miscellaneous links

Pennsylvania Pie Fight: Does the government really have to protect us from home-made pies?

Mitch Daniels states the obvious on cap and trade.

No honest estimate pretends to suggest that a U.S. cap-and-trade regime will move the world's thermometer by so much as a tenth of a degree a half century from now. My fellow citizens are being ordered to accept impoverishment for a policy that won't save a single polar bear.

David Brooks on Fiscal Suicide Ahead

His theory was that he could spend now and save later. He could fund his agenda with debt now and then solve the long-term fiscal crisis by controlling health care and entitlement costs later on.

The first problem is that most experts, with a notable exception of David Cutler of Harvard, don’t believe they will produce much in the way of cost savings over the next 10 years.

The second problem is that nobody is sure that they will ever produce significant savings.

Brooks apparently does not have enough faith that the Obama administration knows what it is doing.

Greg Mankiw links to Peter Orzsag's piece in the Wall Street Journal, but terms the argument wishful thinking. The Orszag piece is interesting because it gives some rationale behind what the Obama admininstration is doing. I would expect them to be focused on trying to get us out of the current recession, but so much of what they have done seems to ignore the recession. The initial talking the economy down, the disregard for contracts in the auto industry, the threatening of financial institutions, the constant talk of higher taxes and more regulation, not to mention to attempts to demonize political enemies, all seem to be things that are likely to impede recovery rather than shorten the recession. But if they see the key as curtailing long-term health costs, then at least the emphasis on health care rather than the recession makes some sense, though I think only the ideologically doctrinaire can believe that increasing government involvement will reduce costs without substantially reducing quality.

From comments at Contentions:

Keynesian fiscal policy was almost dead until the Bush administration revived it, so Bush bears some of the blame for the stimulus debacle. In the years since economics textbooks presented fiscal policy as the magic bullet with which to slay recession, experience has shown that it has serious problems. Fiscal policy is enacted by politicians who always have political motives, it affects many things in addition to its targets, it has long lags, and it crowds out private spending in several ways. If in the 1950s Paul Samuelson’s textbook had said that the government spending multiplier was 1.57, which is what the Obama administration economists claimed, no one would have taken it seriously. I am not quite sure why anyone still does, but it was not Reagan, the first Bush, or Clinton, who pushed fiscal policy back to center stage. It was the second Bush administration that did that, using fiscal-policy arguments as part of a justification for tax cuts in the first term and then actually enacting a tax cut in the second only for fiscal-policy purposes. (Remember it–the tax rebate that was supposed to keep us from recession in 2008?)

The Washington Post is merely reporting on the pre-Bush consensus about fiscal policy.

And also here.

Pity the class of 2009.

The bad news for this spring's college graduates is that they're entering the toughest labor market in at least 25 years.

The worse news: Even those who land jobs will likely suffer lower wages for a decade or more compared to those lucky enough to graduate in better times, studies show.

updated