U.S. economy

The next meltdown: credit-card debt, BusinessWeek

Crisis? Not if we take a long view, by Michael Clemens (via Chris Blattman)

Three trends and a train wreck, by Tyler Cowen

Two big intellectual victories for Ben Bernanke, by Brad DeLong

Everything you need to know about the financial crisis, by Doug Diamond and Anil Kashyap

The stimulus plan we need now, by Martin Feldstein

Complex finance contemplates a more fettered future, Financial Times

Buy now: why Uncle Sam must put everything on sale, by Laurence Kotlikoff and Ed Leamer

Gordon does good, by Paul Krugman

Let’s get fiscal, by Paul Krugman

To do, not to do, by Paul Krugman

The cost of resolving financial crises, by Luc Laeven

Lesson from a crisis: when trust vanishes, worry, by David Leonhardt

How did it all happen?, by Megan McArdle

Full of doubts, U.S. shoppers cut spending, New York Times

Measuring regulatory swings, by Catherine Rampell

Spending stalls and businesses slash U.S. jobs, by Louis Uchitelle

U.S. politics

Working for the working-class vote, by Matt Bai

The irrational electorate, by Larry Bartels

Why the economy fares much better under Democrats, by Larry Bartels

The class war before Palin, by David Brooks

Why is it likely that McCain will lose?, by Brad DeLong

Presidential polls in the final weeks of the campaign, by Robert Erikson

An authentic coalition, by Ezra Klein

Can a president tame the business cycle?, New York Times

One-party control, New York Times

Campaign events vs. the fundamentals, by Brendan Nyhan

The hardest vote, by George Packer

Senate Democrats don’t need 60 seats to reach their magic number, by Bruce Reed

Party loyalty is alive and well, by John Sides

Democracy’s myopia problem, by Matthew Yglesias

Here we go again — maybe, by Julian Zelizer

Living standards, poverty, inequality, well-being

Poverty reduction strategies for the next decade, Brookings Institution

The national minimum wage: evidence of its impact on jobs and inequality, Centre for Economic Performance (via Shawn Fremstad)

A safety net for the least fortunate, by Peter Edelman, Mark Greenberg, and Harry Holzer (via Mark Thoma)

The good life, by Claude Fischer

Wealth gap is focus even as it shrinks, by Robert Frank

Measuring misery, by Phil Izzo

Reinventing the American dream, by Christopher Jencks (via Matt Lewis)

Reforming unemployment benefits, by Alan Krueger

Next victim of turmoil may be your salary, by David Leonhardt

Banks’ bailout unlikely to crimp executive pay, New York Times

Infant deaths drop in U.S., but rate is still high, New York Times

Keeping wary eye on crime as the economy sinks, New York Times

Growing unequal? Income distribution and poverty in OECD countries, by the OECD

Do Americans still hate welfare?, by R.M. Schneiderman

Taxes

Putting U.S. corporate taxes in perspective, Center on Budget and Policy Priorities

FAQ on taxes, by Economists for Obama

Share the wealth, by Howard Gleckman

For incomes below $100,000, a better tax break in Obama’s plan, by Steven Greenhouse

New life for the death tax, by Floyd Norris

Tax-cut follies, by Uwe Reinhardt

The public rejects conservative approach to taxes, by Ruy Teixeira

Housing

Bailing out homeowners: what does it mean?, by Dean Baker

The trouble with a homeowner bailout, by David Leonhardt

The goal of increasing home ownership, by Mark Thoma

Abroad

Think the U.S. housing bust is bad?, by Catherine Rampbell

Urgent need for IMF action, by Dani Rodrik

A shift from bumbling to sensible policy (UK), by Gillian Tett

Miscellaneous

Observations on the Milton Friedman Institute at the University of Chicago, by Gary Becker

Exploding heads deathmatch, by Henry Farrell

Incidents from my career, by Paul Krugman

“Obama prepares for quick transition,” reports Edward Luce in the Financial Times.

Good. Even in the most favorable scenario in terms of congressional support, a President Obama’s window of opportunity for getting major things such as health care reform done might well be short. Rick Perlstein has a nice piece on this in The American Prospect.

Frank Rich and Paul Krugman each have columns in today’s New York Times suggesting that voters’ movement toward Obama in the past several weeks stems from their finally “getting it.” Rich says Americans now recognize Republicans’ coded racial rhetoric as the cynical ploy it’s always been, while Krugman thinks the economic crisis has encouraged attention to seriousness and policy positions rather than impressions of elitism and likeability.

I suspect a simple “fundamentals” interpretation is more likely right. The economy is in crisis and Americans are unhappy with the current administration’s foreign policy. In this type of situation, independents tend to want a change of course. This is 1980 revisited. In fact, it’s 2006 revisited, though with the economy and foreign policy swapping places as the central issue.

In the cover story of the current issue of Newsweek, Jon Meachem argues that Barack Obama, if he wins the election, will have a difficult time pursuing a progressive agenda. This is a right-of-center nation, according to Meachem, and the experience of Democratic presidents from FDR to LBJ to Bill Clinton suggests that bold moves to the left bring electoral punishment and thence a shift back to the center. The current disappointment with the past eight years of Republican rule and the depth of the economic crisis may make it seem as though anything is possible, Meachem says, but Americans remain fundamentally conservative in temperament (dislike of change) and ideology (wary of government), so an Obama administration would do well to avoid overreach.

I think this is wrong. It’s not that I disagree with the claim that the United States is a right-of-center nation; compared to other rich countries, we clearly are. Nor do I think Meachem is mistaken in suggesting that progressive initiatives by an Obama administration might contribute to electoral reaction. But it does not follow from either or both of these suppositions that the wise course of action is to proceed cautiously.

A president’s chief goal should be to make the country a better place, not to win the next election. Even if it were true that the Democrats’ defeat in 1968 owed to liberal overreach in LBJ’s early years, would the country have been better off had Johnson and his congressional allies not pushed through the Civil Rights Act, Medicare/Medicaid, and Food Stamps? Perhaps they would have been passed a bit later and thereby generated less controversy, but it’s also possible that the moment would have been lost for a long time.

More important, presidents and parties don’t merely respond to public opinion; they can actively shape it. Despite their ideological conservatism, Americans are “programatically liberal”; they strongly favor a range of government programs, from public schools to Social Security and Medicare to the minimum wage and Earned Income Tax Credit. When government creates programs that work, Americans tend to support those programs (similar points made here and here). The United States may be an ideologically right-of-center country, but its center has steadily shifted left. That shift is in large part a consequence of government activism.

Bold action can also pay dividends politically, especially in periods of crisis. Franklin Roosevelt was elected in 1932 to do something about the depression, though most who voted for him probably weren’t sure exactly what they wanted him to do. Roosevelt and the Congress moved quickly to put in place a set of programs that enhanced economic security for ordinary Americans — Social Security, unemployment insurance, and a minimum wage, among others. These programs were widely perceived as helpful. And though the American public inevitably moved back toward Republicans in both congressional and presidential elections, the Democrats dominated American politics for a generation.

In the late 1970s the country again faced a perceived economic crisis, this time coupled with a foreign policy one (defeat in Vietnam followed by the Soviet invasion of Afghanistan and anti-American revolutions in Iran and Nicaragua). Like FDR, Ronald Reagan was elected because he proposed to change course. He cut taxes and sharply increased military spending. Rightly or wrongly, a significant share of Americans viewed this as helpful. Republicans suffered some setbacks in congressional elections and eventually lost the presidency for a while. But due in part to Reagan’s aggressive response to the crisis, the party improved its standing among the American public, which in turn contributed to its electoral success. The following chart shows the share of Americans identifying as Republicans and Democrats according to the main sources of such data, the National Election Studies and General Social Survey. The key thing to note is that the rise in Republican identification comes after the 1980 election, not before. (Unfortunately, these surveys began well after Roosevelt’s era.)

If Barack Obama is elected president, he’ll have no choice but to address the economic crisis. Beyond that, my guess is he’ll focus on health care, energy, economic security (perhaps pegging the minimum wage to inflation and reforming unemployment insurance), and taxes. History suggests that both he and his party might well benefit if he moves quickly and boldly, rather than cautiously. That’s the lesson of FDR and Reagan. The Clinton (health care) lesson is that whichever issues Obama chooses to prioritize, it’s critical that he get something done.

Research on the economy, politics, and society often examines countries, comparing across them and/or over time within them.

Analysts doing this type of empirical work utilize a variety of methodological strategies. Among them are pooled cross-section time-series regression, qualitative comparative analysis (QCA), and small-N analysis. Contributions to a new book I’ve co-edited explore the strengths and weaknesses of these approaches by using each of the three to analyze employment performance in affluent nations.

The book is Method and Substance in Macrocomparative Analysis, edited by Lane Kenworthy and Alexander Hicks, Palgrave Macmillan, 2008. The introductory chapter is online here.

Contents:

1. Introduction, by Lane Kenworthy and Alexander Hicks
2. Statistical Narratives and the Properties of Macro-Level Variables: Labor Market Institutions and Employment Performance in Macrocomparative Research, by Bernhard Kittel
3. Comparative Employment Performance: A Fuzzy-Set Analysis, by Jessica Epstein, Daniel Duerr, Lane Kenworthy, and Charles Ragin
4. Do Family Policies Shape Women’s Employment? A Comparative Historical Analysis of France and the Netherlands, by Joya Misra and Lucian Jude
5. The Welfare State, Family Policies, and Women’s Labor Force Participation: Combining Fuzzy-Set and Statistical Methods to Assess Causal Relations and Estimate Causal Effects, by Scott R. Eliason, Robin Stryker, and Eric Tranby
6. Family Policies and Women’s Employment: A Regression Analysis, by Alexander Hicks and Lane Kenworthy
7. Part-Time Work and the Legacy of Breadwinner Welfare States: A Panel Study of Women’s Employment Patterns in Germany, the United Kingdom, and the Netherlands, 1992-2002, by Jelle Visser and Mara Yerkes
8. Comparative Regime Analysis: Early Exit from Work in Europe, Japan, and the USA, by Bernhard Ebbinghaus
9. Identifying the Causal Effect of Political Regimes on Employment, by Adam Przeworski

One hypothesis is that they haven’t yet suffered directly from the financial/economic crisis, or that they don’t believe the plan will prevent things from getting worse.

Another is that, at least for the moment, self-interest is outweighed by considerations of (perceived) fairness, including revenge. So argues Dan Ariely.

From “The Marketplace players” (audio)

Since 1973 the General Social Survey has regularly asked American adults the following question: “Please tell me whether or not you think it should be possible for a pregnant woman to obtain a legal abortion if she became pregnant as a result of rape?”

Sarah Palin’s answer to this question is “no.” This chart shows the percentage of Americans who share her view and the percentage who do not. The data can be accessed here.