Could expectations get any higher?

David Brooks has a dream:

Walking into the Obama White House of my dreams will be like walking into the Gates Foundation. The people there will be ostentatiously pragmatic and data-driven. They’ll hunt good ideas like venture capitalists. They’ll have no faith in all-powerful bureaucrats issuing edicts from the center. ...

They will actually believe in that stuff Obama says about postpartisan politics. That means there won’t just be a few token liberal Republicans in marginal jobs. There will be people like Robert Gates at Defense and Ray LaHood, Stuart Butler, Diane Ravitch, Douglas Holtz-Eakin and Jim Talent at other important jobs. ...

My dream administration will announce a Budget Rebalancing Initiative. Somebody like Representative Jim Cooper would go through the budget and take out the programs and tax expenditures that don’t work. “If we have no spending cuts, then we’re saying government is perfect. Nobody believes that,” Cooper says.

Lawyerocracy

The American Bar Association cannot find a non-attorney on Senator Obama's transition team, leading them to speculate on How an Obama Presidency May Benefit Lawyers

Lawyers in diverse practice areas ranging from labor law to bankruptcy are likely to benefit from legal changes that could be made during the Obama administration.

Lawyers can expect more regulations in banking and health care, fewer restrictions on lawsuits, more real estate lending and a pro-labor tilt, according to business development consultant Larry Bodine. Lawyers who spoke to the American Lawyer also predict fewer bankruptcy restrictions and raise the possibility of job protections based on sexual orientation.

Is Wal-Mart an inferior good?

An inferior good is one whose income elasticity of demand is negative, so that when income goes down, demand goes up. From NY Times:

Sales at department stores and specialty retailers are falling rapidly. They are cutting staff, discounting merchandise and liquidating stores to survive. But even as the financial turmoil strangled discretionary spending at many stores, it sent struggling consumers into the arms of Wal-Mart — and left it, the world's largest retailer, poised for a blockbuster Christmas.

This is a counter-cyclical fiscal policy

from WSJ:

Uncle Milton at his best

thanks Noah:

California's procyclical fiscal policy

In down times, the government increases spending and reduces taxes to mitigate the effects of recession. But California always seems to do things a little differently:

SACRAMENTO, Calif. (AP) - Gov. Arnold Schwarzenegger has proposed $4.4 billion in tax increases and billions more in spending cuts to close California's worsening budget deficit, declaring: "We must stop the bleeding." ...

California's budget relies greatly on capital gains taxes, which have dropped precipitously in recent months along with swooning stock prices. Sales and property taxes also have declined.

He said lawmakers will not be able to close the budget gap with cuts alone. He proposed a temporary 1.5 percent sales tax increase and other "revenue generators."

An early signal that change may not be bad

The Washington Post reports that our own Jim Cooper is being considered for a position in the new administration:

One prospect for a top administration job, possibly at the Office of Management and Budget, who would test the Washington establishment is Rep. Jim Cooper (D-Tenn.), a crusader for government reform who annually publishes a dire alternative report on the federal budget.

How to get our health care expenses under control

NOT

Judge Henry H. Kennedy Jr. of Federal District Court here said the policy of paying for only “the least costly alternative” was not permitted under the Medicare law.

What if the Median Voter Were a Failing Student?

He or she probably is, according to this essay by Bryan Caplan from George Mason University.

When you actually collect data on the public’s economic beliefs and test them for systematic error, systematic errors are easy to find . . . The public systematically underestimates the social benefits of the market mechanism, especially for international and labor markets, and sees the past, present, and future of the economy in an unrealistically pessimistic light.

Here's the summary

As teachers, economists usually assume that their students have systematically biased beliefs about economics; yet, as researchers, economists usually assume that voters understand how the economy works. Teachers have it right, according to Bryan Caplan, and so modern political economy needs a serious overhaul.

(HT: Richard Langlois)

Predicting the Presidential Election

Prediction markets at intrade currently rate Obama's chance of winning the election just under 90%.