This story of a woman who wrote a letter to Barack Obama pleading for help in her effort to prevent her husband from being deported only to have federal agents arrive at her house to arrest him is pretty terrible stuff.

But pull away from the specifics a bit. A judge in Baltimore ruled that Hervé Fonkou Takoulo of Cameroon is not a legitimate candidate for political asylum. That’s why he’s got to go. But asylum aside, Takoulo is also a 2008 graduate of Stony Brook University with credentials that apparently got him job offers in the engineering field, offers he had to decline since he lacks proper documentation. He’s not a terrorist. He’s not a criminal. He’s a bright 34 year-old guy from Africa who went to college and wants to do useful work in exchange for money. How does it help me for my tax dollars to be spent trying to deport him? How does it help you?

It’s all well and good to say that immigration laws need to be enforced, but our immigration laws also ought to make sense. We should be eager to get as many law-abiding, English-speaking college graduates as possible into our country. The fact that the United States of America is the kind of place that Takoulo wants to live is a great strength of our country, and we ought to be taking advantage of it.

I haven’t been paying a ton of attention to Mark Kirk’s Senate campaign in Illinois but he sure seems to have trouble keeping the facts straight. His misstatements about his military service record are all pretty minor, but he’s come up with a wide array of them, not just one, to the point where you wonder what he’s thinking. And now he’s running around the state doing something quite original for a politician—pretending that he used to be a nursery school teacher.

The motive seems clear enough, he was hoping this will help him get an Illinois Education Association endorsement, but it also seems pretty pathological. Who does this stuff?

Annie Lowrey writes about efforts underway in the House of Representatives to penalize those who “strategically default” on their home mortgages. I note as background something that others have pointed out before: In a business context, this whole issue is viewed different. If a firm is paying interest on a loan in a situation where it would be more profitable to simply suffer the consequences of default (reduced future borrowing ability, etc.) the firm’s managers are seen as having a responsibility to do the right thing for their shareholders’ interests. Just on a prima facie level, it seems to me that the same reasoning should apply to households. Resources are best allocated across society when firms and households alike make maximizing financial decisions.

Beyond that, I agree with Lowrey that “[t]here are better ways to deal with this problem than to have the FHA attempt to identify and punish strategic defaulters, particularly if Congress does nothing to ameliorate the underlying issue of homeowners being underwater on their mortgages.” There’s just always been a desperate need for an orderly legal process whereby the value of homes and the value of home loans can be systematically written down (“cramdowns” is the lingo) in response to the system-wide re-estimation of what real estate is worth. Failing to do this is, among other things, introducing a large amount of geographic rigidity into the labor market. We need some people to move away from the worst-afflicted areas and migrate to places where there are more opportunities. People who can’t afford to sell their houses are basically “stuck in place,” disproportionately in the very places where it’s hardest to find jobs.

Temporarily cutting taxes on the children of multi-millionaires would have a minor stimulative effect. But it’s not well-targeted, and the effort to reduce taxes on the kids of multi-millionaires is about permanent tax cuts anyway, which don’t stimulate anything. Yet the very same Senators who said deficit concerns wouldn’t allow them to vote for targeted job creation tend to support budget-busting giveaways to the kids of the very rich. Debbie Stabenow vented a bit about this yesterday, specifically targeting Senator George LeMieux:

I note that Senator LeMieux’s indifference to the unemployed is particularly hard to understand. You can chalk some of the congressional politics of stimulus up to regional variations in the labor market, but Florida is one of the highest-unemployment states. His constituents are in desperate need of help.

Chana Joffe-Walt has a worthwhile podcast about one solution for countries facing the resource curse: “Take all money that comes in from foreign companies — for lithium in Afghanistan, oil in Nigeria, natural gas in Bolivia — and give it to the citizens. Literally have a government official sit down with piles of cash, maybe with some international oversight, and divvy it up.”

There are a lot of merits to this, but one downside is that it still doesn’t do much of anything to alter the exchange rate impacts associated with so-called “Dutch Disease.” Imagine a poor country with low productivity and lots of poor people working in sweatshops making t-shirts. Now along comes the oil find, foreign cash starts pouring in, and the government distributes it via rebates. People have more money (which is good) but they haven’t become any more productive. So when the inflow of foreign funds causes the currency to appreciate and the price of sweatshop goods sold abroad to rise, now the factories have become uneconomical and need to be shut down.

Now being a poor, unemployed person living off welfare checks from your oil rich government might be considered preferable to being a poor person working long hours in brutal conditions in a t-shirt factory so this isn’t necessarily a terrible scenario. But it’s not an ideal one either. Countries can move up the value chain from lowest-end manufacturing and get richer and richer. Those oil checks won’t grow.

I think the better idea has been pioneered by Norway. Here you note that even if you took the money that foreign firms pay for the right to mine your lithium and threw it all in the garbage, the country would still gain economic benefits because there’d be increased employment associated with operating the mine and performing services for the foreign experts brought in to supervise the project. Of course throwing the money in the garbage would be dumb, but you can pool it into government-run investment fund that uses the revenue to purchase foreign financial assets. Those asset purchases will minimize currency appreciation and allow your non-extractive industries to remain competitive. Then once the fund has built up a bit, you can start using the income from the fund (rather than the principle derived from payments for your resources) to finance your public pension system. This allows for either lower taxes or else higher spending on productivity-enhancing non-pension purposes.

The problem of course is that it’s all well and good for Norway to create a giant slush fund managed by political appointees, but you can’t do that in high-corruption countries. So maybe this whole post is pointless. Or maybe this is a service the World Bank could provide—insured deposits at some modest rate of return for resource rich poor countries.

Stephen Gordon at the world’s top Canadian economics blog has an excellent post on Canada’s early nineties recession and subsequent austerity and deficit reduction.

One point, the public sector cuts didn’t come until the private sector was recovering:

The other is that growth was strongly export-oriented. Which sometimes gets talked about by stimulus proponents as if it’s some kind of cheating strategy. It’s not. Small countries that are hit by adverse shocks are well-advised to pursue export-oriented growth. But you can’t do this on a global basis. Uncompetitive southern European economies can’t pursue export-led growth while the US also does so, but Germany and Japan and China all also stick with export-oriented strategies. India can’t consume all that stuff. The world needs more demand.