March 01, 2003
Cranks and Charlatans
Our Australian Cousin John Quiggin is bemused as he watches the cranks and charlatans attack CEA-Chair designate Greg Mankiw:
John Quiggin: Jason Soon points to this piece of silliness by Stephen Moore of the National Review. Moore doesn't like Greg Mankiw because he once wrote that Reagan-era supply-side economists were "charlatans and cranks".... I'll just concentrate on Moore's proposed alternatives [to Mankiw]. He writes
The good news is there are a multitude of brilliant supply-side academics who would be superb chief economists at the White House. I am thinking of talented people like Brian Wesbury of Chicago, Richard Vedder of Ohio University, and David Malpass of Bear Stearns.
It seemed a bit odd to describe someone working on Wall Street as an academic, but of course lots of academics have been lured there in recent years. And while I'd never heard of any of these guys, Chicago is one of the top economics departments in the US (or the world, for that matter) and Ohio State is certainly respectable. But why not say "University of Chicago" and "Ohio State University."
A short Google search reveals all. Not only is David Malpass not an academic, he doesn't hold an economics qualification of any kind (he has an undergraduate physics degree and an MBA), though this hasn't stopped him becoming chief economist at Bear Stearns. Wesbury is "Brian Wesbury of Chicago" in the same sense as millions of other people - he works for a bank in Chicago - but at least his undergraduate degree is in economics. Richard Vedder is a genuine but obscure academic [not at Ohio State but at] ...Ohio University...
So why does this guy Stephen Moore try to make the readers of National Review think that David Wesbury teaches at the University of Chicago (for that's what saying that an "academic" is "of Chicago" means)? Why, in fact, does Stephen Moore try to make the readers of National Review think that David Malpass is an academic? Clearly the hope is that the casual readers will leave thinking in choosing ideologically-unsound Greg Mankiw those idiots in the Bush White House passed over well-qualified University of Chicago Professors, and that in choosing ideologically-unsound Greg Mankiw those idiots in the Bush White House passed over brilliant supply-side academics. There is mendacity here, a peculiar kind that is cloaked in its own feebleness and transparency: you can hear Stephen Moore whine, "But I didn't say David Wesbury taught at the University of Chicago, I only said that he was an 'academic' and was 'of Chicago'."
What is going on here? Why is Stephen Moore doing this? Why is National Review publishing it?
One of my very worst book-purchase investments is looking me in the face from the fourth middle shelf right now: a yellow-covered book called It's Getting Better All the Time: 100 Greatest Trends of the Last Hundred Years (Washington, D.C.: Cato Institute). I bought it because I saw the late Julian Simon's name on the cover: it is "co-authored" by Julian Simon and Stephen Moore--although I cannot believe that Julian Simon had much to do with the manuscript. It is a very, very bad book.
It is a not very bad book because its thesis is wrong--I agree with the thesis, which is that in almost every respect things are a lot better today than they were 100 years ago. It is a very bad book because I cannot trust a word, a paragraph in it. Every time I read a sentence, everty time I read a page, I have to step back and think, "Is this yet another place where Stephen Moore is trying to make me into a fool?"
Last year I opened it at random, and found myself on pages 58-59:
- Pages 58-59: Moore is telling us the extent of economic growth over the past century. He tells us that total GDP is "the broadest measure of a nation's overall economic performance" and that it has multiplied more than twentyfold over the past century. But is total GDP a good measure of overall economic performance? No. A country where population quadrupled and living standards halved would see its total GDP double. A much better measure of total economic performance is GDP per capita, which tells us much, much more about living standards and productivity levels. GDP per capita has multiplied more than sixfold over the century: economic growth has been very impressive. But, Moore seems to think, why tell my readers about the more than sixfold amplification of the right measure of prosperity when I can tell them about the more than twentyfold amplification of another (but wrong) measure?
- Pages 60-61: nothing wrong here...
- Pages 62-63: Very strange. There is a "graph" of median family income year-by-year since 1947. But the graph plots no median family income series I have ever seen before. Certainly it is not the case that the years 1989-1994 are the only years since 1947 in which median family income has declined...
- Pages 64-65: Oh, this is an absolute beauty! "The Millionaire Next Door... less than 5000 Americans, or less than 0.1 percent of households, were millionaires in 1900.... Today there are almost 8 million millionaire households in the United States [or 7.7% of households." The problem is that a dollar back in 1900 had about 20 times the purchasing power of a dollar today. If you want to answer the question "How many people today are as wealthy as a 1900-millionaire?" you need to look at the people today with wealth more than $20 million--about 0.4% of households.
Now it's not that Moore is confused about the statistics: he knows the difference between nominal dollar amounts and inflation-adjusted real income and wealth figures as well as I do. It's just that he would rather give you the (phony) number that an American today is 77 times more likely than an American in 1900 to be a "millionaire" than the (real) number that an American today is 5 times more likely than an American in 1900 to have the purchasing power of a 1900-era-millionaire. He wants to confuse you: to leave you with a false and exaggerated picture of the pace of economic growth.
Note that in all four of these cases starting on pages 58-59 the basic point Moore wants to make is true: America is much richer and there are many more millionaires now than in 1900, median family income has risen steeply over time, the U.S. edge over other countries in productivity has grown, and American economic growth in the twentieth century has been amazing and remarkable. He can tell his story, and he can tell it straight and strong, without resorting to false, erroneous, or misleading calculations at all. But only one of the four examples headlines the right numbers. Moore simply cannot resist painting the lily, cannot resist making things "clearer than truth," regards as a victory each casual reader whom he can make think that economic growth has been even faster than it has been. The result is that I cannot believe--and you should not believe--a single word he writes without carefully, carefully checking it.
And that's what's going on here, today, in the passage quoted by John Quiggen. True, Moore loses credibility among those who know enough to find it strange that David Malpass is called an "academic" and find it strange that David Wesbury is assigned by implication to the University of Chicago teaching faculty. But from Moore's perspective, perhaps it looks like a win-win proposition: there are casual readers of National Review who now think that in choosing ideologically-unsound Greg Mankiw those idiots in the Bush White House passed over well-qualified University of Chicago Professors, and that in choosing ideologically-unsound Greg Mankiw those idiots in the Bush White House passed over brilliant supply-side academics. In shifting the climate of opinion among National Review readers, Stephen Moore has accomplished his mission: he has punished the Bush White House for choosing Greg Mankiw to head the CEA.
And what's the downside for Stephen Moore? None. The fact that Moore has zero credibility with people like me, like John Quiggen, like Greg Mankiw, and Greg's patrons like Dale Jorgenson, Ben Friedman, Robert Barro, Marty Feldstein, et cetera is, from Moore's perspective, not a minus. Reporters will continue to call him for quotes. Cato and Heritage will continue to give him and people like him places to perch and utter their soundbites. And the National Review will continue to publish his stuff.
Posted by DeLong at March 1, 2003 08:10 AM
Of course in the world of journalism, Moore's name is invariably asterisked and referenced with "partisan supply-side think tank fellow". The trouble comes in that, to journalists, everyone commenting upon the subject has a similar asterisk. They think that everyone has an agenda as naked as Moore and the Club For Growth, that everyone treats data in such a cavalier manner, and if they just print "both sides of the issue", then that's fair enough.
You are right about that paragraph in Moore's column. At best, it is seriously misleading. But you insist that Moore is being dishonest, not simply mistaken. Then I would ask two things. First, Moore identifies David Malpass as being at Bear Stearns, which is clearly not a university. If Moore wanted to intentionally mislead, why not say "David Malpass of New York", which at least might imply that Malpass was at NYU? Why flat out say "Bear Stearns"? Second, why are you silent about Quiggin's blatantly false accusation against Moore? Quiggin accuses Moore of saying that Richard Vedder is at Ohio State University instead of Ohio University, when Moore never mentioned Ohio State. If Quiggin is lying, why do you not call him on it? (Are you being dishonest here?) Or do you think Quiggin is merely mistaken? In which case, on what grounds do you conclude Quiggin is merely mistaken, whereas Moore is dishonest? Is it because Quiggin is an ideological soulmate and Moore is a ideological opponent? (Again, are you being dishonest here?)
For the record, I think Moore got very sloppy. I think that Quiggin got careless, because based in Australia, he never heard of Ohio University, and so just assumed Moore was talking about Ohio State, and let his ideology get the better of him. And I think you let your intense dislike of Moore lead you into very sloppy reading of Moore's column and Quiggin's attack. Academics ought to remember that throwing around charges of dishonesty can be a very dangerous game to play.
>>For the record, I think Moore got very sloppy.<<
No he didn't. He wants his readers to think that David Wesbury is a Chicago economist and that David Malpass is a brilliant supply-side academic, both of whom were passed over by the idiot Bush White House in its rush to choose the ideologically-unsound Greg Mankiw.
You're assuming that Stephen Moore is dumb and rhetorically unsophisticated. He's not dumb. He's not rhetorically unsophisticated.
I agree with William Sjostrom that the part about assuming that causal readers would confuse Ohio University with Ohio State University is speculative at best. The "Chicago" part is more compelling. (No one calls New York University "New York," so "David Malpass of New York" would not be an improvement over "David Malpass of Bear Stearns.") Still, we could perhaps forgive Moore (or his editor) for not wanting to write "Griffin, Kubik, Stephens & Thompson" (Wesbury's bank in Chicago).
But "brilliant supply-side academics"? C'mon.
As is clearer in the original (q.v.), part of Quiggin's point is that if you have to go as low on the academic food chain as Ohio University -- which has some fine scholars, but is (like my own) no one's idea of a first-tier research school -- to find a "brilliant academic" economist with the right ideology, it's a stretch to claim academic support for the ideology at all. "If Moore were arguing honestly, instead of claiming the support of 'a multitude of brilliant supply-side academics', he'd argue that the wisdom of practical business people should be preferred to academic theories."
We can quibble on the details, but I'm with Brad, especially after those juicy excerpts from the Simon and Moore book. In my experience, folks who exhibit this degree of "sloppiness" don't care much about the facts. People who care about ideas value honest disagreement, and are ticked off by folks who repeatedly butcher the truth. Whether the crime is mass "murder one" or serial involuntary manslaughter doesn't much matter: you'll tell your friends and colleagues to stay far away from the perp.
Stephen Moore's sloppy mendacity or mendacious sloppiness may have been a trait acquired from his Club of Growth partisan hack colleague, Larry Kudlow of CNBC, also a noted academic.
I often throw my half finished beer at the T.V. screen every time (every show) Kudlow attributes stock market rallies (even intraday) to any Bush utterance on war and/or tax cuts or to his own latest proposal to send 300 crack troops to Venezuela to overthrow their government. Stock market declines are, of course, the direct result of any form of clintonian actions to praise or strengthen our government.
So, in the Moore-Kudlow spirit, I offer this insinuation in the form of a question. Why do these two events at the very least coincide, or better, follow each other, with the latter the result of the former: the announcement of Bush's tax cut platform in March/April 2000....... and the very tippy top in March/April 2000 of the greatest equity bull market in history and the subsequent most severe bear market since 1973 or 1929-32, depending on which index we use?
Now, in the further spirit of Moore-Kudlow, I'll leave this partisan insinuation hanging while I go check my facts on this.
The Ohio State, New York, Chicago debate seems a minor detail when compared to Mr Moore's claim of
". . .the Reagan economic policies that created an 18-year expansion and a $16 trillion increase in wealth." This seems a little high by a few trillion dollars. It would be interesting to know how he came up with that figure, and if they indeed were a result of Reagan policies.
I was under the impression that supply-siders were disgraced not only among economists but in the public in general. Meanwhile, I just saw in the Joinjt Economics Committee Sen. Bob Bennett (R-UT) say that he "he's not sure he agrees" with Henry Aaron that decreasing the corporate income tax decreases revenues. Perhaps he's saying something about the details of the tax itself, but I think he's admitting that he's a proud supply sider. If they were disgraced before Bush came to office (were they?), how do you do it again?
Krugman has a column on his (old, MIT) website about this (http://web.mit.edu/krugman/www/virus.html).
The money quote: "So why does the supply-side idea keep on resurfacing? Probably because of two key attributes that it shares with certain other doctrines, like belief in the gold standard: It appeals to the prejudices of extremely rich men, and it offers self-esteem to the intellectually insecure."
Sorry - people will have to manually trim the ')'.
Is it fair to argue that there is a place for the supply-side argument in the world. For example, in the 1970's with high rates of taxes, interest, and inflation there was a squeeze on the "supply side". This lead to an argument that the costs of investment should be reduced.
Now, in 2003, with lower taxes, interest, and inflation the cost of investment is greatly reduced relatively speaking. Now, a demand-side economics model is more necessary to stimulate the economy. The problem is, because politics require ideologies there is no room to adjust the model just because the economic circumstances have changed. In other words, supply-side economics may have been necessary in 1980, but not in 2003.
Update! According to Kieran Healy (and confirmed by going to NRO) Moore's piece has removed the word 'academic' from the offending sentence with no acknowledgment that a correction was being made. Not that the piece makes any more sense now!