Month: September 2008

Ted Nordhaus and Michael Shellenberger:

The most influential environmental groups in Washington — the Natural Resources Defense Council and the Environmental Defense Fund — are continuing to bet the farm on a strategy that relies on emissions limits and other regulations aimed at making fossil fuels more expensive in order to encourage conservation, efficiency and renewable energy. But with an economic recession likely, and energy prices sure to remain high for years to come thanks to expanding demand in China and other developing countries, any strategy predicated centrally on making fossil fuels more expensive is doomed to failure.

A better approach is to make clean energy cheap through technology innovation funded directly by the federal government. In contrast to raising energy prices, investing somewhere between $30 billion and $50 billion annually in technology R&D, infrastructure and transmission lines to bring power from windy and sunny places to cities is overwhelmingly popular with voters. Instead of embracing this big investment, greens and Democrats push instead for tiny tax credits for renewable energy — nothing approaching the national commitment that’s needed.

A pretty devastating Youtube collecting his economic statements over the last year or so. He had no idea what was going on. Neither did I, of course. But then I’m not running for president.

Fox News seconds Kristol. And McCain is open to it. His first suspension led to the failure of his favored bailout plan.

Tyler Cowen outlines what he sees as best case and worst case scenarios.

McCain runs interference:

I wonder if the failure of the bailout is such a massive failure after all. One reader below strongly disagrees and I don’t know enough about what’s out there to know for sure. But no one knows what’s truly out there. As readers know, I’m a free market guy, and believe in minimal government intervention in most areas. I probably would have held my nose and voted aye if I were in Congress (ha!) but my suspicions of being rushed into a gigantic socialist scheme at the behest of the people that gave us the Iraq war would have remained. I’m interested to see what happens this week without socializing the financial sector as George W. Bush’s big government "trust me" philosophy advocated. And I definitely want the white collar fools and gamblers to get their comeuppance. I’d love to see many of those people who gambled with other people’s money go under. They deserve it.

It’s funny, isn’t it, that when it comes to poor black women, the ethos is always welfare to work. But when it comes to millionaire white men, it’s always work to welfare. Maybe a little welfare reform on Wall Street is overdue.

A reader writes:

Your political thinking and analysis is a true joy to read, but when it comes to economics and particularly financial economics, it’s apparent you don’t know a hill of beans. I think you’ve acknowledged this on a number of occasions, but nevertheless it’s distressing to read you repeatedly downplaying the potential consequences of the current financial/banking crisis, as in last night’s "Next Steps" post: "Unless, of course, we come to realize that letting these banks fail under their rotten loans is not the end of the world. If the world doesn’t end, wouldn’t the bailout lose more support?"

It’s painful to read you make these remarks because your views seem to have been formed in a historical vacuum. It’s totally out of character for you, a thinker who so clearly recognizes the importance of historical knowledge and context in understanding and analyzing contemporary politics and economics.

At the very least you could spend a bit of time reading the historical record of the consequences of large-scale banking crises in industrial countries.

There have been dozens of them. They are universally disastrous. You don’t need to be a highly trained financial analyst or economist to absorb this lesson. Across country after country, the record shows the same pattern of severe economic consequences, including substantial economic contraction, massive private sector layoffs, sharply higher unemployment, and persistently weak growth lasting several years. And this is in cases where national governments intervene aggressively (with "bail-outs"), i.e., these are the best-case scenarios. For a worst-case scenario, look at the "lost decade" in Japan, I assume you’ve heard of it. It was caused by a national banking crisis for god’s sake, not to mention ten years of inept public policy response.

If after you’ve reviewed this historical record you can come up with reasons why "this time it’s different," then by all means explain to your readers why, and then continue to question whether things will really be that bad if we don’t get some sort of major public sector intervention. But until you’ve done this, it would seem appropriate to be a bit more doubtful about your own skepticism towards the need for public sector action.

In battleground states, Obama has surged:

Among registered voters surveyed in Colorado, Michigan, New Hampshire, New Mexico, Florida, Ohio, Pennsylvania, Virginia, Wisconsin and Nevada, Obama tops McCain 50 to 40%. Just a week ago, Obama led 45% to 42%.

Maybe they just needed to get to know Obama better. But a double-digit lead in all these key states is a staggering development – and breaks open the race. For now.

"This is a huge cow patty with a piece of marshmallow stuck in the middle of it and I am not going to eat that cow patty," – Representative Paul Broun, Republican of Georgia.