R.W. Hafer | St. Louis Public Radio

R.W. Hafer

Rik Hafer is a distinguished research professor in the Department of Economics and Finance at Southern Illinois University Edwardsville and a scholar at the Show-Me Institute.

This article first appeared in the St. Louis Beacon, July 30, 2012 - What will you do, what will you do? Whether this reminds you of Karl Malden’s ads for American Express Travelers Cheques or of Mike and the Mechanics, it is an apt question for Chairman Ben Bernanke and the policy-making arm of the Federal Reserve, the Federal Open Market Committee. 


Income inequality in the United States is a hot-button political issue in this mid-term election year. Advocates for substantial increases in the minimum wage, for instance, believe that imposing higher wages on employers will reduce poverty and lessen income inequality. The evidence just does not justify this claim. Workers who remain employed after the increase are made better off on the backs of those workers who face reduced hours or unemployment following government-mandated wage hikes.

linder6580 | sxc.hu

“Capitalism is the crisis.” So read a banner hung off of an overpass on eastbound Interstate 44 heading toward downtown St. Louis. But what did it mean?

Capitalism is characterized by private as opposed to government ownership of the capital used in the production and distribution of goods. This is done in the pursuit of profit.

dleafy | sxc.hu

The end of the year is always a time to take stock of what has transpired during the past year and what is likely to happen in the one about to begin.  Let’s do so by considering several key economic measures.

Economic expansion limped along for another year.  Gross Domestic Product (GDP), adjusted for inflation, is the best measure of the economy’s total output. It increased this year, but not nearly as fast as many would hope, especially three years out form the end of the Great Recession.

This article originally appeared in the St. Louis Beacon. - The Senate Banking Committee, in a 14-8 vote, recently sent to the full Senate, President Barack Obama’s nominee to become the next chair of the Federal Reserve Board of Governors. With the change in filibuster rules, Janet Yellen’s confirmation is a near certainty.

This article first appeared in the St. Louis Beacon: Missouri’s budget priorities have long-term consequences and they are not good.

The recent snafu over the fiscal budget, the debt ceiling and the continued funding of Obamacare provides a teachable moment. Spending choices, whether at the federal or state level, have economic consequences.

This article first appeared in the St. Louis Beacon: The time for enrolling in health exchanges is now upon us. Recent polls show that the majority of Americans continue to disapprove of the health care law — the Affordable Care Act, commonly referred to as Obamacare — enacted in 2010. But how many of us really understand what we can expect and what we will pay for this “affordable” health program? The simple fact is that most of us are just plain bewildered, not knowing how the controversial law will affect us.

This article first appeared in the St. Louis Beacon: After reading the president’s “Plan to Make College More Affordable” I couldn’t help but recall the scene in the “Wizard of Oz” in which the Wizard awards the stalwart travelers symbols of their true characteristics. The Cowardly Lion receives a medal, for he truly was brave. The Tin Man a heart, for he truly was compassionate. And the Scarecrow gets a diploma because even though he actually was quite intelligent, he just didn’t have the college degree to prove it.

This article first appeared in the St. Louis Beacon: The disparity in income between the top 1 percent and the other 99 percent fueled the Occupy Wall Street movement and gave momentum to the ongoing push to raise taxes on the rich. As important as this is both as a social topic and an economic policy issue, there is much confusion that hinders rational debate.

This article first appeared in the St. Louis Beacon: Other than obeying laws and being generally civil, are you obligated to ensure the economic success of others in society? Put another way, what determines your social responsibility? To answer that question, let’s first consider the issue of social responsibility at the personal level and then reflect on the social responsibility of business.

This article first appeared in the St. Louis Beacon: CNBC recently released the 2013 results of its best state to do business in analysis. Its computations put South Dakota at the top and Hawaii at the bottom. As so often happens, Missouri came in right in the middle of the pack with a mediocre ranking of 26.

This article first appeared in the St. Louis Beacon: Looking at stock prices over the past few months, May 22 stands out. That was the first time Fed Chairman Ben Bernanke “rocked” the markets with his comment that maybe the Fed would reconsider the magnitude and duration of its current buying scheme.

This article first appeared in the St. Louis Beacon: The good news is starting to percolate up from a still recovering economy. The Conference Board recently released its May Consumer Confidence Survey and our subjective appraisal of current economic conditions has improved over April, a trend over the past few months. This tentatively rosy outlook is matched by the Thomson Reuters/University of Michigan consumer sentiment index, which also is on the rise.

This article first appeared in the St. Louis Beacon: Ah, the end of the academic year. Amid all the pomp, it is a good time to reflect on the circumstances surrounding college education. Higher education is under attack from many sides.  Let’s start with student debt.

This article first appeared in the St. Louis Beacon: The continuing debate over government austerity programs recalls John Maynard Keynes observation that “madmen in authority … are distilling their frenzy from some academic scribbler of a few years back.”

This article first appeared in the St. Louis Beacon:The stock market is setting new nominal highs. Gas prices are not going through the roof. And just when you thought it looked as though the recovery would gain steam, some economist comes along to write that things are not as good as we thought.

We are nearing the release date (April 26) for our first glimpse at first-quarter GDP, the measure of goods and services produced in the economy, adjusted for inflation. The mounting evidence indicates that it will not be as quick as previously thought.

This article first appeared in the St. Louis Beacon: As deep as the recession that ended in 2009 was, history suggests the recovery should not be limping along as it is.  This weakness is not without explanation. You’ve heard that recessions coupled with financial crisis engender prolonged, shallow recoveries. And many of those unemployed during the downturn have not or cannot find work.

Or is this slower pace of economic activity, this unemployment rate staying above 7 percent, the new normal?

This article first appeared in the St. Louis Beacon: The sequestration of federal government expenditures is in place. Just how will the mandatory cuts in federal government spending impact the economy? To answer that, consider several pertinent facts.

The sequestration will reduce federal government expenditures by a total of $85 billion, which is split between defense and other government agencies (some programs, like Medicare, remain untouchable). The cuts are not immediate and will take time to be implemented. This phase-in lessens any immediate effects on the economy.

This article first appeared in the St. Louis Beacon, Oct. 9, 2012 - Immigration policy is a hot button topic, especially in an election year. One aspect of current policy that is not getting much political attention is the fact that our current policy is driving immigrant entrepreneurs away.

This article first appeared in the St. Louis Beacon, Sept. 25, 2012 - Mitt Romney’s statement about who depends on the government and who doesn’t raised ire from the left and dismay from the right. Lost in the commotion was actually a valid question: How much should the government provide for its citizens?

This article first appeared in the St. Louis Beacon, Sept 13, 2012 - The Chicago teachers’ strike has once again thrown our educational system into the spotlight. The strike juxtaposes the push to improve academic outcomes with the union’s role to protect members from capricious evaluation. At the end of the day, the questions are which will triumph and what that victory portends.

This article first appeared in the St. Louis Beacon, Aug. 15, 2012 - Fair or not, evidence of an economy that is growing or stagnating always plays a pivotal role in presidential campaigns. It is, after all, the economy stupid. 

As someone who works with numbers for a living, I cringe every time I hear a candidate or their minion bandy about some economic statistic. 

This article first appeared in the St. Louis Beacon, July 13, 2012 - China is confronting economic and political difficulties. As its one-a-decade change in party leadership draws near, the path that current leaders choose will affect its citizens and the world economy for years to come.

This article first appeared in the St. Louis Beacon, June 20, 2012 - Expectations play a significant though little understood role in economics. In most introductory economic courses, for instance, the main drivers of, say, demand, are factors such as your income and the price of other goods. When your income rises you tend to buy more. When the price of beef rises you tend to switch to a relatively cheap meat, such as pork.

This article first appeared in the St. Louis Beacon, June 7, 2012 - The May jobs report did little to dispel the notion that the U.S. economy is in a holding pattern of tepid economic growth. The unemployment rate is a percentage point lower than a year ago, but continued decline is less certain. With Europe in its own malaise and China showing signs of slowing, calls for more expansive policy action are being sounded.

This article first appeared in the St. Louis Beacon, May 30, 2012 - Since 2008, the conventional wisdom is that deregulation caused the financial crisis, that financial institutions lacking sufficient government oversight ran amok, and that the only path to future financial stability requires reinstatement of old rules or creation of a new bureaucracy to oversee the financial industry. What if this conventional wisdom is wrong?

This article first appeared in the St. Louis Beacon, May 15, 2012 - Current discussions of economic events usually focus on the European malaise or the U.S. fiscal disorder. Just a few years ago it was the impending economic dominance by the so-called BRIC countries. Wither the BRICs?

BRIC is an acronym for Brazil, Russia, India and China. Not too long ago they were widely regarded as future economic powerhouses. The last few years have not been kind to that forecast, however. Even if they recover from the current downturn, they will face longer-term obstacles to realizing living standards comparable to other developed economies.

This article first appeared in the St. Louis Beacon,  April 30, 2012 - The state of the state of Illinois is not good.  Consider the unpleasant statistics:

  • The unemployment rate in Illinois was 9.1 percent in February. This is significantly above the national rate of 8.3 percent and exceeds that in the five neighboring states. Those states, with an average unemployment rate of 7.3 percent, have done much better at creating jobs following the recession.

Thi article first appeared in the St. Louis Beacon, April 4, 2012 - Economists, psychologists and sociologists have long been fascinated by what promotes our well-being. Well-being is a multi-faceted concept: It encompasses subjective feelings of happiness; it changes over time; and it is influenced by a variety of forces, both personal and external.

This article first appeared in the St. Louis Beacon, March 9, 2012 - If you want less of something, tax it. Tax pollution and people will reduce pollution-causing activities. Tax smoking and people will smoke less. It also is true that if you tax labor, you will get less of it. And that simple notion will be at the heart of the upcoming election rhetoric as each side debates the taxing issue of taxes.