A few days ago, the New York Times had a story about who really makes up the 1%. It’s a wide variety of people, making a wide variety of incomes depending on where exactly they live (unsurprisingly, the top 1% in Connecticut looks a bit different than the top 1% in Alabama). Of course, not all of them, nor even a majority, are the kinds of investment bankers and hedge fund managers that many people are upset at for ruining the economy. The NYT story about the top 1% is about the top 1% by income; the top 1% by wealth is a different group, arguably more removed from the middle class than the top 1% in income earners. That certainly makes sense: a surgeon that is in the top 1% in income may only be one generation removed from a middle-class upbringing, while a top 1% wealth-accumulator has probably only known luxury.

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• Current Mood: Pain
• Currently Reading: "Requiem For A Dream", Hubert Selby Jr.

One of the many wonderful things they teach you in a Master’s program such as MSST is policy analysis. Part of that analysis is looking at a politics versus policy matrix. Whether a certain course of action is good policy versus good politics is largely orthogonal, so you really have four different boxes that an idea can fall into: good policy and good politics, good policy but bad politics, bad policy but good politics, and the box where you never want to end up, both bad policy and bad politics.

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• Current Mood: Geographic
• Currently Listening To: "Money", Pink Floyd

Never have the policies and politics of this country been more frustrating. Not only to myself, but to everybody: approval ratings for the president, Congress, and both political parties are cratering. Is it any surprise? Nothing is getting done. The American house is on fire, Republican leadership is arguing whether now is a good time to finally hold that garage sail, and Obama, meekly pointing to the flames on the roof, capitulates and sells the water hose to the guy across the street. One side is locked into a worldview that is increasingly distanced from reality (the leading Republican candidate for president is campaigning on chain emails, apparently never hearing of Snopes). The other side has thrown up its hands and bothers less and less to fight. The winners are pundits and inside-the-Beltway types who get paid to spill ink and electrons talking about what ails us. The losers are the people who are still unemployed because the U.S. can’t bother fixing its own problems.

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• Current Mood: Holiday
• Currently Listening To: "Golden Years", David Bowie
• Currently Reading: "Fooled by Randomness", Nassim Taleb

The economy is in terrible shape these days, not only in the U.S., but around the globe. And there doesn’t seem to be any way out of it. In Europe, the debt crisis clearly calls out for two solutions, default and inflation. Unfortunately, these are anathema to the ECB, leaving the continent to muddle along until the zombie banks simply run out of brains to ingest and it all falls apart. Here, consumer spending is going nowhere (although luxury spending is just fine), while corporations sit on mounds of cash they aren’t spending. It’s hard to see how the market is efficiently allocating capital right now. It’s almost as if the tragedy of the commons is real and requires government intervention to take some of that capital and redirect it to projects that benefit everybody, like infrastructure.

I don’t see how we are going to get out of this slump anytime soon, so we may as well shoot for the moon. Why not a goal to make the country carbon-neutral by 2050? Sure, it would be a monumental undertaking, with no guarantee of success. But it would put us on the forefront of technology that is going to happen sooner or later, and what we are doing at present clearly isn’t working. Is there anybody who can provide the leadership to arouse the public support for a project like this comparable to the Apollo Program? Our country’s future may depend on it.

• Current Mood: Morning
• Currently Listening To: "The Man Who Sold The World", Nirvana
• Just Watched: Casino

When the mortgage bubble exploded, and the economy was sent into a tailspin, the more intelligent commentators had a plan for hastening the recovery: a big stimulus program, preferably aimed at fixing some of our country’s ancient infrastructure, and mortgage cramdown to take the sting out of the bubble collapse for homeowners. What we got was a stimulus that was too small to affect the economy much, and an incredibly ineffective program known as HAMP. As a result, the economy is stalling, and the Fed is essentially giving up: growth will be lackluster, and perhaps the unemployment rate will drift back down to normal levels by 2014, 2015, 2016…

In Greece, which is also in full meltdown mode, the sanest, most humane outcome for the Greek people would be a default on Greek bonds. Painful in the short term, but better overall in the long term. Instead, we get round after round of austerity that is supposed to improve the economy, but instead is leading to a potential death spiral. The latest idea is selling off state assets, which I guess makes sense in a perverse way: if your house is on fire and you manage to sell off the bedroom and kitchen, you can say that you now have fewer things on fire, and so you’re improving!

In both instances, the rational choices were not taken, both for ideological reasons and because it meant that the banksters would have to lose some money (the fact that at least in the U.S. there were no strong voices actively pushing for things like cramdown was also a huge problem). What’s good for the people in general isn’t what’s important; what’s important is what is best for those who already have most of the money.

As for the current deal-making on the federal deficit, the easy thing to do would be to let the Bush tax cuts expire (and winding down the wars in Afghanistan and Iraq won’t hurt either). Thus, we will end up doing anything but that. It’s only reasonable!

• Current Mood: Full
• Currently Listening To: "Life In A Glasshouse", Radiohead

The economic recovery is going to be painfully, painfully slow. That’s all there is to it. You don’t need fancy equations, or smart economists, or even a crystal ball to know this. All you need is this one graph, courtesy of NPR:

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People are becoming more skeptical about climate change. Much of the change has to do with the failing economy, although the recent embarrassing emails from several scientists hasn’t helped win the public over. Coupled with this increased skepticism (which is wholly disconnected from the reality of climate change) is a decrease in focus on the so-called “green economy”, those jobs that will appear with the shift to a carbon-neutral, less-wasteful economy. This is terrible news, because the green economy is not just about the environment or climate change. It has far more importance.

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• Current Mood: Worn out