Wealth & Poverty

Ways to Connect

In 1843, the English economy was transforming. The Industrial Revolution was drawing people from the countryside to toil long hours in the new factories that were springing up in the rapidly expanding cities. A new middle class was getting rich, but the profits were not always shared with the poor.

Meanwhile, a new field of study continued to expand its hold on the intellectual scene: something called "political economy." Among its champions were Adam Smith and Thomas Robert Malthus, who preached the gospel of self-interest and warned against the dangers of "surplus population."

What's your key indicator for 2019? Today we ask a couple of our friends what they'll be watching most closely next year. New York Magazine's Josh Barro says he'll be keeping an eye on oil. Jennifer Doleac from Texas A&M says she'll be monitoring diversity in the economics profession. Very different indicators, but both important for the world in which we live.

Music: "Terrific Time of the Season"

As the year makes the turn into the final furlong, here at The Indicator, we're already looking forward to next year. What should we be looking at? What are the harbingers that will tell us how the economy is doing? Soumaya Keynes of the Economist, Jared Bernstein of The Center on Budget and Policy Priorities and Martha Gimbel of the Indeed Hiring Lab give us their takes. And tell us about their favorite Christmas drinks. Peppermint almond milk eggnog, anyone?

Music: "Terrific Time of the Season"

The business of getting people high used to require fields of poppies or marijuana, and the farmers to farm them. Over the last two decades, a new generation of potent synthetic drugs has revolutionized the illicit drug trade. These drugs are cheap, easy to make in factories, and difficult to regulate. Now, it's possible to become a kingpin with little more than an internet connection and an email address for a chemical plant in China.

Today on the show: We look at one synthetic drug — Spice — and tell the story of how it helped unleash a revolution.

One of the great joys of working on The Indicator is our audience. Our listeners write to us all the time, sometimes with compliments, sometimes with criticisms, but always with something interesting to say ... or ask. Today we answer several listener questions. On the severity of economic downturns, on the minimum wage and on the Australian housing market.

Links referenced in this episode:

-- Update: "Scariest jobs chart ever" (Calculated Risk)

Updated at 4:03 p.m. ET

Despite enormous pressure from President Trump, the U.S. Federal Reserve announced Wednesday it is increasing interest rates by a quarter point.

The Fed said in a statement it is raising the key borrowing rate to a range of 2.25 percent to 2.50 percent — the highest level in a decade, when the economy was in the early stages of the financial crisis and the beginning of the Great Recession. The Dow ended the day down 352 points, or 1.5 percent, after the Fed announcement. The index was up nearly 300 points earlier.

The Crypto Crash

Dec 18, 2018

2017 and 2018 saw the heady rise and the crazy crash of cryptocurrency. It was a wild ride. But what's at the end? Will crypto start the long, slow climb to indispensable asset or the fast dive into tulip territory? We take a look with Hunter Horsley, co-founder and CEO of Bitwise Asset Management.

Music: "Deliberation"

Happy Birthday, Tax Cuts!

Dec 18, 2018

NOTE: This is an excerpt of Planet Money's newsletter. You can sign up here.

Donald Trump's most important economic policy turns a year old this week. If the Tax Cuts and Jobs Act (TCJA) were a baby, it still wouldn't be able to talk. But its personality is beginning to show, and there's a big debate over whether it's a problem child.

Our friends in Hollywood tell us they've started to receive screeners of movies for consideration for awards. So we thought we'd get a jump on awards season by handing out our own prizes. Today on the Indicator, Cardiff and Stacey hand out awards for some of the silliest, most outrageous, or just dumbest stuff people and companies have done this year — plus awards for a couple of just plainly weird trends.

As President Trump sat across the table from Chinese President Xi Jinping at the G20 in Buenos Aires, things seemed to be looking up. Their two governments, which have been embroiled in a trade war for months, were agreeing to a 90-day truce.

The issue of a border wall between the U.S. and Mexico has been one of President Donald Trump's signature issues. But this isn't the first time the U.S. has talked about a border wall. Back in 2006, President George W. Bush passed the Secure Fence Act. It ordered the building of around 600 miles of wall on the border between the U.S. and Mexico. Economist Melanie Morten and two colleagues examined the economic effects of that wall.

If you've ever wondered how mattress stores stay in business, you're not alone. They seem to defy the laws of economics: They occupy large pieces of often very expensive real estate; they're usually empty; and because most people buy a mattress maybe once or twice a decade, they don't seem to do a lot of trade. So how do they they survive? The most puzzling example of this business is a company called Mattress Firm, which became the biggest mattress retailer in the country following an acquisition binge.

This show originally ran in 2014.

A penny is a strange thing. It is money, but it's just about worthless. It's near impossible to buy something with just one penny. (Trust us. We tried.) And yet, the penny doesn't seem to be going anywhere.

Economic insecurity doesn't get captured by the broader macroeconomic indicators. But if you suddenly get sick, can you afford to go to the doctor? Do you ever worry that you'll run out of money to feed your kids before your next paycheck? Is your paycheck steady enough that you can plan and budget for future expenses? And if you needed to fix your car, would you still have enough money left over to afford that month's rent? These are questions that even people with jobs — maybe even better jobs than they had last year — still struggle to answer.

British politicians were due to vote today on Prime Minister Theresa May's plan to take the UK out of the European Union. In a last minute twist however, May announced a postponement of the parliamentary vote.

After Amazon announced it would open a new office in New York's Long Island City neighborhood, a fight erupted in Planet Money's office. A similar fight is playing out all across the city. Some people think: "Great! This will bring lots of new jobs and investment to New York." Others worry Amazon's presence will raise rents and displace people. Plus, New York gave the company a huge subsidy in the form of tax incentives.

It's jobs day! The U.S. economy created 155,000 jobs in November. That's less than the roughly 200,000 jobs a month that the economy has been creating for the past year. But with solid wage growth and an unemployment rate holding steady at 3.7 percent, the jobs report overall looks pretty good.

Updated at 4:14 p.m. ET Friday

The jobless rate remained at a nearly 50-year low of 3.7 percent in November as employers added 155,000 jobs, fewer than in October and less than expected by private analysts.

Meanwhile, wages grew 3.1 percent over the past 12 months, the same rate as in October, the Bureau of Labor Statistics said. Average earnings climbed to $27.35 an hour.

The Fed's Mistake?

Dec 6, 2018

For years after the Great Recession the Federal Reserve kept short term interest rates near zero percent. That meant money was cheap, making it easier for people and companies to borrow, which helped keep the U.S. economy growing.

But then in late 2015 — with unemployment near five percent — the Fed became increasingly worried about the economy overheating, and it started gradually raising rates. Adam Ozimek, a senior economist at Moody's Analytics, thinks that was a big mistake. Today on the show, he tells us why.

This episode originally aired in 2014.

We go to the auto show to find out why can't you build a car that can be driven anywhere in the world.

Cars could be cheaper. Car companies could make more money. But standing in the way is a disagreement over what counts as "safe enough." Europe has one answer. America has another. Neither is more safe than the other. They're just different.

Paris is still smoldering in the wake of violent protests last weekend. The protestors, known as the gilets jaunes, or yellow vests, were reacting to a bunch of economic reforms President Emmanuel Macron has put in place — including a planned tax increase on gasoline. Today on the show, we look at Macron's economic reforms for France, why they got people so upset, and how the yellow vest movement parallels things going on in the U.S.

Yesterday, a part of the yield curve inverted. The interest rate on 5-year treasuries fell slightly below the interest rate on three-year treasuries. This has spooked some people, because an inversion in the yield curve is sometimes regarded as the harbinger of a recession.

So, are we headed for a recession?

Campbell Harvey says no. He's a finance professor at Duke, and the man who first demonstrated that the yield curve can act as a recession predictor. Today on the Indicator, he tells us why there's no need to panic about a recession — or at least not yet.

The U.S. and China have been escalating tariffs against each other for most of this year. Hundreds of billions of dollars worth of goods have been taxed and companies all over the world have been scrambling to adapt. The impact on the two largest economies in the world has been undeniable. But a dinner over the weekend between President Donald Trump and President Xi Jinping seemed to move toward a partial resolution. At least for now.

Episode 879: The Secret Target

Nov 30, 2018

Their plan was dangerous, risky, and extremely unpopular. But America — and much of the rest of the world — copied them anyway.

Today on the show, how New Zealand changed the way governments all over the world run their economies. This tiny country created an idea called inflation targeting.

For years NASA has been shifting away from a centralized model — where it does everything — to a decentralized model, where the functions of the space program are increasingly shared by the public and private sectors.

Since millennials first started entering the workforce, their spending habits have been blamed for killing off industries ranging from casual restaurant dining to starter houses. However, a new study by the Federal Reserve suggests it might be less about how they are spending their money and more about not having any to spend.

Most people have a fascination with space because of the grand themes — exploration, the search for aliens, going to the moon, maybe someday living on Mars! Matt Weinzeirl of Harvard Business School is just as fascinated, but for a different reason.

Matt says the economic model of space activity was once centralized, and focused mainly on the provision of public goods. But over time, that model has evolved, and NASA has found a potentially fruitful way to partner with the private sector in developing the space economy of the future.

Episode 468: Kid Rock Vs. The Scalpers

Nov 28, 2018

Note: This episode originally ran in 2013.

Scalpers. They are the bane of performers everywhere, taking reasonably-priced tickets and selling them at a profit.

But the market for scalped tickets only exists because artists set the original ticket prices too low. At the same time, few artists want to charge their fans exorbitant prices for a show. It's bad for the brand.

The U.S. has used sanctions to do everything from catching specific drug traffickers, to destabilizing government regimes. But sanctions are a blunt tool and they don't always achieve their goal. Moreover, they can miss the target and hurt the wrong people. Still, there are some steps a government can take to help ensure sanctions achieve their goals.

Updated at 4:08 p.m. ET

The phrase "just below" neutral might seem bland or innocuous. But those words from Federal Reserve Chairman Jerome Powell touched off a wave of optimism among investors who took them to mean the central bank may be winding down its interest rate hikes.

The Dow Jones industrial average closed up more than 600 points, or 2.6 percent, Wednesday.

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