Podcast Delayed

The podcast is going to be 24 hours behind schedule this week, folks. A painting project at my house got out of hand and suddenly the day was over.

It was sort of like the Iraq war, really. I went in all optimistic, assuming that the walls would greet my wife and I as liberators. But not too long after the primer was applied the schedule went to hell, and, well… we didn’t really have a contingency plan. I’m hoping to draw down gradually and leave a small peacekeeping force (my dog) in charge on Monday, at which point the Prof and I will be able to sit down and tell you what we thought about the SOTU and America’s answer to Prime Minister’s Questions.

Update: Podcast is now live.

Green Jobs

The Mayor’s office announces:

SEATTLE – Today Mayor Mike McGinn announced that outgoing Office of Sustainability and Environment Director Michael Mann will work with the McGinn administration to craft a plan for a public-private partnership to lead the economic recovery through a retrofit agenda in Seattle.

Word is that Mann’s first effort will be to commission a 3-hour epic documentary about global warming called Heat 2″.

SotU – Good Speech, Bad Policy

Following up on my own post from yesterday, here’re my quick thoughts on the President’s State of the Union address last night.

  1. In general, I thought the speech was solid — rhetorically, not a masterpiece, but it accomplished what it needed to.  I was most impressed by the President’s solid instinct to generally avoid the rhetorical cliches that too frequently pepper our political discourse; early in the address, I thought to myself “he’s giving someone else’s speech”, but then he moved past it.  Good job.
  2. I was disappointed by the lack of focus on infrastructure investment.  $8bb for trains in Florida and California is great, but that will about pay for the environmental studies, and not much else.
  3. Likewise, I was disappointed by the promise to cut spending starting in 2011 (with the exception of defense spending, of course — I mean, how could we POSSIBLY feel safe with fewer F-22s?).  I’ll do Paul Krugman’s work for him and say again that SPENDING CUTS IN A RECESSION ARE THE WRONG ANSWER!!!  [There, I used 3 “!”s, so you know I mean it.]
  4. Last, I though the “guilt-trip-them-into-submission” approach to dealing with health care and the loss of the Senate supermajority was novel, but, yeah, when pigs fly. it’s sad how deeply cynical the GOP has become, but there it is.

As a special bonus, I’d like to offer a shiny new Sacajawea dollar to anyone who cares to produce a MST3K-style voiceover to Bob McDonnell’s GOP response.  I pretty much tuned this out after the “Sportscenter” reference.  Matski’s official fiance didn’t appreciate me, in my best North Carolina accent, trying my own soundtrack, so I need some help.   Here’s the line I started with: “He watches Sportscenter too! He must be a good man jus’ like me!” Really, Republicans?  Really?  America desperately needs a functioning opposition party that, you know, like, has ideas and stuff.  If you must have a sports reference, the GOPs current approach is something like “let’s show up at the field and just not play – that way, it won’t really be a forfeit, but we can’t lose the game either!”

So, all in all, a good speech, although I’m concerned at some of the specifics.  Probably most of them are throwaways anyway, so I won’t worry about it too much.

What the World is Waiting For*

Before I dive headfirst into the myriad pre-game coverage of tonight’s State of the Union, I want to take a moment to talk about a few things that I’d like to see … admittedly, the POTUS seems to have lost my cell phone number in the last few months, but I’m told he still reads this blog sometimes, so here goes.

  1. Spending, not tax cuts — as pretty much any economist who’s ever bothered to, you know, read the history of the Great Depression will tell you, FDR nearly killed his own recovery by pulling in spending too soon. Had it not been for the massive Keynesian opportunity presented by WWII, the US would likely have been mired in recession – or worse – through most of the ’40s. Unfortunately, most of the money spent on recovery to date has gone to financial institutions. It’s debatable whether or not that was the best, or most necessary, use of taxpayer money, but what’s NOT debatable is that much of that money went to shore up the balance sheets of banks, and not into the kind of direct investments that both create jobs and long-term economic strength — the trains, roads, ports, and sewers that we so desperately need to rebuild in America. Don’t let the budget hawks fool you — America needs MORE spending, not less.
  2. Restraint, not populism — It’s a strong temptation, no doubt, for an embattled President to turn to populism in this crisis. The President needs to resist this urge. Stoking the gathering fires of classism and populist anger isn’t a way to win in the long term. It’s anti-elitist fervor which has been the Democrats undoing for most of the last 20 years. Playing to the hairy knuckles crowd just re-orders the line at the guillotine; better to lead.
  3. Renewed commitment to health care — The President’s big problem on health care is that he’s failed to outline a solid vision for what, exactly, health care reform is going to accomplish. Is it to reduce costs? Provide universal coverage? Improve quality of care? The GoP has succeeded in scuttling reform because, without a clear vision for what health care reform IS, they’ve been able to find something in it for everyone to hate.

I’m pretty much expecting the President to take the opposite approach on all of these points, but a guy can hope, right?

* I suppose I should use a song title from US band (not the UK’s Stone Roses) to preface my preview of the SotU.

The World’s Greatest Deliverative Body

America’s House of Lords continues to brag about its own disfunction:

The measure isn’t quite finished yet, but sources said the current version would cost just over $80 billion. Though that number may change as the process moves forward, it is clear Senate Democrats have no intention of moving a jobs package as large as the $154 billion measure the House passed in December on a narrow, party-line vote. The House measure included money to extend unemployment benefits and COBRA health insurance coverage, items that aren’t in the draft Senate bill but may move in the chamber separately.

“There is ‘big bill fatigue’ in the Senate right now,” said a Senate Democratic aide.

Oy. Cry me a river. There’s unemployment fatigue in America.

We don’t need an $80B tax cut bill. We need a $400B, multi-year job-creation bill. We need infrastructure. Sewer repair. Aid to state and local governments. Wind energy.

But the crybabies in the Senate with their six-figure salaries are just too darn tired, I guess. Holy crap.

Just Walk Away

Those of you who listen to the show somewhat regularly will know that, while I’m a big fan of markets, I’m also highly critical of one of the central tenets of neoclassical economics – the “rationality assumption”. In short, in order for its predictive models to work, neoclassical econ requires that all of the agents in a market act rationally, and with perfect information. In test after empirical test, it’s been demonstrated that the ability of most people to act rationally in most situations is, shall we say, highly suspect.

One example of this is pointed out in the NYT today: for many people suffering through dramatic declines in their home prices, the “rational” choice is to simply walk away from their mortgages. This is a consequence of the policies that created the home mortgage market in the first place (and also an example of one of my other favorite talking points – namely that markets are created, not born … but that’s for another post). Regardless of the moral feelings, social pressure, or hit to their credit scores that those who walk away from their mortgages may suffer, the fact is that this is not only LEGAL, but the CORRECT, rational response to declining home prices and an “underwater” mortgage.

The NYT piece explores the reasons why more people don’t just walk away. It’s a good read. For my part, I’ll just say that if you really want to s***w the banks (and why not?), then support the idea that people with underwater mortgages just walk away from their properties. Plus, it’s the right thing to do for the economy.