Now that the campaign’s been over for a while can we all step back and ponder how nutty it was for Meg Whitman to spend $140 million on a failed bid to become Governor of California? That’s a lot of money. And if you spent that kind of money on philanthropic pursuits, you’d be a very powerful and influential person. If you’re determined to exchange personal wealth for prestige and power, bankrolling your own political campaign seems like a very bad way to go about it.

At any rate, my advice to rich businesspeople who want to get into politics would be to aim lower. Self-finance a campaign for Mayor or State Treasurer or something. Try to do a good job. And then parlay your vast wealth into a leg up in your run for a major office. Politics is difficult. People who’ve run successful statewide campaigns in the past have real skills that money can’t easily substitute for.

I wrote about this once before, but the scandal of America’s taxpayer-subsidized initiative aimed at getting people to eat more cheese has made it to the New York Times:

Then help arrived from an organization called Dairy Management. It teamed up with Domino’s to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign.

Consumers devoured the cheesier pizza, and sales soared by double digits. “This partnership is clearly working,” Brandon Solano, the Domino’s vice president for brand innovation, said in a statement to The New York Times.

But as healthy as this pizza has been for Domino’s, one slice contains as much as two-thirds of a day’s maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories.

And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture — the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting.

Except for the fact that their pizza is bad, I don’t particularly think it’s worth giving Dominoes an especially hard time about their nutritional practices. Their nutritional calculator page is very handy (though the assumption that you’re eating just one slice is a bit unrealistic) and many eateries leave you totally in the dark about this stuff. But there’s just no need whatsoever for a government program of this sort.

And that, to me, is what’s frustrating about a lot of the recent conversation around “government spending” and “are public employees paid too much.” When the government is doing something useless or harmful that it shouldn’t be doing at all then there’s no salary or pension level at which public employees or government contractors are delivering value to the American people. If you’ve got a worthwhile public function, it’s foolish to undermine it by being stingy about spending. But there’s a fair amount of stuff like this in the budget that we could entirely do without. I’d like to think that the new Republican Congress’ budget cutting zeal will give us a chance to re-examine some of these programs, but realistically I think we’ll find that implicit and explicit subsidies to US producers of this sort continue to find favor.

Evan Bayh thinks “Democrats should support a freeze on federal hiring and pay increases. Government isn’t a privileged class and cannot be immune to the times.”

Steve Benen asked a good question about this:

Reading this, I’m wondering, “How would that help the economy?” Bayh is arguing that we’d be better off if fewer unemployed workers get jobs and federal workers have less money. I’m sure he can explain why this would help the economy — and I’m sure it’s very “moderate” — but I have no idea what that explanation might be.

I think that Bayh is probably operating with an explicit model of the economy as a closed zero-sum system. A recession is a negative shock leading to bad times. Policymakers then have the opportunity to influence the course of the recession by allocating the badness around. Failure to cut public sector compensation creates a “privileged class” and increases the quantity of pain felt by people outside that class, whereas ensuring that members of that class experience pain reduces the pain felt by others.

My view is that the Bayh Model is mistaken. Of course the primary losers in Bayh’s plan will be those whose incomes are directly reduced. But individuals will respond to reduced income by reducing spending, and those reductions in spending will reduce everyone else’s income. My model of the economy isn’t a zero sum system. In my version, a typical recession is a needless waste of resources—unemployed workers, vacant storefronts, empty offices, idled factories—and public policy actually impacts the extent to which resources are wasted and the pace at which they’re put back into use.

I think the primary political problem progressives have had over the past two years stems from the fact that our accurate account of the recession is less believed than Bayh’s inaccurate model. I think virtually all Republican members of congress and many Democratic members of congress embrace the Bayh Model. And I think this is how it goes throughout the ranks. From ordinary citizens to campaign operatives to Hill staff to reporters etc. The Bayh Model had common sense on its side, most people are not specialists in the subject, and I think most non-specialists believe in it. They think that being hit by a recession is like being hit by a hurricane or a drought. It’s something that causes a temporary period of intense suffering that can be managed well or poorly but primarily has to be endured. Common sense views “fiscal stimulus” (whether for good or for ill) as a form of humanitarian disaster relief, and common sense views Bayh’s pain-sharing proposal as reasonable, and common sense doesn’t think about monetary policy at all.

I think all this is mistaken and recessions are quite different from hurricanes. But I think that progressives have tended to focus too much on “crazy person misinformation” (Obama is a secret Muslim, Obama spent nine trillion dollars on a trip to India, Obama is from Kenya) and not enough on “common sense misinformation” of the sort Bayh is expressing. The widespread nature of common sense misinformation about the nature of recessions—not just among low-information voters but even among political professionals and policy elites—has been a huge drag on macroeconomic performance and that in turn has dragged down the entire progressive agenda.

Rick Perry’s odd notion that states should be allowed to opt out of Social Security seems like a good opportunity to discuss the useful role of social welfare programs in promoting “automatic” economic stabilizers.

The way this works is that 50 million or so people—about one American in six—gets a Social Security check on a regular basis. And importantly the size of the check is unrelated to short-term or localized economic fluctuations. During downturns, that’s nice for the Social Security recipients who are cushioned from the blow. During upsides, it’s bad for the Social Security recipients who tend to fall behind. So it kind of nets out. But crucially this stability is nice for everyone else participating in the economy since the fact that a certain proportion of your customer base doesn’t fully participate in short-term swings reduces the exposure of your business to those swings.

Many Floridians, for example, are getting hammered by the precipitous decline in Florida home prices. Many other Floridians are getting hammered by the precipitous decline in Florida home construction. But many other Floridians are getting hammered by the fact that their customers are being hammered by the decline in home prices and construction activity. The existence of Social Security benefits is one of the few things that helps halt the downward cycle of other people’s misfortunes becoming your misfortune. The checks keep flowing and their recipients keep buying stuff and their spending becomes your income becomes your spending becomes someone else’s income.

This is an excellent feature of the modern social insurance state that accounts of the negative impact on incentives of taxation tend to neglect. But unfortunately, in America state and local government doesn’t operate like Social Security. One of the key lessons of the current crisis should be about the importance of “automatic stabilizers” we have, but also the extent to which their gross impact is offset by very unsound budgetary practices elsewhere. This is an issue that can be fixed in principle and would leave us in much better shape to weather the next economic storm.