Looking for a Friend?

Robert Novak died last month and you might be surprised to learn that I am saddened by his death. Although he was probably a little more pugnacious than I really like, in general I appreciate the smart and thoughtful political commentators.

More importantly for me personally though is that in thinking about his death, I realized again my lack of conservative friends. I truly enjoy debating politics, and while I enjoy debating people farther to the left than I am, I also like debating people to the right of me (note: my definition of debate is an honest and open exchange of ideas).

So, any conservatives out there looking for a friend?

Same as it Ever Was

It is absolutely appalling that there has been no change on Wall Street. You would think that after the chaos they caused, and the huge amount of tax payer money they needed to stay solvent and prevent a major national recession, they would accept that they cannot continue as they were. But no, once again they want complete freedom in their markets, no regulation. Trust us, they say again.

This is all in their interest, because when their reckless bets pay off, they make tons of money. When they do not, they keep the money they have already won (see the graphic on where the major players are now - none seem to be hurting). As the article says, "Heads I win, tails I get bailed out."

President Obama needs to get health care passed, then move right away to implementing regulatory changes on Wall Street. The first change, and the easiest, should be requiring the derivatives to be traded on an open market.

Batteries

Apparently tonight is a learning night. I came across this really good article in the Economist on the state of electric cars.

Journal on Nuclear Power

The Wall Street Journal has an excellent article on the current state of nuclear power. The amazing thing is that it seems really balanced and objective. The bottom line is that there are technological improvements, but some are as yet unproven and many years away. But for now, cost is a major concern, waste is still an issue and safety is less of an issue - with the exception of terrorism.

Obama Health Care Speech

Last night was Obama's speech about health care reform. I did not watch it, but I did read the text here. And here is a link to the GOP response.

It seems like the speech went over well, and I think in general he made all the right points. The only thing that stands out is the claim that we will pay for it with savings and if we cannot, the law will force the government to find the savings somewhere else. Seems to me like he is kicking the can down the road, since I find it unlikely that the savings will pay for the new costs. Although maybe it is smart politics - pass the reform now, then later make the hard choices about cutting programs or increasing taxes.

The Republican responses seem to be all over the map. Their call to start over with a new bill is absurd. Bill Kristol's thinks that this shouldn't be a priority right now - another ridiculous statement. But their concerns over the cost are accurate. We'll just have to see what resonates. In general it seems many want to just kill it, but I think enough want something to happen, which will allow a good bill to pass.

Anyway, for your information, here is the Times' version of fact-checking.

The Problem with Macroecon

The state of macroeconomics seems to be a major topic of discussion these days - mostly focusing on how macroeconomics had been unable to predict the economic meltdown and has been unable to adequately respond to it. The Freakonomics blog has had a number of posts about it. Their overall take on the situation is that there are too few economists focusing on macro issues (and too many working in finance) which has left the field under-explored as of late.

Paul Krugman has a long article in the Times Sunday Magazine on this issue. He attributes problems in macroeconomics to a shift to the right - that too many economists have forgotten about the lessons of the Great Depression because of the lack of a truly serious recession since then. For at least the last few decades, liberal and conservative economists mostly supported the rational actor underpinning to economics and believed that the lack of a serious recession supported this. Krugman also feels that macro-economists have not correctly understood the recessions that did happen and were overconfident in our ability to control them.

The article is great - it isn't nearly as wonkish as his blog posts on this issue. Be aware though that it comes from a very liberal place. That being said, I do agree with most of it. Here is the key quote:

First, many real-world investors bear little resemblance to the cool calculators of efficient-market theory: they’re all too subject to herd behavior, to bouts of irrational exuberance and unwarranted panic. Second, even those who try to base their decisions on cool calculation often find that they can’t, that problems of trust, credibility and limited collateral force them to run with the herd.

There is a lot more to the article, like discussions about unemployment and the influence of capital on the recession, so I highly advise anyone to read all of it. Overall though, I hope that Krugam is right, that economists will spend more time understanding where economic actors actually deviate from the rational actor that we study in theory. Too much of our political debate is a back and forth about whether markets work or do not work. It would be much better if we talked about when they work and when they do not.