September 10, 2009

After calling an extraordinary special session, the Roberts Court is now debating whether to reverse decades of cases that allow the government to restrict the campaign spending of corporations. Defending the regulation of corporate speech, Elena Kagan, in her first argument on behalf of the Obama administration, made a strategic concession.

Touching the Third Rail of Housing Policy
September 09, 2009

Ed Glaeser posted in Economix yesterday about the lessons that the housing crash imparts for housing policy--including the seemingly untouchable mortgage interest deduction. Now that home prices seem to be moderating, the piece provides a vivid reminder of how steep the price curve was, before and after the crash.

Low Expectations for the G20 and IMF
September 08, 2009

As we wade through a long line of international economic meetings--G20 ministers of finance last week, G20 heads of government in Pittsburgh coming up, IMF-World Bank governors meeting in Istanbul early October (and all the associated “deputies” meetings, where the real work goes on)--it seems fair to ask: Where is regulatory reform of our financial system heading? Long documents have been produced and official websites have become more organized. Statements of principle have been made. And the melodrama of rival reform proposals has reared its head: continental Europeans for controlling pay

Good Finance Gone Bad
September 08, 2009

As the Lehman anniversary approaches, defenders of the financial sector struggle into position--partly in response to your comments (also here). They offer three main points: We need finance to make the economy work. Financial innovation delivers value, although it’s not perfect (but what is?). Don’t kill the goose that laid the golden egg. Point #1 is correct, but this does not necessarily mean we need finance as currently organized. The financial sector worked fine in the past, with regard to supporting innovation and sustaining growth. Show me the evidence that changes in our financial str

Is Krugman Too *Optimistic* About the Economics Discipline?
September 07, 2009

So I think I agree with pretty much every point Paul Krugman makes in yesterdays' Times magazine about where economics went off the rails. Including his big prescriptive point: Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system. If the profession is to redeem itself, it will have to reconcile itself to a less alluring vision — that of a market economy that has many virtues but that is also shot through with flaws and frictions. The good news is that we don’t have to start from scratch.

Rocking Roberts?
September 07, 2009

WASHINGTON -- President Obama's health care speech on Wednesday will be only the second most consequential political moment of the week. Judged by the standard of an event's potential long-term impact on our public life, the most important will be the argument before the Supreme Court (on the same day, as it happens) about a case that, if decided wrongly, could surrender control of our democracy to corporate interests. This sounds melodramatic. It's not.

The Danger of Rejecting Compromises
September 03, 2009

Earlier this year, a group of former Senate Majority Leaders--Howard Baker and Bob Dole, along with Tom Daschle--released a template for bipartisan health reform. They did so through the Bipartisan Policy Center, which they'd established along with George Mitchell (who subsequently left to join the Obama administration). The reaction from liberals was lukewarm, at best. And I shared the ambivalence.

Numbers That Should Disturb, But Not Surprise, You
September 02, 2009

Seven hundred billion dollars may seem like a lot of money. But when it's spread out over ten years--and you're using it to pay for health care reform--it really isn't. It costs money to put people on Medicaid. And it costs money to subsidize private insurance for people who can't afford premiums on their own. Spending enough to make sure every American, or close to every American, has health insurance would push the price tag of reform to over $1.5 trillion, if done properly. Anything less and you have to start cutting back. You offer lower subsidies.

Is Modern Finance Like Junk Food?
September 01, 2009

Is modern finance more like electricity or junk food? This is, of course, the big question of the day. If most of finance as currently organized is a form of electricity, then we obviously cannot run our globalized economy without it. We may worry about adverse consequences and potential network disruptions from operating this technology, but this is the cost of living in the modern world. On the other hand, there is growing evidence that the vast majority of what happens in and around modern financial markets is much more like junk food--little nutritional value, bad for your health, and a h

Outcomes, Outcomes
September 01, 2009

The Constitution in 2020 Edited by Jack M. Balkin and Reva B. Siegel (Oxford University Press, 355 pp., $19.95) There is a genre, the "constitutional manifesto," that sits uneasily between the scholarly or theoretical analysis of constitutional law and the buzzwords of day-to-day constitutional politics. The latter category may be nicely illustrated by the competing slogans of interest groups contesting the Sotomayor nomination: "judicial activism," "empathy," and so on.