Brad DeLong on Bloomberg Surveillance with Tom Keene and Bill Janeway: Wednesday 4:15 AM PDT

Bloomberg Surveillance: Wednesday 4:15 AM PDT: LIVE on TV with Tom Keene and Bill Janeway:

1. What does the 2008 global financial crisis tell us about innovation and digital tech in financial sector? What lessons have you gleaned? That our private sector financial institutions really lousy job at risk management. And this is horrible because if there is one factor of production in desperately short supply right now, it is risk-bearing capacity. The potential risk-bearing capacity of our economy is enormous, but private financial markets managed to mobilize very little of that.

2. How should we be calculating GDP, employment and productivity? Differently than we do now! We really are moving away from the rival-and-excludible-commodity paradigm. Yet we have a measure of economic welfare–GDP–that relies extremely heavily upon that paradigm

3. How should DC communicate with Wall Street & Silicon Valley? I do not think that DC needs to communicate or be thinking about communicating with Wall Street and Silicon Valley. I think Main Street, Silicon Valley, and Wall Street need to effectively communicate their displeasure to DC instead.

   The fact the Bush administration took the deficit reduction work of the Clinton administration and gleefully smashed it on the floor should have provoked enormous displeasure with DC from all three. But what we have here is a failure to communicate. Consider that Barack Obama has put forward George H.W. Bush’s tax policy, second-term Ronald Reagan’s foreign policy, Mitt Romney’s health-care policy, John McCain’s climate-change policy, and Bill Clinton spending-growth policy, and yet is still denounced by Republicans everyday as the radical left-wing Kenyan Muslim Socialist. Enormous displeasure at this should be expressed everyday by Main Street, Wall Street, and Silicon Valley. Yet it is not.

   Plus the Republican establishment in Red States really need to be expressing their enormous displeasure with their statehouses. Their statehouse politicians decided that even though Obamacare implementation–Medicaid expansion, Marketplace competition, the subsidy pool for the working poor to purchase insurance–is working between excellent and so-so in Blue States, they from their Red-State statehouses are going to try to break its implementation in their states. Why? in the hope of gaining some electoral advantage. At what price? At the price of doing a remarkable job to impoverish their constituents. “Political malpractice” and “awesome in its evilness” was how Jon Gruber was characterizing this last week…

4. Thoughts on the digitization of global economy. That we economists haven’t thought through the issues around radical relative price changes/real income/relative income/relative wealth…

5. Are bubbles necessary? No. They may be inescapable, but they are not necessary. But we can hope for systems of surveillance good enough so that central bankers and finance ministers can determine where the punchbowl is, and then brave enough to take it away. And some bubbles may be useful. Cf. Stiglitz on dot-coms…

6. What matters most to you right now? Trying to be one of Larry Summers’s wingmen as he continues what is now the fifth year of his crusade for expansionary fiscal policy via an infrastructure bank. He’s right. Yet his arguments are getting much too little traction everywhere…