Tag Archives: economic growth

2015 Year in Review

I’m going to try picking the most frightening, most hopeful, and most interesting post from each month. If the most interesting is also the most frightening or most hopeful, I’ll pick the next most interesting. Then I’ll have 12 nominees in each category and I’ll try to pick the most frightening, hopeful, and interesting posts of the year.

JANUARY

Most frightening: Johan Rockstrom and company have updated their 2009 planetary boundaries work. The news is not getting any better. 4 of the 9 boundaries are not in the “safe operating space”: climate change, loss of biosphere integrity, land-system change, altered biogeochemical cycles (phosphorus and nitrogen).

Most hopeful: It is starting to seem politically possible for the U.S. to strengthen regulation of risk-taking by huge financial firms.

Most interesting: Taxi medallions have been called the “best investment in America”, but now ride-sharing services may destroy them.

FEBRUARY

Most frightening: There are some depressing new books out there about all the bad things that could happen to the world, from nuclear terrorism to pandemics. Also a “financial black hole”, a “major breakdown of the Internet”, “the underpopulation bomb”, the “death of death”, and more!

Most hopeful: A new study suggests a sudden, catastrophic climate tipping point may not be too likely.

Most interesting: Government fragmentation explains at least part of suburban sprawl and urban decline in U.S. states, with Pennsylvania among the worst.

MARCH

Most frightening: The drought in California and the U.S. Southwest is the worst ever, including one that wiped out an earlier civilization in the same spot. At least it is being taken seriously and some policies are being put in place. Meanwhile Sao Paulo, Brazil is emerging as a cautionary tale of what happens when the political and professional leadership in a major urban area fail to take drought seriously. Some people are predicting that water shortages could spark serious social unrest in developing countries.

Most hopeful: If we want to design ecosystems or just do some wildlife-friendly gardening, there is plenty of information on plants, butterflies, and pollinators out there. There is also an emerging literature on spatial habitat fragmentation and how it can be purposely designed and controlled for maximum benefit.

Most interesting (I just couldn’t choose between these):

  • Innovation in synthetic drugs is quickly outpacing the ability of regulatory agencies to adapt. (I struggled whether to put this in the negative or positive column. Drugs certainly cause suffering and social problems. But that is true of legal tobacco and alcohol, and prescription drugs, as well as illegal drugs. The policy frameworks countries have used to deal with illegal drugs in the past half century or so, most conspicuously the U.S. “war” on drugs, have led to more harm than good, and it is a good thing that governments are starting to acknowledge this and consider new policies for the changing times.)
  • “Germ-line engineering is much further along than anyone imagined.” This means basically editing the DNA of egg and sperm cells at will. I put this in the positive column because it can mean huge health advances. Obviously there are risks and ethical concerns too.

APRIL

Most frightening: A group of well-known economists is concerned that the entire world has entered a period of persistently low economic growth, or “secular stagnation“.

Most hopeful: Donald Shoup, author of The High Cost of Free Parking, is retiring. That might sound bad, but his ground-breaking ideas are continuing on and actually seem to be going mainstream.

Most interesting:

  • Biotechnology may soon bring us the tools to seriously monkey with photosynthesis. (This is one of those stories where I struggle between the positive and negative columns, but clearly there is a potential upside when we will have so many mouths to feed.)
  • Peter Thiel thinks we can live forever. (positive, but do see my earlier comment about mouths to feed…)

MAY

Most frightening: We’ve hit 400 ppm carbon dioxide in the atmosphere, not just some places sometimes but pretty much everywhere, all the time.

Most hopeful: The rhetoric on renewable energy is really changing as it starts to seriously challenge fossil fuels on economic grounds. Following the Fukushima disaster, when all Japan’s nuclear reactors were shut down, the gap was made up largely with liquid natural gas and with almost no disruption of consumer service. But renewables also grew explosively. Some are suggesting Saudi Arabia is supporting lower oil prices in part to stay competitive with renewables. Wind and solar capacity are growing quickly in many parts of the world.Lester Brown says the tide has turned and renewables are now unstoppable.

Most interesting: Human chemical use to combat diseases, bugs, and weeds is causing the diseases, bugs and weeds to evolve fast.

JUNE

Most frightening: One estimate says that climate change may reduce global economic growth by 3% in 2050 and 7-8% by 2100. Climate change may also double the frequency of El Nino. The DICE model is available to look at climate-economy linkages. Dennis Meadows and Jorgen Randers describe what a coming long, slow decline might look like. Rising temperatures in the Arctic are drying things out, leading to more fires, which burns more carbon, which raises temperatures, in an accelerating feedback loop.

Most hopeful: Stock values of U.S. coal companies have collapsed.

Most interesting: According to Paul Romer, academic economics has lost its way and is bogged down in “mathiness”.

JULY

Most frightening: James Hansen is warning of much faster and greater sea level rise than current mainstream expectations.

Most hopeful: Edible Forest Gardens is a great two book set that lays out an agenda for productive and low-input ecological garden design in eastern North America. You can turn your lawn into a food forest today.

Most interesting:

AUGUST

Most frightening: Steven Hawking is worried about an artificial intelligence arms race starting “within years, not decades”.

Most hopeful: It may be possible to capture atmospheric carbon and turn it into high-strength, valuable carbon fiber. This sounds like a potential game-changer to me, because if carbon fiber were cheap it could be substituted for a lot of heavy, toxic and energy-intensive materials we use now, and open up possibilities for entirely new types of structures and vehicles.

Most interesting:

  • “gene drive” technology helps make sure that genetically engineered traits are passed along to offspring.
  • Technology marches on – quantum computing is in early emergence, the “internet of things” is arriving at the “peak of inflated expectations”, big data is crashing into the “trough of disillusionment”, virtual reality is beginning its assent to the “plateau of productivity”, and speech recognition is arriving on the plateau. And super-intelligent rodents may be on the way.
  • Robotics may be on the verge of a Cambrian explosion, which will almost certainly be bad for some types of jobs, but will also bring us things like cars that avoid pedestrians and computer chips powered by sweat. I for one am excited to be alive at this moment in history.

SEPTEMBER

Most frightening: Climate may be playing a role in the current refugee crisis, and the future may hold much more of this.

Most hopeful: The right mix of variety and repetition might be the key to learning.

Most interesting: Edward Tufte does not like Infographics.

OCTOBER

Most frightening: Corrupt Russian officials appear to be selling nuclear materials in Moldova.

Most hopeful: Elephants seem to have very low rates of cancer. Maybe we could learn their secrets.

Most interesting: Stephen Hawking is worried about inequality and technological unemployment.

NOVEMBER

Most frightening: I noticed that Robert Costanza in 2014 issued an update to his seminal 1997 paper on ecosystem services. He now estimates their value at $125 trillion per year, compared to a world economy of $77 trillion per year. Each year we are using up about $4-20 trillion in value more than the Earth is able to replenish. The correct conclusion here is that we can’t live without ecosystem services any time soon with our current level of knowledge and wealth, and yet we are depleting the natural capital that produces them. We were all lucky enough to inherit an enormous trust fund of natural capital at birth, and we are spending it down like the spoiled trust fund babies we are. We are living it up, and we measure our wealth based on that lifestyle, but we don’t have a bank statement so we don’t actually know when that nest egg is going to run out.

Most hopeful: There are plenty of ways to store intermittent solar and wind power so they can provide a constant, reliable electricity source.

Most interesting: Asimov’s yeast vats are finally here. This is good because it allows us to produce food without photosynthesis, but bad because it allows us to produce food without photosynthesis.

DECEMBER

Most frightening: Cyberattacks or superflares could destroy the U.S. electric grid.

Most hopeful: We had the Paris agreement. It is possible to be cynical about this agreement but it is the best agreement we have had so far.

Most interesting: I mused about whether it is really possible the U.S. could go down a fascist path. I reviewed Robert Paxton’s five stages of fascism. I am a little worried, but some knowledgeable people say not to worry. After reading Alice Goffman’s book On the Runthough, one could conclude that a certain segment of our population is living in a fascist police state right now. There is some fairly strong evidence that financial crises have tended to favor the rise of the right wing in Europe.

DISCUSSION

Well, one thing that certainly jumps out on the technology front is biotechnology. We have a couple articles about the possibility of drastic increases in the human lifespan, and what that would mean. “Germ-line engineering”, “gene drive”, and “CRISPR” are all ways of monkeying with DNA directly, even in ways that get passed along to offspring. To produce more food, we may be able to monkey with the fundamentals of photosynthesis, and if that doesn’t work we can use genetically engineered yeast to bypass photosythesis entirely.

At the risk of copyright infringement, I am reproducing the “Gartner hype cycle” below, which was mentioned in one of the posts from August.

Gartner Hype Cycle

Gartner Hype Cycle

Government and corporate labs have been making huge advances in biotechnology in the last decade or so, so it is well beyond the “innovation trigger”. It has not yet reached the “peak of inflated expectations” where it would explode onto the commercial and media scene with a lot of fanfare. I expect that will happen. We will probably see a biotech boom, a biotech bubble, and a biotech bust similar to what we saw with the computers and the internet. And then it will quietly pervade every aspect of our daily lives similar to computers and the internet, and our children will shrug and assume it has always been that way.

Obviously there are dangers. A generation of people that refuse to die on time would be one. Bioterrorism is obviously one. Then there is the more subtle matter that as we raise the limit on the size our population and consumption level can attain, the footprint of our civilization will just grow to meet the new limit. When and how we come up against these limits, and what to do about it, is the subject of the updates to two seminal papers on these issues, by Rockstrom and Costanza. We have entered an “unsafe operating space” (Rockstrom), where we are depleting much more natural capital each year than the planet can replenish (Costanza), and there will be consequences. The Paris agreement is one hopeful sign that our civilization might be able to deal with these problems, but even if we deal with the carbon emission problem, it might be too late to prevent the worst consequences, and there are going to be “layers of limits” as the authors of Limits to Growth put it all those decades ago. If we take care of the global warming problem and figure out a way to grow food for 50 billion people, eventually we will grow to 50 billion people and have to think of something else.

So without further ado:

Most frightening: I can’t pick just one. In the relatively near term, it’s the stalling out of the world economy; the convergence of climate change, drought, and the challenge of feeding so many people; and the ongoing risks from nuclear and biological weapons.

Most hopeful: I see some hope on energy and land use issues. The Paris agreement, combined with renewable energy and energy storage breakthroughs, the potential for much more efficient use of space in cities rather than letting cars take up most of the space, are all hopeful. The possibility of making carbon fiber out of carbon emissions is a particularly intriguing one. At my personal scale, I am excited to do some sustainable gardening of native species that can feed both people and wildlife. I don’t expect my tiny garden to make a major difference in the world, but if we all had sustainable gardens, they were all connected, and we weren’t wasting so much space on roads and parking, it could start adding up to a much more sustainable land use pattern.

Most interesting: I’ve already mentioned a lot of stuff, so I will just pick something I haven’t already mentioned in the discussion above: the rise of synthetic drugs. It’s just an interesting article and makes you think about what it will mean to have advanced chemical, information, and biological technologies in the hands of the little guy, actually many, many little guys. It is a brave, new, dangerous, exciting world indeed. Happy new year!

December 2015 in Review

Now it’s time to review December 2015, before we get on to reviewing 2015 as a whole.

Negative stories (-10):

  • Some car dealers are deliberately talking customers out of buying electric cars that they want, because the car dealer will make less money on oil changes. (-1)
  • Breaking news: we can’t believe everything we hear on the internet. Some of it is deliberate government and corporate propaganda, and some is “online filter bubbles” or marketing algorithms telling each of us only what we want to hear. Data used by all these algorithms is becoming more and more valuable. (-1)
  • Cyberattacks or superflares could destroy the U.S. electric grid. (-1)
  • Guns cause gut-wrenching, accidental deaths of children quite frequently in the U.S. The U.S. has a rate of violent assault 5-10 times higher than our close Anglo-American cousins, which in turn have higher rates than most of Europe and developed Asia. (-1)
  • I mused about whether it is really possible the U.S. could go down a fascist path. I reviewed Robert Paxton’s five stages of fascism. I am a little worried, but some knowledgeable people say not to worry. After reading Alice Goffman’s book On the Run though, one could conclude that a certain segment of our population is living in a fascist police state right now. There is some fairly strong evidence that financial crises have tended to favor the rise of the right wing in Europe. (-2)
  • After more than a decade of drought, there may not be enough water to sustain both Lake Powell and Lake Mead in the U.S. desert southwest. Some are suggesting draining Lake Powell. (-1)
  • This year’s “super El Nino” might have happened with or without climate change, but climate change made it more likely. I have to admit though I enjoyed sitting on my front porch in shorts on Christmas here in Philadelphia. (-1)
  • Jeffrey Sachs makes a pretty good case that the rise of violent religious fanaticism in the Middle East is largely the CIA’s fault. (-2)

Positive stories (+13):

    • Las Vegas is planning to go all renewable by 2017, mostly centralized solar. (+1)
    • Children have a natural aptitude for learning to recognize patterns. Now all we have to do is figure out which patterns we should be teaching them to recognize. (+1)
    • Some U.S. Presidential candidates want to invest in infrastructure, which is good. A national infrastructure plan might also be good. (+1)
    • Ericcson released some technology predictions for 2016 and beyond: Artificial intelligence will start to assist us without the need for smartphone screens. Virtual reality will start to come into its own for tech support, sports, dating, and shopping. And we will start to see more sensors embedded in our homes and eventually our bodies. (+1)
    • Trends in Ecology and Evolution made some technology predictions too: “managed bees as transporters of biological control agents, artificial superintelligence, electric pulse trawling, testosterone in the aquatic environment, building artificial oceanic islands, and the incorporation of ecological civilization principles into government policies in China”. (+1)
    • A serious but treatable infection can destroy a tumor. (+1)
    • Self-driving cars could drastically reduce the amount of land required for parking in cities. There are some moves toward car-free central cities around the world. (+3)
    • We had the Paris agreement. It is possible to be cynical about this agreement but it is the best agreement we have had so far. (+2)
    • New York City recently finished planting a million trees. (+2)

So we end the year on a positive note!

financial crisis and the right wing

According to Vox, there is strong statistical evidence that financial crises have tended to favor the right wing in Europe. And not just in the 1930s.

What does history have to say about the political after-effects of financial crises in modern democracies? Can we, over the long run of modern history, identify systematic shifts in the political landscape after financial crises? …

In a new paper (Funke et al 2015), we conduct the most comprehensive historical analysis on the political fall-out of financial crises to date. We trace the political history of 20 advanced democracies back to the 1870s and construct a dataset of more than 800 elections from 1870 to 2014. We then complement this dataset with existing data on more than 100 financial crises and with historical data on street protests (demonstrations, riots, and strikes)…

Our first main finding is that politics takes a hard right turn following financial crises. On average, far-right votes increase by about a third in the five years following systemic banking distress, as shown in Figure 1. This pattern is visible in the data both before and after WWII and is robust when controlling for economic conditions and different voting systems. The gains of extreme right-wing parties were particularly pronounced after the global crises of the 1920s/1930s and after 2008. However, we also find similar patterns after regional financial crises, such as the Scandinavian banking crises of the early 1990s. Moreover, we identify an important asymmetry in the political response to crises – on average, the far left did not profit equally from episodes of financial instability.

 

infrastructure infrastructure infrastructure

Hillary wants to spend $250 billion on infrastructure. Bernie wants to spend $1 trillion. Infrastructure investment is good. Economists all say so. Politicians who care at least a little about reality all say so. The American Society of Civil Engineers says so. I happen to be a civil engineer so it is definitely good for me.

The idea is that the infrastructure we have in the ground now wears out gradually, and we almost never do enough maintenance to keep it in its original condition. So there is a constant loss of value to the economy. You can also think of infrastructure as reducing friction, transaction costs, wasted time, effort, and energy in the economy. If people and goods can get where they need to go efficiently and cheaply, they can do more productive work and produce more value each day with less waste. The same idea applies to getting energy and water around. Finally, there is the economic idea that when economic growth is below capacity, as it is now, you could pay people to dig holes and fill them back in again, and there would be a net economic gain. So any infrastructure investment, even if it is not optimal, has even more benefit and it is a sort of free lunch, something for nothing, two birds with one stone. And interest rates are so low that it makes sense for the government to borrow money, or even print it, and realize this almost automatic, guaranteed, magical return on the investment. Politicians who oppose infrastructure investment on debt or deficit grounds just don’t understand or don’t care about reality, or else they are telling a cynically calculated story to people who don’t.

Optimal, planned infrastructure investment would be even better, of course. We really don’t do any planning at the national scale in the United States. Maybe we are still trying to differentiate ourselves from the Soviet planned economy, but seriously, it is time to get over that particular hangover.

I like Elon Musk’s Hyperloop because it is a big idea and it asks if we should be considering something bold, big, and different, not to mention more efficient and cost-effective than the same old ideas from the 1950s! But we need to remember infrastructure is not just about transportation, it is about energy, water resources, food, commerce, trade, information, environmental quality and ecosystems. Infrastructure has an ecological footprint which needs to be measured and considered in decisions. Let’s think big, take a holistic, long-term look at the whole system, and ask what kinds of investments would be best. What kind of integrated infrastructure system do we think would make sense in the future, and what steps would we take today to get there? One of the hard things about infrastructure, though, is that it is long-lived. The technology available actually changes much faster than the infrastructure wears out, so blindly repairing and perpetuating old infrastructure ends up retarding the pace of change. A good plan needs to take a long-term view, but it has to be flexible enough to adapt to changing technology, environmental, climate and socioeconomic conditions during the course of its implementation. This is the essence of good planning, but it is hard for many of today’s hyper-specialized, local- and short-term-thinking professionals to pull off.

refugee cities

This post makes a case for establishing cities for refugees rather than “camps”.

Second, the world now has 60 million refugees. That is a number roughly the size of six Belgiums, Hungarys, or Swedens. If they were to create their own country, it would be the size of France. In the face of such staggering numbers, commitments to take thousands or even tens of thousands of people will do almost nothing to alleviate the misery of millions.

Rather than conflating the issues of refugees and terrorism, politicians and policymakers should be addressing each separately. On the question of refugees, Western countries should take in as many as their populations can assimilate, demonstrating a willingness to make good on the universal values they profess for both moral and political reasons.

But the world also needs far bolder solutions than twentieth-century approaches like limited asylum quotas and “temporary” refugee camps. In particular, it is time to embrace the prospect not of camps but of cities – places where up to a million refugees of any particular nationality can live safely and learn how to build a better future.

This reminds me a little of Paul Romer’s “charter cities”. The idea was to create entirely new city states focused on economic growth that people from anywhere in the world could opt into, provided they agreed to certain norms of behavior. I find the idea compelling, although Romer’s attempts to realize it on the ground in Honduras ended up on the rocks. You can argue that Singapore developed somewhat along these lines, although it was not founded based on this ideology (in fact, it was not even founded voluntarily, but just sort of cast adrift.)

Georgescu-Roegen

From Wikipedia:

Nicholas Georgescu-Roegen, born Nicolae Georgescu (4 February 1906 – 30 October 1994) was a Romanian American mathematician, statistician and economist. He is best known today for his 1971 magnum opus The Entropy Law and the Economic Process, where he argued that all natural resources are irreversibly degraded when put to use in economic activity. A paradigm founder in economics, Georgescu-Roegen’s work was seminal in establishing ecological economics as an independent academic subdiscipline in economics…

He was a protégé of the renowned economist Joseph Schumpeter. His own protégés included foundational ecological economist Herman E. Daly and Kozo Mayumi who further extended Georgescu-Roegen’s theories on entropy in the study of energy analysis…

The Entropy Law and the Economic Process, described by the Library Journal as “…a great seminal work that challenges economic analysis”, is a wide-ranging technical and philosophical exposition which promotes the case that economic activity can not be adequately described without taking into account the implications of second law of thermodynamics. It notes that the discovery of the second law in the mid nineteenth century resulted in the downfall of the mechanistic dogmas of Classical Physics. Whereas the equations of Newton‘s Laws of Motion were symmetrical with respect to time, the new law introduced the concept of irreversibility. Although the processes of living organisms appear to violate the second law, Schroedinger demonstrated in What is Life? that there is no inconsistency – organisms feed on low-entropy sources of energy to build and preserve their complex structures, and dissipate the energy in a higher entropic state. It argues that social and economic endeavours are an extension of these biological processes and are governed by the same principles.

time to worry about the national debt?

While the Republican candidates are obsessing over the national debt, economists are thinking the opposite, that Keynesianism is back and a lot of borrowing and spending is going to be necessary to keep the economy going. Your average person on the street can follow the first argument, because it seems similar to his household finances, and because it has an undertone of morality (debt=bad). But very few people understand the theories behind fiscal or monetary policy. Because our education system hasn’t given us the mental tools to understand the nested complex systems we are all embedded in. How are we supposed to elect the right people to make the right choices then?

Finally, there is a fourth view, championed most prominently by Larry Summers and Paul Krugman. They argue that there is little evidence that monetary policy will ever restore full prosperity. In this view, Milton Friedman’s dream of using strategic monetary interventions to offset economic shocks remains just that: a dream. It was only the unique circumstance in Europe and the US over the last half-century – most notably rapid demographic and productivity growth – that made his ideas seem plausible. “If nobody believes that inflation will rise, it won’t,” is how Krugman put it. “The only way to be at all sure of raising inflation is to accompany a changed monetary regime with a burst of fiscal stimulus.”

I do not claim to know which of these views is the correct one. But I do think that this discussion is the most important debate in the field of macroeconomics since John Maynard Keynes wrestled with similar questions in the 1930s. For Keynes, the answer was clear, and it was something close to what is being argued by Summers and Krugman; indeed, his conclusions are what transformed him from a monetarist into a Keynesian.

“It seems unlikely that the influence of [monetary] policy on the rate of interest will be sufficient by itself,” Keynes wrote in 1936. “I conceive, therefore, that a somewhat comprehensive socialization of investment will prove the only means of securing an approximation to full employment.” Those are words worth considering the next time we find ourselves needing the courage to act.

Oh, even if monetary policy did work, the Republicans want to destroy the Federal Reserve.

credit, interest, and a steady state economy

This article in Ecological Economics says that a positive interest rate and a no-growth economy could coincide.

Does credit create a ‘growth imperative’? A quasi-stationary economy with interest-bearing debt

This paper addresses the question of whether a capitalist economy can ever sustain a ‘stationary’ (or non-growing) state, or whether, as often claimed, capitalism has an inherent ‘growth imperative’ arising from the charging of interest on debt. We outline the development of a dedicated system dynamics macro-economic model for describing Financial Assets and Liabilities in a Stock-Flow consistent Framework (FALSTAFF) and use this model to explore the potential for stationary state outcomes in an economy with balanced trade, credit creation by banks, and private equity. Contrary to claims in the literature, we find that neither credit creation nor the charging of interest on debt creates a ‘growth imperative’ in and of themselves. This finding remains true even when capital adequacy and liquidity requirements are imposed on banks. We test the robustness of our results in the face of random variations and one-off shocks. We show further that it is possible to move from a growth path towards a stationary state without either crashing the economy or dismantling the system. Nonetheless, there remain several good reasons to support the reform of the monetary system. Our model also supports critiques of austerity and underlines the value of countercyclical spending by government.

work sharing

Work sharing – it’s an idea to look into before the robots take over most of the work.

Work-sharing for a sustainable economy

Achieving low unemployment in an environment of weak growth is a major policy challenge; a more egalitarian distribution of hours worked could be the key to solving it. Whether work-sharing actually increases employment, however, has been debated controversially. In this article we present stylized facts on the distribution of hours worked and discuss the role of work-sharing for a sustainable economy. Building on recent developments in labor market theory we review the determinants of working long hours and its effect on well-being. Finally, we survey work-sharing reforms in the past. While there seems to be a consensus that work-sharing in the Great Depression in the U.S. and in the Great Recession in Europe was successful in reducing employment losses, perceptions of the work-sharing reforms implemented between the 1980s and early 2000s are more ambivalent. However, even the most critical evaluations of these reforms provide no credible evidence of negative employment effects; instead, the overall success of the policy seems to depend on the economic and institutional setting, as well as the specific details of its implementation.

election season

I try not to get too political on this blog, but as we approach the election season, I have to say that I am just sick of the Republican candidates. These are not serious grownups proposing serious grownup solutions to real problems. We have problems like financial instability, food and water security, sea level rise, economic stagnation, weapons of mass destruction, and global issues of war and peace that need serious attention. There is no time to waste on bullshit. Some are suggesting a GOP implosion is a real possibility.

So what caused the current rebellion in the GOP ranks? It finally dawned on loyal foot soldiers in the odd-couple coalition that they were being taken for suckers. Their causes always seemed to get the short end of the stick. The GOP made multiple promises and fervent speeches on the social issues, but, for one reason or another, the party establishment always failed to deliver.

This belated realization stirred the anger that has flared across the ranks of the followers — and not just in the South. The financial crisis, the bailout of the banks, and collapsing prosperity intensified their sense of betrayal. People began mobilizing their own rump-group politics to push back. The tea party protests were aimed at President Obama, of course, but they were also an assault on Republican leaders who had misled and used the party base for so long. Tea party revenge took down long-comfortable legislators and elected red-hot replacements who share the spirit of rebellion…

If my lobbyist friend is right, the Republican establishment brought this crisis on itself by cynically manipulating its own rank and file. The party can’t deal with the real economic distress threatening the nation as long as rebellion is still smoldering in the ranks. Of course, that suits the interests of the country-club and Fortune 500 wing of the party — the last thing they want is significant economic reform. Confusion and stalemate have their political uses. On the other hand, the GOP can’t give the tea party rebels what they want without darkening its electoral prospects for 2016. Chaos to be continued.

I try not to get overly political on this blog, but I will be starting to think and talk about policies that relate to growth, sustainability, and risk and the upcoming election season.