Ask Dr. Dollar

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  • Why the Shift from Production to Speculation?

    By Arthur MacEwan | May/June 2014

    Dear Dr. Dollar:Why has our economy switched so greatly away from manufacturing that produces real goods and services that provide real value and towards speculative, financial activity—everything from mergers and acquisitions to derivatives, off-shore tax shelters, and other scams? Read more »


  • If distance doesn't determine the cost of your plane ticket, what does?

    By Arthur MacEwan | January/February 2014

    Dear Dr. Dollar:Boston is 3,280 air miles from London, only 27% further than the 2,580 air miles from Boston to San Diego. So why does a flight from Boston to London cost more than twice as much as a flight from Boston to San Diego, 100% more, for the same dates? Is it just supply and demand? Read more »


  • What happened to Black-White income inequality?

    By Arthur MacEwan | July/August 2013

    Dear Dr. Dollar:There is a great deal of awareness of the general increase of income inequality in the United States. But what’s happened to the income inequality between African Americans and European Americans (“Black-White” inequality)? Read more »


  • What are the similarities and differences between structural adjustments throughout the world?

    By Arthur MacEwan | November/December 2012

    Dear Dr. Dollar:What are the similarities and differences between structural adjustment in the rest of the world/Third World and structural adjustment in the United States? Read more »


  • Should we abolish the Fed?

    By Arthur MacEwan | June/July 2012

    Dear Dr. Dollar:Is the Federal Reserve, the Fed, as important to the operation of the economy as it seems? How does it work? If it is so important, how can anyone take seriously politicians such as Ron Paul, who calls for the Fed's abolition? Read more »


  • How important is Citizens United?

    By Arthur MacEwan | March/April 2012

    Dear Dr. Dollar:People in the Occupy movement and many others are quite concerned about "corporate personhood", and especially about the Citizens United decision. Did that Supreme Court decision in fact make a crucial difference with regard to the role of money in elections? Read more »


  • Are low wages and job loss inevitable?

    By Arthur MacEwan | May/June 2011

    Dear Dr. Dollar: The main narrative that I hear in mainstream press is that U.S. workers are being undercut and eventually displaced by global competition. I think this narrative has a tone of inevitability, that low wages and job loss are driven by huge impersonal forces that we can’t do much about. Is this right? Read more »


  • Why do they oppose more stimulus?

    By Arthur MacEwan | January/February 2011

    Dear Dr. Dollar: Why are conservatives, especially wealthy conservatives, against stimulating the economy through deficit spending? Don’t businesses’ profits and the incomes of the wealthy depend on economic growth? Read more »


  • Why are manufacturing jobs being lost?

    By Arthur MacEwan | September/October 2010

    Dear Dr. Dollar: Many times I have read or heard it said that technology is eliminating more manufacturing jobs in the United States than rising imports. Is that true? Read more »


  • What does “pressure from the bond markets” mean?

    By Arthur MacEwan | May/June 2010

    Dear Dr. Dollar: With the crisis in Greece and other countries, commentators have said that governments are “under pressure from the bond market” or that bond markets will “punish” governments. What does this mean? Read more »


  • Are entitlements weakening the U.S. empire?

    By Arthur MacEwan | January/February 2010

    Dear Dr. Dollar: In his book Colossus (2004), Niall Ferguson argues that a major problem with Social Security and Medicare is their underfunded liabilities—to the tune of $45 trillion. Can you comment on this claim? Read more »


  • What is the difference between a Ponzi scheme and a housing bubble?

    By Arthur MacEwan | July/August 2009

    Dear Dr. Dollar: What is the difference between a Ponzi scheme and the way the banks and other investors operated during the housing bubble? Read more »


  • Why are things getting worse?

    By Arthur MacEwan | March/April 2009

    Dear Dr. Dollar: I learned in my economics classes that in a market economy, problems tend to be self-correcting. So why don’t we see this kind of self-correction now? Read more »


  • Shouldn't we just deal with this “rotten tooth”?

    By Arthur MacEwan | November/December 2008

    Dear Dr. Dollar: Isn’t the bailout like having a rotten tooth extracted? The extraction is unpleasant, but it beats the alternative. Shouldn’t people quit complaining and suck it up? Read more »


  • Do labor standards make any difference?

    By Arthur MacEwan | September/October 2008

    Dear Dr. Dollar: Activists often push for higher labor standards in trade agreements. But doesn’t cheaper labor without a lot of regulations help developing countries build their economies? Read more »


  • Why aren't war spending and the Bush tax cuts helping?

    By Arthur MacEwan | March/April 2008

    Dear Dr. Dollar: Doesn’t all the war spending stimulate the economy? And shouldn’t the Bush tax cuts do the same? So why are we falling into recession? Read more »


  • Is the Fed involved in an “international banking conspiracy”?

    By Arthur MacEwan | May/June 2007

    Dear Dr. Dollar: Some of my friends believe that the Federal Reserve and international bankers (Rothschilds, Rockefellers, etc.) run the world. They think the Federal Reserve was formed in secret and is pretty much a conspiracy. Is there anything to this? Read more »


  • What’s the relationship between inflation and unemployment?

    By Ramaa Vasudevan | September/October 2006

    Dear Dr. Dollar: Back in first-year economics we learned that there is a tradeoff between unemployment and inflation, so you can’t really have both low inflation and low unemployment at the same time. Do economists still consider that to be true? Read more »


  • How does the government define poverty?

    By Ellen Frank | January/February 2006

    Dear Dr. Dollar: Can you explain how poverty is defined in government statistics? Is this a realistic definition? Read more »


  • What’s the difference between “radical,” “progressive,” and “liberal” economics?

    By Ellen Frank | November/December 2004

    Dear Dr. Dollar: What is the difference between how a “radical”or “progressive” economist and a “liberal” economist looks at things? Read more »


  • Should developing countries embrace protectionism?

    By Ellen Frank | July/August 2004

    Dear Dr. Dollar: Supposedly, countries should produce what they are best at. If the United States makes computers and China produces rice, then the theory of free trade says China should trade its rice for computers. But if China puts tariffs on U.S.-made computers and builds up its own computer industry, then it will become best at making them and can buy rice from Vietnam. Isn’t it advantageous for poor countries to practice protectionism and become industrial powers themselves, rather than simply producing mono-crop commodities? Read more »


  • Where do U.S. dollars go when the United States runs a trade deficit?

    By Ellen Frank | March/April 2004

    Dear Dr. Dollar: Can you explain what trade deficits are? Who owes what to whom or is it just an accounting device?
    Dear Dr. Dollar: I see that the United States has had a negative international trade balance for years. What happens to those dollars we’ve sent overseas? Read more »


  • Can tax cuts really increase government revenue?

    By Ellen Frank | November/December 2003

    Dear Dr. Dollar: A Republican friend tells me that the huge new tax cuts will actually produce more revenue than the government would have collected before the cut, because once rich beneficiaries invest the money, they will pay taxes on every transaction. He suggested that the increase could be as much as 50% more than the originally scheduled revenues. Is this possible? Read more »


  • Is deflation a serious concern?

    By Ellen Frank | July/August 2003

    Dear Dr. Dollar: I have been hearing quite a bit about the dangers of deflation to the United States economy. I have even heard warnings that "spiraling deflation" could cause a global depression such as occurred in the 1930s. But wasn’t the Great Depression caused by hyper-inflation, not deflation? Is deflation really a serious concern, or is this just scare-mongering? Read more »


  • Are Republicans the new “Spendocrats”?

    By Ellen Frank | May/June 2003

    Dear Dr. Dollar: Bush’s budget has the federal government running huge deficits for years to come. Democrats say this will cause high interest rates and low growth. Republicans argue that deficits don’t matter at all. Isn’t this the exact opposite of what the two parties usually claim? Is my memory shot or am I missing something here? Read more »


  • Does rent control hurt tenants?

    By Ellen Frank | March/April 2003

    Dear Dr. Dollar: What are the merits of the argument that rent control hurts tenants by limiting the incentives to create and maintain rental housing? Read more »


  • How has NAFTA affected trade and employment?

    By Ellen Frank | January/February 2003

    Dear Dr. Dollar: Free-traders claim that free trade will increase U.S. exports, providing more jobs for Americans. So I would expect that NAFTA increased U.S. exports and reduced our trade deficit. I would also expect to see employment increase both in our country and in our trading partners. Has that in fact happened? Read more »


  • Is the administration to blame for economic problems?

    By Ellen Frank | November/December 2002

    Dear Dr. Dollar: Since the United States is a representative democracy, it seems only natural that its citizens would look to their elected officials for answers to economic problems. However, given the limited number of things that the government is allowed to do today to influence the economy (such as comparatively minimal manipulation of interest rates, taxes, or budget deficits), how fair is it to assign credit or blame to a particular administration for economic conditions in the nation? Isn’t our government really a trivial player in the overall economy? Read more »


  • Don’t the rich pay a lot of taxes?

    By Ellen Frank | September/October 2002

    Dear Dr. Dollar: The Heritage Foundation, a conservative think tank, has a website that purports to present evidence that the wealthiest group of Americans historically pay more taxes than middle- or low-income folks. Their sources include the U.S. Treasury Department, the Office of Budget and Management, and the Census Bureau. The wealthiest 1% paid over a third of taxes, while those in the lower 50% paid only 4% of income taxes in 1999. How do those of us who criticize the tax system as inherently unfair to middle- and lower-income folks respond to this apparently progressive tax system? Read more »


  • What’s wrong with inequality?

    By Arthur MacEwan | July/August 2002

    Dear Dr. Dollar: The media constantly report that “there is a growing disparity of wealth,” and as far as I know this is true. But I would like to know why I should care. For all those who say it is important, I have a simple question: Would you rather live in a country where the poorest 20% average $10,000 while the richest 20% on average make $1,000,000 or in a country where the poorest 20% average $7,500 while the richest 20% on average make $90,000? Read more »


  • Who decides stock prices?

    By Ellen Frank | May/June 2002

    Dear Dr. Dollar: During the course of a single day, a stock can go up and down frequently. These changes supposedly reflect the changing demand for that stock (and its potential resale value) or changing expectations of a company’s profitability. But this seems too vague to me. How can these factors be so volatile? Who actually decides, or what is the mechanism for deciding, when a stock price should go up or down and by how much? Read more »


  • Who loses when the Federal Reserve changes the discount rate?

    By Ellen Frank | March/April 2002

    Dear Dr. Dollar: The Federal Reserve keeps fussing with the “discount rate” and everybody thinks it’s important. This is, if I understand it right, the rate banks charge each other for overnight loans. Now presumably someone makes money on the interest that’s charged and someone loses money (or makes less) when the rate is lowered. But no one screams. Why not? If it’s because the charges among banks just cancel one another out, then why does the rate even matter? Or is it that the Federal Reserve itself charges this interest, in which case the taxpayers lose when the rate it lowered? Read more »


  • What’s the imperative for growth among corporations?

    By Ellen Frank | January/February 2002

    Dear Dr. Dollar: I am trying to figure out what propels corporations toward a compulsive expansion. I can think of the following: 1) Competition with domestic and foreign rivals; 2) need for markets; 3) need for raw materials; and 4) advanced technology requiring greater investments and thus greater profits. Would there be other causes? I teach high-school students who are highly motivated to know this. I am most grateful for your publication. Read more »


  • What are some must-read books?

    By Dollars & Sense | November/December 2001

    Dear Dr. Dollar: Could you suggest five to ten must-read books, primers through advanced, that put forth a critique of reigning macro-economic conditions, and a reasoned, detailed framework of a political economy that you would endorse? Read more »


  • How long can we run a trade deficit?

    By Arthur MacEwan | March/April 2000

    Dear Dr. Dollar: Each year the U.S. has huge trade imbalances, especially with Asian countries. How can we keep having these trade deficits without any apparent ill effect on our economy? Will we eventually no longer be able to do this? Read more »


  • How much does the U.S. government spend on NATO and on the United Nations?

    By Arthur MacEwan | January/February 2000

    Dear Dr. Dollar: How much does the U.S. government spend on NATO and on the United Nations? Can you itemize these sums? Read more »


  • Do prices always increase with wages?

    By Arthur MacEwan | May/June 1999

    Dear Dr. Dollar: It’s conventional wisdom that when wages go up, as in the case of a union campaign or minimum wage increase, prices go up. My guess is that if the owners could have raised the prices, they would have already. What is the right answer? Read more »


  • Why is CEO compensation so high?

    By Arthur MacEwan | November/December 1998

    Dear Dr. Dollar: Why do companies compensate CEOs with such high salaries and bonuses? Do the CEOs themselves decide on their pay? Isn’t it always said that no one is indispensable? Read more »


  • Is the economy really going gangbusters?

    By Arthur MacEwan | May/June 1998

    Dear Dr. Dollar: We’re hearing the economy is so good. We’re hearing that there’s plenty of jobs around and wages are up. But I’m not so convinced things are so great. The middle class is shrinking. Underemployment is up, and people don’t have health care. What’s the story? Read more »


  • What is this “Asian crisis” all about?

    By John Miller | January/February 1998

    Dear Dr. Dollar: What is going on with the “Asian Crisis” talked about so much these days? Even though Thailand and Malaysia seem to be hardest hit, how does it affect other Far-East markets? Read more »