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Posted at 6:01 PM ET, 11/18/2010

Reconciliation

By Ezra Klein

Recap: Scott Brown and Ron Wyden have a good idea for reforming health-care reform; Bernie Sanders thinks it could get Vermont to a single-payer system; and I talked with Michael Pollan about the Food Safety Modernization Act.

Elsewhere:

1) You can prove telepathy and clairvoyance once, but it's hard to do twice.

2) Is parenthood like addiction?

3) What's wrong with government 2.0?

4) In praise of bailouts.

By Ezra Klein  | November 18, 2010; 6:01 PM ET
 
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Comments

I get Karl Smith's argument on bailouts, with two caveats:

!) TARP has been paid back in only the most simplistic sense possible. When someone owes you a large debt, and then you lend them money at 0% interest so that they can turn around and lend you the money back with you paying them 4-5% interest. Followed by them paying off the original debt, that's not really paying you back now is it?

2) If we are going to bailout institutions, then we need to charge them for an insurance commensurate with the risk

Posted by: 54465446 | November 18, 2010 7:32 PM | Report abuse

Ezra:

Here's an early lead on the next possibly stunning Fed action. The rumor is that the Fed will buy California's municipal bonds because their most recent auction is a failure. The eventual default of California and several other states, or a "cram down" to avoid bankruptcy is widely presumed as a given in the financial community.

Still the buying of muni debt would be a bombshell to the non-financial world. I'm not sure if I it will happen, but I know this. If Bernanke thinks it's necessary, he'll persue it and everything and everybody else be damned. You have to either like or hate the man for that. He's no wimp!

Posted by: 54465446 | November 18, 2010 7:51 PM | Report abuse

From (4):

"The obvious retort is that it just encourages risk taking. The question, however, is – are we certain that that is a bad thing?

Take TARP. The bank portion of TARP made a profit. However, some people fear that it only encouraged banks to take risks in the future. However, if in the future we bailout more banks and earn additional profits, are we sure this is necessarily a bad arrangement?"

The whole unemployment rate soaring nearly 6% would suggest that yes, it is a bad arrangement.

"If we have a means of stopping a wide spread bank panic and we have a means of stopping a general recession then we effectively have means of neutralizing the downside risks from financial implosions."

That's a VERY big if. There is no guarantee that NGDP targeting can stop a general recession or for that matter if its even effective. It sounds compelling, but our hopes of fine tuning the economy have been dashed before.

Posted by: justin84 | November 18, 2010 10:11 PM | Report abuse

With regard to the parenting link, I'd like to offer a quote from a recent Newsweek article:

A key study by University of Wisconsin-Madison's Sara McLanahan and Julia Adams, conducted some 20 years ago, found that parenthood was perceived as significantly more stressful in the 1970s than in the 1950s; the researchers attribute part of that change to major shifts in employment patterns. The majority of American parents now work outside the home, have less support from extended family and face a deteriorating education and health-care system, so raising children has not only become more complicated—it has become more expensive.

at: http://www.newsweek.com/2008/06/28/having-kids-makes-you-happy.html

The kinds of stresses that parents face today were, of course, far less when you had one spouse who didn't have to work, and so had an extra 50+ hours per week to work out the chores and problems and energy consumption that come with raising children. Of course, many women want to work, at least part time, or at least when the children get older, but with the dominance of the Republican's every-person-for-himself philosophy, stress, risk, devastating positional/context/prestige arms races, and the great inefficiency and loss of utility from discommunity have sky-rocketed.

If we really want to be pro-family, instead of just paying lip service, we need to help families, to efficiently pool our resources and put them towards families rather than positional/context/prestige arms races and the rich. We need things like quality free universal pre-school and generous free positive after school programs, and community transportation for children, and community walking guards so children can get around on their own.

My wife and I are fortunate to be wealthy now, and we'd be happy to pay higher taxes for this. It's a matter of the value of a strong community, and of insurance. We've both been poor, and hard work was a big part of what made us wealthy, but help with college aid when we were poor made a big difference, and so did some luck. Social insurance and progressive taxation makes sure that if you do have bad luck it won't be devastating.

Our first child, Rachel, is now almost a year, and I can tell you having help makes a huge difference. For us it's been an absolute joy. Our help came privately due to wealth and grandma living ten minutes away (there's definitely a cost to moving all over the country for work), but it can easily come for any family from the community. It's a matter of priorities. Do we care more about granite countertops, million dollar cars for the rich, and positional/context/prestige externalities, or our families?

Posted by: RichardHSerlin | November 19, 2010 2:39 AM | Report abuse

Ah, ok, I found what I was looking for; how parenting and happiness correlated in countries that had a lot more support for families than the US, which has been dominated by the Republicans for over a generation. From the Economist last July:

The more pressing question Ms Senior asks is whether there are aspects of contemporary child-rearing, as practiced in America, that are particularly stress-inducing and unpleasant. She talks to a New York mother whose parents, immigrants from large families, can't sympathise with her child-rearing anxieties: "They just think that Americans are a little too complicated about everything." She notes that happiness studies conducted in Europe have found that Danish couples with children are happier than those without, and that a study by Daniel Kahneman found mothers in Rennes, France enjoyed child care more than those in Pennsylvania did...

On the other hand, as Ms Senior writes, America's lack of paid parental leave or subsidised day care makes parenthood much more stressful than in similarly wealthy France or the Scandinavian countries. In part, the anxiety and over-protectiveness of American parents criticised in Lenore Skenazy's FreeRangeKids blog stems simply from the absence of such support systems. But it's always seemed to me that this anxiety is also driven in part by high levels of inequality. In a society with a large gap between excellent and inadequate schools, parents face tremendous psychological pressure to raise and educate their kids the "right" way. In societies with a more egalitarian distribution, parents don't reproach themselves so much for laying off the kids a bit.

This, I believe, also explains why in highly egalitarian Australia, child-rearing consists of turning the tykes loose barefoot in the backyard for 12 years and hurling them slabs of meat thrice daily. They seem to turn out pretty well, actually.

at: http://www.economist.com/blogs/democracyinamerica/2010/07/parenting_and_happiness

And, all of this can result in happier and healthier children, which in turn makes things a lot more pleasant for the parents. For example, we are lucky that my wife only works very flexibly in our business, so she's always breast fed, and as academics we've read greatly on health and nutrition, so our child has only eaten organic plant foods (until age one, as advised by top nutritionist Joel Fuhrman M.D.) This, and other things, has really contributed to a healthier, happier child. In other countries you have much more government support for breast feeding. Obama, to his credit, added a lot of such government support to the health care bill.

Posted by: RichardHSerlin | November 19, 2010 3:10 AM | Report abuse

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