U.S. economy

The real lesson of the New Deal: deficits were too small, not too large, by Bruce Bartlett

There’s no stimulus free lunch, by Gary Becker and Kevin Murphy

(Nearly) nothing to fear but fear itself, by Olivier Blanchard

My economic wish list, by Alan Blinder

Flexibility is out; now we see rigidity’s virtues, by Paul de Grauwe

A guide for the perplexed on fiscal policy, by Brad DeLong

Depression economics: four options, by Brad DeLong

Second biggest bear market ever, by Brad DeLong

Stimulus and uncertainty, by Brad DeLong

Why we need a big fiscal boost program, by Brad DeLong

Go ahead and save; let the government spend, by Robert H. Frank

Tax cuts won’t solve our current economic woes, by Daniel Gross

Bailouts for bunglers, by Paul Krugman

Banking on the brink, by Paul Krugman

The big fix, by David Leonhardt

Time to steer a forceful course for stimulus, by David Leonhardt

Fumble to stumble, by Edward Luce and Krishna Guha

My preferred fiscal stimulus, by Greg Mankiw

Adding up the $787 billion tab, New York Times

Japan’s big-works stimulus is lesson, New York Times

Confusing American companies with American jobs, by Robert Reich

In Japan’s stagnant decade, cautionary tales for America, by Hiroko Tabuchi

Employ overwhelming force, by Martin Wolf

Japanese lessons, by Martin Wolf

What Obama should tell leaders of the group of 20, by Martin Wolf

Why Obama’s new TARP will fail to rescue the banks, by Martin Wolf

Obama on Sweden, by Matthew Yglesias

Living standards, poverty, inequality, well-being

Changes, up and down the ladder, by Edmund Andrews

The ‘w’ word, re-engaged, by Jason DeParle

CEO pay: don’t look to Japan for answers, by Kenji Hall

Why making the rich poorer can make the poor (effectively) richer, by Ezra Klein

Climate of change, by Paul Krugman

Recession and poverty, by James Kvaal and Ben Furnas

A bold plan sweeps away Reagan’s ideas, by David Leonhardt

Bailout needs some strings attached to limit pay, by Gretchen Morgenson

Refuted economic doctrines: trickle-down, by John Quiggin

Luxury or necessity?, by Catherine Rampbell

Finally a progressive budget, by Robert Reich

Four better ways of fixing the CEO pay debacle, by Eliot Spitzer

Creating new US jobs and closing the income gap, by Edward Wolff

Taxes

A grand bargain on taxes, by William Galston

Like having Medicare? Then taxes must rise, by David Leonhardt

Braced for a higher tax bill, some may dodge the bullet, by Ron Lieber and Tara Siegel Bernard

Stimulating the well-off, by Bob Williams

The case for more tax brackets, by Matthew Yglesias

Globalization

The integration of the world economy is in retreat on almost every front, The Economist

Protectionism and stimulus, by Paul Krugman

It’s no time for protectionism, by Greg Mankiw

Health care

Health care reform for dummies, by Jonathan Cohn

The new push for American health security, by Jacob Hacker

Health care reform in eight easy steps, by Ezra Klein

No lunch left behind, by Alice Waters and Katrina Heron

Education

Invest in early education, by Nancy Folbre

Our greatest national shame, by Nicholas Kristof

Recess is crucial too, by Tara Parker-Pope

Housing

Killing (or maiming) a sacred cow: home mortgage deductions, by Edward Glaeser

Cities

How the crash will reshape America, by Richard Florida

Green cities, brown suburbs, by Edward Glaeser

Transportation

Faster trains, maybe, but still behind others in the world, New York Times

Crime and punishment

Five myths about prison growth, by John Pfaff

Unions

Why we need stronger unions, and how to get them, by Robert Reich

Supporters of the Employee Free Choice Act

U.S. politics

Poof goes the purple dream, by Jonathan Alter

What Obama could learn from Reagan, by William Galston

Partisanship: good or bad?, by Andrew Gelman

Rich and poor still vote differently in red and blue states, by Andrew Gelman

History tells Obama to turn on the bipartisan charm, by Edward Luce

Why Republicans won’t support the stimulus, by Robert Reich

In praise of bipartisanship, by Michael Tomasky (via Ezra Klein)

Abroad

The other Iran, by Roger Cohen

Asia needs a new engine of growth, The Economist

In Japan, new jobless may lack safety net, by Martin Fackler

Social democrats and capitalism, by Henry Farrell

Canada banks prove envy of the world, Financial Times

China’s jobless, Financial Times

Roma bear brunt of Hungary’s downturn, Financial Times

Solitary shore (Iran), by Roula Khalaf and Najmeh Bozorgmehr

India’s economy is hurtling ahead, but for many people life is still precarious, by James Lamont

After the fiesta (Spain), by Victor Mallet

Job losses pose a threat to stability worldwide, New York Times

The global middle class, Pew Research Center

Is more effective international regulation the answer?, by Dani Rodrik

Crisis hits eastern Europe, by Stefan Wagstyl

Miscellaneous

A reconciliation on gay marriage, by David Blankenhorn and Jonathan Rauch

Are blogs ruining economic debate?, by Henry Farrell

Greats put the super into superstition, by Simon Kuper

Student expectations as cause of grade disputes, New York Times

The vanishing liberal justice, New York Times

Improving scholarly journals, by Lee Sigelman

Goodbye to the age of newspapers, by Paul Starr

An about-face on gay troops, by Owen West

Europe doesn’t have all the answers, but here’s one thing that merits envy (audio, 4 minutes).

David Leonhardt’s New York Times Magazine piece on how to transform (not just stimulate) the American economy is worth reading. But I don’t share his enthusiasm for Mancur Olson’s explanation of national economic success.

Firms, workers, and citizens tend to organize in interest groups, and those groups sometimes obstruct markets and solicit government favors that benefit themselves at the expense of the larger society. Olson argued, in a 1982 book titled The Rise and Decline of Nations, that in democratic countries such groups grow increasingly powerful over time. Regulations, tax preferences, and government expenditures end up more and more directed toward these special interests rather than the general interest. Economic growth suffers. (The theory is a bit more complicated than that, but I’ll set the complexities aside here.)

Leonhardt says this helps us understand why economic growth in the U.S. has been slower than we’d like it to be. He endorses Olson’s sentiment that what’s needed is to periodically weaken interest groups’ strength and influence.

Olson’s hypothesis seems sensible enough. The trouble is, it’s difficult to find supportive evidence. Leonhardt, like Olson, looks to the experiences of rich nations. He contrasts the United Kingdom with Germany and Japan:

England’s crisis was the Winter of Discontent, in 1978-79, when strikes paralyzed the country and many public services shut down. The resulting furor helped elect Margaret Thatcher as prime minister and allowed her to sweep away some of the old order. Her laissez-faire reforms were flawed in some important ways … and they weren’t the only reason for England’s turnaround. But they made a difference. In the 30 years since her election, England has grown faster than Germany or Japan.

It’s helpful to broaden the comparison to include other countries. Olson suggested we assess his theory based on the timing of the last major societal disruption each country experienced. The longer the period since a disruption, the more powerful interest groups will be and hence the slower the rate of economic growth. The following chart uses this measure (based on a scoring by Erich Weede), with an update to account for the Thatcher disruption in the U.K., Reagan’s in the United States, and a similar one in New Zealand beginning in the late 1980s. Economic growth needs to be adjusted for the catchup effect, whereby nations with lower per capita GDP grow more rapidly simply by virtue of borrowing technology from richer countries. The chart shows catchup-adjusted economic growth in twenty nations since 1973, when the postwar “golden age” of rapid growth for all countries ended. Olson’s hypothesis predicts a positive association. But it isn’t there.

The level of unionization is another indicator Olson used in assessing his theory. Here Olson’s hypothesis predicts a negative association. It too doesn’t pan out.

Olson’s interest group account of economic success and failure may have some merit. But it offers little help, if any, in understanding economic growth patterns over the past few decades.