We wish Matt continued success and thank him for nearly three years of insightful blogging here at ThinkProgress.

In principle there should be shiny new Moneybox blog here come Monday. If that all goes horribly awry, I’ll be on my public twitter account come what may telling you where to find me.

If you think that Democrats aren’t left-wing enough, then the exact same analysis obtains. You have to beat them. On Election Day. At winning elections. Recruit a primary challenger to Dianne Feinstein. Elect a Green Party mayor of New York.

Another thing I would say is that while the economy is clearly the most enduring “fundamental” out there, people should separate the possibility that non-economic fundamentals matter from the existence of campaign effects. Look at, for example, 9/11. That clearly caused a huge spike in Bush’s approval ratings. I think we can infer that had a similar-scale terrorist attack occurred in the September immediately before a presidential election that it would have had a large impact. But this is still “fundamentals” rather than “campaign.”

I would characterize the difference between the views this way. Conventional political journalism tends to take the fundamentals — the state of the economy, and the ups and downs of world affairs — as in some sense “given.” We’re supposed to believe that the political outcomes are driven by what the candidates say about the outcomes. Like if George McGovern had just been better able to relate to the hippie-averse working class the voters would have overlooked the strong economic growth and declining rate of U.S. military deaths in Vietnam. My view is the reverse. That the major party nominees we’ve seen have all been reasonably skilled politicians who’ve already advanced to a senior level in American politics and been vetted by the other elites in their parties, and that they all run well-funded campaigns staffed by veteran political operatives. It’s precisely because the politicians and the campaign operatives are all skilled and hard-working that the fundamentals make the difference. If the Republicans nominate Michele Bachmann, she’ll lose regardless of the state of the economy which is why they won’t nominate Michele Bachmann. The problem is that we tend to look at candidates who were beaten by objectively bad circumstances, and read things into them. Under different circumstances, people would have written articles about how a Midwestern war hero turned Vietnam-critic like George McGovern was exactly the right guy to bridge the hippie/hardhat divide in the Democratic Party.

So nothing is “predictable” about the 2012 campaign but what’s unpredictable about it is that we don’t know what will happen between today and election day. It’s also quite possible that the fundamentals will give us a close election, in which case we’ll all be glad the candidates hired so many people to write speeches and cut ads. To say that the campaign operatives earn their wages at the margin isn’t to knock their work. The difference between winning and losing is a big deal.

Puzzlingly, the article poses this as a “vexing problem” rather than a win-win for blue collar construction workers, and white collar office drones alike. “How” they ask, “do you house those new workers in ways that are both affordable and don’t worsen the soul-crushing commutes that already plague the region’s residents?” In principle, this is easy. The DC area actually already went through the trouble of building a multi-line heavy rail subway network. There’s also the MARC commuter rail serving the Maryland suburbs and the VRE commuter rail serving the Virginia suburbs. I, personally, walk about 10 minutes to work and will probably just take the ~30 minute walk to my new job starting on Monday. Lots of people in DC bicycle or ride the bus. All we need to do is squeeze a lot of housing into those parts of the metro area that are walking distance from downtown, or for Metro/VRE/MARC stations. The only problem is that in order to do that, the buildings would need to be very tall and we’d need some kind of elevating device to get them from floor to floor.

More seriously, you see a great small example here of the very concrete economic problems that come with restrictions on tall buildings. There are lots of people around the country who’d like to come and work in DC’s vibrant service sector. And if we were building apartments for them to live in, not only would they have jobs, but so would the people working in our not-so-vibrant construction sector. We’ll see some of that, to be sure, but we’re also just going to see a lot of spiking rents as supply is restricted. I own a condo and will, personally, benefit from the increase in house prices. But the only way for me to realize those gains without leaving town would be to sell the place and then go live in an Occupy DC tent in McPherson Square. The losses to renters and the unemployed are quite real, in other words, while the gains to homeowners are hazy and illusory. But, you know, the views.

Via Joe Weisenthal, Jim Reid at Deutsche Bank says that if Angela Merkel won’t relent on ECB action to prevent the collapse of the European debt situation, you ought to “dig a hole in the ground and hide” as your best solution for avoiding economic catastrophe:

The problem for the market is whether to take these comments at face value or to see them as part of a general tactic of trying to force other leaders into line or believing that the comments will be reversed if the alternative to an aggressive ECB is the collapse of the Euro. If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide. It’s difficult to see any other scenario than widescale Sovereign defaults without an aggressive ECB. Indeed it doesn’t seem we’re alone on this anymore. An Irish Times story overnight said that Sarkozy told his deputies yesterday that the euro would not survive unless the ECB decisively entered the fray.

Here’s the problem. For a bluffing strategy to work, people need to believe it. But a bluff that’s credible to Italians should also be credible to Finns. And if you’re in Finland and you think Merkel’s not bluffing, then, notwithstanding Finland’s lack of unsound budget practices, it makes sense to start bailing on Finnish banks. The contagion knows no bounds. If everyone’s hiding in holes in the ground, then the economy’s going to collapse no matter what the budget deficit is.

This doesn’t, however, change the basic analysis. You can just imagine pushing it back one level. If consumers buy less coffee, Starbucks loses revenue, but its costs also fall. But if some people decide they want to drop ESPN, that doesn’t do anything to reduce ESPN’s cost structure. Some of the resulting losses will be allocated in the form of lower content production budgets, some will be less profits for ESPN’s owners, and some is going to wind up being higher prices for ESPN’s remaining customers. Most of these customers will be able to afford the higher fees thanks to all the money they “saved” dropping CNN. Meanwhile, CNN faces the same problem of reduced revenue and the same need to cut costs and raise prices. What ends up happening is that everyone is paying substantially higher per channel prices for somewhat lower-quality versions of the products. But each network now has a somewhat smaller audience since its lost marginal customers, and therefore its advertising rates go down which creates further losses. Now this isn’t a pure “everyone loses” scenario. If ESPN is genuinely the only channel you watch, then you’ll come out ahead in the new fragmented dystopia. But most people will be worse off.

Now don’t get me wrong, I ditched cable television a little while back! The companies have terrible customer service and are currently offering a poor value proposition. But rather than usher in the fake utopia of à la carte, I think new digital distribution models will eventually settle on giant bundles.

The thing about the corporate income tax, it seems to me, is that we should be leery of a tax that manages have such a high rate and yet raise so little revenue. If a tax isn’t raising much revenue, then it ought to be either that you have a very low rate or else that you’re taxing something trivial. Here in DC, they levy a five cent tax on plastic bags at the supermarket, and nobody is shocked to learn that this doesn’t raise much money. But if you’re leveling a 35 percent tax on corporate income, it ought to raise a lot of money. In fact, it raises very little because the corporate income tax code is shot through with loopholes and firms squeeze tons of activity into exempt activities. But this — the distortions — rather than the burdensomeness of handing over the money is what we should worry about. The corporate income tax induces a lot of tax-related lobbying and accounting and lawyering activities. Or consider that interest on debt is tax deductible, which encourages firms to finance through leverage rather than through equity. It’s the high rate which makes that subsidy so valuable. Or even the now-infamous accelerated depreciation schedule for corporate jets.

This is all bad stuff. We could gain lot by lowering these rates and making up the lost revenue. That could be a classic “lower rates, broader base” reform. It could be higher taxes on rich people. It could be taking grand ma’s Medicare away. The conventional wisdom is totally right about this. The problem, obviously, is that rich people don’t want to pay higher taxes and non-rich people don’t want grandma to lose her Medicare benefits. If the CEOs who wine about the corporate income tax were serious about it, they could start lobbying for the “replace it with higher taxes on rich guys like us” plan. But they prefer lower personal tax burdens and a less efficient economy.

The good people at the European Central Bank have a game on their website called €conomia that I would really encourage anyone who reports on economic policy to play around with for a while. The game embeds a number of assumptions I would disagree with, but that seem telling. Short-term interest rates are your only policy tool. And their view of the transmission mechanism seems to be that inflation in QN is jointly determined by the change in inflation rate between QN-1 and QN-2 and the level of real output growth in QN-1. But a change in interest rates affects output immediately. So if the inflation rate is rising, whether because of demand-side or supply-side factors, the only way to prevent it from spiraling out of control is to raise rates enough to reduce real output. If inflation is plugging along at your target level, then bad weather causes crop failures and food prices go up and output goes down, you need to raise interest rates. If you don’t raise rates, then what happens is that inflation momentum pushes inflation up further in the next quarter and then the hit to output fades away which further increases inflation. Then since there’s even more inflation built into the system, you need to undertake a bigger rate hike down the road to drive output growth down enough to get inflation under control.

Long story short, the only responsible thing to do is to prophylactically raise rates in the face of adverse supply shocks. It shouldn’t stun us that this is what the game says, since it’s how the ECB behaves in practice. But the consequences have been disastrous in practice and I’m not sure what theoretical support they think they have for this view of how the world works.

The other thing, of course, is that they grade you on the basis of a pure inflation targeting regime asymmetrically centered at 2 percent. I played a round in which inflation averaged -0.25% and we had a continent-wide depression in which output fell for twelve straight quarters. They gave me 2 stars out of four. I also ran a game in which inflation average 4.16% and we had zero quarters of recession. They gave me zero stars even though in the higher inflation scenario I was closer to the 2% target!

That’s the ECB’s view of the world. Output doesn’t matter. Unemployment doesn’t matter. Having inflation close to 2 percent matters a little. But it matters more to be below 2% than to be close to the target. If forced to choose between full employment and 4.16% inflation and a years-long deflationary recession, choose the recession.

I was being a bit contrarian about an aspect of this on Twitter the other day, but obviously it’s insane to declare that your average slice of public school pizza meets healthy eating standards for high nutrition. Everyone understands that. Sometimes public policy goes awry because of good faith disagreement about the issues, but there’s no serious disagreement about whether “feed kids more pizza” is a valid way to improve the nutritional content of school lunch. Read Michele Simon on the gory details of the ferocious lobbying that led to this outcome. Compare that to the story of Finland’s 1999 school lunch reform, which basically took the form of well-qualified people giving parliament a few options reasonable options and then parliament picking one whose budgetary costs they were comfortable with.

This contrast tells us a lot about America. It has a lot of lessons to teach. Most notably, it reminds us that provision of public services in this country tends not to work very well and also that low-quality provision is not inevitable. But all too often in the United States we have programs that are too dominated by the interests of the service providers. And all too often in the United States we have partisans responding to these controversies thanks to arbitrary facts about the organizational structure of the service providers. So we’ll argue about “unions” or “agribusiness” or “for-profit colleges” without seeing the underlying common structure of the problem.

A government that works well is a really valuable thing to have. It can give you reasonable nourished, healthy kids who learn a lot in school. It can give you safe streets and reasonable commuting times. It can prevent banking panics. There’s more to life than that stuff, but it’s not nothing. But you have to fight to make it work.

Brad Plumer did an excellent post earlier this week calling bullshit on ECB claims that it would be illegal for them to step up to the plate and provide relief in the European debt crisis. In a speech delivered early this morning in Frankfurt, ECB Chief Mario Draghi took another stab at explaining himself. His view is that if the ECB stepped in to offer relief, that might undermine its credibility as an inflation-fighter over the long term. “Losing credibility can happen quickly,” he warned, “and history shows that regaining it has huge economic and social costs.”

I’m running out of analogies to explain how frustrating I find this logic. So let’s just be frank. What is it that Draghi thinks is happening now? Is Ireland enjoying a walk in the park? Have the past 12 months been party time for Greece and Spain and Portugal? Another year of this kind of suffering is baked into the cake for those four countries. If Italy tips into a Spain-esque depression, wouldn’t that have huge economic and social costs? Aren’t there costs to prolonging the Spanish depression? Or think about plucky little Ireland and Estonia, winning praise from bureaucrats everywhere for their imposition of internal devaluation, aren’t they going to smacked with a sledgehammer if things go to shit? And what about France?

Now I don’t want to be alarmist, but let’s talk a bit about credibility. Suppose there’s a prolonged, continent-wide depression. Suppose the European Union and its institutions lose all credibility as a force for human welfare. Suppose the mainstream political parties in every European country lose all credibility as vehicles for popular aspiration. How does that story end? Don’t we already know? Didn’t we build these institutions for a reason? I think they were built for a reason. A reason that had something to do with huge economic and social costs. But it wasn’t fear of the Harmonized Index of Consumer Prices increasing at a four percent annual rate.

That’s not because Germans are lazy, it’s because German workers are productive and the gap is growing. When workers get more productive, they consume more goods and services, but they also work less. And most of all, productivity and “hard work” are not the same thing. Vietnamese rice farmers have abysmal labor productivity, but they’re working very hard. In general, workers in high-productivity northern European countries (Netherlands, Denmark, etc.) work less, not more, than their southerly neighbors.

— “The End” by Best Coast.

— “The End” by Kings of Leon.

— “The End” by The Doors.

— “The End” by Pearl Jam.

— “The End” by Ryan Adams.

In other news, this is my last day here with the ThinkProgress team and the larger CAP/CAPAF family. I hope folks will keep reading me at Slate and keep up with all the very fine work that the growing team of reporters is working on here. More posts today, and more details about where to find me next week coming later.

If you’d heard about two different people, one of them a rich guy who investment a few million dollars in Pixar in the mid-to-late ’80s and handled the big picture dealmaking with Disney without playing a substantial role in the company’s movies and the other Steve Jobs who brought us the Apple II, the Macintosh, the iPod, the iPhone, and the iPad, you’d think it was ridiculous that the Pixar angel investor made more money than the genius consumer electronics designer. This would probably count as an example of how weird it is that the economy seems to do more to reward people who just shuffle money around than people who invent and create stuff. The fact that they’re actually the same guy makes the life story more interesting, but doesn’t actually change the main point. Inventing successful products is lucrative. Spearheading a successful corporate turnaround is lucrative. But in strict financial terms, it really doesn’t compare to well-timed investment decisions. And yet we all know that the ratio of skill-to-luck involved in industrial design is much higher than in investment timing.

Metaphors are important to how people think about the world, so I think it’s worth discussing them explicitly. Many people, I think, view the relationship between a central bank and a parliament as like a canoe. You’re both paddling the thing in tandem. And if the boat’s not getting to where you want it to go, the sensible question is to ask who’s not paddling hard enough. If you have more inflation than real output, then you need parliament to paddle more. But if prices are dipping into scary deflation territory, then maybe the central bank has to step up.

A different way of thinking about it would be a sailboat. The central bank is blowing the wind, and the parliament has its hand on the steering wheel. The wind strength determines, in nominal terms, how far the ship goes. The steering determines whether that nominal distance gets you closer to where you’re trying to go in terms of living standards. As long as some wind is blowing, it’s true that better steering will shorten your trip. And it’s certainly true that harder wind isn’t going to compensate for the ship pointing in the wrong direction. But at the same time, even a really well-steered ship isn’t going to go anywhere without wind in its sails. If you’re becalmed, you’re becalmed and getting lectures about how your previous navigation was less than ideal doesn’t change anything. It’s true that you can always hope the ocean currents push you in a favorable direction, and that it would be advisable to have the rudder in the right position to take advantage of good luck, but fundamentally you need wind. By the same token, if the ship’s going in the wrong direction what you really need is to turn the ship around, not less wind. At the same time, if the wind goes too strong, you could dangerously overburden your navigators.

People, I believe, intuit that the STEM fields are good majors. But I think that’s not just, or even primarily, because of their intrinsic merits. The fact that these programs are hard and the people in them tend to spend a lot of time studying is an important part of the story. By contrast, majoring in “business” sounds very practical-minded to a lot of people. After all, how could a business degree not be more valuable than some nonsense like philosophy? That’s one of the reasons why it’s become the most popular major by far. But business majors aren’t actually doing anything! Not surprisingly, in exchange for doing less work than people in other majors, business majors also learn less.

None of that’s to say that there’s anything wrong with business (or education) as a subject to study. But a good starting point for colleges across the country would be to say that if they have degree-granting programs that don’t seem to require the students to do any work, they’re probably doing something wrong. Meanwhile, I worry that in some respects we’re probably undershooting arts/humanities education as a country. For people who are good at it, the ability to create objects of aesthetic merit is incredibly valuable and this is a domain where we show no little sign of making progress with automation.

One of the biggest mistakes people make in thinking about politics is overlooking this kind of thing. People have very strong and largely fixed views about the political parties and their major leaders. When a partisan politicians starts talking about something loudly, he doesn’t really persuade anyone. If people pay attention at all, what happens is that he causes opinion to become organized along the main axis of partisan conflict the way you can use a magnet to make all the iron filings line up in a certain way. If there’s an issue you’d like to see progress on, your best hope by far is for two relatively obscure members of congress from opposite sides to reach an agreement, then persuade a bunch of their colleagues, and then unveil the proposal as a big bipartisan initiative. People love bipartisanship.

I share Erik Loomis’ skepticism that we should attribute an important social role to Twitter or other information technology in driving or facilitating the Occupy Wall Street protests. The issue here seems to me to be the same as with efforts to draw a causal link between social media and anti-authoritarian movements abroad — the reasoning is backwards.

Think about something banal. A dinner party. If I were to organize a dinner party, I would invite people by email and they would RSVP by email. My friends would all do it the same way. So an alien might look at all these dinner parties and conclude that email was the key party-enabling technology. Thanks to email, people can gather and socialize! But that’s wrong. Before email, people just used earlier technologies to do the same thing. We use email because email exists and it’s easier. But do we have more and better dinner parties in 2011 than we had in 1991? Maybe we do. After all, they’re easier to organize. On the other hand, email also makes it easier to organize meetings at work. It makes it easier to bug employees after hours. It makes it easier to organize a revolution. It makes it easier to gossip with your buddy who still lives in Boston. But it’s doubtful that you actually do more of everything. There are still only 24 hours in a day. You still need to sleep. And you need to get to the gym after eating all that food at the dinner party. To figure out what’s going on, you need to actually examine how people are using their time and not just observe that the Internet facilitates all kinds of different things. As I recall, 20 years ago we had a lot of anti-authoritarian mass movements in the Soviet Bloc even without Facebook.

I offered my complaint about Erik Brynjolfsson and Andrew McAffee Race Against The Machine yesterday, but I also want to praise one extremely important insight in the book that really changed my way of thinking about something. This is what they call “the back half of the chessboard” and they derive it from an old story about a Persian king who makes a deal in which he promises to pay someone as follows. On the first day, one grain of rice is placed on one square of a chessboard. On the second day, two grains go in the second square. On the third day, four grains go in the third square. On the forth day, it’s eight grains in the forth square. The king agrees, and of course it turns out that 2^64 grains of rice bankrupts the kingdom. But the point about the back of the chessboard is that even though the mathematical pattern is evident throughout the process, the actual impact is amazingly backloaded.

The point of this, in terms of technological progress, is that we’ve gotten so accustomed to Moore’s Law that we sometimes overlook the implication that the deeper we get into the chessboard, the bigger the changes. We all know that computers advanced a lot between 1991 and 2011, but we should expect the scale of change over the next 20 years to dwarf those changes. This is a straightforward application of a well-known principle and some pretty basic math, but it’s usually not discussed in quite the right way. We think we’re used to the idea of rapid improvements in information technology, but we’re actually standing on the precipice of changes that are much larger in scale than what we’ve seen thus far.

He attributes this to “[d]ownward nominal rigidity — the great difficulty of actually cutting wages and many prices.” I agree that this is an important factor. But I think an equally important role is being played by the Federal Reserve’s meandering behavior. As Krugman has shown elsewhere, monetary policy near the zero bound is all about expectations and credibility. What I think’s happened is that with Ben “Making Sure ‘It’ Doesn’t Happen Here” Bernanke at the helm, the Fed has successfully embedded the expectation of non-deflation. People (or at least the people who matter) know that the Fed will push the panic button and show Rooseveltian resolve to set things aright. But contrary to what I would have expected three years ago, he’s shown no inclination to reach into the Helicopter Ben toolkit to actively reflate a depressed economy that’s not teetering on the brink of a deflationary spiral. So we kind of bounce along, with no new disasters really striking after the terrible winter of 2008-2009 but no catchup and real recovery either.