Kevin Drum, nearing the conclusion of a very enlightening post about oil, concludes:

This is not something that can be tamed with gasoline taxes in the United States or anything similar. It’s a global phenomenon. This is all the more reason we should be making Manhattan Project kinds of commitments to developing alternative energy sources and reducing our economy’s dependence on oil. There’s plenty of low-hanging fruit in the areas of conservation and increased efficiency, and no reason to waste any more time arguing about. At the very least, we should be doing the easy stuff.

I find this kind of breezy dismissal of higher gasoline taxes to be quite frustrating. For one thing, it’s just not the case that some amazing technological breakthrough is required for people to have less gasoline-intensive lifestyles:

The technologies deployed in France—shorter commutes, lighter cars, trains, and buses—don’t require a massive R&D effort to implement. They require some investment in transit, they require a lot of changes to land use regulation, and they require people to receive a clear signal that saving money on gasoline by purchasing a lighter car and/or living closer to work is a good idea.

Meanwhile, if Congress were sitting around atop a giant pile of money, I feel certain that they could be relatively easily persuaded to disburse it on a giant alternative energy R&D effort. Alongside the various boondoggles, some of the money might even end up being well-spent on useful projects! But how to acquire the giant pile of money? Well, you could tax gasoline. That way not only would Congress get a giant pile of money to throw around on R&D projects, private firms would also invest R&D funds on products that would help consumers evade these punitive new taxes. What’s not to like? Obviously, the politics are bad. The voters like their cheap gasoline! But it’s precisely the federal government’s longstanding implicit promise to deliver cheap gasoline that’s landed us in this mess.

The idea, which Dylan Matthews found a variety of credible people to endorse, that the Federal Reserve might try and fail in an effort to raise the price level strikes me as totally bizarre.

Imagine a situation in which you are the only person in the world who’s capable of producing diamonds. But you also have the ability to produce arbitrary quantities of diamonds, at any time, instantly, and at zero cost. Now why on earth would anyone worry that you might be unable to reduce the price of diamonds? I think that if someone in that position said, “I want to make diamonds 25 percent cheaper and intend to do whatever it takes to make that happen” that the price of diamonds would fall more or less immediately by roughly 25 percent. After all, the magical diamond man has promised he’s going to make this happen. You probably wouldn’t need to do anything at all. To be sure, just to show the world that you’re not a jerk and to maintain your credibility for the future it would probably be wise to follow-up the crash in the diamond futures market with the production of some actual new diamonds. So instead of diamonds, say you had the ability to produce arbitrary quantities of dollars….

Harold Pollack has gotten religion on federal housing policy:

Here is one central reality. A small down payment mortgage is the most leveraged, least diversified investment most Americans will ever make. If we internalize the idea that housing prices do not automatically traverse an upward escalator, it’s not obvious that we should be encouraging families to take these risks. The risks are greatest when families assume subprime mortgages or are victims of fraud. But even when everything is transparent, there are inherent risks.

It’s easy to overlook these risks because housing prices were on a positive trajectory for many years. Low-interest, low-money-down VA and FHA loans promoted upward mobility for a quarter-century following World War II. One might regard these policies as central pillars in the creation of a stable middle-class. Maybe they were. Yet in retrospect, the more important factor was the anomalous stable and prosperous stretch of American economic history that supported these policies. There is no guarantee that such sustained and stable prosperity will return anytime soon to Americans of modest means.

It’s always worth thinking about other ideas. Suppose I proposed that the government create a program to subsidize middle class families making modest 5:1 leveraged investments in the stock portfolio. Put $20,000 down, get yourself $120,000 worth of stocks, pay interest on the loan but less than the market rate thanks to an implicit federal guarantee. That would be a way of encouraging middle class savings and investment, a perhaps worthy goal. But it’d be a pretty strange way of going about it. What’s more, if we announced the program tomorrow stock prices would presumably go up which would mean that in the future people are getting a subsidy to buy assets that are more expensive than they would have been had the subsidy not been put in place.

I had hoped to check out Shaw’s Tavern roughly in my neighborhood at some point, but apparently instead of staying open the brand new restaurant will be closing since it can’t get a liquor license. Why no license? Well because they soft launched with a couple of charity events before opening without having properly secured the correct special one-day licenses.

That’s all too bad. Walking around Washington, DC it’s difficult not to notice that there are a lot of vacant storefronts in the non-downtown portions of the city. There are also a lot of unemployed working class people, even as the college educated professionals in town enjoy one of the strongest labor markets in the country. It’s a bit of a puzzling situation. Why don’t markets clear? Surely these idle resources—vacant retail spaces, unemployed workers—should be mobilized to some purpose? In most of the country, I think these kind of problems can be attributed primarily to a shortfall of demand. That’s not the case in DC. There’s plenty of demand for bars and restaurants. There’s plenty of space where bars and restaurants could open. There are plenty of people who need jobs. What’s more, there are plenty of people who could use the increased social services that higher tax revenue would provide. Instead, we’re doing this. Not just one restaurant shut down, but a sign to would-be entrepreneurs everywhere that their potential investments are much riskier than a superficial read of market conditions would suggest.