 percent for black women. (The situation is bleaker for black women when family income metrics are used.)
It’s also true that poverty rates are higher for Native Americans than blacks, higher for Vietnamese Americans than Filipino Americans, and higher for Dominicans than Cubans.
So, should the Fed maintain expansionary monetary policy until the black-white gap for males is closed, even if doing so harms black women (and everyone else)? Should they expand their purchases of bonds until the poverty rate among all different “Hispanic” groups equalizes, or until Native Americans have the lowest poverty rates of any group?
Perhaps supporters of Warren’s bill have something different than monetary (or regulatory) policy in mind, such as providing banks with more funds to lend to young black males or Native Americans? If that’s the sort of thing Congress has in mind, they should say so.
Hopefully enough members of Congress see how dangerous it is to drag the Fed further into this game of identity politics. That effort runs counter to the idea that people judge each other based on the content of their character rather than by the color of their skin, and it fosters the demonstrably false idea that the American mainstream is only attainable for white people.
It also reinforces the false notion that the economy is a zero sum game where some groups are winning at the expense of others, and it perpetuates a culture of victimhood that helps turn the well-connected into millionaires. It moves us farther away from a free enterprise system and closer to the centrally planned economies that trap people in poverty and subjugate them to an elitist ruling class.
In response to the activists’ demands [during the 1960s and 1970s], the policy makers of the past blessed the federal bureaucracy’s creation of racial and ethnic categories and the related use of racial preferences for university admissions, employment and government contracting. The formalizing of groups, the addition of incentives to adhere to them, and the culture of victimhood that the whole scheme instilled, betrayed the colorblind promise of the civil-rights movement. The Civil Rights Act of 1964 was intended to cure problems like segregation. Instead, by creating an incentive system based on grievances, the architects of identity politics all but ensured victimhood would never end.
Rather than continue down this path – one that has clearly failed millions of Americans – Congress can implement countless policies to expand economic freedom and help Americans improve their lives. A great place to start would be to reverse decades of harmful housing policies that unnecessarily saddle lower income folks with higher home prices and debt, trap people in poverty, and offer few incentives for upward mobility.
Instead, some of the leading progressives want to expand the existing government-dominated housing system and to close “the racial wealth gap” by providing subsidies to prospective home buyers in areas that were formerly red-lined. (This term refers to the federally-initiated policy of “outlining areas with sizable Black populations in red ink on maps as a warning to mortgage lenders, effectively isolating Black people in areas that would suffer lower levels of investment than their white counterparts.”)
But a major problem with this approach, as a Brookings study shows, is that most of the people who now live in these formerly segregated areas are not black – they are white and Latino. The study shows that “Black residents in redlined areas account for just 8% of all non-Latino or Hispanic Black Americans.”
This case is the perfect example of politicians being more concerned with playing identity politics than actually solving economic problems. It is also directly comparable to what they are doing to the Fed. Hopefully, there are still enough reasonable members of Congress to reverse course before it’s too late.
HALIFAX – Nova Scotia Premier Tim Houston says it’s “disgraceful and demeaning” that a Halifax-area school would request that service members not wear military uniforms to its Remembrance Day ceremony.
Houston’s comments were part of a chorus of criticism levelled at the school — Sackville Heights Elementary — whose administration decided to back away from the plan after the outcry.
A November newsletter from the school in Middle Sackville, N.S., invited Armed Forces members to attend its ceremony but asked that all attendees arrive in civilian attire to “maintain a welcoming environment for all.”
Houston, who is currently running for re-election, accused the school’s leaders of “disgracing themselves while demeaning the people who protect our country” in a post on the social media platform X Thursday night.
“If the people behind this decision had a shred of the courage that our veterans have, this cowardly and insulting idea would have been rejected immediately,” Houston’s post read. There were also several calls for resignations within the school’s administration attached to Houston’s post.
In an email to families Thursday night, the school’s principal, Rachael Webster, apologized and welcomed military family members to attend “in the attire that makes them most comfortable.”
“I recognize this request has caused harm and I am deeply sorry,” Webster’s email read, adding later that the school has the “utmost respect for what the uniform represents.”
Webster said the initial request was out of concern for some students who come from countries experiencing conflict and who she said expressed discomfort with images of war, including military uniforms.
Her email said any students who have concerns about seeing Armed Forces members in uniform can be accommodated in a way that makes them feel safe, but she provided no further details in the message.
Webster did not immediately respond to a request for comment.
At a news conference Friday, Houston said he’s glad the initial request was reversed but said he is still concerned.
“I can’t actually fathom how a decision like that was made,” Houston told reporters Friday, adding that he grew up moving between military bases around the country while his father was in the Armed Forces.
“My story of growing up in a military family is not unique in our province. The tradition of service is something so many of us share,” he said.
“Saying ‘lest we forget’ is a solemn promise to the fallen. It’s our commitment to those that continue to serve and our commitment that we will pass on our respects to the next generation.”
Liberal Leader Zach Churchill also said he’s happy with the school’s decision to allow uniformed Armed Forces members to attend the ceremony, but he said he didn’t think it was fair to question the intentions of those behind the original decision.
“We need to have them (uniforms) on display at Remembrance Day,” he said. “Not only are we celebrating (veterans) … we’re also commemorating our dead who gave the greatest sacrifice for our country and for the freedoms we have.”
NDP Leader Claudia Chender said that while Remembrance Day is an important occasion to honour veterans and current service members’ sacrifices, she said she hopes Houston wasn’t taking advantage of the decision to “play politics with this solemn occasion for his own political gain.”
“I hope Tim Houston reached out to the principal of the school before making a public statement,” she said in a statement.
This report by The Canadian Press was first published Nov. 8, 2024.
REGINA – Saskatchewan Opposition NDP Leader Carla Beck says she wants to prove to residents her party is the government in waiting as she heads into the incoming legislative session.
Beck held her first caucus meeting with 27 members, nearly double than what she had before the Oct. 28 election but short of the 31 required to form a majority in the 61-seat legislature.
She says her priorities will be health care and cost-of-living issues.
Beck says people need affordability help right now and will press Premier Scott Moe’s Saskatchewan Party government to cut the gas tax and the provincial sales tax on children’s clothing and some grocery items.
Beck’s NDP is Saskatchewan’s largest Opposition in nearly two decades after sweeping Regina and winning all but one seat in Saskatoon.
The Saskatchewan Party won 34 seats, retaining its hold on all of the rural ridings and smaller cities.
This report by The Canadian Press was first published Nov. 8, 2024.
HALIFAX – Nova Scotia‘s growing population was the subject of debate on Day 12 of the provincial election campaign, with Liberal Leader Zach Churchill arguing immigration levels must be reduced until the province can provide enough housing and health-care services.
Churchill said Thursday a plan by the incumbent Progressive Conservatives to double the province’s population to two million people by the year 2060 is unrealistic and unsustainable.
“That’s a big leap and it’s making life harder for people who live here, (including ) young people looking for a place to live and seniors looking to downsize,” he told a news conference at his campaign headquarters in Halifax.
Anticipating that his call for less immigration might provoke protests from the immigrant community, Churchill was careful to note that he is among the third generation of a family that moved to Nova Scotia from Lebanon.
“I know the value of immigration, the importance of it to our province. We have been built on the backs of an immigrant population. But we just need to do it in a responsible way.”
The Liberal leader said Tim Houston’s Tories, who are seeking a second term in office, have made a mistake by exceeding immigration targets set by the province’s Department of Labour and Immigration. Churchill said a Liberal government would abide by the department’s targets.
In the most recent fiscal year, the government welcomed almost 12,000 immigrants through its nominee program, exceeding the department’s limit by more than 4,000, he said. The numbers aren’t huge, but the increase won’t help ease the province’s shortages in housing and doctors, and the increased strain on its infrastructure, including roads, schools and cellphone networks, Churchill said.
“(The Immigration Department) has done the hard work on this,” he said. “They know where the labour gaps are, and they know what growth is sustainable.”
In response, Houston said his commitment to double the population was a “stretch goal.” And he said the province had long struggled with a declining population before that trend was recently reversed.
“The only immigration that can come into this province at this time is if they are a skilled trade worker or a health-care worker,” Houston said. “The population has grown by two per cent a year, actually quite similar growth to what we experienced under the Liberal government before us.”
Still, Houston said he’s heard Nova Scotians’ concerns about population growth, and he then pivoted to criticize Prime Minister Justin Trudeau for trying to send 6,000 asylum seekers to Nova Scotia, an assertion the federal government has denied.
Churchill said Houston’s claim about asylum seekers was shameful.
“It’s smoke and mirrors,” the Liberal leader said. “He is overshooting his own department’s numbers for sustainable population growth and yet he is trying to blame this on asylum seekers … who aren’t even here.”
In September, federal Immigration Minister Marc Miller said there is no plan to send any asylum seekers to the province without compensation or the consent of the premier. He said the 6,000 number was an “aspirational” figure based on models that reflect each province’s population.
In Halifax, NDP Leader Claudia Chender said it’s clear Nova Scotia needs more doctors, nurses and skilled trades people.
“Immigration has been and always will be a part of the Nova Scotia story, but we need to build as we grow,” Chender said. “This is why we have been pushing the Houston government to build more affordable housing.”
Chender was in a Halifax cafe on Thursday when she promised her party would remove the province’s portion of the harmonized sales tax from all grocery, cellphone and internet bills if elected to govern on Nov. 26. The tax would also be removed from the sale and installation of heat pumps.
“Our focus is on helping people to afford their lives,” Chender told reporters. “We know there are certain things that you can’t live without: food, internet and a phone …. So we know this will have the single biggest impact.”
The party estimates the measure would save the average Nova Scotia family about $1,300 a year.
“That’s a lot more than a one or two per cent HST cut,” Chender said, referring to the Progressive Conservative pledge to reduce the tax by one percentage point and the Liberal promise to trim it by two percentage points.
Elsewhere on the campaign trail, Houston announced that a Progressive Conservative government would make parking free at all Nova Scotia hospitals and health-care centres. The promise was also made by the Liberals in their election platform released Monday.
“Free parking may not seem like a big deal to some, but … the parking, especially for people working at the facilities, can add up to hundreds of dollars,” the premier told a news conference at his campaign headquarters in Halifax.
This report by The Canadian Press was first published Nov. 7, 2024.
