A roundup of economic news from around the Web.
- Regulatory Capture: Daniel Kaufmann of the Brookings Institution draws parallels between the shortcoming of auto-safety regulators in the Toyota case and the failures of bank regulators. Without absolving Toyota of its share of responsibility, it is necessary to probe further on the National Highway Transportation Safety Administrations role in this safety debacle. Having recently looked at the abdication by financial regulators, such as the Securities and Exchange Commission and Office of Thrift Supervision, of their financial regulatory and oversight role, a review of emerging evidence from the media raises some parallel questions about the NHTSA. Namely, was the NHTSA merely asleep at the wheel? In dealing with Toyota, did it fall into a lull because it viewed the carmaker as too-large-and-successful-to-do-wrong? Did it suffer from management deficiencies and soft leadership, and/or from budgetary as well as know-how limitations in an industry undergoing fast technological change? No doubt, all these factors may have contributed to the subpar performance of the NHTSA to varying degrees, he writes.
- America The Beautiful: Maybe Japans quality-manufacturing prowess isnt all it was cracked up to be in light of Toyotas woe, says Daniel Gross of Slate. Japan was supposed to have a huge competitive advantage in high-quality manufacturing. Well, not so much, he writes. And maybe the European model, celebrated just a few months ago because the recession produced fewer layoffs there than in the U.S., isnt quite so attractive. The bonds that tie Europe together are coming asunder because of the travails of its less economically robust members. As Greece struggles to cope with high debt and a dysfunctional political system, it is threatening to drive a stake into the heart of the European monetary union, he adds.
- The Thrifty American: In another of their Staff Position Notes series, International Monetary Fund economists predict that American consumers will spend less and safe more well after the current crisis ends. U.S. household consumption declined sharply in late 2008, marking a departure from the trend of a steady increase in U.S. consumption as a share of income since the 1980s. Combining econometric and simulation analysis, we estimate that this departure will be sustained beyond the crisis: the U.S. household consumption rate will likely decline somewhat further from its current level, as the saving rate rises to around 6% of disposable personal income (from nearly 5% in 2009). Compared to the pre-crisis years (200307), this saving rate implies a decline in U.S. private-sector demand on the order of 3 percentage points of gross domestic product.