Capital Commerce

I am currently in the middle of reading the fabulous Grand New Party: How Republicans Can Win the Working Class and Save the American Dream by Ross Douthat and Reihan Salam. It's chock full of interesting economic ideas that Republicans can use to better appeal to working-class voters and families. Among them: massively expanding the tax credit for children, a "GI bill" of tuition tax credits for stay-at-home parents who want to get back into the workforce, and government investment in a better telecommunications infrastructure to boost telecommuting.

Although an interview with Douthat is in the works, I wanted to get his quick take on McCainomics. Here is what Douthat wrote me:

I'm pretty down on the McCain economic agenda, frankly—my sense is that they assume, rightly, that they'll be dealing with large Democratic majorities, which means that nothing they propose will actually have any chance of coming to fruition ... so they've decided to avoid making any tough choices, and instead are promising a grab-bag of ideas that don't add up: They're claiming they're going to cut corporate taxes and cut taxes for families and preserve the Bush tax cuts and balance the budget and pay for people who can't get insurance under his healthcare plan and maybe have a program of wage insurance and institute a cap-and-trade regime and so on and so forth. (I tried to write about this here, when McCain gave his first big speech on the economy: http://thecurrent.theatlantic.com/archives/2008/04/mccainomics.php) So while there are things in his agenda, like doubling the dependent tax credit, that I think are good ideas for Republicans, and in broad outline I like his healthcare plan ... they don't seem to have any interest in making it all add up, and he clearly has no appetite for getting into the weeds on domestic policy at all.

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Russell Roberts, George Mason University econ professor and blogger over at Café Hayek, E-mails me to tell me that my $5 trillion estimate of the cost of Al Gore's 10-year, zero-carbon-emission energy plan could be a bit low.

If 20% of something costs $1 trillion, how much would 40% cost? If it's two trillion, that's linear, and so on so the whole thing would cost $5 trillion. But replacing the first 20% of US energy with wind, solar and a bunch of people pedalling isn't going to be the same as replacing the second 20%. My presumption is that the second fifth is harder than the first fifth. For example, if you replace 20%, you might use solar in the sunniest parts of the country. But what about the non-sunny parts that aren't windy? Those are going to cost more.

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"Necessary but not sufficient." That's the verdict of a story in today's Wall Street Journal that examines whether a college degree is still the ticket to a better life. The supposed killer stat is this one:

In the economic expansion that began in 2001 and now appears to be ending, the inflation-adjusted wages of the majority of U.S. workers didn't grow, even among those who went to college. The government's statistical snapshots show the typical weekly salary of a worker with a bachelor's degree, adjusted for inflation, didn't rise last year from 2006 and was 1.7% below the 2001 level.

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I would very much like for this to be true:

We've developed a telecommuting model which shows that if the 40% of U.S. workers that studies show could work from home actually did, the U.S. could reduce Gulf Oil imports by 74%, and reduce gas consumption by 11.5 billion gallons a year. That would save consumers $52 billion and reduce greenhouse gases by 101 million tons. If those 40% worked from home half the time—roughly the national average for existing teleworkers—the savings would be $40 billion and 78 million tons of CO₂.

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