Edward Lotterman

Economic news was incongruous this past week as three economists got Nobel prizes for their research on factors that determine how well economies grow over the long term just as President Donald Trump throws money to bail Argentina out of a short-run crisis very familiar to that nation.

Start with the Nobels. The three laureates’ work returns us to economics pioneer Adam Smith’s focus on “the nature and causes” of why some economies become more prosperous than others.

Joel Mokyr, a Dutch-born Israeli-American, got half the prize for exploring why technological innovation takes place and how cultures foster or retard this process. He sees modern science as key.

Prior to the scientific method, meeting challenges to new technology was piecemeal. An example would be that 200 years ago, the new, efficient Bessemer converter to make steel did not work with many iron ores. Modern chemistry found the problem was phosphorus content and that a different firebrick to line the converters solved the problem.

The other laureates, French economist Philippe Aghion and Canadian-American Peter Howitt, also took up the earlier work of renowned Austrian-American economist Joseph Schumpeter, from the first half of the 20th century, 150 years after Smith.

Smith had argued that leaving resource allocation to market forces fostered efficient resource use. But why and how did this cause growth? Schumpeter found it was because free markets fostered “creative destruction” — the natural eroding away of obsolete businesses and technologies as newer, more productive ones take over. Efficiency and convenience drive market forces, market forces drive out less-efficient, less-convenient technology. Think automobiles replacing horse-drawn buggies and electric lights supplanting kerosine lamps.

Why, however, was such creative destruction more prominent in some countries than in others, say Japan or the United States versus Peru or Argentina? Did culture play a role in such activities? If so, which aspects? Aghion and Howitt used sophisticated mathematical models to tease out answers.

Thus, the work of this year’s laureates helps us understand differences in longer run trends for nations that perform better or worse than others.

Now, let’s relate this work to news of Trump offering a potential $40 billion rescue package to help Argentina. First, let’s note that Argentina’s problem is acute rather than its traditional chronic ones that have hindered the creative destruction needed to foster growth.

President Javier Milei, Argentina’s charismatic but mercurial leader, had been lauded until recent weeks for turning his nation’s economy around after 2023. He is much beloved by the even more mercurial Trump. Yet again Argentina is in deep financial trouble, and Trump sees an opening. Not only is Trump proposing a currency swap that is essentially a $20 billion loan from the U.S. Treasury, but he’s trying to strongarm another $20 billion from private financial institutions.

What’s happening here? Argentina is entering a “foreign exchange crisis,” essentially a subset of the broader phenomenon of “financial crises.” Start by understanding both.

In generic financial crises, that often appear quite suddenly, many individuals, businesses or governments cannot meet their financial obligations, whether payments of interest or principal on loans or simply paying for goods purchased or even wages due. Those stiffed in this initial round are rendered unable to meet their own bills and a vicious cycle ensues. Businesses go broke, financial institutions fail and economic activity shrivels. Like one icicle falling from an alpine crag onto an unstable snow cornice below, a small slide rapidly turns into a thundering avalanche.

The Wall Street crash of 1929 was a financial crisis. So was the collateralized mortgage debacle starting in 2007. Ditto for “panics” in 1873, 1893 and 1907.

A “foreign exchange crisis,” such as the European exchange rate crisis of September 1992, involves a country’s or countries’ need for foreign currencies to facilitate economic activity. In 1992, pre-euro, several European countries had entered an exchange rate “mechanism” to fix relative values of the different currencies across the continent. However, there is always a danger of a sudden shortage in some country of the other currencies it needs for payments to trade partners, financial institutions or governments.

Trump’s current Treasury secretary, Scott Bessent, then a young protégé of financier George Soros (yes, the same now-noted target of right-wing political derision), thought in 1992 that the United Kingdom had pegged the British pound at too high a value. Soros bet that the U.K. would be forced to decrease the value of the pound relative to other European currencies and bought financial derivatives that would pay off if it did, essentially short-selling the pound. Other traders soon joined in. Britain did have to devalue after burning through billions of pounds trying to defeat the speculators. Bessent and Soros alone earned something over $1 billion. So our Treasury secretary understands exchange rate crises.

The European crisis was followed by the Mexican peso crisis in 1994-1995 and exchange crises in South Korea and other Asian countries in 1997. These also had affected many countries in the generalized Latin American debt crisis of the 1980s-1990s and in many African countries. Argentina has had repeated episodes.

Financial crises, including foreign exchange crises, resemble bankruptcies. They can stem from two problems. One is true insolvency — not having enough assets to pay all debts. The other is illiquidity, when the value of assets actually exceeds obligations, but assets like real estate or bonds cannot be converted to cash fast enough to meet demands. In the classic 1946 Christmas movie “It’s a Wonderful Life,” banker George Bailey pleads to angry depositors that his small-town Building and Loan is only illiquid and not insolvent.

Any country whose currency, unlike the dollar, is not wanted by others to park extra cash, must wrestle with exchange rates. Fixing the rate reduces uncertainty. Businesses can grow with imported machinery financed abroad. Firms that use foreign raw materials or import retail goods can plan.

However, the nation with the fixed rate must always sell enough abroad to provide foreign currencies for those needing it. Or it must continually attract new investment from foreigners.

Yet maintaining a fixed exchange rate isn’t easy. If domestic inflation gets above that of other countries, imported consumer goods or industrial inputs get relatively cheaper in local currency. Retailers in neighboring Chile and Uruguay have booming businesses right now as Argentines snap up electronics, appliances and other goods now cheap in terms of Argentine pesos.

Those who export, however, find that for any given world price of soybeans, iron ore, automobiles or apparel, the limited local currency gotten for each shipment pays fewer for the same hours of labor, gallons of diesel fuel, electricity or facilities needed to produce the goods. This hits exporting producers hard.

Understand that a country can be on sound long-term footing in terms of its exchange rates, but still suffer temporary shortages of foreign currencies. Without help, the value of its currency must drop. Central banks help each other with “swap lines.” If Sweden, still using krona, runs short of euros or dollars to pay for oil or fertilizer imports, the European Central Bank or U.S. Federal Reserve may lend it euros or dollars. These usually are repaid in weeks or months.

It is crucial, however, to understand that such intra-central bank swaps are to counter illiquidity problems. They most certainly are not suited to any “fundamental disequilibrium” of insolvency.

That brings us back to the Argentina bailout. That Bessent and the U.S. Treasury, instead of the Fed, is making a $20 billion loan to Argentina shows the problem is deeper than a temporary shortage. The Trump administration’s “urging” private U.S. banks and investment funds to lend another $20 billion shows it wants these institutions to assume risks of large write offs later. Or is a future bailout by the U.S. Treasury to cover eventual loan losses for these same institutions?

The final kicker is that all sorts of financial institutions, including many run by donors to Trump campaigns, can do to the Argentine peso what Soros, Bessent  and others did to Britain in 1992 and what speculators worldwide did to South Korea and other Asian nations in 1997. The very financial firms Trump asks to join him and Bessent in lending to Millei’s government may be using derivative securities to force Millei’s government to throw in the towel.

Outraged U.S. soybean growers losing export dollars to Argentina and other South American countries make news, but why should the rest of us care? Well, while the reserve status of the dollar still protects us from foreign exchange crises, we hurtle hell-bent toward a federal debt crisis, perhaps in less than a decade, that will be the mother of all financial crises, not only for ourselves but for the world.

It’s a sad irony that the Nobel prizes were given just as Argentina, a nation rich in natural resources, is falling into yet another financial crisis. “Creative destruction” indeed. Despite highly unusual aid from our nation, an acute crunch including a devaluation of Argentina’s currency and a 10th default on its debt is very possible.

Yet we in the United States, a nation in its worst political crisis since 1860, cannot gloat. We rapidly are making our nation’s finances as dodgy as many a Third World country. A congressionally orchestrated government shutdown manifests the collapse since 2010 of a functioning legislative branch. Are we really all that different from Argentina, where political deadlock has for years begat stagnation? Might we, in fact, be on track for a debt crisis even more severe?

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St. Paul economist and writer Edward Lotterman can be reached at stpaul@edlotterman.com.

By CATHY BUSSEWITZ, Associated Press

NEW YORK (AP) — With the U.S. experiencing a significant hiring slowdown, it’s a daunting time to be looking for a job. Many workers are staying put instead of changing jobs to secure better pay. Artificial intelligence tools increasingly screen the resumes of applicants. Now may seem like an inappropriate time to request a raise.

But sticking around doesn’t mean wages and salaries have to stagnate. Career experts say it’s not wrong, even in a shaky economy, to ask to be paid what you’re worth. Raises aren’t even necessarily off the table at organizations that are downsizing, according to some experts.

“A lot of people think if their company has done layoffs, the likelihood of getting a raise is pretty low,” said Jamie Kohn, a senior director in the human resources practice at business research and advisory firm Gartner. “And that might be true, but the the other way to think about it is that this company has already decided to reinvest in you by keeping you on.”

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When should you ask?

If you’ve taken on greater responsibilities at work and have received strong performance reviews, or if you’ve learned you’re paid substantially less than colleagues or competitors with similar levels of experience, then it may be the right time to ask for a pay adjustment.

“They know that you’re taking on more work, especially if you’ve had layoffs on your team,” Kohn continued. “At that point, it is very hard for them to lose an employee that you know they now are relying on much more.”

Another signal that it’s time to ask for an adjustment is if you’re working a second job to make ends meet or your current financial situation is causing angst that impacts job performance, said Rodney Williams, co-founder of SoLo Funds, a community finance platform.

“There’s nothing wrong with saying, ’Hey, I need to raise my financial position. I’m willing to do more,” Williams said. “I’m willing to show up earlier, I’m willing to leave later, I’m willing to help out, maybe, and do other things here.”

Some people view asking for more compensation as less risky than switching to a new job. “There is a sense of not wanting to be ‘last in, first out’ in a potential layoff situation,” said Kohn.

Know your worth

Before starting the compensation conversation, do some research on current salaries. You can find out what people with comparable experience are making in your industry by searching on websites such as Glassdoor, where people self-report salaries, or ZipRecruiter, which gathers pay data from job postings and other sources.

Three years ago, a lot of people asked for 20% pay increases because of price inflation and high employee turnover coming out of the coronavirus pandemic, Kohn said. Companies no longer are considering such big bumps.

“Right now, I think you could say that you are worth 10% more, but you’re unlikely to get a 10% pay increase if you ask for it,” she said.

Your success also depends on your recent performance reviews. “If you’ve been given additional responsibilities, if you are operating at a level that would be a promotion, those might be situations where asking for a higher amount might be worth it,” Kohn said.

Compare notes with colleagues

Many people view the topic as taboo, but telling coworkers what you make and asking if they earn more may prove instructive. Trusted coworkers with similar roles are potential sources. People who were recently hired or promoted may supply a sense of the market rate, Kohn said.

“You can say, ‘Hey, I’m trying to make sure I’m being paid equitably. Are you making over or under X dollars?’ That’s one of my favorite phrases to use, and it invites people into a healthy discussion,” Sam DeMase, a career expert with ZipRecruiter, said. “People are way more interested in talking about salary than you might think.”

You can also reach out to people who left the company, who may be more willing to compare paychecks than current colleagues, DeMase said.

Brag sheet

Keep track of your accomplishments and positive feedback on your work. Compile it into one document, which human resources professionals call a “brag sheet,” DeMase said. If you’re making your request in writing, list those accomplishments when you ask for a raise. If the request is made in a conversation, you can use the list as talking points.

Be sure to list any work or responsibilities that typically would not have been part of your job description. “Employers are wanting employees to do more with less, so we need to be documenting all of the ways in which we’re working outside of our job scope,” DeMase said.

Also take stock of the unique skills or traits you bring to the team.

“People tend to overestimate our employers’ alternatives,” said Oakbay Consulting CEO Emily Epstein, who teaches negotiation courses at Harvard University and the University of California, Berkeley. “We assume they could just hire a long line of people, but it may be that we bring specialized expertise to our roles, something that would be hard to replace.”

Timing matters

Don’t seek a raise when your boss is hungry or at the end of a long day because the answer is more likely to be no, advises Epstein, whose company offers training on communication, conflict resolution and other business skills. If they’re well-rested and feeling great, you’re more likely to succeed, she said.

Getting a raise is probably easier in booming fields, such as cybersecurity, while it could be a tough time to request one if you work in an industry that is shedding positions, Epstein said.

By the same token, waiting for the perfect time presents the risk of missing out on a chance to advocate for yourself.

“You could wait your whole life for your boss to be well-rested or to have a lot of resources,” Epstein said. “So don’t wait forever.”

Responding to “no”

If your request is denied, having made it can help set the stage for a future negotiation.

Ask your manager what makes it difficult to say yes, Epstein suggested. “Is it the precedent you’d be establishing for this position that might be hard to live up to? Is it fairness to the other people in my position? Is it, right now the company’s struggling?” she said.

Ask when you might revisit the conversation and whether you can get that timeframe in writing, DeMase said.

Laura Kreller, an executive assistant at a university in Louisiana, recently earned a master’s degree and asked for her job description to change to reflect greater responsibilities and hopefully higher pay. Her boss was kind but turned her down, citing funding constraints. Kreller said she has no regrets.

“I was proud of myself for doing it,” she said. “It’s better to know where you stand.”

Share your stories and questions about workplace wellness at cbussewitz@ap.org. Follow AP’s Be Well coverage, focusing on wellness, fitness, diet and mental health at https://apnews.com/hub/be-well

I have lived in the Midway neighborhood of St. Paul for nine years now, and the business I own, the queer soccer bar The Black Hart of Saint Paul, just celebrated its seventh anniversary. On my three-block walk to work, on one of the busiest streets in the city, I pass by three empty lots and I stare at a wall of empty storefronts. Just a few more blocks away is the derelict CVS that has become a lightning rod of neighborhood fury, a monument to gross neglect.

Most of us who live and work in Midway can imagine so much better for our neighborhood: vibrant streets filled with more housing and more dynamic, locally owned business. There is no single panacea that will spur more development and investment, but there are a few tools to bring about that vibrant future that are incredibly basic and simple.

The fact is that our local government has been deliberately handcuffed from being able to take action on derelict spaces in our neighborhoods.

Unlike all other big cities in Minnesota, when a commercial property owner leaves their property to crumble, St. Paul cannot fine them. The city can send them a sternly worded letter and then eventually take the owners to criminal court. There is nothing in between.

In the spring, our City Council finally voted to give the city tools to operate between the harsh warnings and criminal charges: financial penalties that can be right-sized for the situation — and don’t go on anyone’s criminal record — called Administrative Citations. The city was finally going to be able to address the owner of the CVS building or others like it in the future. But then a small group of loud voices took those tools away and forced us to wait for a citywide vote to implement them.

Most small businesses owners like me are community-minded and do our best to play by the rules. Let me give you an example. In 2023, Black Hart built a patio next to our bar (it’s gorgeous, you should visit) after a long approval process. Around the same time, we saw another patio created without a single construction permit. Likewise, a major hardware store installed an illegally tall fence that also cuts off pedestrian access. I spoke to an inspector about the hardware store who said they had no luck getting beyond an automated phone service to get anyone to address the situation — meaning that, just like the CVS building, nothing was going to happen.

They broke the rules, with absolutely no consequences. Let me clarify — no consequences for them, but lots for the community. The city’s inability to enforce its ordinances for bad actors brings down the surrounding neighborhoods, makes the city less safe and less pedestrian- and transit-friendly, all of which are a drag on the city’s image and the small businesses on University Avenue.

The current system incentivizes scofflaws and penalizes people who obey the law. What incentive do business owners like me have to follow the rules?

This November, we have the opportunity to change this. In the current St. Paul city election, if we vote yes to approve an amendment to our city charter, we can give our local officials the authority to fight back against bad actors who make our neighborhoods suffer. That will kick off a public process in which the City Council will carefully consider which violations warrant the use of of administrative citations and how the fines will be scaled. They will be established by new, specific ordinances, each one evaluated by an equity committee and adopted through a public process that allows residents to weigh in. This approach will ensure that this tool is aimed at giving the worst offenders a financial incentive to operate by the same set of rules as the rest of us.

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Today it’s the CVS building, but there are a large number of derelict spaces throughout the city. Many are owned by far-away speculators who are happy to turn down offers from local start-ups that want to improve the neighborhood, and instead let their properties molder while they wait to cash in when property values rise. Our community cannot continue to simply hope that these situations will turn themselves around someday. Many small businesses won’t make it that long.

St. Paul residents deserve thriving, walkable communities now. The city desperately needs this tool, making a vote for Administrative Citations common sense. We need to untie the city’s hands, so it can push back against absentee landlords, employers who steal employee wages, those who violate the conversion therapy ban, and other egregious rule-breakers.

Wes Burdine, St. Paul, owns The Black Hart of Saint Paul in the Midway.

JOHN U. BACON: Presents “The Gales of November: The Untold Story of the Edmund Fitzgerald.” 7 p.m. Tuesday, Magers & Quinn, 3038 Hennepin Ave. S., Mpls.

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COFFEE HOUSEPARTY: Literary publisher Coffee House Press invites the public to a “What’s Brewing?” fundraising evening featuring a silent auction; peeks at forthcoming books; and readings by authors Steve Healey, Bob Phi, Kathryn Savage, Sun Yung Shin and Moheb Soliman. Free but registration encouraged. Go to coffeehousepress.org. 6 p.m. Thursday, Coffee House offices, 79 13th Ave. N.E., Mpls.

BILL GAYTHWAITE: Discusses “A Place in the World” with Mubanga Kalimamukwento. 7 p.m. Wednesday, Magers & Quinn, 3038 Hennepin Ave. S., Mpls.

PEG GUILFOYLE: Minnesotan reads from her new book, “An Eye for Joy: Noticing the Good World Everywhere.” 3 p.m. Oct. 26, Unity Unitarian Church, 733 Portland Ave., St. Paul.

MOINETTE MAGRATH: Shares a behind-the-scenes look at her one-woman show “The Last Flapper,” by William Luce, based on the writings of Zelda Fitzgerald, in Friends of the St. Paul Public Library’s Fitzgerald at 100 celebration of St. Paul native F. Scott Fitzgerald’s novel “The Great Gatsby.” Free. 6 p.m. Monday, Merriam Park Library, 1831 Marshall Ave., St. Paul.

MINNESOTA MYSTERY NIGHT: Monthly reading series celebrates its third anniversary with a conversation between award-winning Minnesota authors Michael Mallory and Cheri Johnson, who writes as Sigrid Brown. Mallory’s most recent mystery is “Tiger Claw,” and his first novel in his latest series is “The Lost Dragon Murder.” Johnson is the author of  “The Girl in Duluth” and a literary novel, “Annika Rose,” a reimagining of “Rosemary’s Baby.” 7 p.m. Monday, Lucky’s 13 Pub, Mendota. $13 cover charge. Reservations at ticketttailor.com/events/minnesotamysterynight/1865730.

READINGS BY WRITERS: Welcomes poets Sarah Green, Ryan Vine, Marg Walker and Joyce Sutphen. 7:30 p.m. Tuesday, University Club. 420 Summit Ave., St. Paul.

(Courtesy of Kelly’s Cover Press)

BART SCHNEIDER: Former editor of the Hungry Mind Review reads from his new novel “Giacometti’s Last Ride,” which follows the Swiss sculptor and painter Alberto Giacometti in Paris during his last years. When he meets a “working girl” who becomes his lover and final model, his life shifts into high gear. Schneider captures the milieu of Paris in the early 1960s with appearances by Jean Genet, Samuel Beckett, Pablo Picasso and Eli Lotar. This is the second collaboration between artist Chester Arnold and Schneider, after “The Daily Feast.” 6 p.m. Monday, Moon Palace Books, 3032 Minnehaha Ave., Mpls.

SL SMITH: Discusses “Malice,” 10th in the Pete Culnane series. 4 p.m. Saturday, Once Upon a Crime, 604 W. 26th St., Mpls.

LYNN PAINTER: Bestselling author of “Better Than the Movies” celebrates her latest release, “Fake Skating,” a hockey romance set in Minnesota. 6 p.m. Tuesday, St. Catherine University, 2004 Randolph Ave., St. Paul. Presented by Red Balloon Bookshop and the school’s master of library and information science program. Ticket required. Go to redballoonbookshop.com.

OCEAN VUONG: University of Minnesota Freier Lectures in Literature hosts bestselling, award-winning author of “On Earth We’re Briefly Gorgeous” and a MacArthur “Genius” fellow. Free with registration. 7:30 p.m. Thursday, Coffman Union Great Hall, 300 Washington Ave. S.E., Mpls. Registration: https://cla.umn.edu/english/news-events/events/ocean-vuong-conversation.

What else is going on?

What good news. Minneapolis-based Trio House Press announced it is acquiring Red Dragonfly Press, the acclaimed Minnesota-based small press founded by the late poet and publisher Scott King. Known for its commitment to books with rural, communal and environmental themes, Red Dragonfly has been a part of Minnesota’s literary landscape for more than two decades. Among its books are “Loon in Late November Water” by Freya Manfred and “The Ice-Cream Vigils: Last Poems” by Philip Dacey. When the acquisition is finalized in 2026, Trio House will officially launch the Red Dragonfly imprint. For information, go to triohousepress.org.