Mae I help you?

PRE-POSTSCRIPT: Within the "MAE/MAC" story are wheels within wheels. They're government-backed and subsidized. But they also have their own PACs and spread the campaign donation funds around to Congress. Nonlinear feedback government corruption!

Read here for more from the Wall Street Journal, which was all over this long before it became "news."
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The non-recession continues, with strengthening economic growth figures. Since we live in an age when the media is its own parody, leave it to the Onion to tell it to us straight.*

But what about rising energy prices? That's due more to the falling dollar than anything else. The falling dollar does boost exports. Among other things, strong exports are keeping us from slipping into recession.

But what about the mortgage/finance crisis? That's real, but it effects only one part of the economy. Its roots lie mostly with bad government policies, although demographics play a role too: the Boomers have exited their prime house-buying years. In fact, I wouldn't be surprised if this thing doesn't end with the government-backed mortgage sector going through a controlled disintegration. It's just like the savings and loan crisis from 15 years ago, except Fannie Mae, Freddie Mac, and Ginnie Mae are government-created and government-guaranteed. If their loans go bad, government has to step in and make good on them for their investors. That's what "government-backed" means. Don't expect that fact to stop a lot of whining about "bailing out investors." If we want to not do that, we should stop the government from backing private-sector loans.

The Wall Street Journal has waged a lonely, decade-plus-long campaign against the reckless credit practices of the government-backed mortgage industry. (See this from a year ago.) Reality has caught up, at last, but -- alas -- not the rest of the media.

Boogie Nights return: Here's a depressing item from Megan McArdle on a recent, ignorant declaration by a bunch of University of Chicago professors protesting the positive influence of two of the school's crown jewels, its Economics and Finance departments. Here is more of the Boomer, New Left "progressive" illiteracy at work. Instead of telling people the truth (which is known in the "global south," by the way) -- that the accelerating integration of economies has been immensely beneficial to poorer countries -- we get stale neo-Marxist blather from the 1970s.

Even trained economists who should know better, but who are also infected with desire to relive their long-haired youth -- like Krugman -- are swooning for specious arguments against free trade. And don't mistake it: such willed ignorance is foretaste of an Obama administration, wiping out 30 years of economic progress on an altar of Boomer nostalgia.

We really do seem to be slipping back 30 years or so, what with inflation, the disappearance of a conservative alternative in American politics, and the revival of discredited leftism. Similar policies (an explosion of public spending) lead to similar results. The only things missing are the bad drugs, bad sex, and polyester leisure suits.

But I do hear a cheezy ABBA soundtrack in the background ....
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* Of course, Samuelson does get it right, as he always does. He routinely puts the rest of the media to shame.

Is the GOP kaput?

Yes and no.

Looking at it from just this year's election perspective, we can see two seemingly contradictory trends. One is in the presidential race, where McCain has a moderate but distinctive advantage, even against Hillary Clinton, the stronger of the two remaining Democratic contenders. The other is in the Congressional elections, where the Republicans are still in real trouble, as much trouble as they were in back in 2006.

The root of the trouble remains what is was then: no political party has so swiftly abandoned what it purported to represent after achieving such dominance. This development certainly alienated the conservative base, a trend already visible as far back as the 1998 elections. But the party's fecklessness with regard to spending and reorientation towards big guvmint has also alienated right-leaning independent voters and conservative Democrats. Even without being conservative purists, they find less and less reason to vote Republican. It's hard to find a comparable example of a party squandering its natural advantages so completely, so quickly.

It may be past time for what remains of the conservative movement to abandon the baggage of traditional conservatism. It once had a reason and a role. But it's becoming clearer every day that the rhetoric of traditional Anglo-American conservatism - appealing to traditional moral and political authority, patriotism, and religion, while opposing the growth of government - is incoherent, at least under modern conditions.

It leads to weird paradoxes, like the revival of respect for governmental and presidential authority under Reagan, who was opposed to the ambitions and pretensions of modern government; or the abuse of governmental authority by Bush, even while he still uses the rhetoric of conservatism. The ultimate upshot is that such a contradiction has to be solved and has been, by moving in a Nixonian direction - traditional authority, patriotism, and morality tied to massive growth of government. The parallel move of conservative and moderate Democrats to the Republican party means the party has a whole new constituency to serve and a new type of right-leaning populist politician. The most striking sign is the rise of Mike Huckabee, the Christian minister and nanny-statist, who came in second overall in the Republican primaries. Such a politician would have been unthinkable in the GOP even as recently as 15 years ago.

A new sort of coalition is needed, perhaps taking a page from "liberal" parties in other countries, using "liberal" for once in its real meaning: smaller government, market-oriented, and individualist - without the traditionalist, moralistic, and populist baggage. The pieces of such a coalition are at hand. But we don't yet have politicians to lead it. Voters thinking that Obama fits the bill are deluding themselves. He's the most left-leaning presidential candidate in American history, although he lacks much political definition. His politics are a throwback. Even Hillary Clinton, as left as she is, is not such an antique. From the present wreckage of the GOP, such a beginning can be made by liberal Republicans and center-right independents. But it will take a lot more to regroup and reassert the limited government message. (May 29)

POSTSCRIPT: Kimberley Strassel has made a similar argument over at the Wall Street Journal: McCain needs to run against Congress. It's not just that it's controlled right now by the Democrats and has the lowest poll ratings ever recorded. The Congressional Republicans need the wake-up call as well. McCain has contributed in his own way to the present debacle, above all with the ridiculous and unconstitutional McCain-Feingold political speech and finance restrictions.* But he does have significant credibility on spending and not falling into the braindead partisan lockstep that led to the Republican losses in 2006. (May 30)

POST-POSTSCRIPT: Jon Henke of the fascinating Web site, The Next Right, concludes about the Republicans in a way very similar to my distinction among liberal, conservative, and big-government-populist (miracles not math!) Republicans. He correctly points to the rise and fall of the third group, the marginalization of the second, and the surprise resurgence of the first. Henke's been guest-blogging over at Megan McArdle's joint. Maybe someone out there is paying attention to me, and I'm not just bloviating into the silence of cyberspace :) (June 1)
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* Ironically, McCain himself has opted out of public campaign financing, because of its onerous restrictions.

Now it gets interesting

The coming fall of PCU, triggered by intolerable costs, is preceded by the final stages of rising prices and hemorrhaging subsidies. This bubble is now the subject of more and more active discussion in the blogosphere and the specialized higher ed press.*

Over at the Yeah Right blog, the mysterious Batman refers to this article on the student loan bubble, following the lead started by Instapundit:

... about "the next market bubble" being higher education, where government subsidies (obstensibly, to improve access to higher education) have had the unintended (but certainly foreseeable) consequence of inflating the costs of college: "Over the last 10 years, after adjusting for inflation, tuition is up 48% at public schools and 24% at private schools."

There are several important parallels with the recent housing bubble; policy goals of extending participation (in higher education, in home ownership) led to people with serious credit risks borrowing a lot to pay a lot for something that, it turns out, isn't worth what they paid....

This bubble, like all bubbles, will have its tragic stories, so I don't want to cheer this on. But if there's a silver lining, it's that it may make people rethink the value of those four years that polite society assumes you need.

Discussion ensues.

How much you wanna bet now on a federal plan in 2009 or 2010 to "save" higher education from a government-enabled burst bubble? And, of course, to keep pushing college education on students who don't need or want it? Just like pushing houses on people who don't need or can't afford them ....

POSTSCRIPT: Nice blog, BTW. Although Batman seems even more mysterious than we are :)

Additional thoughts about how the cultural elite skews education spending the wrong way, from Jerry Pournelle.

POST-POSTSCRIPT: Some bloggers caught Megan McArdle's hysterically funny take on HillaryPlan, but not all of us saw it:

What do Americans care most about this election season? The troubled housing market, and the short supply of oil. That's why Hillary is here with a plan. Specifically, a plan to discourage investment in the oil industry through a windfall profits tax, and to destroy the mortgage market by freezing foreclosures and interest rates. That way, no one has to worry about oil or houses, because there won't be any to worry about. That's just the kind of thoughtful, caring politician she is.

Plus Megan has some really cool economics charts that take me back to college days. I guess my public college education is worth something. And it means Megan is way cool.

And that is why my new life goal is to meet and marry Megan McArdle.
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* Your guides to the academic scene, Inside Higher Ed and the Chronicle of Higher Education.

I am vast and right-wing, hear me roar

PRE-POSTSCRIPT: Megan McArdle does it again: finally, an explanation for our campaigns.
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The agony and the ... well, no ecstasy yet. Conservatives are in a funk about McCain winning the Republican primaries and the smooth walk he apparently has ahead of him to the Republican nomination. Conservatives deserve a Valentine. So here's a belated one.

How did he do it? Independents, my dear. They can vote in most primaries, and they've recently been the fastest-growing group in American politics. McCain plays well among them. Conservatives are in conniptions, and rightly so, about some of McCain's politics - his support for restrictions on campaign donations and speech (which are unconstitutional, shut out challengers, and have done serious damage to our politics), and above all, his questionable views on illegal immigration, which, for state and local governments, has become a major welfare-state crisis that national politicians, who set the policies or lack thereof, pay no price for.

McCain, like Romney and Giuliani, is a liberal Republican. (Romney spent a lot of time and money unconvincingly presenting himself as a conservative - which is too bad, because he would have done himself and everyone else a favor by just being himself.) Liberal Republicans are the smallest of the three factions of the Republican party (liberals, conservatives, and populists). But they are critical: they are the closest to the center of gravity of American politics, somewhat to the right of center. They do not share conservatives' fatal ambivalence about modern government, but they are also free of faith-driven big-government populism - you know, where miracles are more important than math.

Conservatives should not have been surprised by this. While waiting in vain for a viable conservative Presidential candidate this year, many conservatives are still mentally stuck in the 90s. Conservatism lives on as an ideology, as an intellectual movement, and as an attitude. But as a politics, it's been dead for almost a decade. Conservatives who thought there would be a conservative comeback this year were always deluded. Conservatism didn't die a natural death, of course. It was shunted aside, by the Republican party - it was in the way. The irony is that, the Republicans would be in far better shape now if they had stuck consistently to their earlier conservatism. Like Nixonism, the Bush-Rove-ism approach was too clever by half.

So conservatives are going through separation trauma. They once had enough confidence in themselves that, in the late 70s and the 80s, they were able to take over the Republican party. But the last 13 years have not been kind to them: the Republicans lost their ideological moorings. Conservatives overidentified with the party, which became less and less conservative while becoming more and more partisan. Now conservatives have to go back to where they were in the 1950s and 1960s: they need to disentangle themselves from the Republican party and revisit the basics. They can start by mending fences with libertarians. And they need to figure out what they have in common with the "good government" liberal Republicans. (Hint: nowadays, "good government" usually means "smaller government.") For electoral politics, they need to face what I wrote here last year:

Once Bush & Co. are gone, it will be springtime for Republicans, who are more likely than not to retake the Senate in 2008. But it will not be a new conservative era: the 20-year era of conservative ideological dominance, from the late 70s to the late 90s, will probably not return in our lifetimes. Everyone now loves big government ....

Will the liberal Republicans ride to the rescue? Maybe. Liberal Republicans like politics and don't suffer from the conservatives' fatal ambivalence about being in charge of modern government. And unlike Bush, they value competence above machine politics and loyalty. They also lack Bush's faith-based, blindfolded, trust-walk style, and are not tainted with [it]. Although liberal Republicans are the smallest faction of the Republican party, they sit the closest to the center of gravity of American politics - unlike the conservatives or the Bush fraternity house .... the future of the Republican party, if it belongs to anyone, belongs to them.

Conservatives need to grasp that the game this year is, not pick a viable conservative candidate, but pick an acceptable liberal Republican. Now the primary voters have done that for them and picked McCain. If conservatives don't like the result, they should have been stronger in the primaries for Romney or Giuliani. Instead they were twiddling around with Ron Paul or Fred Thompson.

Conservatives also need to rebuild at the state and Congressional level. They have always had a strong tendency towards ghettoizing their issues as "ideology." They need instead to do what conservatives before the mid-70s did, anticipate and understand what the big governmental crises are going to be, and then be ready when those crises appear. (Back then, they were out-of-control expectations, the post-1965 explosion of federal spending, stagflation, the dead-end of détente; today, they include the coming entitlements crisis, illegal immigration, the possible break-up of the Western alliance system, the rise of the "oil" axis). Conservatives need to disconnect completely from the conventional television media and encourage everyone else to do the same. The news media will do its utmost to obscure important issues and change the subject. Instead of arguing with them, everyone should be ignoring them. If voters do, then the politicians will eventually get it. Those who don't get it, will find themselves less and less relevant.

There is real upside for the Republicans: the cards are still stacked in their favor this year. Bush and Cheney are out of the picture. The negative referendum on them already happened, in 2006. As a proportion of voters, self-described liberals are still shrinking. The Congressional Democrats' poll ratings have been crawling on the bottom since they took over 13 months ago (teens or single-digits) and consistently well below Bush's. If the Republicans are smart, they'll run against Congress. The 2008 presidential race is the Republicans' to lose. The interesting question is whether they have a chance to regain one of the houses of Congress as well.

POSTSCRIPT: Speaking of which - is it all over for Hillary? Peggy Noonan considers. My answer is, obviously not. She's won most of the big states and will probably win Texas and Ohio. The Democratic race is far from over. And given the Democrats' weird superdelegate rules, we may end up with an old-fashioned brokered convention. Of course, it won't be totally old-fashioned: the back rooms will have women as well as men, and they'll be free of smoke.

Before there was gay marriage ...

... there was Rudolph and his shiny red nose.*

I'm supposed to start commenting on ... politics ... I guess ... ugh. Right now, the primary voters are in their final swoons. The Ron Paul silliness seems to have peaked but not disappeared - yet (via Megan McArdle's must-read blog). The Obama swoon hasn't maxed out yet. But pretty soon, they're gonna have to get serious and settle down with Responsible Girls and Fellas, so let them have their final weeks of free love. We'll wait til we're married. But read the always-sensible advice from Peggy Noonan too.

Happy new year!
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* It's scary what you can find on Wikipedia - some people, it seems, have far too much free time on their hands :)