If I’m understanding this Lee Ohanian paper (PDF) correctly, he wants us to believe that the Great Recession was caused not by the collapse in aggregate demand that occurred in 2008 and its failure to get back up to trend in 2009-2010 but instead by time travel. In particular, the Troubled Asset Relief Program of the Bush administration and various Obama-era interventions traveled back in time to cause a recession. I’d heard secondhand that Ohanian adheres to a time travel theory of the Great Depression, but thought that might be a caricature. But he really does say on Page 61 of this document that TARP initiated a recession (“perhaps because policymaker communications concerning the underlying strength of the economy increased uncertainty”) which was then exacerbated when the Treasury announced a small means-tested mortgage modification program that inspired people to become unemployed in order to qualify for loan forgiveness.

It’s all down there on paper!

Economics aside, I’ll just make the sociological observation that it’s strange to bolster an argument in favor of free markets and against government intervention via a theory which holds that the operation of the market is in fact so delicate that downbeat utterances from George W Bush can lead to a worldwide loss of trillions of dollars in output.

Via Ryan Avent’s Twitter feed and Paul Kedrosky, a nice look at what’s dooming the planet:

Forests in the Interior West could soon flip from carbon sink to carbon source, forest experts say. The region’s forests once absorbed and stored more carbon from the atmosphere than they released. But huge conflagrations — like the 138,000-acre Hayman Fire in Colorado in 2002 and the Yellowstone fires of 1988, which scorched 1.2 million acres — combined with a series of severe bark beetle infestations and disease outbreaks, have left large swaths of dead, decomposing trees in almost every major Western forest.

Those dead trees are releasing massive amounts of carbon dioxide, turning the region into a net emitter of carbon rather than a CO2 sponge.

The reversal, which has already occurred in Colorado and is anticipated in several other states, is the result of misguided forest management practices and a changing climate, forest experts say. Rising temperatures, resulting in shrinking snowpacks and drier conditions, have left the region’s forests more susceptible to disturbances, such as wildfires, bark beetles and disease.

A modest rise in world temperatures, if it stays modest, could be manageable. But a modest rise in world temperatures could lead to a big increase in greenhouse gas levels through a variety of feedback loops. Then the rise gets unmanageable, especially since once all this stuff gets into the atmosphere the climate just keeps getting hotter.

According to Adam Bonica, the 112th House of Representatives will be the most conservative and most polarized House on record:

To an extent, though, I do think these comparisons are hard to make. Back in the good old days of the 108th Congress one thing that distinguished the really right-wing Republicans from the Bush/Hastert/McConnell leadership cadres is that the super-conservatives didn’t like the idea of adding a prescription drug benefit to Medicare. These days I don’t hear anyone, no matter how conservative, talking about repealing that.

It’s hardly the biggest deal in the world, but I think the Simpson-Bowles proposal to start charging admission at Smithsonian museums is a great example of a kind of pennywise and pound-foolish thinking about spending that often afflicts the political system.

Here’s the thing. Building these museums, acquiring the collections, and keeping them running is a fairly expensive undertaking. There are some real benefits to having a National Gallery of Art, but there are also costs associated with it. However, the marginal cost of having an additional person visit the National Gallery is extraordinarily low. And presumably “people might visit the museum” is high on the list of possible benefits of having a National Gallery of Art. What you would ideally do with these kind of public services—be it a museum or a subway or whatever—is take a good hard look at whether or not you really believe in providing the service. And if you do, you provide it for free so that as many people as possible can benefit. If you develop a problem of overcrowding, then you start charging admission to ration capacity. And if you decide the tax burden involved in continuing to provide the service is too high, then you shut down or privatize the thing in question.

As Stan Collender says the key thing for any fiscal adjustment plan to say on the cut side isn’t really how much money you’re cutting, it’s what things do you want the government to stop doing. Once you name the things, you can total up the savings. Then you can either say you’ve cut enough, or else you can go back and name more things.

Among other things, I think talking in these terms would help clarify what it is people are saying about Medicare. Right now what Medicare basically is is an unconditional guarantee to provide unlimited health care services to senior citizens. The question we face is whether we want to keep doing that. If we do, we need to pay a lot more in taxes. If we don’t, then we need to decide what the alternatives are.

The most straightforward thing would be to put Medicare on a fixed budget. Then Medicare administrators would need to ration Medicare dollars. This is a big conservative bugaboo, but conservatives don’t like unlimited spending either so Paul Ryan came up with the idea of putting Medicare on a fixed budget and privatizing Medicare. This lets naïve people tell themselves that Ryan has devised an alternative to rationing whereby privatization saves money. But what actually saves money in the Ryan Roadmap is the hard cap on Medicare spending. The difference is that under his plan insurance companies would make the rationing decisions instead of Medicare administrators.

A semi-alternative to either of these things is just to start paying less money per unit of service. Medicare isn’t a monopsony purchaser, but it is a sufficiently big market that relatively few providers will just say no to it. The issue here is that profits drive innovation. If we start paying less for prescription drugs, the prescription drug industry will attract less capital. If we start paying doctors lower salaries, medical school admissions will get less competitive. I think there are some okay options along these lines, but there’s still only so far you can really press them. If the government is willing to pay whatever it is that “health care for old people” costs then, over time, health care costs, and thus federal spending, are bound to increase faster than GDP.

Via Eric Weber the latest growth forecasts for the Washington DC area foresee strong growth in both population and employment in both the city and the surrounding area:

I don’t think DC residents should reconcile ourselves to accepting the idea that our city will grow slower than the metropolitan area as a whole. If we allowed for the construction of taller office buildings downtown, more employment than this would located in the District. This would allow for lower tax rates and better city services, both of which would make the city a more attractive place to live. Combine that with the fact that proximity to employment is a factor people consider when choosing where to live, and we could see much stronger population growth.

That would mean shorter commutes, less sprawl, a more efficient regional economy, and less pollution.

Much the same, I might add, applies to the inner suburbs of Arlington, Montgomery, Prince George’s, and Fairfax Counties all of which are projected to see slower-than-DC population growth. These territories contain many more people and occupy much more space than DC itself. And they’re nice places to live. But land use regulation tends to prevent them from becoming denser, and pushes people ever-further out onto the fringe.