Dan Ariely says you shouldn't be too specific in your compensation practices because it motivates people to game the system instead of working hard. For example:

A consulting company once told me they made a rule that if you stayed until 8 in the office, you could order food and use the car service to get home. So what happens? A ton of people are there at 8. Nobody’s there at 8:05.

Really? A "ton of people" who probably billed out at $300 per hour were there at 8? At a cost of maybe 30 bucks in food and another 50 for the car service? Sounds like this strategy worked great — as long as you understand that it's primarily aimed at increasing billable hours. What's the problem?

From Ryan Avent, surveying both the weak current economy as well as the spectacular destruction about to be let loose in the near future:

It's just shocking to think about the dangers that loom and consider the extent to which they're driven by governmental failures.

And yet, to a large extent, governments are merely responding to the wishes of the public. It's a simple fact that the average Joe (or Dieter or Emile or Carlotta) believes pretty strongly in folk economics — low inflation, a strong currency, and balanced budgets — and decidedly doesn't believe in bailing out people who aren't them. On the latter front, this applies both to Germans who don't want to bail out Greeks and Americans who don't want to bail out underwater homeowners.

It's all perfectly understandable — and about as self-destructive as insisting that we should plant crops by the phase of the moon. Which might be about where we're headed if we don't get our act together soon.

Jonathan Bernstein picks up on one of my hobbyhorses:

Here's the thing. Barack Obama isn't as popular now as he was in January 2009. This is not exactly a little-known fact; indeed, we fortunately have some really good indicators of exactly how popular Obama is overall, and they're not all that obscure.

What this means is that sloppy journalists can get endless mileage from picking out any subgroup in the nation and finding out that, gee, Obama has lost popularity there!....To know whether any of these stories is actually news, it's absolutely necessary to compare Obama's decline within the group in question to his overall decline. If it's more, then you have something; if it's the same or less, then you're at best illustrating how an overall decline works within that subgroup.

Roger that. This usually bugs me most during the post-election recap season. In 2008 the media was full of breathless reports about how Obama gained support among married women or McCain lost support among Hispanics or some such. But of course they did. In 2008 Obama did a lot better among all voters than Kerry did in 2004, and McCain did worse than Bush. So it stands to reason that Obama also did better among most demographic groups and McCain did worse. In 2008, for example, several writers suggested that Obama did especially well among churchgoers, but in fact he didn't: he performed about 9 points better than Kerry overall and about 10 points better among churchgoers. There was nothing to it.

Anyway, this is just another example of "compared to what?" That's a question that should be on everyone's minds a lot more than it usually is.

Brad Plumer points today to a Dallas Fed report that, rather amusingly, demonstrates that a big reason Texas has done well during the recession is because of Fed policy. Roughly speaking, most of the Fed's monetary policy works through bank channels, and since Texas banks were in better shape than most (thanks to Texas's mild housing bubble), the Fed's actions were especially effective there. That's pretty interesting. But for sheer comedy gold, this chart is my favorite:

That "debased" dollar that tea partiers keep screaming about? Actually, it's not really very debased in the first place. But it has weakened over the past couple of years, and it's weakened especially against Texas's major trading partners, primarily Mexico. And the Texas economy has benefited from that.

Maybe Rick Perry needs to send Ben Bernanke a a fruit basket or something?

Polls show repeatedly that people (a) approve of Obama's specific proposals to boost the economy, but (b) disapprove of Obama's handling of the economy. Weird! But then again, maybe not. Andrew Sprung points out that there's a reason Obama lost support after the debt ceiling deal even though the public largely supported his approach:

He wanted to cut spending and raise taxes, and so put the U.S., by his lights, on a firm financial footing for ten years and put the deficit wars behind him. That's what he told the American people, repeatedly, through the summer. They believed him. They supported him — polls showed strong backing for his "balanced" approach to deficit reduction. And he couldn't do it — not because he was happy to just cut spending, but because he lashed himself to the debt ceiling mast, notwithstanding the fact that Republicans were swearing their willingness to row him (and the country) over a cliff. He is being punished in the court of public opinion not for trying to compromise but for failing to get a compromise.

The difference is important.

Yes it is. And you know who understands this really, really well? The Republican leadership.

This is one of the reasons I've long been skeptical of the notion that Obama should have fought harder for progressive legislation even when it was likely to fail. "At least people would know where he stands," goes the usual mantra. And that's true. But what people would also know is that he didn't have the juice to get anything done. You can stand on a soapbox forever and tell people that this is all the fault of those obstructionist Republicans, but most of them aren't paying attention. They'll just vaguely hear that Obama failed yet again and start to think that the guy's a loser.

Nothing succeeds like success. And nothing helps a president more than an economy that's actually doing well. The details of failure just don't matter that much, unfortunately. And Republicans know it. For them, congressional dysfunction is a feature, not a bug.

I think Christina Romer is pulling a fast one in her op-ed defending President Obama's jobs plan. She takes on several arguments against his proposal, and this is one of them:

WE NEED A HOUSING PLAN, NOT MORE FISCAL STIMULUS The bubble and bust in house prices has left households burdened with too much debt. Until we deal with this problem — perhaps by providing principal relief to the 11 million households whose mortgages are larger than the current value of their homes — we’ll never get the economy going.

The premise of this argument is probably true....[But] recent research shows that government spending on infrastructure or other investments raises demand even in an economy beset by over-indebted consumers....In the recovery from the Great Depression, economic growth, which raised incomes and asset prices, played a big role in lowering debt burdens. I strongly suspect that fiscal stimulus will be more cost effective at speeding deleveraging and recovery than government-paid policies aimed directly at reducing debt.

Hmmm. Romer seems to be attacking a straw man. No one — at least no one arguing that we need a better housing plan — is claiming that fiscal stimulus won't spur economic growth, or that economic growth won't lower debt burdens. Of course they will! The argument is that fiscal stimulus isn't enough by itself, or, alternately, that it might not give us the biggest bang for our buck. Among state economies, there's a very strong correlation between deleveraging and unemployment, which suggests pretty strongly that programs aimed at targeting underwater mortgages would be extremely helpful.

But Romer's only real response is that she "strongly suspects" that fiscal stimulus is the best way of addressing this. As it happens, I'm willing to give a "strongly suspects" from Christina Romer a lot of weight. Still, the role of housing in driving the recession and its continuing role in keeping demand depressed is pretty clear cut, and this suggests that any effective jobs plan should include both fiscal stimulus and an aggressive mortgage forgiveness program. It's possible (likely, in fact) that an aggressive housing plan is politically infeasible, but still, from an economist I'd like to hear an economic argument either for or against. I don't think we have one here.

I know this is beating a dead horse, but fun is fun. Here are the results of the latest Winthrop poll of South Carolina Republicans. 75% think "socialist" describes Barack Obama pretty well, 30% think he's a Muslim, and 36% think it's likely he was born in another country. Note that releasing his long-form birth certificate barely moved the needle about his birthplace.

In other, more substantive news, the poll suggests that Rick Perry is only slightly ahead of Mitt Romney, sort of a surprising result for such a bedrock conservative state. And this was before last week's debate. I don't think Perry is a dead duck or anything, but I do think that his frontrunner status has always been thinner than it seemed, and it's way thinner now. Public Policy Polling confirms this: "Thursday night part of our Florida poll Romney led Perry by 2. Friday-Sunday part Romney led Perry by 10. Debate did matter." He better get cracking.

The current impasse over keeping the lights on in Washington seems like small beer: Republicans want to offset increased disaster aid with cuts to green vehicle technology that amount to about $1.5 billion — a pittance in the grand scheme of things. But this is part of a much bigger fight. As the failure of last week's House budget bill showed, the tea party faction of the GOP still holds the whip hand in Congress and they've made it crystal clear that they have no intention of accepting any of the usual norms surrounding the federal budget, whether it's spending levels or anything else. Remember what Stan Collender told us a few days ago: there's really no reason to be voting on a short-term continuing resolution in the first place. After all, we've already agreed on budget levels for the year. But:

The commonly assumed but unstated reason for a short-term CR is that the House GOP wants to have increased political leverage on budget and other issues by being able to hold yet another potential government shutdown over the heads of Congressional Democrats and the White House. This time it supposedly will be policy riders — changes in authorizations — rather than spending levels that will be the biggest points of contention.

....This will sound quaint to some and unimaginable to others, but there was a time when doing what the GOP apparently is planning by authorizing on appropriations bills was considered by most Members of Congress to be as much a major legislative sin as usurping another committee’s jurisdiction....In fact, authorizing in an appropriations bill has been considered so taboo on Capitol Hill that Republicans and Democrats on the authorization committee that would be affected by the proposal typically have worked together to prevent it from happening.

The tea partiers want lower spending levels and they want to hijack the budget process to tack on their pet policy proposals. They don't care if the former has already been agreed to or that the latter is a violation of long-established understandings from both parties. Just like they don't care that emergency aid has never required budget offsets in the past.

So while those offsets might be minor on their own merits, they're basically a bellwether: if tea partiers can force Democrats to cave in on that, they can force them to cave in on every other violation of normal procedure too. Agreements will become meaningless and the budgeting process will become almost literally a free-for-all. That's what this is all about.

The New Deal

I just finished reading The New Deal: A Modern History, by Michael Hiltzik, and I can't recommend it highly enough. I'm a friend of Michael's, so feel free to take this with a grain of salt if you want, but it's really terrific, an energetically written and eminently readable history that makes all the right tradeoffs. At a little over 400 pages, you're not going to get every last detail of the New Deal, but you're going to get all the high points, narrated with vigorous prose, a clear-sighted appreciation of just what motivated FDR and his allies, and a modern understanding of what they actually accomplished. And unlike the doorstop histories, you'll finish it quickly enough to be left wishing for more.

And you'll meet some new friends. All the usual New Deal architects are there — Raymond Moley, Frances Perkins, Harry Hopkins, and, always, the redoubtable Harold Ickes — but Hiltzik also spends more than the usual time on a few of its lesser known figures: Benjamin Cohen, the genius legislative drafter; General Hugh Johnson, the force of nature who ran the NRA for a year and probably destroyed it long before the Supreme Court did; George Warren, the eccentric Cornell economist responsible for FDR's peculiar decision to tinker with the price of gold in 1933; Martin Dies, the red-baiting foe of the WPA whose "Dies Committee" would become famous as HUAC during the McCarthy era; and a variegated cast of other misfits and less familiar faces. Because of this a few things get short shrift — the labor movement comes most to mind here — but for the most part the omissions are modest. The big ticket items are all here.

Hiltzik also devotes a full chapter to the almost complete inability — or unwillingness — of the New Deal to help black Americans, the "most forgotten man," in T. Arnold Hill's words. With only narrow and fleeting exceptions, nearly every New Deal program was transformed, either in law or in practice, to insure that only whites would benefit from them. "The Tennessee Valley Authority might have the ability to raise an entire region out of near-medieval poverty," Hiltzik writes, "but black Americans were not permitted to reside next to the white dam workers....Almost every federal settlement, work relief camp, and construction crew that accommodated blacks did so on a racially segregated 'Jim Crow' basis" — and this was nearly as true in the Northern states as in the Southern. This aspect of the New Deal has gotten more attention in recent years than it used to, but nonetheless deserves wider recognition. Hiltzik delivers that.

This is also a timely book. One of the most striking things that shines through Hiltzik's narrative is the political similarity of the 30s to our current era. There's the intense hatred of FDR among the affluent, with their insistence that unemployment remained high only because he was destroying business confidence and strangling corporations with excessive regulation. There's the emergence of a lunatic right convinced that FDR was subverting the constitution and establishing socialism, ironically combined with a progressive left that became increasingly disillusioned with his centrism and political accommodation. There's the modest size of the early New Deal stimulus, which was too small and too brief, animated as it was by a skepticism of Keynesian ideas even among much of the left. There are the racial underpinnings of much of the opposition to the New Deal, coming from Southern Democrats hypersensitive to anything that might undermine the authority and influence of white power. There's the overriding folk belief in balanced budgets, which seemingly affected everyone from the president to the lowliest janitor. Sound familiar?

The Great Recession of 2008 was milder than it could have been because we learned so many lessons from the Great Depression of the 30s. But its continuing hold, and the possibility that we might yet fall into a second recession, is largely due to the lessons we haven't learned. The New Deal teaches them to us all over again.

Dave Weigel explains why Rick Perry failed so miserably in this weekend's Florida straw poll:

Walking through the walls of the Orange County Convention Center, you hear these words and phrases over and over again.

Perry. Immigration. Illegals. Tuition. Illegals. He didn't do as well as he could have. Why?

Almost every conversation I walked into was on the question of why Rick Perry approved a law that let young non-citizens get in-state tuition rates at Texas schools, and why he had characterized the program's critics as heartless.

Obviously this is a huge deal with the Republican base. But I think Perry's real problem is that Thursday's debate badly shook up a GOP establishment that was pretty uneasy with him already. It's not so much that Perry spoke in platitudes — all candidates do that — or that he muffed a few lines — any candidate can do that too — or even that his policy positions were unacceptable. Hell, he'll figure out how to fight back on the tuition for illegal immigrants thing eventually, and he'll get his foreign policy act together too.

But there was a bigger problem: Perry looked like he didn't think he needed to even care about any of that stuff. He muffed his attack lines because he hadn't bothered to study them. He wasn't prepared for the tuition fight because he figured that he could just repeat the same old explanations and flash his thousand-watt smile at the audience. He didn't know what to say about Pakistan because he figured any sort of good ol' boy BS would do. It always has before, after all. So he's apparently spent the past month doing....nothing.

That's just way too Palinesque for the political pros. He looks like a guy who's had such an easy time in Texas that he doesn't really think he's going to have to work for the nomination — or the presidency. Gentleman's Cs have always been good enough, and he figures they'll be good enough again. So he's got nothing except a single set of sound bites for every occasion, and he's not prepared to put in the time and effort it takes to sound even minimally ready for prime time when he's taken out of his comfort zone.

That's a scary thought for Republicans. The economy is bad enough that Barack Obama is seriously vulnerable, but even with a bad economy he can beat somebody who's convinced that his winning personality is enough to see him through any troubles. When Perry first announced his candidacy, he had the aura of a political animal willing to do whatever it takes to win. Now he looks like he's willing to do anything except actually work hard. That's a sure way to lose in November, and that's why the GOP establishment is suddenly so nervous.