Thursday Morning Links

This and that for your Thursday reading.

- Alison picks up on Armine Yalnizyan's important question as to whether the Cons have a Plan B other than hoping for factors beyond our control to boost oil prices. And Brad Delong argues that based on the foreseeable direction of our economy, we need a stronger public sector now than we've ever had before:

(A)s we move into the twenty-first century, the commodities we will be producing are becoming less rival, less excludible, more subject to adverse selection and moral hazard, and more subject to myopia and other behavioral-psychological market failures.

The twenty-first century sees more knowledge to be learned and thus a greater role for education—and if there is a single sector in which behavioral-economics and adverse-selection have major roles to play, it is education. Deciding to fund education via very long-term loan-finance and thus to leave the cost-benefit investment calculations to be undertaken by adolescents has been a disaster.

The twenty-first century will see longer life expectancy, and thus a greater role for pensions. Yet here in the United States the privatization of pensions via 401k(s) has been an equally great disaster.

The twenty-first century will see health-care spending as a share of total income cross 25% if not 33%. Enough said. Sooner or later some insurance plan is going to start saying that we do indeed cover cancer treatment as part of our essential health benefits—but we believe that the proper and state-of-the-art treatment for cancer is via aromatherapy.

The twenty-first century will see information goods a much larger part of the total pie than the twentieth. And if we know one thing, it is that it is not efficient to try to provide information goods via a competitive market for they are neither rival nor excludible. It makes no microeconomic sense at all for services like those provided by Google to be funded and incentivized by how much money can be raised not off of the value of the services but off of the fumes rising from Google’s ability to sell the eyeballs of the users to advertisers as an intermediate good.

Infrastructure and R&D. Enough said.

- And Paul Krugman follows up on the reason why government intervention is valuable due to predictable and well-documented gaps between individual decision-making and social goods.

- Of course, we're being told on far too many fronts that we have to put up with just the opposite - such as in Alberta where everybody short of the massive-donor class is facing cuts and cost increases. But Jeff MacLeod and James Sawler explain why austerity represents a path to ruin rather than development, while Stella Lord addresses the connection between government cuts and individual poverty.

- Finally, Duncan Cameron writes that the Cons have gone out of their way to turn Canada into an outlaw state. Frances Russell laments that the Cons have turned contempt of Parliament into the normal state of affairs in Canadian politics. And Antonia Maioni warns Australia against following in Stephen Harper's evidence-destroying footsteps by gutting their own census.