Brad DeLong's Semi-Daily Journal: A Weblog

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Maybe the right is now laying the groundwork for a big ratcheting up of the printing presses sometime in a 2nd Dubya administration to pay off all the debt..they'll very much need people to care intrinsically about pieces of paper when that happens.

Unbelievable. Even for them. I shouldn't be posting, because I'm speechless.
This has become a philosophical issue. Anything which "serves the liberal agenda" has been expelled from their ontology. It's the only explanation.

Luskin sure seems to have a lucrative little racket going for himself over there, doesn't he?

It would interesting to try to reconcile this view with that of other rightwing cranks who write passages such as Krugman quotes:

"First let us get our accounting unit squared away. To measure anything in the floating paper dollar will get us nowhere. We must convert all wealth into the measure employed by mankind for 6,000 years, i.e., ounces of gold. On this measure, the Dow Jones industrial average of 6,000 today is only 60 percent of the DJIA of 30 years ago, when it hit 1,000. Back then, gold was $35 per ounce. Today it is $380-plus. This is another way of saying that in the last 30 years, the people who owned America have lost 40 percent of their wealth held in the form of equity. ... If you owned no part of corporate America 30 years ago, because you were poor, you lost nothing. If you owned lots of it, you lost your shirt in the general inflation."

http://www.pkarchive.org/cranks/goldbug.html

there's a need to work up a deflation index that tracks the collapse of NR quality. With William F Buckley circa late 50s early 60s indexed at 100, where are we now?

The NRO is Shrill??

-100 and falling quickly

I think you ascribe to ignorance what is rightfully malice.

Luskin knows his statements are wrong - he's lying, for lack of a better phrase - but the truth is an inconvenient fiction in the service of his agenda.

Heh. You get such a kick out this stuff, Prof. I love it.

Think of Lysenkoist biology, or creation science ^H^H^H^H^H^H Intelligent Design.

Why would I think of intelligent design after reading Luskin?

Matthew Yglesias found the perfect twist to this: "Carter Vindicated" - as nominal GDP rose a lot during his tenure. Pandagon a few days ago went after some Bruce Bartlett oped for trying to claim median income was up. Part of the issue was the timing (1980 to 2003 v. 1999 to 2003) but one of Bruce's complaint about some other NYTimes piece was its use of REAL income. What's up with the Bartlett-Luskin admiration of nominal income increases?

NEWS FLASH: all those folks in 1920's Germany with the wheelbarrows full of money were billionaires, every last one of them!

This is almost better than the idiot who claimed that slavery was better than income taxes, because some slaves could get freed, but nobody is ever free of income taxes... remember that wacko?

NEWS FLASH: all those folks in 1920's Germany with the wheelbarrows full of money were billionaires, every last one of them!

This is almost better than the idiot who claimed that slavery was better than income taxes, because some slaves could get freed, but nobody is ever free of income taxes... remember that wacko?

The argument for ignorance over malice here is that these guys learned their economics from the Austrians who like to explain that index numbers are incoherent because they do not measure, e.g., changes in quality, improvements of technology, changes in taste, changes in spending allocations when prices rise unevenly.

These arguments are not nutty, although Germans in 1923 were still poor.

So we should regard the hyperinflation in Germany in the 1920s which France's and Belgium's occupation of the Rhineland as an economic Golden Age. Think of the tremendous income growth enjoyed by ordinary Germans.

Aren't these the same people who insist that the Bush deficits are not worrisome because as a percent of the economy theyhey are less than the height reached during the Reagan administration even though in nominal terms they are at record levels?

And aren't these the same people who insist that the real, i.e. inflation-adjusted, price of oil is not a problem because it is less than the price in the 1970s?

In other words, are these the people who use inflatin adjustments when it serves their peurposes but not when it doesn't?

Buce,

The arguments weren't nutty, but now they are. Many US price indices now do take changes in quality and substitution among goods and services into account.

This is no example of a poor press corps, nor is this is am example of a thoroughly biased press corps. The National Review can not even claim to be conservative, for such articles are false. Rather the National Review is an off-shoot of the Republican Party and what they write has only the objective of supporting Republican policy.

The more you think about this, you more you have to realize that it is outrageous almost beyond belief. It is the print equivalent of what some Bush supporters did by doctoring the picture of Kerry to make it look like he was next to Jane Fonda.

This should not be allowed to go unpunished. I suggest we make sure that the CJR knows about it and that media reporters like Howard Kurtz at the Washington Post get the story. After all, isn't this what the Bush folks would do if something analogous were published in a Democrat-leaning magazine?

Franken had a guest on today, an old friend of his who happens to be a longstanding dittohead.

If I can summarize his friend's position: "It's okay that Rush and Bush lie sometimes because on the whole they have it right."

From my own experience, this is the dominant viewpoint in the right wing today.

Do we want a measure of nominal income--not adjusted for inflation--that tells us that everyone's income is twice as big and that the economy is twice as prosperous as it was?

I could see some idiot republicans going for this. The same ones that believe that standard of living is a relative measurement as opposed to absolute.

P. O'Neill: "Maybe the right is now laying the groundwork for a big ratcheting up of the printing presses..." Makes sense given President Bush's sharp increase in the annual public deficit and the consequent rapid run up in the public debt. Inflation has been used more than once in the past as a way of dealing with irresponsible fiscal polciy.

When I needed a good laugh today, I imagined your various comments on the lack of quality in NRO economic writing. And there they go, managing to set a new low for themselves!

I'm pretty sure Twain delt with this in A Connecticut Yankee in King Arthur's Court.

Great. Brad restates the witty adage, "It's not the money - it's the amount of money" by claiming "it's not the money - it's the value of money." Sure, it informs a policy discussion but will it garner any laughs?

It must be very frustrating for serious, trained professionals to have to fend off such silliness as goes on in National Review. I mean, don't the real heavy hitting professors usually avoid the Econ Intro classes so they can escape the inane and get on with serious work? Thus, having achieved freedom from the unclever at their schools they nonetheless find themselves confronting them in public forums. My heart goes out to you, Brad. (I, myself, was heroically unclever in Econ some thirty years ago. Yet I was only the dispair of a Grad student and never staulked a Prof. as Luskin does to this day.)

Kharris and I may be off on our own side issue but I am unpersuaded that Indeces now "work." I haven't any doubt that they have been tweaked, but the argument is that they are in principle unworkable. What value shall we include in this year's index for the technology that will not be invented until next year? If consumer's tastes shift from beer to wine, do we (a) maintain an index based on beer (in which case we do not measure reality)or (b) change to wine (in which case we no longer have an index)? And by the way, who is the "typical" householder? Does Kharris put kim chee on his wheaties? These problems seem to be unsolveable not just in practice but in principle.

Anybody who has access to a Bloomberg box should find Blinder's presentation to the NABE. The difference between stupid partisan crap (Luskin, anybody in the Bush cabinet, Bush himself) and a very honest, capable economist talking about policy alternatives is just stunning.

"We should be adjusting for inflation AND effective tax rates AND non-cash comp."

If only I could get my mortgage lender, grocery store, babysitter, gas station, state and local tax boards, utilities etc. to accept non-cash comp. as payment, I'd have it made.

Al,

I think you're moving the goalposts here. Luskin's argument boils down to, "he's using a measurement that is arbitary and benefits the liberal agenda!"

Well, yes, it is arbitrary, but it is also a common and reasonable way of looking at it.

And sure, you could start adding in all sorts of other factors, like taxes and non-cash compensation. I suppose you could also add in Christmas presents, winnings at the dog track, and that $10 you found on the street.

But at some point you have to draw some lines.

The size of your pay-check in relative, dollar, terms is a pretty good thing to measure and talk about, isn't it? It's the biggest determiner of your disposable income, assuming you're an average Joe.

The bottom line is this -- Luskin has an easy job. All he has to do is scream "you did this! you didn't do that! liberal bias!"

Al,

I think you're moving the goalposts here. Luskin's argument boils down to, "he's using a measurement that is arbitary and benefits the liberal agenda!"

Well, yes, it is arbitrary, but it is also a common and reasonable way of looking at it.

And sure, you could start adding in all sorts of other factors, like taxes and non-cash compensation. I suppose you could also add in Christmas presents, winnings at the dog track, and that $10 you found on the street.

But at some point you have to draw some lines.

The size of your pay-check in relative, dollar, terms is a pretty good thing to measure and talk about, isn't it? It's the biggest determiner of your disposable income, assuming you're an average Joe.

The bottom line is this -- Luskin has an easy job. All he has to do is scream "you did this! you didn't do that! liberal bias!"

Al,

I think you're moving the goalposts here. Luskin's argument boils down to, "he's using a measurement that is arbitary and benefits the liberal agenda!"

Well, yes, it is arbitrary, but it is also a common and reasonable way of looking at it.

And sure, you could start adding in all sorts of other factors, like taxes and non-cash compensation. I suppose you could also add in Christmas presents, winnings at the dog track, and that $10 you found on the street.

But at some point you have to draw some lines.

The size of your pay-check in relative, dollar, terms is a pretty good thing to measure and talk about, isn't it? It's the biggest determiner of your disposable income, assuming you're an average Joe.

The bottom line is this -- Luskin has an easy job. All he has to do is scream "you did this! you didn't do that! liberal bias!"

Buce,

If the argument is that price (or other) indices don't take quality changes or substitution into account, they do. I'm not sure I understand your objections. Next year's technological advances don't figure into either Lasperye or Paasche index calculations. This period and a prior period, yes, and we have data for both. The weightings of goods and services? We have data for this period and the prior period. Whether the kim chee goes on my wheaties on in my beer immaterial. If I buy the stinkin' stuff in this period, and did not in a prior period (or vice versa), it is possible to take that into account when calculating price adjustments, real consumption levels, real income levels and the like. Since I think what I'm saying is obvious, I think I probably haven't addressed your (the Austrian) objection, but I don't know what the objection is.

Al

You might find it useful to go back and read the original Luskin article. In that article he talks about 'income' not tax rates or anything else. It is only when challenged that he brings up tax rates and non-cash compensation.

General question. Should we feel pity for those who are buying Luskin's advice.

"Why Oh Why Can't We Have a Better Press Corps?" Now you are bashing the press for what is clearly just a mouthpiece of extremist rightwing insanity. You mistake the National Review for something which informs. It's a propaganda rag, and a very bad one at that -- as you point out. Don't bash the press for this.

"P. O'Neill: "Maybe the right is now laying the groundwork for a big ratcheting up of the printing presses..."

I doubt the right would do this before they manage to get more of Social Security, pension, and middle-savings into equities. Give them time.

http://www.metafilter.com/mefi/36019

Geez,

$12,000 a year income in 2004 = poverty
$12,000 a year income in 1904 = WOO HOO!

Jim D said: ``I suppose you could also add in Christmas presents, winnings at the dog track, and that $10 you found on the street.''

And ebay earnings. Don't forget ebay earnings.

When you read the whole Luskin article it's even worse than the excerpt Brad quoted: it's a whole disjointed rant about how liberally biased the author is without making a single substative claim. It's amazing in its way. He even goes on to bring in an obscure review of the book under discussion from "Tax Notes", and selectively exerpt some very negative things said by the reviewer: but the review itself is titled "Perfectly Legal: Not Perfect, But Well Worth Reading".

Still, the fact that someone else, somewhere in the world had said something similar counts as pretty solid evidence for a claim by Luskin's standards. I was expecting to go to the review and find that Luskin himself had written it, but had been to modest to mention it.

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No, it is important to do it now, before the masses get hold of any more of the inflation resistant shares.

KHarris

Quite right, price indexes are modified to take account of product quality changes and substitutions. The measurements of price changes do not seem distorting in any significant way. There may be a problem with the impact of price changes however. An index designed to measure price changes in low income neighborhoods might well show more inflation than a general index. There is considerable anecdotal evidence that shoppers pay more in poor neighborhoods than in middle class and wealthy neighborhoods. Also, I wonder whether older women and men face higher inflation costs for a basket of goods and services.

The National Review article, as many such articles, is simply a knowing deception. Quite awful, in a serious of awful articles on economic issues.

"Is there nobody in National Review's offices who has any degree of economic literacy whatsoever?"

Nope.

"Is everybody so shortsighted as to have no idea what printing this kind of tripe does to the remains of National Review's already well-shredded reputation?"

Everybody at National Review, yes.

The Austrian School of economics shows a wariness of data presentation that turns the work I look at on occasion to mere odd intuition.

No, it is important to do it now, before the masses get hold of any more of the inflation resistant shares.

I just read Luskin's article. The guy has had some whoppers in the past but, Jeebus, this is inept.

Paulo, the rest of the media should be indicted if the only people calling Luskin on this are on the web. If I were an economic reporter at any self-respecting publication and I wrote like Luskin did, I would and should be fired.

Two will get you one folks on the right will buy him dinner for taking on the NYT.

Anne is being polite when she says this is not stupidity, it is knowing deception. It is outright lying, something that this administration lives by. But, Corzine, the mainstream media can't be indicted for ignoring each case on every magazine and website. Just look at TownHall.com -- it would take the NYT an entire issue a week to respond to their catalogue of lies. Then there's the masses of Rush Limbaughs and Insta-idiots. The National Review is a small mag (for small minds) and doesn't deserve that much attention. It's hard enough dealing with the pseudo-intellectualism from AEI and Heritage (which show up on Townhall etc often).

"It's hard enough dealing with the pseudo-intellectualism from AEI and Heritage (which show up on Townhall etc often)."

Nicely noted!

Let's not forget Cato.......

SNL Circa Late 70's: Dan Ackroyd as Jimmy Carter pointing to the silver lining of inflation- we are all going to be millionaires!

Actually it is discouraging when instead of arguing over policy nuances, the need is to refute economic analysis that is knowing wrong.

SNL Circa Late 70's: Dan Ackroyd as Jimmy Carter pointing to the silver lining of inflation- we are all going to be millionaires!

"Why would I think of intelligent design after reading Luskin?"

I wonder if the cofounder of the Intelligent Design club at UCSD, Casey Luskin, is Donald's kid? If so, the nut doesn’t fall far rrom the tree…

http://www.ideacenter.org/contentmgr/showdetails.php/id/754

OT What are we going to do about energy? Biofuel? Anything serious going on? Brad could we have a thread about this?

Luskin is a dirty old man. His niveau of humour reaches to the gutter:

http://www.poorandstupid.com/2004_10_03_chronArchive.asp#109691127724949462

"MAYBE KERRY CAN GET THIS GUY TO HELP US IN IRAQ
One of those foreign leaders who endorses him?
Thanks to reader PJ Broderick for the link.
Posted by Donald Luskin at 1:33 PM | link "

LUSKIN'S LINK LEADS TO STORY:
"Man Mistakenly Cuts Off Penis, Dog Eats It"

Penis jokes. Kind of says it all about Luskin.

glennstonecottage: the guy who wrote that income taxes are worse than slavery was Paul Craig Roberts, FYI.

"glennstonecottage: the guy who wrote that income taxes are worse than slavery was Paul Craig Roberts, FYI."

And not to be outdone, Grover Norquist likened taxation to the Holocaust. What a classy bunch.

little alex, cato is a bastion of intellectual honesty and philosophical consistency in comparison to the hacks under discussion here. That i don't agree with everything they say is different than saying they are fundamentally dishonest totalitarians who live only to render propaganda, which is the story of luskin and the national review crowd.

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The multitude of lies the right wing regurgitates daily are designed to fool the easily fooled. It works all the time.

FOLLOW-UP TO POLICYWONK ABOVE:

...What the reporter at USA Today and so many other fear mongers forgot to do was adjust for inflation. In the world of economics, this is an unpardonable sin. After all, if you don't adjust for inflation, just about everything is more expensive today than 30 years ago...

Stephen Moore, National Review Online, May 10, 2004
http://66.216.126.164/moore/moore200405100825.asp

Monetary policy. Should it remain national in a global economy?

An argument against monetary policy remaining national : see the comment above from Paul Callahan that "in the last 30 years, the people who owned America have lost 40 percent of their wealth held in the form of equity."

The deterioration started about 30 years ago when Bretton Woods1 was destroyed in the early 1970's. This heralded a rare period in the history of the world when nationally issued money was not linked to a commodity (eg, gold or silver). However the three decades since show the chaos possible if we leave a system that prevents money from being printed willy nilly.

The IMF would doubtless prefer that monetary discipline was reintroduced for the global economy to remain stable - discipline is being attempted in the eurozone. National stability is of course another matter.

An informative paper is still available on this website: http://www.j-bradford-delong.net/Politics/whynotthegoldstandard.html

If you believe that the money last 40$ of its value in 30 years, and if your investment strategy can only make 40% in 30 years, then it takes all the running you can do to stay in the same place.

Those two ifs might be correlated.

"But as everyone who has ever taken the first three weeks of introductory economics....."

Actually, my students don't get to inflation and adjusting for it until about the 5th week :)

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