"Stop Blaming Wall Street"

This long and dense article by John Judis gives a history of how the United States' economic and monetary policy has increasingly marginalized the manufacturing industry.

The whole thing is worth reading, and the history is so complicated that I wouldn't even try to sum it up. But here's the bottom line (notice that Judis is criticizing liberals here even though he's pretty liberal himself):

Conservatives blame “big government” for throttling entrepreneurship; liberals tend to take aim at Wall Street. Rolling Stone writer Matt Taibbi memorably described Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Among less inventive critics, the term in vogue is “financialization.” According to author Kevin Phillips, who popularized this notion, financialization is “a process whereby financial services, broadly construed, take over the dominant economic, cultural and political role in a national economy.” . . .

One thing is clear: Financialization, in some form, has taken place. In 1947, manufacturing accounted for 25.6 percent of GDP, while finance (including insurance and real estate) made up only 10.4 percent. By 2009, manufacturing accounted for 11.2 percent and finance had risen to 21.5 percent—an almost exact reversal, which was reflected in a rise in financial-sector employment and a drop in manufacturing jobs. It is also clear that high-risk speculation and fraud in the financial sector contributed to the depth of the Great Recession. But Phillips, Johnson, and the others go one step further: They claim that financialization is the overriding cause of the recent slump and a deeper economic decline. This notion is as oversimplified, and almost as misleading, as the conservative attack on the evils of big government. . . .

Some critics of financialization have insisted that breaking up the banks is the key to reviving the U.S. economy. Charles Munger, the vice chairman of Berkshire Hathaway, has said, “We would be better off if we downsized the whole financial sector by about eighty percent.” It’s certainly true that, if the derivatives market isn’t thoroughly regulated and if reserve requirements for banks aren’t raised, then a very similar crash could happen again. The Dodd-Frank bill goes part of the way toward accomplishing this, though it leaves too much to the discretion of the Treasury, the Federal Reserve, and regulatory agencies.

But, unless the United States takes the necessary measures to revive its industrial economy, radical downsizing of the financial sector could do more harm than good. It could even deprive the economy of an important source of jobs and income. Many mid- and large-sized cities—including New York, San Francisco, Jacksonville, Charlotte, Boston, Chicago, and Minneapolis—are now dependent on financial services for their tax bases. Instead of agitating for breaking up the banks, critics of financialization would do well to make sure that Republicans don’t gut Dodd-Frank.

Why, then, has financialization played such a starring role in explanations of America’s economic ills? One obvious reason is that the financial crash did turn what would have been an ugly recession into a “great” recession. This sequence of events is an almost exact replay of the Depression, which began with a short recession in 1926 . . . . In both cases, the financial crash played the most visible role.

Another reason is the centuries-old tendency in American politics to allow moral condemnation to outweigh sober economic analysis. Picturing bankers and Wall Street as a “parasite class” or as “vampires” is an old tradition in American politics. It goes back to Andrew Jackson’s war against the Second Bank of the United States and to Populist Party polemics against “a government of Wall Street, by Wall Street, and for Wall Street.” And currently it is one of the few ideological bonds between the Tea Party and left-wing Democratic activists. But, just as free silver wasn’t the answer to the depression of the 1890s, smashing the banks isn’t the answer to the Great Recession of the 2000s. The answer ultimately lies in the ability of U.S. businesses to produce goods and services that can compete effectively at home and on the world market.

Policy uncertainty and jobs

"Policy uncertainty" has dramatically increased since the September 2008 crash. (via)

That article (written by 3 economists at Stanford and University of Chicago) notes that it's hard to disentangle uncertainty about policy (tax rates, health-care law, regulations) from uncertainty about the economy as a whole. But the authors tried to isolate policy uncertainty as a distinct factor inhibiting businesses from hiring people.

They "estimate that restoring 2006 levels of policy uncertainty would yield an additional 2.5 million jobs over 18 months."

UPDATE: My mom, Ann Althouse, remarks: "And yet the government is always scrambling to help us out with new policies." She quotes President Obama from today:

“If Congress does nothing, then it’s not a matter of me running against them. I think the American people will run them out of town. I would love nothing more than to see Congress act so aggressively that I can’t campaign against them as a do-nothing Congress.”

She urges us to "[r]econsider the amazing value of nothing."

A silver lining to budget cuts for police departments

Budget cuts are forcing the police to come up with innovative ways to police more efficiently, possibly spurring police departments to achieve the same or even better results than in the past, at lower costs.

That article focuses on this example (though it also lists several others):

Partnering with criminologists from George Mason University, a team led by Sacramento Police Sergeant Renée Mitchell identified 42 “hotspots”—street corners that attracted the highest percentages of violent crime in California’s second most violent city.

As part of a 90-day study conducted between February and May this year, Mitchell and her team assigned officers to visit a randomized rotation of three or four of these hotspots for 12 to 16 minutes apiece during shifts. That meant police would inhabit Sacramento’s most dangerous corners about every two hours. The officers were told to be “highly visible” during these visits—to step outside patrol cars, to talk with people.

This was a change for Sacramento police. It focused on places to target rather than specific crimes, and relied on data rather than police instinct. The results, Mitchell says, were striking.

“Part I” crimes—which include violent offenses such as murder, rape and robbery, as well as property crimes such as burglary and vehicle theft—decreased by 25 percent in these hotspots. Calls for service decreased by nearly 8 percent.

The police were able to achieve those huge successes in the most high-crime areas of the city for just $75,000, which the article tell us is "less than one percent" of the police department's 2011 budget of $116 million. If my math is right, that's technically true but a dramatic understatement: 75,000 divided by 116 million isn't just less than one-hundredth; it's less than one-thousandth (about 0.065%). If you multiply the cost by 4 to estimate what this practice would cost year-round (instead of the study's 3-month period), it's only about a quarter of 1% (about 0.259%). The media expect us to think of "one percent" as "the smallest possible percentage," so they don't bother to make even smaller divisions than that.

Mitchell, the police sergeant who led the team that implemented the study, says:

“Arrests are glamorous. . . . People want to see that guns and drugs are being taken off the streets. But that’s reactive. We should be working to prevent. Our job is to reduce the opportunity for crime, not necessarily to patrol every street corner and make high-profile arrests. Sooner or later we’re going to have to face that.”

I've tagged this post with "unintended consequences." That phrase is normally considered negative, but it can be positive too.

(The article is from a brand-new site by the Atlantic called the Atlantic Cities.)

Breaking down Obama's "jobs" plan (stimulus)

1. An "Absolute Moron's Guide."

2. A smart person's assessment.

Here are some highlights from that second link (by Megan McArdle):

The infrastructure stuff will be fine, if we choose good projects--America needs roads and airports and so forth. But as we discovered with the previous round, the better the project, the worse the stimulus. There are no terrific infrastructure projects sitting around, waiting to break ground next week . . . nay, not even if we streamline the regulatory red tape.

For that matter I'm not even sure that the president has the authority to streamline most of that red tape, and I'm highly skeptical that Congress is going to get busy undoing several decades worth of environmental and anti-corruption protections. So most of that $100 billion is not going to be spent next year--presumably, even the school rehab is going to have to wait until summer, when what we need is jobs right now. . . .

She also points out that Obama hasn't proposed any way to pay for the plan. She quotes from Obama's speech:

The agreement we passed in July will cut government spending by about $1 trillion over the next ten years. It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas. Tonight, I'm asking you to increase that amount so that it covers the full cost of the American Jobs Act. And a week from Monday, I'll be releasing a more ambitious deficit plan -- a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.

Then she quotes a Twitter post, summing up Obama's message to Congress:

"Here's the deal: I take credit for the new spending now; you take credit for making politically unpopular cuts later."

McArdle adds:

This is becoming a signature move for Obama. . . .

But it's hardly been a rousing success when Democrats tried to maneuver the Republicans into putting their sticky little fingerprints all over the unpopular parts of their plans while taking credit for the successes, which is what this boils down to. During the speech, Justin Wolfers tweeted to the effect that the GOP wouldn't dare vote against these hard-to-dislike provisions. I take it that this sentiment is common among liberals, who expressed approval that Obama was finally taking it to Republicans.

I'm less sure. For one thing, they've got a legitimate critique: it isn't paid for. Of course, if you want more stimulus, you don't want it to be paid for next year . . . but it isn't paid for at all. Select committees are turning into the Laffer Curve of the left: every time you want more money to pay for something, assign a committee to make unspecified cuts years in the future.

Republican complaints that the spending will happen and the pay-fors won't aren't unreasonable, and I suspect they'll get some traction with independents.

Gauging the liberal mood on Obama's jobs speech

See if you can detect a subtle change in Ezra Klein's mood based on two of his articles about speeches by Barack Obama.

The first is from January 3, 2008, the night of the 2008 Iowa caucuses, after Obama gave his first victory speech of the campaign:

Obama's finest speeches do not excite. They do not inform. They don't even really inspire. They elevate. They enmesh you in a grander moment, as if history has stopped flowing passively by, and, just for an instant, contracted around you, made you aware of its presence, and your role in it. He is not the Word made flesh, but the triumph of word over flesh, over color, over despair. The other great leaders I've heard guide us towards a better politics, but Obama is, at his best, able to call us back to our highest selves, to the place where America exists as a glittering ideal, and where we, its honored inhabitants, seem capable of achieving it, and thus of sharing in its meaning and transcendence.

In the days to come, just as in the days that have passed, I'll talk much more about Obama's policies. About his health care policy, and his foreign policy, and his social policy, and his economic policy. But so much as I like to speak of white papers and scored proposals, politics is not generally experienced in terms of policies. It's more often experienced in terms of self-interest, and broken promises, and base fears, and half-truths. But, very rarely, it's experienced as a call to create something better, bigger, grander, and more just than the world we have. When that happens, as it did with Robert F. Kennedy, the inspired remember those moments for the rest of their lives. . . .

The politician who gets the most votes merits our congratulations. But the politician who enlarges our politics and empowers more Americans to step forward into the public square deserves our gratitude.

Now, here's Ezra Klein writing a few days ago about President Obama's upcoming jobs speech to a joint session of Congress:

I’ve stopped pretending that the president’s jobs speech scheduled for next week is going to matter. I’m tired of speculating about what it will contain and whether its proposals will be big or small, bold or timid.

Here is what will actually happen: President Barack Obama will give a speech. It will include a mixture of ideas the administration has pushed for some time (extending the payroll tax cut, investing in infrastructure, passing trade agreements) and some modest new additions (a tax cut for companies that hire new workers, for example). Relatively few people will tune in to the speech; of those who do, most will be either committed Obama supporters or equally committed detractors. . . .

Obama’s speech will achieve nothing. It will go nowhere because it has nowhere to go. . . .

The interest in the president’s speech is just a function of the fact that people who discuss politics and policy for a living need to seem like we’re doing something through the long summer months. The administration needs to look like it’s acting to create jobs, the media need to appear to be reporting news, the pundits need to generate opinions about it all.

This is the part of the column where, as a pundit, I lay out my three-point, politically implausible plan to turn the situation around. This is where I tell the president to fight harder, or take his message directly to the people, or fire up the lethargic Obama for America organization. This is where I remind the Republicans that they supported tax cuts as stimulus all through the last decade and even into 2009; where I beg them to put country before party; where I warn them that everything they are doing unto the Democrats today will be done unto them tomorrow. This is where I summon history to show how FDR or Reagan or Truman broke a similar logjam.

But such exhortations -- and I am guilty of writing variations on these many times over -- are pointless today. The facts are what they are. And what they are is depressing and unlikely to change.

So, it's safe to say Ezra Klein isn't predicting that President Obama's big speech on jobs in the middle of the primary campaign season is going to be one of his finest speeches?

But wait, Jonathan Chait at The New Republic does have a plan for Obama to accomplish something with his jobs speech. It's summed up in the headline of his article:

Obama's Best Hope on the Jobs Crisis: Convincing Us He's Not in Charge

Notice that Chait isn't saying Obama should be worried that his speech might give the impression that he's feckless on the economy. He says this is the best-case scenario for Obama.

In another piece, Chait points out that the White House's supposed interest in historical analogies to presidents who won reelection while unemployment was high — FDR and Reagan — "sounds like pure delusion":

Roosevelt in 1936 and Reagan in 1984 had high unemployment, yes. But they also had very rapid economic growth. . . .

These were situations where the public could discern rapid improvement from a bad situation. No such thing is likely to be the case next year. 1936 and 1984 are not good lessons. They're counter-examples . . . .

Americans are very, very unhappy. Obama's task is to persuade them to blame Republicans. Running an election taking credit for, well, anything is a terrible idea.

Judge Richard Posner on economic recovery and the deficit

This whole article is well worth reading.

A sample:

The problem is not the level of the debt but its growth. In the seven years between 2000 and 2007 (the last year before the financial crisis that triggered the current depression), the public debt grew in real (that is, inflation-adjusted) terms by 56 percent, the consequence of reckless spending and tax cuts by the Bush administration. Between 2007 and 2012 (the debt in fiscal 2012, which ends September 30 of next year, is of course an estimated number), a shorter period, the nation’s public debt will have grown by another 134 percent. . . . These annual rates of growth vastly exceed the rate of the nation’s economic growth even in prosperous times, and if they continue will bankrupt the federal government.

Unfortunately, even when the economy recovers, and tax revenues increase, the federal deficit will continue to rise because of the rapid growth of entitlement expenditures—primarily Medicare and Social Security and, because of the health-reform law, Medicaid. . . .

[T]he deficit, politics aside, should be manageable. But it’s worth pointing out that anything that takes money out of the economy, such as reducing federal spending or increasing federal taxes, will exacerbate the current depression. Consumers will have less money to spend, and this will discourage employers from hiring. So the reforms that I have been discussing should be phased in gradually over a period of years.

But it’s not clear that we have enough years. . . .

Posner concludes that we're in "a quandary. I don’t see a way out of it. I hope others do."

Michael Moore calls on Obama to prosecute the CEO of Standard & Poors.

Michael Moore says on Twitter:

Pres Obama, show some guts & arrest the CEO of Standard & Poors. These criminals brought down the economy in 2008& now they will do it again

And Eugene Volokh has the perfect blog post heading:

You’d Think Anti-Establishment Filmmakers Would Have a Bit More Interest in Preserving a Strong First Amendment

Wisconsin Governor Scott Walker: "We don’t have anything to give."

This is Walker's explanation for why he's trying to cut benefits and take away most collective-bargaining rights of public workers in Wisconsin:

“I’m just trying to balance my budget,” Mr. Walker said. “To those who say why didn’t I negotiate on this? I don’t have anything to negotiate with. We don’t have anything to give. Like practically every other state in the country, we’re broke. And it’s time to pay up.”

If that's true — if he has no choice because he simply doesn't "have anything to give" — then why does he want to exempt police and firefighters?

How to lie with statistics: Unemployment edition

The US Department of Labor's new unemployment report -- which seems to show a major drop in the unemployment rate yet a tiny increase in actual jobs -- is explained here. (via)

Why don't people know about the Obama tax cuts?

The New York Times looks into this question:

What if a president cut Americans’ income taxes by $116 billion and nobody noticed?

It is not a rhetorical question. At Pig Pickin’ and Politickin’, a barbecue-fed rally organized here [in Huntersville, North Carolina] last week by a Republican women’s club, a half-dozen guests were asked by a reporter what had happened to their taxes since President Obama took office.

“Federal and state have both gone up,” said Bob Paratore, 59, from nearby Charlotte, echoing the comments of others.

After further prodding — including a reminder that a provision of the stimulus bill had cut taxes for 95 percent of working families by changing withholding rates — Mr. Paratore’s memory was jogged.

“You’re right, you’re right,” he said. “I’ll be honest with you: it was so subtle that personally, I didn’t notice it.”

Few people apparently did.

In a troubling sign for Democrats as they head into the midterm elections, their signature tax cut of the past two years, which decreased income taxes by up to $400 a year for individuals and $800 for married couples, has gone largely unnoticed.

In a New York Times/CBS News Poll last month, fewer than one in 10 respondents knew that the Obama administration had lowered taxes for most Americans. Half of those polled said they thought that their taxes had stayed the same, a third thought that their taxes had gone up, and about a tenth said they did not know.

The North Carolinians' feeling that their taxes had been raised did have some basis in reality:

[T]axpayers in more than 30 states saw their state taxes rise, according to the Center on Budget and Policy Priorities.

That is what happened here in North Carolina. The Treasury Department estimated that the federal tax cut would put $1.7 billion back in the hands of North Carolina taxpayers this year. Last year, though, North Carolina, facing a large budget shortfall, raised a variety of state taxes by roughly a billion dollars.

“It was a wash,” said Mr. Tillis.

Who's Mr. Tillis? That would be Thom Tillis, someone of no significance to the New York Times' readers except that he allows the reporter to voice his opinion through someone else. (Michael Kinsley explained this phenomenon in his excellent piece on why newspaper articles are so long.)

Back to the tax cuts: Obama makes it sound like he planned for people not to notice them:

President Obama said that structuring the tax cuts so that a little more money showed up regularly in people’s paychecks “was the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut.”

“And in fact what ended up happening was six months into it, or nine months into it,” the president said, “people had thought we had raised their taxes instead of cutting their taxes.”

I find it hard to believe that the economics and the politics were so out of sync with each other. If the specific way the tax cuts were implemented caused people to feel like they hadn't gotten any relief, wouldn't that have undermined the goal of stimulating the economy?

The problem with the stimulus

According to Jonathan Cohn at The New Republic: not enough wasteful government spending!

Resigning by Twitter haiku, or senryu

A CEO resigns with quirky dignity by posting this on Twitter:

Today's my last day at Sun. I'll miss it. Seems only fitting to end on a #haiku.

Financial crisis
Stalled too many customers
CEO no more

That was all one tweet, but I've added the line breaks so it's in proper haiku form. The CEO is Jonathan Schwartz, and he resigned from Sun Microsystems.

I sent this to my dad, and he responded with (1) a correction:

These poems are senryu, not haiku. Same structure, but haiku are about nature and include a seasonal reference, while senryu are about human experience.

. . . and (2) a senryu of his own:

CEO only
of myself, if I resigned
who would take over?

Richard Posner gives a history of "the intellectual decline of conservatism" from the '60s to now.

In this blog post (which is woefully in need of paragraph breaks).

Here's his assessment of where it's ended up:

[T]he policies of the new conservatism are powered largely by emotion and religion and have for the most part weak intellectual groundings. That the policies are weak in conception, have largely failed in execution, and are political flops is therefore unsurprising. The major blows to conservatism, culminating in the election and programs of Obama, have been fourfold: the failure of military force to achieve U.S. foreign policy objectives; the inanity of trying to substitute will for intellect, as in the denial of global warming, the use of religious criteria in the selection of public officials, the neglect of management and expertise in government; a continued preoccupation with abortion; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset-price inflation.

Posner's post helps clarify the disconnect between (1) the fact that he's typically labeled a "conservative" and (2) what he actually says about the issues.

Unemployment in the double digits

Already.

"I officially retract any attempt at levity associated with my earlier post."

Republican economic policy defies parody.

Hope-based administration

In the midst of an overwritten, over-metaphored piece called "Is Obama skidding or crashing," Penn Jillette sums up exactly how I'm feeling about the Obama administration right now, except for the part about being twice Obama's weight:

President Obama is so damn smart. He just drips smart. He clearly understands stuff that we could never understand. He's trustworthy. ... If I weren't twice his weight, I'd fall back with my eyes closed into his caring arms in one of those cheesy '70s church trust exercises. He could talk me into anything.

Obama tells us that we can spend our way out of debt. He tells us that even though the government had control over the banks and did nothing to stop the bad that's going on, if we give them more control over more other bank-like things, then they can make sure bad stuff doesn't happen ever again. He says we can get out of all those big wars President Bush caused by sending more troops into Afghanistan. And I don't know. I really don't know.

RELATED: This blog post by my mom from right after the financial crisis exploded:

Democrazy.

A typo I just made while trying to IM the line "this shows we don't really have a democracy." The topic was how impossible it is for almost anyone to understand the current financial crisis, how disembodied it is from the presidential candidates we've been so focused on, and how we are forced by the complexity of the system to rely on experts whose reliability we cannot judge.

That was about an IM conversation she and I had in September 2008. I don't think the situation has gotten significantly better since then.

I feel like giving up on reading the news, then checking back in a year or two to see how things went. In the meantime, trying to figure out what's going on seems hopeless.

Obama's prime-time press conference

- President Obama says we need to take on "drug cartels that have gotten completely out of hand." As opposed to the reasonable drug cartels?

- He seemed to get an extra (uncharacteristic?) burst of enthusiasm when he said: "That whole philosophy of persistence is one that I'm going to be emphasizing in the years to come when I'm in office." (Rough quote from live broadcast.)

"This is a big ocean liner. It's not a speed boat. It doesn't turn around immediately."

UPDATE: Mickey Kaus points out that of the reporters who asked Obama a question stated a blatant falsehood: "1 in 50 children are now homeless in America." As Kaus says, "This is one of those statistical assertions that you know is BS before you even set out to show it's BS." But click here if you're interested in the details.

Amid "the outrage over the AIG bonuses," don't forget the other 99.9%.

And I'm not using "99.9%" loosely to mean "the vast majority." That's the actual figure: the total of the bonuses paid to AIG employees are about one one-thousandth of the AIG bailout. (The bonuses are just under $200 million; the bailout is just under $200 billion.)

Noam Scheiber, at his financial-crisis blog on The New Republic called The Stash, says:

I'm starting to find the obsessive "what did Geithner/Obama know and when did he know it" line of questioning a little tedious. Yes, it's worth establishing a rough chronology so we know if public officials are telling us the truth. But the endless preoccupation by my colleagues in the media--when did the Fed tell Treasury, when did Treasury tell [Tim] Geithner, when did Geithner tell Obama--is getting a little ridiculous. This just wasn't a huge substantive mistake. It was a small substantive mistake--we're talking about a tiny fraction of the $200 billion we're floating AIG here....

He then quotes a passage from a recent Washington Post article that "gets at the absurdity of it all" (boldface added by Scheiber):

During this period, Geithner's primary concern was keeping the financial system from collapsing, a source said. The compensation packages for AIG employees were hardly, if ever, brought up, another source said. Other staff members at the Fed and Treasury were in charge of the compensation issues and only briefed Geithner, sources familiar with the matter said. Once nominated for the Treasury post in December, Geithner recused himself from affairs related to specific firms.

Scheiber adds:

[H]ow much would we even want a Treasury secretary to focus on $165 million in bonus money while there were hundreds of billions of dollars in bailout money flowing to AIG and other companies? Doesn't seem like that would be a particularly good use of his time beyond a certain point.

The problem, of course, is that if you don't mind the politics of a situation like this, it can quickly cripple your efforts to do anything else. But, again, that's a reason for the press to treat it like a political fiasco ("please tell the American people what you're doing to make this right") not a substantive fiasco (Watergate-style badgering). The coverage seems to me a lot more in line with the latter than the former.

I don't have much to add since I think Scheiber is pretty clearly correct about all this.

Just one more point. I remember partaking in the outrage over the big investment banks' CEOs "taking private jets to hold out a tin cup to Congress" last year. For a moment there, it felt really important. Then I saw some story about CEOs making a point of not taking their private jets. Now, you can say that's too little too late. But let's say, for the sake of argument, that you actually admire the CEOs' abnegation. It occurred to me: does that really change anything important? I mean, I think it's good to avoid taking private jets because of the monstrous financial and environmental costs. But it's not as if I was going to be any less outraged about the need to bail them out no matter how ascetic their lifestyle choices were. Unfortunately, there's such an enormous amount of money at stake that a few million dollars swishing around here and there just doesn't change very much. I care very little about these people's moral purity; I care a lot more about what's going to happen to everyone else.

Is economic stimulus an enemy of the environment?

The Associated Press reports (via ProPublica's Eye on the Stimulus):

One bill [in Montana] gets straight to the issue — promising to exempt hundreds of millions in economic stimulus projects from the state's landmark environmental policies. Environmentalists are ramping up lobbying efforts as a wave of measures eroding regulatory rules gain serious traction in the face of a recession and shrinking state coffers....

In California, lawmakers relaxed environmental laws for road projects and construction equipment in the name of economic stimulus as part of a recently approved budget package. In Idaho, lawmakers shut down new regulations for septic-tank drain fields because they feared it would hinder Idaho's economy, especially during a recession.

Utah is even considering a company's offer to take nuclear waste in exchange for needed cash. In Kansas, lawmakers are pushing for legislation that would pave the way for coal-fired power plants in the southwest part of the state....

Huffington Post gives this story the headline, "Some States Still Don't See Economy-Environment Connection." The implication is that this kind of thing is a strange aberration occurring in a few out-of-step states. But it seems like there's a pretty straightforward leap from "We need to stimulate the economy with big infrastructure projects and new blue-collar jobs or else the world as we know it is going to collapse," to "Hey, wouldn't it be worth loosening up a bunch of environmental regulations?"

Of course, one reaction is: don't worry, everything's fine, because you can stimulate the economy through "green jobs." I'm all in favor of stimulating the economy with green jobs. But that's not the only thing or even the main thing being done as part of the stimulus plan. The overall plan is clearly in tension with environmentalist goals, but people are just hoping we won't notice this.

An excellent letter to the New York Times makes the broader point:

We consumers are getting contradictory messages about spending. On the one hand, we are told that our overconsumption is polluting and cluttering up the earth with garbage, using up resources and showing insensitivity to all the needy people in the world. On the other hand, we are told that until we start buying more goods and services, the economy will be in the dumps and we will leave many of our fellow citizens jobless, homeless and hungry.

Something is wrong with that picture.

My economic stimulus plan: lower the drinking age.

Minnesota is already considering it.

There are millions of Americans wanting to give so much money to American businesses -- bars, restaurants, liquor stores -- but they can't do it legally.

Ed Morrissey at Hot Air responds to the Minnesota proposal:

In fact, the economics of the argument are usually considered a wash, since one of the points made against the ban is that teens buy alcohol on their own anyway.

I don't know who he's referring to who "usually consider[s]" it a "wash," but I find it hard to believe that many economists would seriously hold that view. Isn't it the most basic principle of economics that if you reduce the cost of goods, more people will buy them? Breaking the law has heavy built-in costs: the risk of getting in legal trouble, plus whatever extra efforts they're taking to avoid getting caught.

As long as we're just talking about the effect on the economy, this is all a question of numbers. The plan wouldn't need to increase every 18-to-20-year-old's alcohol purchases, just some of them. While "teens buy alcohol anyway" is a handy debating point, the truth is that plenty of underage people simply don't drink because they're dissuaded by the law.

Everyone knows that people under 21 already buy alcohol illegally. But you'd get a surge of economic activity if you dropped the legal barrier.

This was a good idea without the economic crisis, but it seemed politically impossible. Now that it doesn't just make sense but is also economically necessary, maybe it is possible.

(Photo by Daniel Krieger.)