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Must-Read Op-Eds for Monday, May 14, 2012

WHY WE REGULATEPAUL KRUGMAN NEW YORK TIMESJust to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they

WHY WE REGULATEPAUL KRUGMAN NEW YORK TIMESJust to be clear, businessmen are human — although the lords of finance have a tendency to forget that — and they make money-losing mistakes all the time. That in itself is no reason for the government to get involved. But banks are special, because the risks they take are borne, in large part, by taxpayers and the economy as a whole. And what JPMorgan has just demonstrated is that even supposedly smart bankers must be sharply limited in the kinds of risk they’re allowed to take on. ... I expect Wall Street to be back to its usual arrogance within weeks if not days. But the truth is that we’ve just seen an object demonstration of why Wall Street does, in fact, need to be regulated. Thank you, Mr. Dimon.IS THERE A ROMNEY DOCTRINE?DAVID SANGER NEW YORK TIMESThe economic sanctions Mr. Obama has imposed have been far more crippling to the Iranian economy than anything President Bush did between the public revelation of Iran’s nuclear enrichment facilities in 2003 and the end of Mr. Bush’s term in early 2009. Covert action has been stepped up, too. Mr. Bolton has called efforts to negotiate with Iran “delusional,” but other advisers — mostly those who dealt with the issue during the Bush administration — say they are a critical step in holding together the European allies and, if conflict looms, proving to Russia and China that every effort was made to come to a peaceful resolution.

THE HUMAN DISASTER OF UNEMPLOYMENTDEAN BAKER AND KEVIN HASSETTNEW YORK TIMESIt seems clear that neither political party was prepared to deal with the crisis of long-term unemployment. In spite of the severity of the downturn, there was a general expectation that the economy would bounce back, as it had after previous downturns. Some countries that were more familiar with long-term unemployment, notably Germany, were much better prepared to deal with the fallout from the crisis. …[I]nstead of workers’ being laid off and receiving unemployment benefits, the German government helped companies keep employees, working fewer hours, on their payrolls by subsidizing their wages with the money saved on unemployment benefits.  Thankfully, there is some effort to learn from this model. The recent bill that extended the payroll tax cut included a provision that covered the cost of work-sharing programs in the 23 states that already had them as part of their unemployment insurance systems, and it helped other states start such programs. ...From now on, the first line of defense during a recession should be to expand work sharing rather than simply extend unemployment benefits.SEEKING ORIGINAL BLISSMAUREEN DOWDNEW YORK TIMES[Obama's] embrace of gay marriage was not a profile in courage. It was good, better than continued “evolving,” but not particularly brave. ... Who knows how long he might have kept evolving, while his advisers gamed it out, if Joe Biden, Arne Duncan and Shaun Donovan hadn’t forced his hand by speaking out in such an unabashed way in support of same-sex marriage. ... In the end, Obama had to rip off the Band-Aid and take a stand, because if his campaign depends on painting Romney as a bundle of ambiguous beliefs, the first black president can’t be ambiguous himself on a civil rights issue. A WEEK OF DISTRACTIONSKATHLEEN PARKERWASHINGTON POSTYes, Obama’s statement carries symbolic weight, but it changes nothing. In fact, by also saying he thinks the issue should remain with the states, he is both taking a conservative, states’-rights position and passing the constitutional buck. As commentator Joe Scarborough pointed out, if the president believes that equal marriage rights are constitutionally protected, then he has a duty to fight for those rights rather than hand off the issue to the states. Gay men and lesbians won’t fare well on that frontier given that 30 states already have passed prohibitive amendments to their state constitutions.  Thus, Obama’s announcement, while political and pragmatic, was fundamentally meaningless.THE DIMON PRINCIPLEEDITORIALWALL STREET JOURNALEmployees at J.P. Morgan may think that CEO Jamie Dimon's primary rule is to minimize risk. But Washington politicians now have their own Dimon Principle: Use mistakes at a bank run by an admired CEO to expand government control over financial markets. If this impulse were being translated into reduced taxpayer exposure to Wall Street trading, it would be cause for cheer. But the events of the past week demonstrate why taxpayers are still a long way from enjoying real reform. ... One tragedy of J.P. Morgan's trading loss is that it will become an excuse to give regulators even more power, when what taxpayers really want is a system that ends too-big-to-fail banks, not a plan to revive them.WE NEED A DOLLAR AS GOOD AS GOLDHERMAN CAINWALL STREET JOURNALThe political establishment will fight this idea viciously, because gold convertibility strips them of power and places the trump card over monetary policy with the people. ... The debate over sound money has moved from whether we need it to how we get there. The pieces are moving in the right direction, and we have an opportunity to make the dollar once again as good as gold. Limiting Washington's power is a winner. Restoring prosperity is unifying. Joining forces behind bold solutions—engaging both gears of sound economic policy—will restore prosperity for generations to come.