A roundup of economic news from around the Web.
- Spending Freeze: Writing for the Tax Policy Center’s TaxVox blog, Len Burman characterizes the president’s proposed spending freeze as a statement on government payrolls. ” But I’ve concluded that Obamas freeze isnt aimed at either Republicans or the Democratic base. Its a populist move meant to assuage those who are ticked off that the federal payroll has grown while private-sector jobs have been vanishing at an alarming rate. The message in the freeze is that government jobs no longer come with life tenure. To that end, Pelosi and Reids protestations are a plusif the president can put together a coalition to implement the freeze. And such a bipartisan coalition would provide comfort to the independents who are fleeing Obamas camp.”
- Fake Homeowners: Mike Konczal of Rortybomb looks at home ownership in the age of subprime foreclosures. “I saw an ad on craigslist (though most story that starts with that line are shady, this one is not especially so) for apartment rental opportunities in Sacramento, CA. The rent was very cheap, but you had to post a gigantic security deposit, sign away rights related to eviction and give proof that youve never been convicted of a crime. Digging a bit deeper, it was clear that the owner was an out of state company that was buying up sections of foreclosed homes in abandoned neighborhoods. And what they needed was less a renter but a controlled squatter. If left alone, these buildings would become homes for the homeless, gang activity, looters and pranksters, etc. So what the investment company wanted to do, since they wanted to sell the properties as homes in the long run but couldnt in the short run, was get someone to squat in these buildings for them; they were looking to hire a respectable squatter, get him on the payroll through really cheap rent, and he or she who could do whatever in the building as long as it wasnt destructive of value.”
- Animals’ Animal Spirits: On Marginal Revolution, Alex Tabarrok wonders whether animals have animal spirits. “Can there be a Keynesian business cycle in the pond? i.e. Could animal spirits drive a natural business cycle? It’s harder for me to see exactly how this would work. We would need “money” or something similar to generate a rush to liquidity and a decline in investment. We could perhaps get a coordination type business cycle (ala Roger Farmer) with herd behavior. Interestingly, the trend in biology–as I read it at least–has been to think of herd behavior as optimal for the herd but this is not necessarily the case. We know that slime molds self-organize and aggregate during times of stress could this process be set off with no or little exogenous shock? Could a natural system provide a model for business cycle behavior? It would be odd if only people had animal spirits. Biology and economics have much to offer one another.”
Compiled by Phil Izzo