Jeff Faux

Jeff Faux was the founder, and is now Distinguished Fellow, of the Economic Policy Institute.

Recent Articles

One More Bubble to Go

We've relied on a robust dollar to see us through the crisis, but that cushion is about to disappear.

The word from Washington and Wall Street is that the worst is over. Sure, it will take a while for jobs to recover, for housing to come back, and for wages to rise. But we are definitely on the road to recovery from the biggest debt-bubble collapse since 1929. Maybe. There were actually two debt bubbles. One was driven by Americans borrowing against unsustainable inflation in housing prices. The other was driven by America borrowing against unsustainable inflation in the price of the U.S. dollar. One more bubble is left to pop. When it does, our unique economic cushion -- privileged access to the world's savings -- will deflate. Like overvalued housing prices in the run-up to the 2008 crash, the dollar is headed for a substantial fall. The question is whether our political class can minimize the hit to working Americans' already-battered living standards. On the available evidence, the answer is, "No." The central threat here is not the currently rising federal deficit, which despite...

The Ultimate Bear Market

The uncouth bankers who brought down Bear Stearns make for an entertaining story. But the real responsibility for the crisis lies elsewhere.

House of Cards: A Tale of Hubris and Wretched Excess on Wall Street by William D. Cohan, Doubleday, 468 pages, $27.95 "We all fucked up," says Alan Schwartz in the final paragraph of House of Cards . "Government. Rating agencies. Wall Street. Commercial Banks. Regulators. Investors. Everybody." Schwartz was the last chief executive officer of Bear Stearns, which, when it collapsed in March 2008, became the first of the financial-market dominos that ultimately toppled the U.S. and world economies. His generous sharing of culpability is a bit like the sly confession of the serial murderer who implicates his parents, his teachers, and the police for their failure to keep him from killing. Still, he has a point; there are multiple fingerprints at the scene of this crime. House of Cards is not the complete picture of the bursting of Wall Street's credit bubble. Other books will give you a clearer understanding of swaps and derivatives (Charles Morris' The Trillion Dollar Meltdown ), policy...

What to Really Do About Immigration

Half a million Mexicans will cross the border annually for the next 15 years. Here's a plan to enable them to stay home.

Art by John Ritter
The backlash against illegal immigration -- which looks like the Republicans' only hope for a wedge issue in next November's election -- is largely aimed at Latinos, of whom the vast majority are Mexicans. In fact almost 60 percent of all undocumented workers in the United States are from Mexico, and close to 12 million of that country's nationals now live in the U.S. Fix the Mexican part of the problem and the divisive politics of illegal immigration shrink dramatically. But the news from south of the border is not good. The number of Mexican workers continues to grow faster than the number of Mexican jobs that pay enough to earn a living. And there is no end to this problem in sight. A November 2007 Mexican government report concluded that even if the overall economy grows steadily, low wages and social inequality will continue to generate heavy out-migration to the U.S. at the current annual rate of roughly 500,000 -- for the next 15 years! Moreover, Mexico's overall growth is...

Trade War

Do liberals need to rethink their outlook on globalization? Two progressive economists debate.

In " Why Populists Need To Re-think Trade ," James K. Galbraith calls on populists to adjust their assumptions and priorities when it comes to trade policy, and adopt a "reality-based" view. In " Breaking the Consensus (Finally) ," Jeff Faux offers a different take, arguing that it's good policy as well as good politics to focus on revamping the rules of the global economy. Here, the two engage each other directly: --- Jeff Faux First, let's get the politics straight. The divisions among Democrats over trade during the last two decades have not been initiated by the populists, but by those who have carried the water for Wall Street. As the chair of American Express exultingly put it, Bill Clinton drove NAFTA home "over the dead bodies" of his two prime constituents, labor and the environmentalists. Then came the WTO, opening to China, and scores of similar deals. Today, "centrist" Democrats are pushing Congress to pass Bush's newest pacts with Colombia, Peru, Panama, and Korea. Anyone...

Breaking the Consensus (Finally)

For the first time in a long time, it may be politically achievable to make globalization work for working Americans.

The bipartisan consensus that has integrated Americans into the global economy over the last two decades is clearly in trouble. Polls show a majority of voters skeptical of free trade, and November's election shifted at least 7 Senate and 30 House seats from supporters of current trade policies to outspoken critics. When Wall Street's Robert Rubin -- who as Bill Clinton's Treasury Secretary guided the policies that exposed U.S. workers to low-wage competition in the 1990's -- met with House Democrats in December, he was greeted with a chorus of complaints about outsourced jobs, depleted local tax bases and shrinking opportunities for young people. Rubin responded that, in the interests of party unity, they ought to drop the subject. They told him he was out of touch. For two decades, leaders of both political parties have assured members of Congress and the public that de-regulating imports and exports would make the typical American working family richer. It was said to be Economics...