Brad DeLong quotes a post from Mark Thoma. When I read it, Google Ads was displaying the image you’ll see at right:

My doubts come on two fronts. The first is the ability of QE to affect long-term real rates, and the evidence is somewhat favorable on this point, though not 100 percent compelling. It does seem that the Fed can lower long-term real rates, mortgage rates in particular, though why we want to stimulate investment in new housing in the aftermath of an housing bubble is a question we might want to ask.

My second objection is related to this – even if we do lower long-run real mortgage rates, will that stimulate new investment in housing given the inventory problem that already exists, and given the condition of the economy? I’m doubtful, and that doubt extends generally. The mechanism described below relies upon lower real interest rates stimulating new investment, but even if long-term rates fall across the board, will firms be inclined to go out and buy new factories and equipment when so much of what they have is sitting idle?

I think the answer here lies in Google’s automatic word-matching. All this talk of mortgage interest rates inspired Google to try to interest me not in buying a new home, nor in building a new home, but in refinancing an existing mortgage. If low interest rates let people refinance on favorable terms, then they’ll have more money left over to spend on things that aren’t housing. That should reduce the extent of idling and/or stimulate new investment in non-housing sectors, depending on what it is consumers with more cash on their hands turn out to want.

I agree with Thoma that fiscal measures—especially aid to state and local government and acceleration of infrastructure projects—is desirable, but I wouldn’t underestimate what central banking could achieve.

A very large share of the world’s population still lives basically rural lives, and essentially depends on agricultural production for its well-being. And agriculturalists, particularly practitioners of low-tech agriculture, a highly dependent on the weather for their fortunes. Patterns of human settlement and land ownership are thus heavily shaped by expectations about the climate. When the climate shifts, that’s extremely disruptive. The historical and archeological records are full of examples of wrenching changes forced by past instances of climate change. But those fluctuations have always taken place on a much longer, slower time frame than the current era of climate change induced by human industrial activity. That makes the change all the more wrenching:

Natural calamities have plagued humanity for generations. But with the prospect of worsening climate conditions over the next few decades, experts on migration say tens of millions more people in the developing world could be on the move because of disasters.

Rather than seeking a new life elsewhere in a mass international “climate migration,” as some analysts had once predicted, many of these migrants are now expected to move to nearby megacities in their own countries.

“Environmental refugees have lost everything,” said Rabab Fatima, the South Asia representative of the International Organization for Migration. “They don’t have the money to make a big move. They move to the next village, the next town and eventually to a city.”

Part of the solution should be better migration policies by the developed world. And part of the solution needs to be action to limit greenhouse gas emissions.

Ezra Klein explains the perverse logic of our current political dynamic:

These two problems get to the essential difficulties confronting the nation: There is no doubt that minority parties generally profit in elections when the unemployment rate is high. But given that reality, what incentive do they have to help the majority party lower the unemployment rate? Further out, there is no doubt that the majority party has an incentive to prevent a fiscal crisis on its watch. But what incentive does the minority party have to sign on to the screamingly painful decisions that will avert crisis?

In most political systems, it doesn’t really matter that the minority has no incentive to help the majority. What the minority does is outline an alternate policy dynamic, try to make hay out of scandals, and generally wait in the wings to seize the opportunity to take over if the majority can’t deliver the goods. But the US political system actually affords the minority substantial opportunities to prevent the majority from delivering the goods.

At a time when the strange politics of the apartheid south led to low levels of congressional polarization this wasn’t a large practical problem:

Those days, however, are gone and it’s not clear what would bring them back. People sometimes suggest that gerrymandering is the culprit, but political science disagrees. What’s more, though people may find polarization in the House of Representatives aesthetically displeasing, the practical problem arises from the intersection of the filibuster and polarization, and gerrymandering isn’t an issue in the Senate.

I observed the other day that even though US macroeconomic performance was poor in the 2000s, we did see the emergence of enterprises like Wikipedia that are useful to their users in a way that’s out of proportion to their market value. A lot of people in comments seemed to take that to be a “right wing” concept, as if I was saying that since we can listen to streaming music on Pandora it’s okay that we have ten percent unemployment or that your ability to listen to David Blight’s lectures on the civil war justify the Bush tax cuts.

That kind of thing is, of course, insane. But it’s also insane not to realize that non-commercial endeavors have real value that doesn’t show up in national account statistics. If anything, people on the left should be eager to embrace the point that the market value of an activity isn’t the correct measure of its social value (a cure for baldness, for example, would be much more lucrative than a cure for malaria).

Of course this has always been the case. But one important consequence of the rise of the digital era is that it’s now much, much, much easier for goods produced on a non-commercial basis to be distributed. Yale professors have always been giving lectures, but now the lectures can go online. People have always performed music for their own entertainment but now it’s fairly easy to record that music and ship it all around the world. People have always wanted to show off their knowledge and engage with communities of interest, but now they can write Wikipedia articles and post on blogs.

To an extent this kind of thing can reverse some traditional thinking about certain policy questions. Traditional analysis, for example, treats leisure as a kind of private consumption good. If you’re doing work for money, then by definition someone else thinks it would be useful to them for you to do the work. You, in addition, presumably want the money. Thus when people are inspired to go do paid work, rather than sit around the house enjoying themselves, they are creating social value. Internet distribution of non-commercial production changes that calculation. If people are using (some of) their leisure time to contribute to open source software projects, to write interesting blogs, to post videos on YouTube, to record music, to write Wikipedia articles, etc., then value is being created for others.