Newsmakers

Dr. Mario Belotti, W.M. Keck Foundation Professor of Economics, wrote an op-ed that appeared in the San Jose Mercury News titled “Two economic reasons why the Democrats lost,” discussing contributing factors to this year’s election results.

An excerpt from the article:
One factor comes from the major push by the present administration to achieve a cleaner environment. Numerous subsidies totaling billions of dollars have been given to the solar industry, the wind power industry, to corporations to produce energy using alternative energy sources or to individuals to purchase electric cars, install solar panels, buy more efficient appliances and so on.

These subsidies were aimed at reducing as fast as possible the use of petroleum, coal and other environmental polluters to meet environmental goals, but they were very unequally distributed. 

The second economic factor behind the recent vote is the easy monetary policy the Federal Reserve System has maintained in the last several years.

By keeping the federal funds rate at zero or not much higher for many years using “quantitative easing,” the Fed has mainly benefited the U.S. government’s ability to finance the government debt at ever- lower interest rates, and benefited even more the value (price) of corporate stocks and other financial assets. But those very low interest rates forced banks to reduce interest rates paid on saving accounts, bank CDs, and bank money market accounts very close to zero.

Read the full article here »

Learn more about Professor Mario Belotti »