Kevin Drum hits the nail on the head when it comes to the politics of averting foreclosures, something I think a remarkable number of progressive bloggers overlook:

The only other thing I can think of that the administration screwed up seriously is mortgage reform. Again, though, that would have been politically difficult even if they had played all their cards perfectly. Like it or not, the American public hates the idea of seeing their neighbors get bailed out from stupid mortgages. It makes them feel like saps: we scrimped and saved and bought a house we could afford and we’re getting nothing. Joe and Betty down the street lived the high life, took out a NINJA loan they knew was way more than they could afford, and now they’re getting a taxpayer-funded bailout and living easy. That’s not a vote getter.

It’s probably even worse than that. Across the board principal modification would have undone some optimistic accounting lurking on bank balance sheets and required additional government capital injections (read: bailouts) of large financial firms. I’m resolutely pro-bailout, of households and banks alike, but the public feels differently.

All that said, this is one of a number of reasons why I hope next time the world’s large economies find themselves mired in recession with nominal interest rates near zero that we’ll try to rely much more on the idea of money-financed fiscal policy to solve our problems. Specifically, take the “helicopter drop” scenario out of the thought-experiment world and put it into practice. Have the Fed print up a bunch of money, stuff it in envelops, and mail it out to the American people. It winds up working as a kind of universal bailout. People who happen to need help paying their mortgages can use the cash for that purpose. Similarly for folks behind on their credit card bills. And having folks pay their loans on time works as a “backdoor bailout” for troubled banks. Senior citizens and the really poor will just go out and spend the money on some kind of goods and services they need. The unemployed will get the benefits of an Unemployment Insurance extension, but without any disincentive to work hard at finding a new job. And non-poor, non-old, non-indebted people will either have the chance to splurge on some consumer goods they’ve been eying (stimulus!) or else if they just have a preference for thriftiness they can thriftily save the money and continue to feel self-righteous without needing to express that self-righteousness in terms of opposition to the idea of helping out people who need help.

I don’t think helicopter drops can solve all our problems. There’s still an urgent need to construct some automatic stabilizers that discourage pro-cyclical state and local budgetary practices. But I think watching the past two years’ worth of politics and policy needs to make everyone pretty skeptical that congress is ever going to do a good job of adequately crafting fiscal stabilization policies on the fly.

Tyler Cowen offers a “Ricardian thought in process”:

In Ricardo’s basic model there are diminishing rather than linear returns. Surplus accrues to the fixed factor, which is land. Labor earns some version of subsistence and the going rate of profit is piled on top of that. The productive difference between a piece of land, and the least valuable piece of land, accrues to each specific landlord as rent.

What if ideas rather than land are the fixed factor? Wages and profits stagnate. Some “idea landlords” receive enormous pecuniary returns, while others do not. The rate of invention is slowing down and indeed “patents per researcher” has been falling for a long time.

I like this first and foremost because it’s an opportunity to link to Martin Wolf’s article asking “Why Were Resources Expunged From Neo-Classical Economics?” making the case that it was a mistake of contemporary economics to abandon this Ricardian point about land in the first place. And, indeed, I would note that if you follow Wolf in expanding the concept of “land” to include “resources” more broadly you find that real estate and energy are well-represented on the Forbes 400 and five of the world’s ten largest corporations are in the oil business.

But on the “ideas” front, this I think highlights some of the problems with our trend toward ever-stronger definitions of intellectual property rights. It’s difficult to look at the growth in high-end income inequality in the United States and reach the conclusion that people lack adequate financial incentive to develop and exploit commercializable new ideas. But strong IP is not only an incentive to innovate, it also raises the cost of innovation. And I think there’s a much more plausible case to be made that innovation is currently too hard to do than there is a case that innovation is insufficiently rewarded.

Ricks on Shelton:

First, he reports, a bit mysteriously, that late in the Clinton administration, the president’s authorization codes to use nuclear weapons strike were lost. He doesn’t really explain what happened or who knew about it, except that the guy who was supposed to make sure once a month that an aide to the president had the codes kept getting the runaround, and putting up with it. It turned out that an aide to the president had misplaced the codes, and had no idea where they were. The situation only came to light when it was time to collect the old codes and replace them with new ones, and the aide apparently confessed. Shelton tells the story a bit oddly — I had to read this section a few times. I am guessing that the story is about the nuclear “football” that a military aide carries. It made me wonder what happened to that aide. Also, what would have happened if the president had decided to launch a nuclear strike? (392-393)

And what happened to the aid?

Here’s an article about proposals to increase the level of permitted density in Reston as Metro extends heavy rail access out to the area. As you know, I’m generally pro-density, so of course I support this.

But more broadly I would say that state and federal transportation funders should make local approval of increased density a condition of appropriating money for new transportation infrastructure. You wouldn’t build a road network in an empty area unless you were planning on putting some development there. And by the same token, the thing that makes rail transportation useful is that it makes high densities logistically feasible. Of course in any given location there will be a market limit to how much density can be supported, but if you build the infrastructure without increasing the regulatory limit you’re basically just transferring wealth to owners of existing structures.

Dave Winograd on the failure of the iBookstore:

The Kindle store currently advertises that they have over 700,000 books, magazines, and blogs available for download. Apple hasn’t released statistics on the number of currently available books, so an accurate comparison isn’t easy to make, but it’s a safe bet to say that once you eliminate the ability to load .pdf files, the availability of e-books from the iBookstore pales. At launch, it was reported that the iBookstore contained somewhere between 46,000 and 60,000 titles, 30,000 of which came from the Project Gutenberg library of free out-of-copyright books. However, since these are also available on the Kindle, we can reduce both sides of the equation by 30,000. This brings the number of titles at launch for the iBook to a generous 30,000. That’s a big difference, but outside of raw numbers, there are many factors constraining a massive increase in iBookstore sales.

I love gadgets more than anything, so I got a Kindle when it came out and loved it. Then I got an iPad when that came out and I love it. I never use my Kindle anymore. But one of my very favorite iPad aps is Kindle for iPad, which syncs nicely with Kindle for iPhone and even in a pinch with Kindle for Mac.

Which is just to say that I think the whole business concept underlying the iBookstore is kind of misguided. Apple makes electronics that I think are great, and Amazon is a great retailer. In retrospect, the whole success of iTunes (as opposed to the iPod) is really just a huge business mistake on the part of firms with specialization in online retail or music retail.