Before I attend the sessions of the American Economic Association held here in Atlanta, I am going to be upbeat. Here are three positive effects of the economic disaster of the last 24 months. 

Because land prices are so cheap, conservancies and state and local governments are buying more to get it off the market and to keep it from commercial development: More swamps in the Florida Everglades and bluffs in Oregon have been protected from condo developers and shopping mall speculators. Everyone wins: When wild lands, parks, and green spaces are created from land that is falling in price, the very developers who slashed the prices win -- they have a buyer -- and prices stop falling and the already developed land retains more value.

Another piece of good news is that the recession helped households curb their spending and save more. In this recession Americans are spending, on average, 9...

Will Obama give NASA a special gift this Christmas season or will the space agency find a lump of coal it its stockings? After discovering water on the Moon, the agency could not be blamed for hoping for favorable attention from the Administration.

For all of its problems, democratic government provides goods when markets won't. Markets fail under many conditions, including when costs paid by future generations are incurred for the benefit of a few powerful adults. Future generations don't vote with their dollars, so they can't go back in time to sign agreements in Copenhagen, tax carbon, or allocate money from AIG bailouts to long-term investments in space exploration.

So, how does a government decide to spend money now to reap gains in the future? The answer: committees composed of scientists, businesses, and government officials charged with the public good deliberate, now and into ...

In this holiday season we hear many variations of Charles Dickens' "A Christmas Carol." We know the story -- miserly Ebenezer Scrooge gets religion and sees the light, Tiny Tim lives, and Bob Cratchit is paid a fairer wage (not clear if he gets health insurance, but Tiny Tim stays healthy somehow). The Cratchits fall away as primary characters and Scrooge shines. It is a heartwarming story, a hardnosed directive for personal behavior, and a powerful, but misguided, template for social reform and charity.

Like many of Dickens' characters, Scrooge is virtually a parody -- in this case, a miserly, self-regarding businessman. His lack of charity harms society, embodied in the form of the hard-working, deserving Cratchit family. The ghosts show him the light, and Scrooge changes, and becomes, in Dickens' words, "... as good a friend, as good a master, and as good a man, as the good old...

My fellow Brainstormer, Diana Auer Jones, argues in her post "Is Health Reform the New Social Security?" that the Social Security system was a success because it started small and grew in a dynamic process. But she also says Social Security is a failure because unforeseen economic events caused changes in  benefits and contribution rates. Well, she can't have it both ways.
She is right on the first observation. Social Security is a success because it is a dynamic program. (Nancy Altman provides a great history.)

Auer Jones complains that Social Security is administered by politicians who are, by nature and design, short term. As a bromide it is easy to nod in agreement; but, a wrong interpretation when it comes to Social Security. Unlike other federal government promises -- say the court system or Homeland Security (where future costs could be forecasted and paid for by a dedicated tax,...

My posts often jump into the controversy about whether we have too much government debt. I, a professor of mainstream macroeconomics, maintain that in recessions deficits are right and good.

But David Oakley, of The Financial Times, argued recently that investors are growing more fearful  about rich countries defaulting on their debt. His proof? The growing demand for insurance against default (the technical name for default insurance is Credit Default Swaps, or CDS's). A CDS is simply a promise to pay if a debtor doesn't pay back a loan or redeem a bond.

For example, I might buy a CDS against the U.S. defaulting if I feared my son's U.S. savings bond would not be paid when he redeemed it.

Oakley's reasons for the fear of growing debt, evinced by the increase in CDS demand, is that rich countries are running up big deficits. I say hogwash.

There is little relationship between the...

The current Great Recession started in December 2007, so this was the second Thanksgiving in the worst downturn since the Great Depression. Unemployment is over 10 percent, and predicted to continue at that level well into next year. People who hoped to retire are struggling to rebuild their savings and facing years of additional work. Housing foreclosures remain a serious threat. 

So you would think the discussion around the Thanksgiving table, when friends and family gathered, would have been about how to get the economy growing again.

But at least in my admittedly unscientific sample, people's legitimate anxieties about losing their homes, or jobs, or retirement savings were focused in the wrong place. Instead of calls for continued job creation, I'm hearing a lot of misplaced fear about inflation and the growing federal debt -- what Paul Krugman correctly calls the phantom menace.

As a former UC Berkeley student I am devastated by the tuition hikes. My contribution to the crisis is to help explain the mentality that wrongly cuts government spending in a recession. This is precisely the time the Federal government  should be inflating the economy, like California's, to keep up investments in education. Sadly, in China last week President Obama announced policies going in the wrong direction.

He said "It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a double-dip recession".

Most all economists were slack-jawed at the declaration. No economist can imagine that an increasing deficit will be inflationary in a recessed economy because there is so much unused  capital and labor. demand for capital and labor would have to soar off the charts...

Garry Wills' article in this week's New York Review of Books is stark and chilling. "A One Term President?" Wills is talking about Afghanistan and argues that Obama should pull U.S. troops out, even if it risks any chance of his being re-elected. "I'd rather see him as a one-term president than have him pass on another unwinnable war to the person who will follow him in office." Whether Hillary would have risked a one-term presidency to stop the wars is an open question as well, but I think Wills is shining his spotlight on the wrong question. The problem isn't Obama, but the depth of the problems he faces and the efforts by Republicans to destroy his presidency.

When Obama and Hillary were battling for the Democratic nomination, many commentators spoke in glowing tones about Obama's postpartisan character, and how he would transcend the political divisions that were paralyzing the...

The papers were filled with headlines on Saturday that the House passed a comprehensive health care bill, by a narrow 220-215 margin. Predictably, only one Republican voted for it, and he will be gone soon, as he holds a historically Democratic seat in Louisiana. 

The action now shifts to the Senate, where the two main committee bills are still being reconciled, and then the reconciled bill will be presented and filibustered. Joe Lieberman has already announced that he will filibuster any bill with a public option in it -- other Democrats might as well -- assuring that such a bill cannot get the 60 votes needed to bring it to a vote. Because of the overuse of fillibusters, the minority rules in the Senate blocking any hope for a public option.

So will we get a bill? My magic eight ball still says "yes," but it is now possible that the reform effort will collapse under the weight of...

Productivity is up over 9.8 percent in the third quarter of 2008; which is mostly good news. When a recession starts, stunned companies keep paying their bills while they sell less output. Not until they idle factories and lay off workers does labor productivity improve: Workers produce more per hour than ever before.

That raises profits, raises wages, and raises spirits.

Productivity gains kept earnings from falling during the Great Recession -- earnings were up over 2 percent this year. The fact that workers are saving costs by doing the work of two or three people -- after their colleagues have been ditched -- is the good news.

The bad news is that unemployment rose to 10.2 percent after the economy lost 190,000 more jobs in October. The consensus prediction was for a "mild" job loss of 175,000, mild given the 600,000 lost in the bleak months last year.

The biggest losers here are...