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July 27, 2005

Why Oh Why Can't We Have a Better Press Corps? (City Journal/Reducing Poverty in the Long Run Department)

it's a dirty job. Bradford Plumer reads City Journal so we don't have to:

Bradford Plumer: City Journal always strikes me as one of the most noxious magazines around... its writers... wade into decades-old debates... disregard all... research, and then flatly declare that liberals are stupid and conservatives were right all along about everything. Exhibit A is Kay Hymowitz's piece this month on how... legions of liberal academics... have kept people poor and stupid for 40 years... [and] the one true cause of black poverty is that most black children grow up in fatherless homes. Liberals, Hymowitz declares, need to step out of their "don't blame the victim" mentality and realize this hyper-obvious fact.

Well, okay. Plenty of liberals have been thinking about the importance of family structure for quite some time: she even mentions two (William Julius Wilson and Sara MacLanahan), and then there was, um, the last Democratic president--a pretty prominent liberal, when you think about it. (Hymowitz makes it seem like Clinton was only "forced" to worry about family structure in the post-Gingrich era, but in fact, his 1992 campaign speeches included lines like, "Governments don't raise kids; parents do.") Beyond that, though, the relationship between marriage and childhood problems--let alone wider poverty--is complex and deserves a bit fuller treatment than the shallow gloss Hymowitz gives.

As it happens, the other day I was reading a collection of essays called The Future of the Family, edited by none other than Hymowitz' hero, Pat Moynihan, with a literature review of the effects of fatherlessness co-authored by... yet another one of Hymowitz' heroes, Sara MacLanahan! And lo, the results are a bit more ambiguous than the City Journal essay suggests.... MacLanahan argues that... fatherlessness is associated with lower test scores, greater levels of poverty, behavioral problems, delinquency, etc. for children.... What's not clear... is why... perhaps poverty causes both fatherlessness and negative outcomes for children, in which case single motherhood wouldn't be the root problem. One study, for instance, found that "when pre-divorce circumstances are taken into account, the associations between family disruption and child outcomes become smaller, sometimes statistically insignificant." (Not all studies, though.) And then some of the findings are just plain odd. For instance, the academic achievement gap between kids in one- and two-parent families is moderately small in many social democracies like Sweden and Iceland--smaller than the gap in "neo-liberal" states like the U.S. or New Zealand--suggesting that a sturdy safety net can overcome the supposed disadvantages of single-parent families. On the other hand, the achievement gap is even smaller in Mediterranean countries....

Basically, it's just not clear.... The facts here aren't speaking for themselves, or else they are, but in ancient Aramaic.

[I]nsofar as the fact of single motherhood itself is actually a "problem" (and I'm not convinced it is, but let's suppose...), there are basically two remedies. One, we can try to reduce the number of divorces by, say, making divorce harder... that seems like a terrible option....

So let's look behind door #2. And door #2 is... reducing out-of-wedlock births in the first place. This seems like a pretty unambiguously decent policy goal, especially since 60 percent of all births are unintended.... Now the tried-and-true way to reduce unintended out-of-wedlock births involves teen-pregnancy prevention programs that emphasize, yes, condoms and other "icky" items. (Hell, they can teach abstinence too, since that seems to work, though "abstinence-only" programs pretty clearly do not.)... But these are all pretty well-known liberal policy goals, I daresay.

Posted by DeLong at 02:28 PM | Comments (0) | TrackBack

Lessons From Medieval Trade

Avner Greif's book draft is online:

Avner Greif Book: Institutions and the Path to the Modern Economy: Lessons from Medieval Trade

  1. Introduction
  2. Institutions and Transactions
  3. Private-Order Contract Enforcement Institutions: The Maghribi Traders Coalition
  4. Securing Property Rights from the Grabbing Hand of the State: The Merchant Guild
  5. Endogenous Institutions and Game-Theoretic Analysis
  6. A Theory of Endogenous Institutional Change
  7. Institutional Trajectories: How Past Institutions Affect Current Ones
  8. Building a State: Genoa’s Rise and Fall
  9. On the Origin of Distinct Institutional Trajectories: Cultural Beliefs and the Organization of Society
  10. The Institutional Foundations of Impersonal Exchange
  11. Interactive, Context-Specific Analysis
  12. Institutions, History, and Development

It's clear what I'm going to be doing today. I expect great things.

Posted by DeLong at 01:43 PM | Comments (0) | TrackBack

China and the U.S. Embark on a Perilous Trip - New York Times

The great tightrope walk begins. Somehow the dollar has to decline massively but slowly, yet somehow foreigners holding dollars must not see the decline coming and demand higher interest payments on their dollar-denominated assets. It will be a neat trick.

Louis Uchitelle reports:

China and the U.S. Embark on a Perilous Trip - New York Times : By LOUIS UCHITELLE: The Cassandras who hold this view are a distinct minority, like their original in ancient Greece. Still, the most prominent, like Paul A. Volcker, the former Federal Reserve Board chairman, are hard to ignore. "The circumstances seem to be as dangerous and intractable as any I can remember," Mr. Volcker said Thursday, repeating an earlier warning in a February speech. "If people lose confidence in the dollar as a store of value, or lose confidence in the political strength of the United States relative to other countries, there is going to be trouble. I'm not saying a crisis is inevitable or that an orderly adjustment is impossible, but at some point big adjustments will have to be made."

The problem stems from America's persistent buying of much more from other countries, particularly China and Japan, than those countries purchase from the United States. The payment for the imports is in dollars, and because the foreigners do not use all of the dollars to make offsetting purchases here, they lend the excess back to Americans, who then use the loans to purchase more from abroad....

"The Asians have no choice but to hold onto our dollars," Mr. Glassman said. "If they dumped them, they would be jeopardizing their own development." To which Stephen S. Roach, chief economist at Morgan Stanley - whom many on Wall Street view as too pessimistic - replies: "Because nothing bad has happened yet, there is a growing conviction that nothing bad will happen."...

The challenge will come once the price of imports begins to rise. At that point, Americans will have to produce for themselves much more of what they consume - or pay a lot more for the privilege of importing. Ideally, the process would involve America's becoming a much bigger producing nation, even stepping up its exports to Asia, while Asia - and especially China - takes on more of the role of consumer. That is essentially the view of the Bush administration as outlined by Ben S. Bernanke, the newly appointed chairman of President Bush's Council of Economic Advisers. "We probably have little choice except to be patient as we work to create" the necessary conditions for a reversal of roles, he said in a recent speech.

That is not an easy transformation. Americans now produce only about 75 percent of the merchandise they purchase, importing the rest. That is down from 90 percent or so a decade ago....

This time the housing bubble could burst if the flow of dollars lent from Asia were to slow too abruptly. The result would be a shortage of money to lend and a rise in mortgage interest rates, which are tied to the yields on the Treasuries that the Japanese and Chinese often buy in the lending process...

Posted by DeLong at 01:41 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (David Sanger/New York Times Edition)

Eric Umansky writes:

Eric Umansky: Decontructing a Bogus Leak: ArmsControlWonk nails the NYT David Sanger, who hyped a story he knew was shaky (or at least had evidence was shaky), a week later was forced to row back a bit and flag what he had buried in the original piece, and now nearly three months later pens a Page One piece saying his sources were wrong and were passing along what normal people would call gossip.

That the NYT Page One'd that final story is admirable, though it would have been better if the piece also explained the role the Times played in hyping the bogus leak in the first place.

Anyway, it's not like the story was about an important topic with, say, major policy decisions hanging in the balance. It was just an article about one peaceful little country, with whom the U.S. has had no tension, getting ready to explode a big freakin' bomb.

I'm not sure I'd describe glossing over your role as a megaphone for disinformation as "admirable." It has reached the point with the political (not business) reporters of the New York Times that the first question you have to ask is "who is this reporter shilling for today?"

Posted by DeLong at 01:37 PM | Comments (0) | TrackBack

Gender Imbalance in Movie Attendance

Less than three (3) percent of people watching "The Sisterhood of the Traveling Pants" in the movie theater were male.

That is all.

Posted by DeLong at 01:04 PM | Comments (0)

Pharyngula::Cats, candy, and evolution

P.Z. Myers on the non-sweet tooth of cats:

Pharyngula::Cats, candy, and evolution: What this protein does is detect sugar, and then instruct your taste buds to start sending nerve impulses up to your brain.... Cats don't get to experience that... their TAS1R2 gene carries a substantial mutation that destroys its function.... There is a small deletion near the beginning of the sequence that chops out 247 base pairs. This deletion puts the remainder of the sequence out of register... turning it into non-functional nonsense, and also generating multiple stop sequences.... Poor kitties. They don't even know what they are missing.

It's nice to have an explanation for why cats prefer fish to candy bars, but there's more to the story than that. It's also another piece of evidence for evolution. The cat TAS1R2 gene has been thoroughly blasted into uselessness, but there is obviously more than one way to do that. A larger deletion that took out the whole gene would be just as effective, as would a 1 base pair deletion at the beginning of the sequence. Any random scrambling would do. So how do you explain this?

The sequence was analyzed in house cats, but the gene was also examined in samples taken from a tiger and a cheetah. They have exactly the same mutation... "plagiarized errors ", a phenomenon that is most simply explained by common descent. The last common ancestor of house cats, tigers, and cheetahs had this mutation, and passed it on to all of its progeny.

We can also make an evolutionary prediction: I expect that lions, leopards, and lynxes will also have the same 247 base pair deletion... the scar of this ancient gouge in their DNA will be present in all cats...

One question: is there any sense in which it is... adaptive for cats to not like fruit? Fruit is, after all, a quick source of energy--easily digested calories. One would think that a cat that liked fruit would have more energy for the hunt.

Or is this just an example of genetic drift at work? The few animals that speciated into the ancestral cat lineage got this mutation, and it wasn't (very) harmful, so they didn't become extinct. And thereafter there was no way to undo it.

Posted by DeLong at 01:03 PM | Comments (0) | TrackBack

"Free Trade," Bush Style

The Bush administration commitment to free trade:

No WTO agreement on farm liberalisation talks: By Alan Beattie and Frances Williams in Geneva: Talks on liberalising farm trade came to a halt without agreement at the World Trade Organisation on Tuesday, slashing almost to nothing the already slim chances of a big breakthrough in the Doha round of global trade negotiations by the autumn. The latest round of talks on cutting agricultural tariffs and reforming farm subsidies, which have been continuing for several days, broke up with countries still far apart. Ministers had wanted the meetings to produce a broad outline of a deal on farm and industrial goods trade by the end of this week, when the WTO starts its month-long summer break. But the chair of the farm negotiations, New Zealand's WTO ambassador Tim Groser, said he could not produce a framework that commanded consensus. Participants said that continuing sticking points included the EU's refusal to go beyond a broad commitment to use a particular formula....

Meanwhile, participants said, the US continued to resist making concessions on domestic farm subsidies. The EU and the Cairns Group of agricultural exporting countries are pushing the US to restrict payments that compensate farmers for low prices. "We were looking for movement from the Americans and did not get it," said one Cairns Group ambassador yesterday...

The Doha Round is one of the most important things the Bush administration might be doing. And it is one of the things the Bush administration cares about least. Typical.

Posted by DeLong at 12:49 PM | Comments (0) | TrackBack

The Tragedy of Rudolf Hilferding

From Peter Gourevitch (1986), Politics in Hard Times: Comparative Responses to International Economic Crises (Ithaca: Cornell University Press: 0801494362) http://www.amazon.com/exec/obidos/asin/0801494362/braddelong00, pp. 143-4:

As exports plummeted, so industry's ability to pay the costs of the labor alliance dropped. The assertions of the heavy industry groups now sounded more plausible... a revival of sales required lower prices, which required lower costs, which required lower wages and taxes.... [T]he [Great] Depression led immediately to sharp conflict with labor.

Labor found itself squeezed ever more tightly between its economic policy preferences and its desire to preserve a [Weimar] constitution whose political features helped guarantee labor's... power.... As defenders of labor in the market, party and union opposed the reduction of unemployment benefits, the pressure against wages, and the rollback of state expenditures.... [Yet] the Social Democrats felt compelled to support a prosystem government even when that government pursued economic policies contrary to their goals in labor markets.

Socialist leaders, particularly Rudolf Hilferding, the finance minister and leading party intellectual in matters of economic theory, allowed their economic ideas to constrain sharply Social Democratic politics. Their leaders saw no alternative between full socialization of the economy, for which they had no electoral majority, and operation of the capitalist economy by its own logic, which Hilferding understood by means of the same [deflationist] orthodoxy accepted by the [conventional] economists.... Hilferding rejected completely the deamnd stimulus ideas.... The trade-union movement had been persuaded to adopt... the WTB plan (so called for Wladimir Woytinski... Fritz Tarnow... and Fritz Baade...) which called for deficit-financed public works.... Woytinski and his colleaues were unable to overcome Hilferding's commitment to an orthodox capitalist interpretation of capitalism.

The SPD thus lost an opportunity as much political as economic... all circles of German society... were exhibiting considerable dissatisfaction with economic orthodoxy.... Although demand stimulus per se had no particular intellectual basis... the notion of government assistance was thoroughly familiar [to German industry]....

By 1932 political support for waiting for results from Bruening's [deflationist] economic orthodoxy had dissipated...

Great book.

Posted by DeLong at 12:46 PM | Comments (0) | TrackBack

John "Bug Food" Muir

John Muir called Crescent Meadow "the gem of the Sierra."

John "Bug Food" Muir.

It's true that it was the wettest winter-spring in a hundred years. And it is the hottest day of what looks to be the hottest summer in the memory of California Man. But these mosquitoes are absolutely amazing. And the gnats! Never have I seen such large dense clouds of gnats in my life!

Make that John "Bear Bait" Muir. There's an adult black bear 200 feet ahead on the trail on the west side of Crescent Meadow.

Well, that certainly gets the adrenaline flowing...

Posted by DeLong at 12:44 PM | Comments (0) | TrackBack

Canon del Rio de los Reyes

Kings Canyon is absolutely beautiful. How come I have never been here before?

I do have one reprogramming request to make of the Universe. It seems that whenever we head for the mountains, hot weather follows us--so that we are far hotter at 6000 feet than we are at our 250-foot-above-sea-level house (where we did not even get air conditioning until 2003). Last time we went to Lake Tahoe it was 97F in Truckee. When we went to Yosemite it was 95F at the Merced River Bridge (and boy did yesterday's snow melt feel good!). When we went to Banff it was 90F--and when we dipped down onto the plain to go to the Royal Tyrrel "More Albertosaurus Skeletons Than You Ever Imagined Existed" Museum it touched 97F.

And now 93F here at Cedar Grove.

One more reprogramming request: the trail from Road's End to Mist Falls is indeed lovely, but Mist Falls generates insufficient mist. More mist!

Posted by DeLong at 12:42 PM | Comments (0) | TrackBack

A Recipe: Chips-and-Salsa Sandwiches

  1. Crush chips (not too fine)
  2. Mix with salsa
  3. Spread onto whole wheat bread
  4. Eat sandwich

Posted by DeLong at 11:11 AM | Comments (0) | TrackBack

The Law of Large Numbers

I continue to shake my head in amazement as I consider the most bats* ignorant thing I have read all summer: the claim in National Review that in order to get a picture of income distribution and mobility in America:

Intellectual Garbage Pickup: you'd have to track hundreds of millions of individuals.... [N]one of this is reliable... the Panel Study of Income Dynamics... tracks only 8,000 families out of a U.S. population of 295 million individuals...

The whole purpose of the science of statistics is to tell us that this is simply not true. As long as you can take a random sample of your population, you can find out an enormous amount about the population from a relatively small number of observations. You can find out what proportion of rich people had poor paretns, or what proportion of twenty year olds think they will graduate from college, or pretty much any other average proportion that you want.

Now the "random sample" part of this is very important. But if your sample is random--if the fact that the yes-no pattern of observations so far makes it no more (or less) likely that you next observation will be a "yes"--then the law of large numbers tells us that the sample average you compute will converge to the true population average at a frighteningly rapid speed.

The standard demonstration of this is to repeatedly flip a coin and count the excess proportion of heads over tails. We know that--with a coin flipped and caught in the air by a human being at least--the population average taking all coins that have ever been flipped of the excess proportion of heads is zero. How many observations do we have to take--how many coin flips--before the sample average converges to this population average of 0% excess heads?

Let's see. Here's one run of 1,000 "flips" from Excel's internal random number generator:

Here are ten more:

Impressive, no?

Try some yourself.

You could have a population of 295 million flipped coins. Yet you don't need to look at "hundreds of millions" of them to determine what is going on. Looking at 1,000 will do.

This is the principal insight of the science of statistics. it is an important insight. It is a powerful insight. It is also not an obvious insight--that's what makes it powerful and important.

Yet because statistical studies sometimes produce results ideologically inconvenient for the Republican Party, National Review feels it has to pretend that this insight doesn't exist.

That's really sad.

Posted by DeLong at 11:10 AM | Comments (0) | TrackBack

A Better Class of Critics of Jared Diamond, Please...

C. Northcote Parkinson was the first to identify the phenomenon of "injelitance"--the jealousy that the less-than-competent feel for the capable.

Here we have a classic case from the anthropologists at Savage Mind, who are both positively green with envy at Jared Diamond's ability to make interesting arguments in a striking and comprehensible way, and also remarkably incompetent at critique. Assertions that Nigeria was one of the richest countries in the world after World War II and that California's Amerindians had as ample a portfolio of plants and animals to draw on as did the people of the Fertile Crescent are just plain embarrassing:

Savage Minds: I finally watched episode one of the Guns, Germs, and Steel TV show... painfully made.... So many shots of Jared Diamond looking scholarly.... Ugh!.... The show is framed by the motif of "Yali’s Question."... "Why you white man have so much cargo and we New Guineans have so little?"... [T]he show is forced to portray New Guniea as a land of poor people, and the US as a land of wealth.... [O]ne would hardly know that there is internet access in the country.... [I]t overlooks a fundamental issue: the inequality within countries as well as between them. I assure you that logging industry executives in New Guinea live better than you or I do!... Nigeria (environmentally blessed with some of the largest oil reserves outside of the Middle East) used to be one of the richest countries in the world. Corruption, aided by Western banks who provided the means of funneling the majority of the nation’s GDP into private bank accounts, and deep cultural divisions between North and South, destroyed that wealth. Yet there are still many, many, millionaires and billionaires in Nigeria....

As best we can estimate, Nigerian real GDP per capita peaked at $942 per head at the start of the 1980s. Nigeria had oil. But Nigeria was never, not by anyone's wildest dreams, not by any stretch of the imagination, "one of the richest countries in the world." An extraordinary degree of detachment from the reality of Lagos or from the technology and land availability of Nigerian agriculture is required for anyone to imagine that this was so. (See http://pwt.econ.upenn.edu/php_site/pwt_index.php.)

The gap in median living standards between the United States and Papua New Guinea today is about ten-to-one. And out of every hundred households in New Guinea, only two have the real purchasing power of the median American household.

Savage Minds: Kerim suggested Savage Minds mount a response to... self-described polylingual polymath Jared Diamond.... [W]e all conceded it was a worthy idea.... To explain why you don’t like the book would take more time than most people making friendly small talk want to spend, and –- worse yet –- your explanation will necessarily impugn the motives of people who do like it, a group that you now know includes the person with whom you are speaking. My own usual reaction in such encounters is to say that unfortunately I have not read the book but that boy, it sure does sound interesting. Alas, I did read most of the book.... Part the first is: white people are immeasurably superior to everyone else on the planet, in terms of technology, wealth, store of knowledge, and actual power, and have been so for a long time. Part the second is: this is not because non-white people are lazy and stupid. Part the third is: it’s because of the determining force that geographical and ecological constraints have exerted on human history....

I can’t exactly remember the Eurasian landmass part of the argument.... I don’t have any grounds for critiquing this part.... It sounds like a plausible hypothesis to me, but (given the caliber of the rest of Diamond’s case) might be ridiculous....

Diamond... argues that the inhabitants of... Eurasia... started off with a better array of potentially domesticable plants.... [M]y problem with this argument was that it is utterly post-hoc: he insists that there just plain are (and thus, by inference, were) more such plants in Eurasia than elsewhere, but I wondered about ongoing hybridization between wild ancestor plants, land races, and domesticated plants across thousands of years of domestication and whether that may have transformed what he takes to be the “wild” baseline.... Diamond likewise argues that the Eurasian landmass offered a uniquely amenable population of potentially-domesticable proto-livestock.... Now, again, this argument runs into the a posteriori problem... hand-waving.

Furthermore, in the lowland South American context at least, there is considerable evidence that human-animal relationships are in important respects conceptualized and experienced as relations between social equals, such that a pastoral, dominating, domesticating relationship is rendered “no good to think” (apologies to Stanley Tambiah).... The point, though, is that given the presence of potentially useful animals, it is not a foregone conclusion that humans will set about domesticating them....

I will admit I never finished reading GG&S....

Diamond's argument is that in a really big continental landmass stretching east-west--like Eurasia--somebody, eventually, will start domesticating animals. And if it seems to work as a lifestyle, their neighbors will copy them. And their neighbors will copy them. And so on. Somebody in South America did domesticate the llama--even though it was "no good to think" in such terms. It is indeed not a foregone conclusion that any one group of humans will start domesticating animals--indeed, almost none of the groups will. But it is a foregone conclusion that some group, somewhere, will try, and that what they learn will spread to those in ecologically-similar regions with whom they are in direct and indirect contact.

Diamond's argument is that in a really big continental landmass there will be lots of variation in animal and plant life, some of which will turn out to be useful for agriculture. Hence wheat, rice, barley, rye, oats--an impressive portfolio compared to corn (and a lot of people must have worked really hard over a long time to turn teosinte into corn) and... acorns. California Amerindians were doing the best they can at making bread and porridge, and yet they could only get as far as gathering and grinding acorns.

It does indeed take a very special cast of mind--or injelitance--to critique a book you didn't finish, and don't remember.

Posted by DeLong at 11:08 AM | Comments (0) | TrackBack

Les Miserables

Kim Lane Schepple says that John Roberts is Inspector Javert!

Balkinization: Ansche Hedgepeth's French Fry: Kim Lane Scheppele: Now that John Roberts has been nominated... his few opinions written on the DC Circuit Court of Appeals will be scrutinized line by line. In the main, they seem, so far as I have been able to tell on a quick scan, to deal with fairly specific and technical questions whose answers seem hard to generalize into major constitutional controversies. But then there is the case of Ansche Hedgepeth. Ansche Hedgepeth was, at the time of her crime, 12 years old. She was waiting for a friend to buy a Metrocard at the Tenleytown/American University Metrorail station in Washington, DC when she committed the fateful act. She opened the fast food bag she was carrying and ate one French fry -- in plain view of an undercover police officer. The police officer placed her under arrest, handcuffed her and removed her shoelaces "pursuant to established procedure," as the opinion tells us. She was held at the local police station for three hours until her mother could come to collect her. Her offense? She violated a city ordinance against eating in Metro stations. The police had been instructed to adopt a "zero tolerance" policy in enforcing this ordinance, and Ansche Hedgepeth was one of 14 juveniles arrested for similar infractions during zero tolerance week.

The adults who ran afoul of the policy during zero tolerance week were merely given citations on the spot and were allowed to pay their fines later, as the local ordinance permitted. Minors were not eligible for such citations, however, and so were arrested because that was the only strategy available to police to enforce the ordinance. Given that police had been told that no infraction, however minor, was to be excused, any minor caught eating in the Metro was subject to mandatory arrest.

Her mother brought suit on Ansche's behalf against the Washington Area Metropolitan Transit Authority, asserting that Ansche's arrest violated her equal protection right under the Fifth Amendment and her right to be free from unreasonable seizures under the Fourth Amendment. Both claims failed. To the argument that age should be considered a suspect classification that would trigger heightened scrutiny in constitutional Fifth Amendment analysis, Judge Roberts wrote for a unanimous panel that it is not. As a result, the difference between the treatment of the adults and the treatment of children in the DC ordinance was subject only to a rational relation test, which Judge Roberts found it easily passed. To the Hedgepeth argument that Ansche's arrest burdened a fundamental right to be free from restraint, Judge Roberts wrote that no one has a right to be free from restraint when they have obviously violated a law under the very nose of the police:

The law of this land does not recognize a fundamental right to freedom of movement when there is probable cause for arrest.... That is true even with respect to minor offenses.

And to the argument that such a minor crime could not produce a "reasonable" arrest, Judge Roberts cited the Supreme Court's decision in Atwater v. City of Lago Vista which held that a police officer had not acted unreasonably in violation of the Fourth Amendment when he arrested a woman who had merely failed to fasten her seat belt. So too, Ansche Hedgepeth, could not rely on the Constitution to escape the consequences of her misdeeds. She clearly ate a French fry in clear violation of the city ordinance in the clear view of a police officer. No leniency for her. (Poor Ansche!) As a doctrinal matter, the Hedgepeth case might be of little interest. But it is one of the few decisions we have to go on to see how a future Justice Roberts would differ from the departing Justice O'Connor. As it happened, Atwater was a 5-4 decision in which Justice O'Connor penned the dissent.... Justice Roberts's opinion has a markedly different sensibility from that of Justice O'Connor, and given the similarity of the facts in the two cases, one can begin to get a sense of how Justice Roberts would alter doctrine.... Justice O'Connor in Atwater was clearly disturbed by the prospects of someone being subjected to a full-blown arrest merely for not wearing a seat belt. So she proposed a Fourth Amendment balancing test. As Justice O'Connor wrote:

There are significant qualitative differences between a traffic stop and a full custodial arrest. While both are seizures that fall within the ambit of the Fourth Amendment, the latter entails a much greater intrusion on an individual's liberty and privacy interests. . . . Justifying a full arrest by the same quantum of evidence that justifies a traffic stop--even though the offender cannot ultimately be imprisoned for her conduct--defies any sense of proportionality and is in serious tension with the Fourth Amendment's proscription of unreasonable seizures.

Proportionality analysis.... [T]he reasonableness of arrests for minor offenses would have to be determined in light of the state interest to be achieved through such an arrest:

Because a full custodial arrest is such a severe intrusion on an individual's liberty, its reasonableness hinges on "the degree to which it is needed for the promotion of legitimate governmental interests." [citation omitted] In light of the availability of citations to promote a State's interests when a fine-only offense has been committed, I cannot concur in a rule which deems a full custodial arrest to be reasonable in every circumstance. Giving police officers constitutional carte blanche to effect an arrest whenever there is probable cause to believe a fine-only misdemeanor has been committed is irreconcilable with the Fourth Amendment's command that seizures be reasonable. Instead, I would require that when there is probable cause to believe that a fine-only offense has been committed, the police officer should issue a citation unless the officer is "able to point to specific and articulable facts which, taken together with rational inferences from those facts, reasonably warrant [the additional] intrusion" of a full custodial arrest. [citation omitted]....

Police departments are no doubt grateful for the five votes on the other side. But those of us in the general public who are now subject to discretionary arrests for fine-only misdemeanors might feel differently.... [T]here was wiggle room to distinguish Ansche Hedgepath's case from Gail Atwater's -- wiggle room purposively left by the Atwater majority. Justice Souter's opinion for the Court positively invites a future distinguishing case when he notes that the police officer in Atwater was "authorized (not required, but authorized)" to arrest Atwater and that police needed to be able to exercise this discretion in the heat of the moment.... Had the police officer in Atwater been required to arrest the offender no matter how trivial the infraction, as the police officer was in Ansche Hedgepath's case, a reasonable judge might have concluded the arrest itself was not reasonable. Eating one French fry does not endanger others as failing to buckle in one;s children would....

Even though his statement of facts in Hedgepeth begins with a lament that "No one is very happy about the events that led to this litigation," he did not let his unhappiness divert him from what, in his view, the law required. And the law allows of no exceptions, no room for common sense to modify the strict operation of a strict rule....

Posted by DeLong at 11:06 AM | Comments (0) | TrackBack

Whither the Yuan?

The best debate on the yuan I have seen is this Econoblog by Nouriel Roubini and David Altig:

WSJ.com - Whither the Yuan?: July 21, 2005 6:38 p.m.: China's decision to lift the yuan's peg to the dollar marks a modest but important first step in overhauling its strict currency regime. The yuan has been strengthened, effective immediately, to a rate of 8.11 yuan to the U.S. dollar -- compared with the 8.28 yuan it has been set at for more than a decade -- and the currency will now be allowed to trade in a tight 0.3% band.... WSJ.com asked economist bloggers Nouriel Roubini and David Altig to take a closer look at the news and the numbers....

Nouriel Roubini writes: Last week I predicted... that China would revalue the peg to the U.S. dollar (by a small amount close to 3%-5% rather than a larger 10%-15% move), that it would move from the peg to the U.S. dollar to a basket peg and that it would create a fluctuation band around this basket. That is indeed what happened today... the band around the basket is still very narrow.... [T]he move is too small: It is too small to make a dent on the Chinese trade surplus or on the U.S.-China bilateral trade balance... the move won't appease those in Congress who want to pass protectionist legislation... the move may lead to even more speculative capital inflows into China from investors who will bet on further Chinese revaluation....

But this small move is a beginning of a much larger currency regime change in China and Asia.... In the past I warned against biting the hand that feeds you as the U.S. was aggressively pushing for a large Chinese revaluation while, at the same time, needing such Chinese and Asian cheap financing of its twin deficits. If a modest 2.1% currency move increases U.S. long rates by 0.07 percentage points, consider the implication of a 15%-20% move in currency values in China and Asia over time. It could get ugly for the U.S. unless the U.S. seriously tackles its fiscal deficit....

David Altig writes: Nouriel, not surprisingly, puts his finger on one of the key issues: How close is the new yuan-dollar exchange rate to the value it would take if allowed to float freely? In other words, how many shoes are yet to drop?... Owen Humpage and Pat Higgins... find that, although the Chinese central bank has increased the pace of foreign exchange reserves over the past year, much of this activity has been "sterilized."... [W]hile the Chinese central bank has been increasing the supply of money to accumulate dollar assets on the one hand, they have at the same time been engaging in domestic operations to reabsorb that liquidity with the other hand. The end result has been that the pace of money creation in China -- monetary base growth, specifically -- has not been accelerating, even as the central bank has appeared to intervene more and more to sustain the peg.

Why is this interesting? Because, again roughly speaking, sterilized exchange rate operations have no effect on the value of the currency, outside of a short window of time.... One possibility is that the value of the Chinese currency hasn't been, and so isn't now, as far away from its "fundamental" value as many people think. The second possibility is that the Chinese fixed exchange rate regime has been held together by the chewing-gum-and-chicken-wire device of capital controls. The latter possibility means that the announcement that China plans to loosen capital controls... is at least as big a story as today's announcement....

Nouriel writes: David, correctly, points out the role of sterilized intervention in China. One of the reasons China decided to change its currency regime is that this intervention was leading to two serious financial costs and vulnerabilities for China: 1. Piling up more and more U.S. dollar foreign exchange reserves would lead to severe capital losses for China... once the Chinese currency was allowed to appreciate.... Not moving the peg would have implied intervening and accumulating even more forex reserves over time -- to the tune of over $200 billion a year lately -- and thus even larger capital losses for China down the line.... 2. The forex intervention has been -- as suggested by David -- only partially sterilized (only 50% of it lately).... This increase in the Chinese monetary base has led to excessive liquidity creation in China....

As for the loosening of the capital controls, such liberalization will not -- in the short run -- lead to significant capital outflow out of China and prevent appreciation pressures. The reason is as follows: With the currency move today there is now a greater likelihood that the Chinese currency will further appreciate over time. Thus, international traders and investors, Chinese expat communities in Asia and foreign firms doing investments and FDI in China will have an even greater incentive to bring capital into China to obtain large capital gains once the Chinese currency moves even further. So, liberalization of capital outflows won't help in the short run....

The systemic consequences of this currency realignment throughout Asia and the world could be radical and have significant impacts on U.S. long-term interest rates, on U.S. financial markets and on the U.S housing bubble.

David writes: I remain less convinced than Nouriel that we have a firm notion of how much further the Chinese currency will appreciate or how much effect liberalization of capital controls will have on exchange-rate dynamics. We simply don't know how private decision-makers in China will respond when offered the opportunity to freely move their own financial capital about the world. I don't find it at all implausible that private accumulation of dollar assets could put a pretty good dent in whatever reduction we see from the central bank.

I am going to stick with Ben Bernanke's position (or my version of it): The really important question is whether, when the dust settles, the Asian taste for saving outside of Asia will persist. If it does, it is hard to conjure up a scenario in which a good fraction of that saving won't continue to flow in the direction of the U.S. If it doesn't, there probably isn't enough that can be done via fiscal deficit reduction to stave off the effects on the U.S. economy that Nouriel fears.... But the market, today at any rate, has responded in a fairly orderly manner....

Nouriel writes: I beg to disagree. If China were to liberalize its capital account... and stop intervening, the Chinese currency could appreciate by more than 20%, minimum. Think of it: China has a current-account surplus that is now growing to more than 4-5% of its GDP; it also has long-term capital inflows in the form of FDI that are another 2-3% of GDP; and on top this, last year it had hot money capital inflows that were another 5% of its GDP. Each one of these three forces leads to a currency appreciation; and this is why China was forced last year to intervene to the tune of $200 billion in forex-reserve accumulation to prevent the yuan from appreciating....

The hard part for China and the rest of Asia will be now to manage the massive speculative inflows of capital that are betting on further appreciations of the yuan and other Asian currencies. As the extensive coverage today of the news and blogosphere comments on the China move on my RGE Monitor suggest, markets are now expecting that China will now allow further upward movements of the yuan and of other Asian currencies....

As for the impact on the U.S., this depends on the factors that have caused the bond conundrum. Unless one believes -- a la Bernanke -- that such a conundrum is explained only by a persistent global savings glut, the impact of this change in currency regime in China and Asia on the U.S. financial markets could be serious. The effect of Chinese and Asian intervention on U.S. long rates is hard to measure but estimates range between 0.5 and 1.5 percentage points....

[W]hile I agree with David that a sharp reduction in the Asian and world appetite for the U.S. assets would be painful for the U.S. even if the U.S were to make a significant fiscal adjustment, the lack of such fiscal adjustment would inflict greater pain than otherwise....

David writes: I'm not so much disagreeing with him as much as cautioning that the web of effects that may arise from broad financial reforms are so complex that I wouldn't place very big bets on any particular outcome.... In the overall scheme of things, if you put any faith at all in markets' ability to provide best guesses of such things, the expected magnitude of RMB-appreciation looks pretty moderate.... [F]orward foreign exchange contracts were suggesting a total appreciation of about 8% over the next twelve months.... [I]t does indicate where those with their money on the line see the process heading.... It is in the interest of the Chinese central bank and the Chinese government to maintain a pace of reform that is consistent with an orderly transition....

Nouriel writes: [T]his is the beginning of a much larger currency move that, over time, will lead to a managed float a la Singapore and to significant capital account liberalization. I venture to guess that over the next 12 months, the Chinese currency will be allowed to appreciate by more than 10% and that other Asian currencies... will also follow.... [T]he large accumulation of U.S. dollar reserves by foreign central banks to the tune of over $500 billion a year may unravel.... This would... force the U.S. to make significant and painful adjustments to its private and public savings droughts, droughts that much more than a global savings glut explain why the U.S. external balance has been worsening over time. Then, U.S. private spending, both consumption and investment, may have to fall sharply -- driven by higher U.S. interest rates and a bursting of the housing bubble -- relative to U.S. output to make room for an improvement of U.S. net exports....

Finally, I am concerned about the financial consequences of an uncoordinated global rebalancing, where the lack of policy coordination between the U.S., China/Asia and Europe may lead to significant financial markets' volatility. There is now a huge incentive for hedge funds, prop desks and other highly leveraged institutions to try the Asian Currency Revaluation bet and go for a currency kill in Asia.... The stakes are so high that traders/investors may want to test how far they can collectively push such currencies and make significant capital gains on this speculative attack. Herding behavior and momentum trading are typical of financial markets, and the Chinese move today is a signal that it's open season on trying to push up a wide range of Asian and other currencies.... In 1998, Russia's currency crisis triggered the LTCM crisis and a 10% plus move of the Yen relative to the U.S dollar in a matter of three days....

David writes: Nouriel says "policy makers and regulators may want to be wary of systemic risks associated with such large capital flow movements." There are certainly no truer words than those, and over time I have become convinced that the truly important work of central bankers is to handle those episodes when the feared meltdowns come a'calling. It is interesting, then, that Nouriel references the 1998 Russian/LTCM crisis, which was the back-breaking straw piled on the 1997 Asian currency crisis. If I had to choose one example of a case where severe stress in global financial markets was weathered just fine, that would be a good candidate....

None of this is to claim that it's time to fall asleep at the wheel. Nor is it to claim that there aren't some tough adjustments ahead. We may well be at the beginning of an upward climb in long-term interest rates that many of us have long expected, and the reversal of the current-account deficits that all of us knew would come sooner or later. And though I am not much convinced by Nouriel's worst-case scenarios, I'm glad he's out there reminding us to not forget about them.

Posted by DeLong at 11:03 AM | Comments (0) | TrackBack

Michael Kinsley Needs Some Directions

Michael Kinsley is lost in cyberspace, and seems to visit only the bad neighborhoods.

He writes:

Cybercreeps Run Amok: Well, have you visited cyberspace lately? Of course you have. And of course the Internet has vastly improved life for anyone likely to be reading this. But as a friendly place to hang out, give me meatspace any day. There is commerce aplenty, but that's not the problem. The happiest and most peaceful parts of the World Wide Web are the places where people are buying things. The nasty parts of the Web are where people are doing what the Founding Surfers intended: expressing themselves and forming communities. Why is the tone of conversation on the Internet, especially about politics, so much lower than in the material world?...

The simple answer is that it isn't. Here are three places on the internet he might visit where the tone of conversation is at least as high as anyplace I have seen in the material or the conventional journalistic world--certainly much higher than the tone wherever various Kinsley proteges (think: Kaus, Krauthammer, Sullivan) hang out:

  1. http://www.tpmcafe.com/
  2. http://nielsenhayden.com/making_light/
  3. http://www.marginalrevolution.com/

Other suggestions?

Posted by DeLong at 10:43 AM | Comments (0) | TrackBack

Worrying About the Housing Bubble

Dean Baker is more than worried about the housing bubble:

CEPR Press Release (07/07/05): The ABC of the Housing Bubble: The “Housing Bubble Fact Sheet” provides an overview of the housing market and its implications for the economy:

  1. Over 2 million housing units are being built annually, while the number of households is only growing by 1.4 million a year.
  2. Some regions of the U.S. have experienced a 60 percent increase in real home prices, while the average for the country as a whole is 45 percent. Historically, real home prices have not increased... house prices have just kept pace with the overall rate of inflation.
  3. The collapse of the housing bubble will have a larger impact than the collapse of the stock bubble, since housing wealth is far more evenly distributed than stock wealth.
  4. The collapse of the housing bubble will likely throw the economy into a recession and require a federal bailout of the mortgage market. It could lead to a loss of 3.6 to 4.5 percentage points of GDP.
  5. Given how far out of line house prices have grown from fundamentals, there is no way to avoid enormous economic damage when the bubble collapses. However, the sooner house prices drop, the less damage there will be.

I can see three scenarios for getting out of things without serious damage:

  1. Interest rates stay low for a long time, so the bubblyness of the housing market deflates gradually.
  2. The housing market collapses, but the dollar collapses too. If the Federal Reserve then follows an accomodative monetary policy, workers who lose jobs in construction and consumer services will be able to move relatively smoothly into jobs making goods for export.
  3. The housing market deflates at the same time that businesses' animal spirits recover, and so workers who lose jobs in construction and consumer services will be able to move relatively smoothly into jobs making and installing capital goods.

Posted by DeLong at 10:40 AM | Comments (0) | TrackBack

A Supreme Court Justice Should Have a Better Memory

Shouldn't a Supreme Court justice have a better memory? It's possible to forget joining an organization. It's hard to forget being on its steering committee:

Roberts Listed in Federalist Society '97-98 Directory: By Charles Lane: Supreme Court nominee John G. Roberts Jr. has repeatedly said that he has no memory of belonging to the Federalist Society, but his name appears in the influential, conservative legal organization's 1997-1998 leadership directory. Having served only two years on the U.S. Court of Appeals for the D.C. Circuit... Roberts has not amassed much of a public paper record.... [The] Federalist Society... keeps its membership rolls secret.... When news organizations have reported his membership in the society, he or others speaking on his behalf have sought corrections. Last week, the White House told news organizations that had reported his membership in the group that he had no memory of belonging....

Over the weekend, The Post obtained a copy of the Federalist Society Lawyers' Division Leadership Directory, 1997-1998. It lists Roberts, then a partner at the law firm Hogan & Hartson, as a member of the steering committee of the organization's Washington chapter and includes his firm's address and telephone number. Yesterday, White House spokeswoman Dana Perino said Roberts "has no recollection of being a member of the Federalist Society, or its steering committee."...

Then it gets really weird:

Federalist Society Executive Vice President Leonard A. Leo said that either he or another official of the organization recruited Roberts for the [steering] committee.... Membership in the sense of paying dues was not required as a condition of inclusion in a listing of the society's leadership, Leo said....

[T]he society is tolerant of those who come to its meetings or serve on committees without paying dues. "John Roberts probably realized pretty quickly he could take part in activities he wanted to" without being current on his dues, Whelan said.... In 2001, after he was nominated by President Bush for the seat he currently holds on the court of appeals, Roberts spoke to Post reporter James V. Grimaldi and asked him to correct an item Grimaldi had written that described Roberts as a member of the Federalist Society. In a subsequent column, Grimaldi wrote that Roberts "is not and never has been a member of the Federalist Society, as previous reported in this column."...

How much are Federalist Society membership fees? $100 per person a year? Would you want a cheepskate on the Supreme Court?

Posted by DeLong at 10:37 AM | Comments (0) | TrackBack

Unfunded Entitlements and Default Savings Plans


I had thought one thing I would never see would be Martin Feldstein endorsing a large, unfunded entitlement expansion:

WSJ.com - Saving Social Security: By MARTIN FELDSTEIN: July 15, 2005; Page A10: A recent proposal by House and Senate Republicans marks the start of the legislative process to implement President Bush's approach to Social Security reform. The fundamental principle is to supplement traditional pay-as-you-go Social Security with investment-based personal retirement accounts. Although the new congressional plan is not a complete solution to long-run problems, it's an excellent starting point. By using the Social Security surpluses that are projected between now and 2017, it lays the foundation for personal retirement accounts without diverting the payroll tax needed to fund current benefits...

It also reduces government net revenues without reducing future government commitments to pay money. The message discipline required of practicing Republican economists is very harsh indeed.

The rest of the op-ed is quite good:

Adding voluntary savings through salary deductions to these personal retirement accounts would substantially strengthen this reform.... The key to the success of such a voluntary add-on plan is to combine automatic enrollment with the ability of each individual to opt out... participation rates of 80% or more even when there are no employer matching contributions... the "default option" -- whether you are automatically in unless you decline, or automatically out unless you enroll -- has a powerful effect on what individuals choose to do....

The personal retirement accounts would not replace traditional Social Security but would supplement the more limited pay-as-you-go benefits that would result as the aging of the population leaves fewer workers per retiree.... The automatic enrollment feature would also increase national saving, a high priority in its own right. A higher national saving rate would finance investment in plant and equipment that raises productivity and produces the extra national income to finance future retiree benefits. A higher national saving rate would also reduce dependence on capital from abroad and would therefore shrink our trade deficit....

The aging of the population means that the existing pay-as-you-go Social Security program cannot by itself provide adequate retirement incomes without a very large increase in the payroll tax rate.... Supplementing the traditional pay-as-you-go benefits with investment-based personal retirement accounts financed by a combination of the projected surpluses and voluntary automatic savings would eliminate the need for any rise in Social Security taxes while providing a secure source of income for future retirees.

But funding them by uncapping FICA would be much, much better.

Posted by DeLong at 10:16 AM | Comments (0) | TrackBack

A Minute's Worth of Weblogs

Courtesy of Teresa Nielsen Hayden:

Making Light: Weblogs.com... gives you... a single flat unadorned list of weblogs that’ve updated that minute... 66 entries.... I copied off the list and looked at all of them, as though I were doing a species count in a wildlife area.

Here’s how they break out. My categories are arbitrary, but all categories are.

  1. Potemkin weblogs that have a parasitic relationship with Google Ads [19].... [T]he great-grandchild of the “reports” scam... the mark in the reports scam is the person who thinks he can make big money publishing and selling the junk content he buys from the scammers. In this variant, the junk content is being automatically scooped up and aggregated from free content feeds to create Potemkin weblogs. The sites’ owners then sell ad space on them to Google Ads, which is itself heavily automated, and thus doesn’t notice that it’s placing ads on junk sites.... Posts in this group invariably start with the first paragraph of a news story or press release related to the weblog’s declared subject. The story’s headline is used as the title of the post. Subsequent paragraphs are a random selection of the first paragraphs of other stories they’ve already used. It’s obviously a completely automated process, because major text glitches don’t get corrected. The resulting “weblog” couldn’t fool anyone but a computer...
  2. Moneygrubbing fake weblogs that don’t depend on Google Ads: "19. Belmont Stakes Live Gambling belmont stakes gambling wagering offtrack race track betting"...
  3. Just using the software... sites that have adapted the weblog software and format to non-webloggish purposes. I expect we’ll be seeing more and more of this. Weblogging software is cheap, flexible, feature-rich, and extremely easy to use...
  4. Spaces.msn.com: bringing self-expression to sensitive students worldwide... spaces.msn.com... must be making it cheap and easy to get on. I can’t make out most of their names, or the titles of their weblogs, but most of them give their location.... Chiba-ken... Tokyo-to, Japan.... IASDTO, Brazil.... Shanghai, China.... Cholula, Puebla, Mexico.... Grenoble, France.... Heilongjiang, China.... Taiwan.... Minas Gerais, Brazil...
  5. Non-spaces.msn.com weblogs in languages in which I am not fluent.... Hessamblog’s blog @ PersianBlog... Antin Itä-Bloggi... Coredump... Ciencia Rabia... Franchement!... Antidig... Serializer... diario de wendy...
  6. Anglophone blogs-for-the-sake-of-blogging: Fourteen weblogs, between a fourth and a fifth of the total. Naturally, since this is the category I’d fall in, I can see all kinds of fine distinctions and subcategories within the list....

So, there’s the lot of them. What do I conclude?

  1. Automated intelligence is stupid.
  2. Google Ads ought to be more discriminating about its ad placement.
  3. ...[W]eblogging is an activity and a set of customs, not the software and templates used to do it.
  4. Weblogging... may or may not prove to be an enduring literary form, but I wouldn’t be surprised if the weblog template—-episodic, open-ended, easily modified to have sidebars and text jumps and comments and embedded mini-blogs, imposing no relationship on its elements beyond chronological order—-outlives everything else we’ve done....
  5. We don’t have to read all the weblogs all the time—-who could?—-but as long as they exist, those parts of the world they illuminate can’t be invisible to the rest of the world. Hardworking teenagers in China, beleaguered housewives in Iraq, avant-garde art students in Turkey-—they’re all real to us.
  6. If there’s an overall message to weblogging-—not that there has to be one, but still, if there is—-it’s HELLO WORLD.

Addendum: Jim Macdonald tells me that Wendy of “diario de wendy” had a fight last night with her mother over her clothing, and over the Catalan slang that she and her friends use.... Jim also says that “Ciencia Rabia” means... possibly “Science, My Ass”...

Posted by DeLong at 10:15 AM | Comments (0) | TrackBack

Revenue Situation

The consensus on the federal revenue situation:

REVENUE COLLECTIONS IN 2005: WHAT DOES THE RECENT INCREASE IN REVENUES SIGNIFY? by Richard Kogan and Isaac Shapiro: Shortly before the release of CBO’s July’s Monthly Budget Review, which provided data on the recent revenue increases, the director of CBO emphasized the temporary nature of the revenue surge. “I do hope people are taking this with a grain of salt and not thinking this is 1998 all over again,” CBO’s director Douglas Holtz-Eakin said. “There’s simply no question if you take yourself to 2008, 2009, or 2010, that vision is the same today as it was two months ago.”


Posted by DeLong at 10:11 AM | Comments (0) | TrackBack

Ken Mehlman Says George W. Bush Is Wrong

The Whiskey Bar picks up a very sharp and public dissent by RNC Chairman Ken Mehlman from the partisan political strategies of George W. Bush:

Whiskey Bar: Southern Strategies: It was called "the southern strategy," started under Richard M. Nixon in 1968, and described Republican efforts to use race as a wedge issue -- on matters such as desegregation and busing -- to appeal to white southern voters. Ken Mehlman, the Republican National Committee chairman, this morning will tell the NAACP national convention in Milwaukee that it was "wrong".... "Some Republicans gave up on winning the African American vote, looking the other way or trying to benefit politically from racial polarization. I am here today as the Republican chairman to tell you we were wrong." Washington Post "RNC Chief to Say It Was 'Wrong'to Exploit Racial Conflict for Votes" July 12, 2005.

As the nation honored the legacy of Dr. Martin Luther King Jr. on Monday, thousands of people gathered here to demand that lawmakers remove the Confederate battle flag from atop South Carolina's Statehouse.... "I think that the flag should be removed from the state Capitol," Vice President Al Gore said Sunday. "That's my position and I think that Governor Bush has avoided taking a position or has ducked the issue." GOP front-runner George W. Bush has denied avoiding the issue. "I haven't waffled from day one when I've been asked the question," Bush told CNN's "Late Edition on Sunday. "That's a decision for the people of South Carolina to make." CNN "Thousands march against Confederate flag in South Carolina" January 17, 2000

Posted by DeLong at 10:09 AM | Comments (0) | TrackBack

Treading Water

Stagnant wages. This doesn't feel like an economy near full employment. Not at all:

How Long Can Workers Tread Water? - New York Times: By EDUARDO PORTER: James Barnes, a $350-a-week guard at an office building on Madison Avenue in Midtown Manhattan, has not had a raise in years. But his income just jumped sharply: Three months ago, he took on a newspaper delivery route from 3 a.m. to 7 a.m., which pulls in an extra $235 a week.

Mr. Barnes fits snugly into the pattern of America's current economic expansion. The wages of typical workers are treading water, growing roughly at the same rate that inflation eats into their buying power. Last week, the Labor Department reported that average wages for production and nonsupervisory workers in the private sector, about 75 percent of the labor force, reached $16.06 an hour in June, just 2.7 percent above the level a year ago.... Workers' wages may be barely keeping up, but Americans' average incomes are growing briskly - in part, because of growth in the overall number of jobs, including Mr. Barnes's extra one. But it also reflects other forms of income, flowing mostly to the more affluent.... "You have a lower half of the wage distribution in the United States that has not experienced any income gains for a long time now," said Barry P. Bosworth, an economist at the liberal-leaning Brookings Institution.... Even as the average worker's wages are stuck in neutral, corporate profits, professionals' incomes, gains from investments and executive compensation - the kind that frequently comes in the form of stock options - are all surging, supporting healthy gains in the economy....

To be sure, income growth has slowed from its torrid pace - year-on-year growth of real disposable income decelerated to 3.7 percent in the first quarter of 2005, from 4.7 percent in the fourth quarter of 2004.... But that is still plenty strong enough to support substantial output growth, which is expected to advance about 3.5 percent this year, after accounting for inflation. The income gains have been powerful enough to overcome the headwind of surging oil prices, which have pushed gasoline to over $2.25 a gallon.... And there are scant signs that spending is on the wane. Mr. Mann just bought an iPod. With the prospect of more take-home pay, even Mr. Barnes joined the shopping crowds, spending his income-tax refund on a secondhand Dodge Caravan minivan. "It's good because I enjoy it," Mr. Barnes said, "but I need it for my second job."...

Posted by DeLong at 09:53 AM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Liars? (Doug Feith Edition)

Kevin Drum writes:

The Washington Monthly:

DOUG FEITH'S SWAN SONG.... Via Suburban Guerrilla, you really have to admire the chutzpah of senior Bush administration staffers sometimes. Here is Doug Feith, the outgoing #3 guy at the Pentagon:

"Our intelligence community made, apparently, an error, as to the stockpiles" of weapons it assured President Bush existed in 2003, Feith said. Thus that part of the administration's argument for why war was necessary was overdone, he said, adding, "Anything we said at all about stockpiles was overemphasis, given that we didn't find them."

Our intelligence community made, apparently, an error. Yep, it was all the CIA's fault! Damn their hides!

This really takes some balls considering that it comes from the guy who was ultimately in charge of the Office of Special Plans, the Pentagon outfit charged with ferreting out evidence of WMD and al-Qaeda connections in Iraq that the squishy analysts at the CIA were too reality based to acknowledge. The OSP was practically created to find WMD whether it was there or not. If the CIA did screw up, Feith's shop made them look like pikers.

Ballsy indeed. Of course, Feith is also the guy that Gen. Tommy Franks memorably called "the fucking stupidest guy on the face of the earth." Perhaps that's the perfect combination for this administration: ballsy and stupid.

The combination also needs its #3 as well: a press corps that lets them get away with it...

Posted by DeLong at 09:51 AM | Comments (0) | TrackBack

The New York Times Writes About Class!

Louis Uchitelle, David Cay Johnson, and finally the New York Times has a third good story about class in America today!

Patrick Nielsen Hayden reports:

Making Light: "I also feared she would judge my life and find it wanting": There's an entire novel of manners lurking under the surface of this, particularly when paired up with this response.

For some bloggers, of course, the only point of the story is that it's foolish to be too forthcoming with an employer about your personal stuff. (A point readily acknowledged by the blogger herself, in the comment thread here.) Other bloggers seem to grasp that there's a bit more going on. Atrios highlights Pandagon commentor Jeff's wry observation that evidently "an employee writing about her employer in a blog is enough to get her fired, but an employer writing about her employee in the New York Times is just journalism. Jeff suggests we may be in the presence of something called "class issues", which is of course impossible since America doesn't have cla—, I mean cl-, I mean, you know, that word I can't even type.

Interestingly, while you might get the impression from Helaine Olen's Times piece that her former nanny was placarding the intarweb with overt discussions of Olen and her family, in fact the nanny never named any of them; indeed the blog didn't even contain the blogger's own full name. (Indeed, in retrospect, the nanny/blogger appears to have been writing about the Olen clan rather less than Olen and her husband thought she was, but tha's a comic subplot.) By contrast, Olen was nowhere so circumspect:

I told my friends about the blog, and even my childless acquaintances were riveted. They called, begging for more details. "Did she wear the rose negligee, the pink see-through slip or the purple Empire-waisted gown?" demanded one after perusing a post on the proper outfit for first-time sex.

For a smart and nuanced discussion of all this, which digs past the obvious What-Did-You-Expect harrumphing into the much more interesting complicities, check out Bitch Ph.D. Do read the comments; they're worth the extra time. Unsurprisingly, the nanny/blogger is a participant in that discussion, reacting reasonably to criticism and adding some interesting details to her own side of the story. It would be particularly interesting if Helaine Olen were to show up the conversation as well, but of course that's never going to happen, and that fact is at the h

Posted by DeLong at 09:38 AM | Comments (0) | TrackBack

Digby Is Shrill

Yep. Really shrill:

Hullabaloo : Spikey's Threat: I woke up this morning thinking about Michael Isikoff, which isn't my favorite thing to think about first thing in the morning. Last night he told Jon Stewart that Pat Fitzgerald had better have something really, really strong to justify this investigation taking the turns its taken. It had better be about something really important --- it had better be about national security. He was quite fierce about it.

I didn't hear the rest because I threw the remote at the TV and it mercifully turned off.

The idea that Michael Isikoff, of all people, is laying down the gauntlet --- warning Fitzgerald that if he's thinking of prosecuting someone for perjury, say, or obstuction of justice, he will lead the chorus denouncing him as an overzealous prosecutor --- is stunning. I don't know what is in the Chardonnay in DC but it's causing a lot of people to have severe problems remembering things --- and seeing themselves in the mirror.

Michael Isikoff was practically Ken Starr's right hand man in the media. He performed at only a slightly less partisan level than Drudge or Steno Sue Schmidt. He admits in his book that he became convinced that the president treated women badly and therefore needed to be exposed. He didn't seem to think that throwing a duly elected president from office for lying about a private matter was overzealous in the least. He was on that bandwagon from the very beginning and one of the guys who drove it.

Michael Isikoff did not go on television and say that the punishment didn't fit the crime or that Starr should have had something really, really important to justify his 70 million dollar investigation. Indeed, he did exactly the opposite....

Short Term Memory Loss

The NY Times is reporting than an anonymous Rove defender who has been briefed on the case (by Rove?) says that Novak was the one who told Karl Plame's name and informed him of "the circumstances" in which her husband traveled to Africa --- at which point we are supposed to believe Karl suddenly remembered that he'd heard some of this from other journalists and confirmed the story to Novak by saying either "I heard that too" or "oh, you know about it."

I can certainly understand why Fitzgerald might have been suspicious of this tale --- especially when he read that Novak's first comment on the matter was: "I didn't dig it out, it was given to me. They thought it was significant, they gave me the name and I used it."

According to this article "they" refers to an unknown source and ... Karl Rove.

Posted by DeLong at 09:27 AM | Comments (0) | TrackBack

Taking the Long View

Tim O'Reilly writes:

O'Reilly Radar > On Failing to Think Long Term: Stewart Brand gave me permission to post his email summary of Jared Diamond's talk last night. Over to Stewart...

To an overflow house (our apologies to those who couldn't make it in!), Jared Diamond articulately spelled out how his best-selling book, COLLAPSE, took shape.

At first it was going to be a book of 18 chapters chronicling 18 collapses of once-powerful societies--- the Mayans with the most advanced culture in the Americas, the Anasazi who built six-story skyscrapers at Chaco, the Norse who occupied Greenland for 500 years. But he wanted to contrast those with success stories like Tokugawa-era Japan, which wholly reversed its lethal deforestation, and Iceland, which learned to finesse a highly fragile and subtle environment.

Diamond also wanted to study modern situations with clear connections to the ancient collapses. Rwanda losing millions in warfare caused by ecological overpressure. China-- "because of its size, China's problems are the world's problems." Australia, with its ambitions to overcome a horrible environmental history. And Diamond's beloved Montana, so seemingly pristine, so self-endangered on multiple fronts.

He elaborated a bit on his book's account of the Easter Island collapse, where a society that could build 80-ton statues 33 feet high and drag them 12 miles, and who could navigate the Pacific Ocean to and from the most remote islands in the world, could also cut down their rich rain forest and doom themselves utterly. With no trees left for fishing canoes, the Easter Islanders turned to devouring each other. The appropriate insult to madden a member of a rival clan was, "The flesh of your mother sticks between my teeth!" The population fell by 90% in a few years, and neither the society nor the island ecology have recovered in the 300 years since.

Diamond reported that his students at UCLA tried to imagine how the guy who cut down the LAST tree in 1680 justified his actions. What did he say? Their candidate quotes: "Fear not. Our advancing technology will solve this problem." "This is MY tree, MY property! I can do what I want with it." "Your environmentalist concerns are exaggerated. We need more research." "Just have faith. God will provide."

The question everyone asks, Diamond said, is, How can people be so dumb? It's a crucial question, with a complex answer. He said that sometimes it's a failure to perceive a problem, especially if it comes on very slowly, like climate change. Often it's a matter of conflicting interests with no resolution at a higher level than the interests-- warring clans, greedy industries. Or there may be a failure to examine and understand the past.

Overall, it's a failure to think long term. That itself has many causes. One common one is that elites become insulated from the consequences of their actions. Thus the Mayan kings could ignore the soil erosion that was destroying their crops....

One good sharp question came from Mark Hertzgaard, who asked the speaker if he agreed "with Stewart Brand's view that the threat of climate change justifies adopting more nuclear power." To my surprise, Diamond said that he was persuaded by last year's "Bipartisan Strategy to Meet America's Energy Challenges" to treat nuclear as one important way to reduce the production of greenhouse gases....

Posted by DeLong at 09:20 AM | Comments (0) | TrackBack

July 26, 2005

Why Oh Why Can't We Have a Better Press Corps (New York Times Media Whores Edition)

Billmon writes:

Whiskey Bar: For a powerful example of what a joke the nation's newspaper of record has become, here's the story to read. But only for the entertainment value: "Prosecutors in the C.I.A. leak case have shown intense interest in a 2003 State Department memorandum that explained how a former diplomat came to be dispatched on an intelligence-gathering mission and the role of his wife, a C.I.A. officer, in the trip, people who have been officially briefed on the case said."

Once again we have the ubiquitous "people who have been briefed on the case," which under the circumstances, can only mean the Justice Department officials to whom Patrick Fitzgerald must report. (Back before Ken Starr got his hands on the job, this kind of thing was considered a strong argument for having an independent counsel.)

The first thing to note about this story is that there is not a particle of "news" in it -- that is to say, information that can't be found in the archives of the Wall Street Journal (October 17, 2003), the Washington Post (December 26, 2003) and Newsweek (August 9, 2004).... Now the squad of Times reporters who worked on today's story (three bylines, two "contributing" lines) couldn't be bothered to tell us that somebody deliberately leaked the memo to a GOP front group as part of a continuing effort to smear Wilson. On the other hand, the Times squad (like Police Squad, but dumber) puts a lot of stress on the fact that the Secretary of State was actually seen reading it....

This, we are told, is one of the "new details" about the memo and its origins that could offer "clues into who knew what and when." Which I guess is why the fact that the memo was originally addressed to Marc Grossman -- undersecretary of state for political affairs and a made member of the neocon mafia -- is buried in the 17th paragraph. So is the fact that the memo was dated June 10th, 2003 -- not long after Wilson began talking (off the record) to journalists about the administration's efforts to hype the alleged Niger uranium deal.

Likewise, the fact that the memo is based on the notes of a State intelligence analyst who was at the meeting where it was decided to send Wilson to Niger is relegated to the 20th paragraph. But that's still better placement than what the Times squad gives to the fact that the CIA has contested the authenticity of the notes because one of the guys quoted in them wasn't even at the meeting. That didn't make it into the Times story at all....

The real purpose of the Times story seems fairly obvious: The leakers (those mysterious "people who have been briefed") wanted to point a finger of suspicion at Colin Powell, the man who was seen holding the smoking memo in his hand on the plane to Africa.... The Times, in other words, has allowed itself to be used -- cheerfully, unapologetically and, most of all, stupidly...

Posted by DeLong at 06:35 PM | Comments (0) | TrackBack

Do Writers for National Review Have "Beliefs"? Empirical Evidence Says "No"

Matthew Yglesias does a dirty but necessary job:

TPMCafe || Conservative Epistemology: Productivity was low today, so I thought I'd pay a visit to the Corner:

Yesterday in my writers' room, the subject of the blacklists and Communist writers came up. I quickly found myself outnumbered 11 to 1 (the Annoying Friend, my only conservative ally, was out writing a script, damn him) and also (as usual) a bit under-informed. I need a good article or two on the subject, countering the following assumptions: 1) Communists in Hollywood weren't putting their ideology into their work. 2) The threat was just paranoia. 3) The United States is a democracy, so if people want to be Communist, that's their right. 4) The people who "named names" were cowards. Thanks in advance.

Now, see, I'm not very well informed on this topic so I don't have strong opinions on any of those theses. Evidently, though, they form beliefs differently on the other side.

I challenge Matt's implicit claim that writers for National Review have "beliefs." I don't think any philosopher would classify whatever-they-have as such.

Posted by DeLong at 05:44 PM | Comments (0) | TrackBack

July 15, 2005


There is a four-point buck that has taken to resting during the day underneath the small deck outside the laundry room.

It cannot fit all the way underneath the deck--it's antlers are too big. So it sits there in the permanent shade with its head sticking out.

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Friday Long Pig Blogging

From the moment Alex Tabarrok began writing about "vegetarian meat", I knew this was not far off.

Posted by DeLong at 08:01 PM | Comments (0) | TrackBack

Two Months Before the Mast of Post-Modernism

Over at The Valve, they are talking about the book Theory's Empire--and thus about the damage done by "Critical Theory" and its spawn on the American humanities over the past generation. But most of it is all too... theoretical.1 What work can you do with statements like:


There is a certain bloodlessness here: the dry bones hop about and clatter, but there is no flesh on them: much too little is said about how High Critical Theory changed--for good and for ill--how "we" "read" "our" "texts".2

So let me get down and dirty: in the boiler room, at the contact point, before the mast. Let me recount the two months--November and December 1981--that I spent enthralled by the High Critical Theory of Michel Foucault.

By day I would rise late, eat a strange late breakfast of scrambled eggs mixed with cottage cheese (a kind of breakfast which I ate only from November 1981 through January 1982, never before, and never since), and then walk across the Charles River footbridge to the Kress Collection of the History of Economic Thought in Baker Library. I would read. I would hasten out into the lobby where I was allowed pens and take notes. I would go back in and read some more. I would hasten out into the lobby. After dinner I would sit in my room, either staring at the wall wondering what my thesis was going to be about or reading secondary works on the history of economic thought, hoping to spot a hole that I could fill with something sorta original.

It was Associate Professor of Social Studies Michael Donnelly's fault. He knew I was trying to write an undergradute thesis about the British Classical Economists and how they understood the economy of their time. He gave me a book by Keith Tribe, Land, Labour, and Economic Discourse. And Tribe had read and been hypnotized by Foucault--specifically The Order of Things and _The Archaeology of Knowledge. I began to read Keith Tribe. He said very strange things. He said that the Wealth of Nations that economists read was not the Wealth of Nations that Adam Smith wrote. The Wealth of Nations that economists read was made up of two books: Book I on markets and Book II on capital. The Wealth of Nations that Adam Smith wrote was made up of five books: Book I on the "system of natural liberty," Book II on accumulation and the profits of stock, Book III on the economic history of Europe and why the empirical history of its economic development had diverged from its natural history, Book IV on the mercantile and physiocratic systems of political economy, and Book V on the proper management of the affairs of the public household by the statesman.

The Wealth of Nations, Tribe said, could not be a book of economics because a book of economics had to be about the economy. And there was no such thing as the economy in 1776 for a book of economics to be about. What was there? There was the undifferentiated stuff of the mixed social-cultural-political-trading system that governed production and distribution: material life. There was the study of the management of public finances. This was conceived in a manner analogous to the domestic-economic management of household finances. Just as--to Robert Filmer and others--the King was the father of the people, so the King's household--which became the state--had to be properly and prudently managed.

In the words of James Steuart, who wrote his Principles of Political Oeconomy nine years before the Wealth of Nations, in 1767: "Oeconomy, in general, is the art of providing for all the wants of a family, with prudence and frugality. What oeconomy is in a family, political oeconomy is in a state." It is managing affairs to make the people prosperous and the tax collections ample by governing "in such a manner as naturally to create the reciprocal relations and dependencies between [inhabitants], so as to make their several interests lead them to supply one another with their reciprocal wants."

There wasn't, Tribe argued, an economy that an economist could write a book of economics about until the 1820s or so.

Strip Tribe's (and Foucault's) arguments of their rhetoric of apparent contradiction and you can understand that within the mystical shell there is a rational kernel. It is--or, at least, I read them as--an injunction to analyze a school of thought in more-or-less the following way:

  1. Read not just one or two important books, but a whole bunch of books that talk to our past each other and use the same or similar vocabulary in order to identify the school you will look at.
  2. Strip your mind of what they must be talking about, and look with fresh eyes on what they are talking about.
  3. Examine what rhetorical, conceptual, and intellectual moves are common within the examples you have of this "discursive formation."
  4. Think hard about what rhetorical, conceptual, and intellectual moves you would think you would find in these books--but don't.
  5. Think hard about what rhetorical, conceptual, and intellectual moves you do not expect to find prominently in these books--but that you nevertheless do find.
  6. Present to the world, in as clear and straightforward a way as you can, what this particular form of discourse was--what it thought the world was like, what it saw as important, what its particular blindnesses were, what its particular sharp points of insight were.
  7. Do not, ever, grade a discursive formation of the past by how much it falls away from the ideas of the bien-pensant of today. The past is another country.

And I became convinced that Tribe and Foucault were write. It was, indeed, only with Ricardo that the operation of what we now say is the economy--the production, exchange, and distribution of goods and services all mediated through market exchange--was seen as something that was important enough, or separate enough, or coherent enough to be something that it made sense to write books about, and, indeed, something that it made sense to be an expert in. David Ricardo was a political economist. Adam Smith was a moral philosopher. To try--as somebody like Joseph Schumpeter was--to grade Adam Smith as if he were engaged in the same intellectual project as Schumpeter was somewhat absurd.

Tribe applied this methodology to Adam Smith, his predecessors, contemporaries, and successors. What they were doing, before Ricardo, was Political Oeconomy--writing manuals of tactics and policy as advice to statesmen, although manuals restricted to what Adam Smith would have called (did call) a subclass of police: how to keep public order and create public prosperity. Hence for Adam Smith Book V of Wealth of Nations is the payoff: it tells British statesmen what they ought to do in order to make the nation prosperous, their tax coffers full, and thus the state well-funded. Book IV is a necessary prequel to Book V: it tells the statesmen in the audience why the advice that they are being given by others in other books of Political Oeconomy--by Mercantilists and Physiocrats. Book III is another necessary prequel: it teaches statesmen about the economic history of Europe and how political oeconomy of various kinds has been practiced in the past.

But Tribe's (and Foucault's) methodology collapses when we work back to Books II and I of the Wealth of Nations. For Adam Smith is not the prisoner of the discursive formation of Political Oeconomy. He is not the simple bearer of currents of thought and ideas that he recombines as other authors do in more-or-less standard and repeated ways. Adam Smith is a genius. He is the prophet and the master of a new discipline. He is the founder of economics.

Adam Smith is the founder of economics because he has a great and extraordinary insight: that the competitive market system is a remarkably powerful social calculating and organizing mechanism, and that the sophisticated division of labor to which a competitive market system backed up by secure and honest enforcement of property rights give rise is the key to the wealth of nations. Some others before had had this insight in part: Richard Cantillon writing of how once you have specified demands the market does by itself all the heavy lifting that a central planner would need to do; Bernard de Mandeville that dextrous management by a statesman can use the power of private greed to produce the benefit of public utility. But it is Smith who sees what the power of the "system of natural liberty" that is the market could be--and who follows the argument through to the conclusion that it forever upsets and overturns the previous intellectual moves made in and conclusions reached by the discursive formation of Political Oeconomy.

And once I had worked my way through to this conclusion, I could start to write my own thesis. I had broken the thralldom. Foucault's ideas of "discourse" and "archaeology" were not my masters, but my tools. And as I wrote it became very clear to me that between David Ricardo and even the later John Stuart Mill the discursive formation that was Classical Economics did not produce anybody like Adam Smith. There was nobody who made the intellectual leap--produced the epistemological break--that Smith had done that shattered Political Oeconomy and enabled the birth of Classical Economics. I could write my thesis about how the British Classical Economists never understood the Industrial Revolution that they were living through.

--J. Bradford DeLong, B.A. in Social Studies summa cum laude, June 1982.

1Let me interject that the best contribution I have found so far is from Tim Burke--I think I like it the most because it is the meatiest and the bloodiest. But, as always, YMMV:

Tim Burke: Book Notes: Theory's Empire: In 1989, I was well into graduate school... had a lot of exposure to "critical theory" as an undergraduate... a class with Judith Butler on Foucault while she was at Wesleyan. I liked theory, even when I felt I didn't have the faintest idea what was going on, because if nothing else you could sense the energy behind it.... Theory made you feel almost like you were in the dream of the Enlightenment... disciplines and specializations set aside....

I warm to the talk that [Theory] was an empire, but I'm equally aware that my sense of it as such is a direct personal consequence of my individual experience of academic careerism.... I get both the insider and outsider version[s].... I tend to bristle on one hand at know-nothing denunciations of theory, like E.O. Wilson's in Consilience, but also at circle-the-wagons defenses of it.... The main point, and it is one made again and again throughout the anthology, is that theory was above all a... way of feeling and being academic... native to a past time and place.... You can't just separate out some of the chief manifestations of the era of theory, like the star system, as unrelated epiphenomena, or insist that we just talk about the actual texts. (Though at the same time, the volume could really use an ethnographic retelling of a conference or conversation from the late 1980s or early 1990s. Anthony Appiah comes closest in his short essay, and maybe there's nothing that really fits the bill besides a David Lodge novel.)....

[W]hatever "theory" began as, it quickly metastasized into... a way of being and acting that was often a new and virulent practice of academic warfare which left a lot of casualties and fortifications in its wake....

Saussure, Foucault, Derrida, Lacan, and even many of the various American academic superstars who dominated the era of theory like Fish, Jameson, or Spivak had important, substantive arguments to make that can't just be waved away or ignored.... Still, I agree with many of Theory's Empire's authors: the geist and historical moment of theory is an equally important part of the subject....

This is not to underrate the particular forms of self-interest that theory serviced in very particular ways.... [T]heory was the ultimate careerist maneuver, because its normal operations conferred upon the theorist a position of epistemologically unimpeachable, self-confirming authority (in part by claiming to abjure authority) while also freeing the theorist from having to know anything but theory in order to exert such authority.... [S]uch gestures of intellectual hypocrisy, some of them more subtle, some less so, are a particular target of mockery and anger from the authors in Theory's Empire.... [O]ther points that emerge along the way... strike me as important. One is the amnesia of theory.... So when John Ellis observes of Stanley Fish's work that it ignored the past, that in Fish's work, "philosophy of science begins with Thomas Kuhn, serious questions about the idea of truth and the positivist theory of language begin with Derrida, jurisprudence begins with the radical Critical Legal Studies movement", I think he's exactly right, and not just about Fish.... The same affliction affected us all across a wide swath of disciplines: we reinvented wheels, fire, alphabets and chortled in satisfaction at our own cleverness. Theory dropped into our midst like commodities drop into a cargo cult, and our reaction was roughly the same, right up to eagerly scanning the skies for the next French thinker to drop down....

[T]he ordinary work of postcolonial scholarship takes the already deeply problematic arguments and style of the dominant superstars like Spivak, Prakash and Bhabha and operationalizes it as yeoman-level banality.... [A] missing generation of monographs [is] a result, an absence of substantive, minutely authoritative, carefully researched and highly specialized knowledge....

It is a straightforwardly good thing that historians now write about a whole range of topics that were relatively unstudied in 1965; a straightforwardly good thing that literary critics read and think about a much wider range of texts than they once did.... I suppose if I had one hope from this volume, it's that people who read it and take it seriously won't be the kind of lazy Sokollites that Michael Berube justifiably complains about, because nowhere in the volume does anyone claim that doing literary analysis or humanistic scholarship is easy or straightforward. If this is a roadmap to the future, it does not go from point A to point B, much to its credit...

2A second interjection: Sean McCann does attempt to put some sinews on what he is talking about: he lists six (he thinks four, but they are six) intellectual power-moves of High Critical Theory http://www.thevalve.org/go/valve/article/theorys_empire_wrestling_the_fog_bank/#2277:

  1. Language is a complex and imperfect instrument of profound importance to our sense of what it means to be a self-conscious human being. Because communication makes use of conventional codes, it’s always possible for a listener to misinterpret the intentions of a speaker or for a sentence to be given more or different meanings than a speaker intends (a matter which explicitly or not may become a reflexive resource and thematic concern of literary texts).
  2. The various possibilities for imperfect communication are comparable to, or perhaps consistent with or related to, the other senses in which individuals are less than fully autonomous, rational, self-directed beings.
  3. Many commonplace beliefs, practices, and institutions owe far more to persistent habit, superstition, and ideology (in a word, culture) than to reason or evidence. These include once prevalent beliefs about the properties and boundaries of literature.
  4. They also include more fundamental matters—-e.g., the social reproduction of race, gender, sexuality, and, to a degree, of class—-whose role in shaping our individual and social lives may be of greater importance than explicit legal or governmental structures. Literature plays a role in establishing and legitimizing, as well as in revealing and challenging those tacit beliefs, practices, and institutions and in this way is connected to more extensive social problems.
  5. The existence of those social conventions, and our understanding of them, is shaped by systematic social inequities. We have good reason, therefore, to be highly attuned to the way interest as well as culture affects belief.
  6. Taking full cognizance of these matters could have emancipatory consequences.

Posted by DeLong at 05:35 PM | Comments (0) | TrackBack

China's First Currency Revaluation Coming This Summer?

The Bush Administration tells the Congress that China will revalue its currency in the next two months:

FT.com / World / US - US expects Chinese currency revaluation: By Demetri Sevastopulo and Andrew Balls in Washington, and Richard McGregor in Beijing: The Bush administration has told key senators that it expects China to revalue its currency in August ahead of a planned visit to Washington by President Hu Jintao in September, according to people familiar with the matter.

Senators Charles Schumer and Lindsey Graham, co-sponsors of a bill that would impose a 27.5 per cent tariff on Chinese imports, agreed to delay a vote on their bill after receiving what they regarded as an assurance that China will move on its currency next month.

In a June meeting attended by Alan Greenspan, Federal Reserve chairman, John Snow, Treasury secretary, told the senators that he believed China would allow the value of the renminbi to increase against the dollar in August, the people familiar with the discussion said.... The US Treasury has told Beijing it needs to revalue the renminbi by at least 10 per cent against the dollar. Mr Snow reiterated on Thursday that the US wanted China to move “as soon as possible.”

China’s foreign exchange reserves increased by just over US$100bn in the first six months of this year to US$711bn, nearly double the rate at which its store of overseas currency rose in the same period last year. China is considering introducing a currency regime similar to the managed float operated by Singapore. Under this system the renminbi would be pegged to a basket of currencies reflecting the country's trade, but the details of the weights of the basket would not be made public, a person familiar with the Chinese administration's thinking said.

Tony Fratto, Treasury spokesman, said: “Secretary Snow did not provide an assurance on a specific time-frame for when China would reform its currency regime. Targeting a specific date or time-frame is counter-productive. That said, it is clear that China is prepared to move now. It would be in the best interests of China, and the global financial system, if these reforms came sooner rather than later.”...

The debate over the renminbi will be fuelled, in China as well as in the US, by news that the country's foreign exchange reserves increased by more than $100bn in the first six months of this year to $711bn. China's foreign reserves are on track to break $1,000bn by June next year if it continues to expand at the present rate.

China is a $2 trillion economy. That rate of reserve accumulation means that 10% of China's total income is being spent buying reserve assets--the overwhelming bulk of them dollar-denominated.

That is amazing...

Posted by DeLong at 12:45 PM | Comments (0) | TrackBack

How Much Slack in the Labor Market Today?

PGL at Angry Bear points me to Rex Nutting, who summarizes Katherine Bradbury's calculations on what the unemployment rate would be if labor force participation were behaving "normally":

Joblessness understated, Fed study says - Economy - Bond Market: Labor force participation rates have not rebounded By Rex Nutting, MarketWatch: The current low U.S. unemployment rate probably understates the true level of joblessness by 1 to 3 percentage points, the senior economist at the Boston Federal Reserve says. Millions of potential workers who dropped out of the labor force during the recession four years ago have not returned as expected and are thus not counted in the official unemployment statistics, said Katherine Bradbury in a paper published by the Boston Fed. The jobless rate fell to 5% in June the lowest level since the terror attacks of September 2001.

Labor force participation rates "have not recovered as much as usual and the discrepancies are large," she wrote. "Current low rates of labor market participation thus potentially represent considerable slack in the U.S. labor market," she wrote. The amount of slack in the economy is a key variable for Federal Reserve policymakers, who have been raising interest rates for more than a year to return rates to "neutral' levels. All things equal, the more slack in the economy, the lower rates ought to be.

Some policymakers have argued that the economy is close to full employment with the jobless rate at 5%, thus justifying higher rates to pre-empt inflationary pressures from building in a tight labor market. While the official unemployment rate has fallen from a peak of 6.3% in June 2003 to 5% in June 2005, the labor force participation rate remains close to 15-year lows of 66%....

All of the improvement in participation rates during this recovery has come from people over 55, as more relatively healthy Baby Boomers enter this cohort. At the same time, participation rates for teenagers have fallen to 44% after averaging more than 50% during the 1990s boom. If labor force participation rates had improved as much during this recovery as typical, between 1.6 million and 5.1 million more people would be in the labor force, Bradbury concluded. If those people were counted in the labor force but not working, the jobless rate would have been somewhere between 6.5% and 8.7%, rather than the 5.4% reported by the Labor Department in the three months from November 2004 to February 2005. "An 8.7% unemployment rate would represent considerable slack in the labor market," Bradbury said.


As I say often, the pattern of long-term unemployment, labor force participation, anemic real wage gains, payroll employment numbers, and the behavior of weekly hours all suggest a weak labor market with considerable slack and unused labor resources. Only the unemployment rate tells a different story.

Why the unemployment rate tells a different story remains a great mystery.

Posted by DeLong at 12:29 PM | Comments (0) | TrackBack

Saying the D-Word More Loudly

Ben Bernanke gives a speech as Chair of Bush's Council of Economic Advisers. It contains only one mention of the word "deficit": "One consequence of the strong income growth we are enjoying is higher than expected levels of tax collections so far this year, which if maintained with spending control will reduce the government's budget deficit for this year well below its projected level." It does not contain the phrase "national savings" or the phrase "current account" or the phrase "fiscal policy."

If Ben is going to be a success at CEA chair, he needs to say the D-world more often and more loudly than this. Bush plans to extend his tax cuts and fix the AMT are grossly inconsistent with any form of budget near-balance. Permanently and grossly unbalanced budgets lead, in the long run, to slow growth and high inflation. And in the short run our chances of solving our trade deficit problems by ourselves--and if we don't solve them by ourselves the market will solve them for us via deep recession or major financial crisis--are greatly increased if we balance our budget soon.

Here's his opening:

Council of Economic Advisers: Speeches and Statements: SKILLS, OWNERSHIP, AND ECONOMIC SECURITY: By Ben S. Bernanke, Ph.D. Chairman, Council of Economic Advisers, at the American Enterprise Institute, July 12, 2005: Thank you for inviting me to speak today. I would like to begin with a few words on the state of the U.S. economy....

In brief, the economic recovery continues to be strong. With real GDP growth at 3.8 percent in both the fourth quarter of 2004 and the first quarter of 2005, last December's forecast of 3.4 percent real growth during 2005 appears to be on track, despite the challenges created by high oil prices. Professional forecasters outside the government take a similar view. The job market continues to strengthen as well. Payroll employment has increased by about 181,000 jobs per month during the first half of 2005.... The unemployment rate has been declining for two years and has now dropped to just 5.0 percent, the lowest since September 2001. Estimates of growth in wage and salary income have been revised upward substantially, raising the possibility that the labor market may be even stronger than we thought. One consequence of the strong income growth we are enjoying is higher than expected levels of tax collections so far this year, which if maintained with spending control will reduce the government's budget deficit for this year well below its projected level.

Inflation remains low by historical standards... core inflation remains stable. We expect the United States to continue to enjoy price stability over the next few years.

The market for residential housing has been remarkably strong.... While speculative behavior appears to be surfacing in some local markets, strong economic fundamentals are contributing importantly to the housing boom. These fundamentals include low mortgage rates, rising employment and incomes, a growing population, and limited supply of homes or land in some areas.... [O]ur best defenses against potential problems in housing markets are vigilant lenders and banking regulators, together with perspective and good sense on the part of borrowers.

In all, we are in the midst of a healthy and sustainable economic expansion. Aided by the President's policies and low interest rates, the economy has recovered from an investment bubble, recession, corporate scandals, terrorism and war. Perhaps most importantly, these developments re-confirm the importance of having a flexible, market-based economy...

Posted by DeLong at 12:26 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Liars? (Dick Armey Edition)

Former Majority Leader Dick Armey is a weathervane:

Think Progress:

Dick Armey'9s Hypocrisy on CIA Leak Case

Appearing on Fox this morning, former House Majority Leader Dick Armey said the following.... "We%'ve got Karl Rove, who is under this constant attack of political malarkey, who has probably the most documented case of his evidence of anyone in the the whole story. So quite frankly, I think the American people are seeing it for what it is right now. More than anything else it's a political farce not a matter of national security interests. [Fox News, 7/14/05]


Dick Armey... in October 2003.... "Now, there was no reason to tell the world about the ambassador's wife. It was just a short-sighted, self-centered, simple-minded cowardly act of revenge, and who's paying the cost? The Bush White House.... If they ever find [the leakers], they ought to just -- they ought to just kick them out of the White House and prosecute them, because... the greater the pretension, the greater the hypocrisy. [CNN, 10/19/03]

Posted by DeLong at 12:23 PM | Comments (0) | TrackBack

Whiskey Bar: End of the Line

More from the Whiskey Bar:

Whiskey Bar: End of the Line: I realize nobody cares about this any more -- since it has no obvious connection to Plamegate -- but the official (or at least semi-official) death notice for Shrub's Social Security "reform" fiasco has been quietly printed:

House Ways and Means Committee Chairman Bill Thomas (R-Calif.) now thinks he may not begin consideration of Social Security legislation until September, an aide said. Thomas told an Associated Press reporter yesterday that, "The issue is dealing with more time-sensitive legislation first." He said Social Security "is not time-sensitive..."

It appears the Keystone Cops... haven't been able to decide which version of "reform" to get behind -- "ponies for everybody" (private accounts without benefit cuts or tax increases) or "root canal work for the middle class" (benefit cuts and tax increases with private accounts.) Thomas's stealth approach -- SS privatization would have been packaged with a grab bag of private pension goodies -- was the last hope for getting any kind of legislation this year that Bush could sign without putting a paper bag over his head.

But, despite the looming horror of a Social Security meltdown that would end civilization as we know it... the issue apparently is no longer "time sensitive".... So that's it. It's over: with the whimper instead of the bang.

Posted by DeLong at 12:19 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Liars? (Think Karl! Think! Department)

The Minuteman is disappointed in Karl Rove:

JustOneMinute: Novak Talked To Rove: [T]he AP and the WaPo chat with lawyers close to the investigation, and here we go. But these leaks don't fully square with the Times, and have ghastly bits:

The AP:

Rove told the grand jury that by the time Novak had called him, he believes he had similar information about Wilson's wife from another reporter but had no recollection of which reporter had told him about it first, the source said.

The WaPo:

The lawyer, who has knowledge of the conversations between Rove and prosecutors, said President Bush's deputy chief of staff has told investigators that he first learned about the operative from a journalist and that he later learned her name from Novak. Rove has said he does not recall who the journalist was who first told him that Wilson's wife worked for the CIA, or when the conversation occurred, the lawyer said.

Oh my goodness - we are going with the "I Forgot" defense. Oh, boy. Look, the question of how Karl learned this is important. Think, Karl! Be the genius we know you are!

Posted by DeLong at 12:17 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Come To Scenic Niger Boondoggle Department)

Hilzoy has some words about the gullibility of Washington Post reporters:

Obsidian Wings: Come To Scenic Niger!: Having made my views on the Plame/Rove matter as clear as I can... I thought I might mention instead one aspect of the whole thing that has always struck me as really funny, namely, this:

"On July 12, two days before Novak's column, a Post reporter was told by an administration official that the White House had not paid attention to the former ambassador's CIA-sponsored trip to Niger because it was set up as a boondoggle by his wife, an analyst with the agency working on weapons of mass destruction."

A boondoggle. To Niger.... [T]hese words alone should have sent you into gales of laughter.... Getting there is no fun. Travelocity tells me that to fly from JFK to Niamey takes over 38 hours (via London and Paris), but, oddly, only a little over 20 coming back (via Ouagadougou, Casablanca, and Paris)....

What do you find when you arrive? Sand, mostly. About 80% of Niger is the Sahara desert. If you google-image Niger, you will find a lot of photos of SUVs up to their axles in sand in the middle of a trackless waste, with titles like "and this is our off-road vehicle, stuck in the sand!" It's normally bone-dry, and getting worse because of desertification, about which the Lonely Planet Guide writes: "The ratio of desert to semi-desert is ever increasing, and there is a danger that the country may, one day, disappear under a blanket of sand." These days they are having not only a drought but a plague of locusts. I don't know whether Niger was having a drought when Joe Wilson went there, although, as a friend of mine asked me over dinner, in the Sahara, how could you tell?

Even without drought and locusts, Niger is desperately poor. According to the World Bank (Table 1.1), Niger's GDP was $200/year in 2003; alarmingly, there were ten countries that were even worse off. On the Human Development Index (pdf), which measures quality of life more generally, it's second to last, just ahead of Sierra Leone.

Second to last in the world. Think about it. According to the World Bank, life expectancy is 46.4 years (and that's without a serious AIDS problem); more than one in seven infants die; more than one in four children die by five; and the adult literacy rate is around 18%. That's not just poor; that's a disaster...

Posted by DeLong at 12:15 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Liars?

Kevin Drum writes:

The Washington Monthly: Paul Krugman says exactly what needs to be said.

If there's any single thing that I hold against George Bush more than any other, it's the way that, with almost animal instinct, he decided within days of 9/11 to use it as nothing more than a routine opportunity to destroy his domestic enemies, rather than as a unique and fleeting chance to unite the country and destroy our foreign enemies. That tawdry instinct came from Karl Rove and people like him, and it's that instinct that is destroying the modern Republican party. Someday the few remaining grownup conservatives will figure that out.

And here's Krugman:

Karl Rove's America - New York Times: What Mr. Rove understood, long before the rest of us, is that we're not living in the America... where even partisans sometimes changed their views when faced with the facts. Instead, we're living in a country in which there is no longer such a thing as nonpolitical truth. In particular, there are now few, if any, limits to what conservative politicians can get away with: the faithful will follow the twists and turns of the party line with a loyalty that would have pleased the Comintern.

I first realized that we were living in Karl Rove's America during the 2000 presidential campaign, when George W. Bush began saying things about Social Security privatization and tax cuts that were simply false. At first, I thought the Bush campaign was making a big mistake - that these blatant falsehoods would be condemned by prominent Republican politicians and Republican economists, especially those who had spent years building reputations as advocates of fiscal responsibility. In fact, with hardly any exceptions they lined up to praise Mr. Bush's proposals.

But the real demonstration that Mr. Rove understands American politics better than any pundit came after 9/11. Every time I read a lament for the post-9/11 era of national unity, I wonder what people are talking about. On the issues I was watching, the Republicans' exploitation of the atrocity began while ground zero was still smoldering. Mr. Rove has been much criticized for saying that liberals responded to the attack by wanting to offer the terrorists therapy - but what he said about conservatives, that they "saw the savagery of 9/11 and the attacks and prepared for war," is equally false. What many of them actually saw was a domestic political opportunity - and none more so than Mr. Rove. A less insightful political strategist might have hesitated right after 9/11 before using it to cast the Democrats as weak on national security. After all, there were no facts to support that accusation. But Mr. Rove understood that the facts were irrelevant. For one thing, he knew he could count on the administration's supporters to obediently accept a changing story line. Read the before-and-after columns by pro-administration pundits about Iraq: before the war they castigated the C.I.A. for understating the threat posed by Saddam's W.M.D.; after the war they castigated the C.I.A. for exaggerating the very same threat. Mr. Rove also understands, better than anyone else in American politics, the power of smear tactics. Attacks on someone who contradicts the official line don't have to be true, or even plausible, to undermine that person's effectiveness. All they have to do is get a lot of media play...

Posted by DeLong at 12:13 PM | Comments (0) | TrackBack

Airlifting Harry Potter Copies in by Chopper...

The kids are back from their summer camp, which was featured in this morning's New York Times as Andrew Townsend and company grapple with the Harry Potter crisis:

http://www.nytimes.com/2005/07/14/books/14camp.html?pagewanted=print Harry Potter and the Half-Crazed Summer Camper By EDWARD WYATT: The boys and girls at the Kennolyn Camps in the redwood forests of the Santa Cruz Mountains in California will get a most unusual wake-up call on Saturday. Roused from their beds at 6:30 a.m., more than an hour earlier than usual, they will be marched to a campfire meeting, served hot chocolate from a bubbling cauldron and read the first chapter of the new Harry Potter novel by counselors dressed as characters from that popular series.

Few of the campers - or their counselors, 18-to-25-year-olds who have spent the last seven years following Harry Potter's adventures - are likely to complain, said Andrew Townsend, the camps' director.

"We haven't announced it to the kids yet, but we announced the plans to the staff last week, and I was surprised at how excited they were," he said. "We figured it would be one of those great camp memories, listening to Harry Potter in the redwoods as the sun rises."

Around the country, many camps that over the years have dealt with every imaginable contingency are facing a first-time event this week: how to please campers eager to dive into the latest Harry Potter. In this case it is "Harry Potter and the Half-Blood Prince," the sixth novel in the series by the British author J. K. Rowling, to be released around the world early Saturday just after midnight.

While all five of the earlier novels were published in summer or early fall, most arrived either before the traditional summer camp season or at a time when the frenzy surrounding a Harry Potter debut was more subdued. As a result, many camps are having to make special plans to deal with the book's arrival...

Posted by DeLong at 12:08 PM | Comments (0) | TrackBack

Why I Am a Utilitarian...

The witty, erudite, and highly intelligent Julian Sanchez convinces me that I would be insane were I to prioritize liberty over utility: that I am right to be a utilitarian:

Reason: Save Me From Myself!: Parentalism and the fear of freedom: I had not expected to see non-smokers attacking the ban on principle locked in debate with smokers who, between languorous puffs and grey exhalations, welcomed it as a means of reducing their own smoking. If the argument... sounds strange, it is not, at any rate, rare. When New York City was mulling its own smoking ban, one young "man on the street" interviewee told the Village Voice: "I'd actually be all for it, which is odd since I am a smoker myself. I think it might make me smoke less. The increase in the cost of a pack of cigarettes hasn't stopped me from smoking. I just have friends who come up to visit from Florida bring cartons for me."...

We are all, sometimes, afflicted with akrasia, those attacks of weak will that lead us to satisfy fleeting desires at the expense of our own acknowledged long-term interests. Like Ulysses lashed to the mast, we empty the pantry of sweets, hire pricey personal trainers, join rehab groups, or loudly announce an intention to start working on that novel, knowing how embarrassed we'll feel if there's no progress to report when a friend asks how it's coming.... There may even be ways for government to help us combat akrasia without overly restricting our freedoms.... [P]hilosopher Kwame Anthony Appiah offers... the example of the "self management card." When we go shopping for smokes or fatty foods or alcohol or a dose of heroin, Appiah imagines, the store is required to swipe our cards to ensure we haven't gone over a self-imposed limit.... Normal and necessary as these akrasia-countering mechanisms may be, though, they may also be symptoms of what Nobel laureate economist James Buchanan has dubbed "parentalism."... Parentalism... emerges when we begin to suspect that we ourselves are not competent to make our own choices, to yearn for someone to relieve us of the burden of choice.... The thought is not novel to Buchanan. Jean-Paul Sartre described the "anguish" that comes with our realization that we are "condemned to be free." Marxist psychologist Erich Fromm diagnosed the totalitarian movements of the 20th century as symptoms of an urge to "escape from freedom," from the displacement of a feudal world in which identities were given--a place for everyone, and everyone in his place--with a capitalist order that made who we were and what we were to become seem dizzyingly contingent....

[T]he true parentalist wants to escape not just the burdens of the act of choosing, but the responsibility for making a poor choice. Voluntary market mechanisms for filtering or restraining choice... allow us only to defer responsibility, not avoid it.... But perhaps a more important problem with parentalism is that it licenses what Sartre called "bad faith," the attempt to avoid the burdens of responsibility by denying our own freedom. Classical liberals may even inadvertently encourage this by speaking of responsibility as "the other side" of freedom, as though it were the spinach that had to be cleared away before getting to desert. But is that really so? When we make trivial choices--what to have for dinner, what movie to see, which CD to buy--what we most value is the freedom to select without constraint from many options. Yet when it comes to our most central choices--what kind of person am I to be, what work will I find rewarding?--we may take as least as much satisfaction in the feeling of responsibility for our choices, in knowing that we have shaped a life that is ours even when we have chosen badly.

Classical liberals have become good at explaining how the market order they favor promotes freedom and happiness. They have been less adept at explaining why--at least past a certain point--people ought to want that freedom, which when genuine is always at least a little frightening. In the face of the parentalist impulse, we may need to develop the case that our bad choices, the choices that make us unhappy, are as vital and precious as the ones that bring us joy.

My mind explodes when I read Julian's command to "take as least as much satisfaction in the feeling of responsibility for our choices, in knowing that we have shaped a life that is ours even when we have chosen badly." It is the libertarian version of the old communist story:

Speaker: After the revolution we will all eat strawberries and cream.
Worker: But I don't like strawberries and cream!
Speaker: After the revolution you will eat strawberries and cream--and like it!

Posted by DeLong at 11:47 AM | Comments (0) | TrackBack

I See the Stars at Bloody Warrs in the Wounded Welkin Weeping

Teresa Nielsen Hayden writes about Poul Anderson:

Making Light: Loss of suspension: ...that terrible moment when you see too far into the emotional strategies of a work of fiction, and it falls dead for you. There's no retrieving it. That moment of insight recolors all your previous readings, so that what was once fascinating is now just painful.

I've only ever seen one instance where it was salvaged. When I was a kid, I happily read Poul Anderson's Dominic Flandry stories. When I got older they turned to ashes in my mouth,1 around the time I noticed what a shallow manipulative SOB Flandry is, and how often his exploits are paid for by the women in his vicinity. Then, much later, Poul Anderson paid off the series's debts in full with the stark and (in my opinion) underrated A Knight of Ghosts and Shadows.

I was long past being a kid by then, certainly past believing that writers have any obligation to deserve the trust we give them; so the sense of relief and reassurance I felt came as a complete surprise. It surprises me still....

I had always thought that being a shallow manipulative SOB was part of the main point of the Flandry stories. He is cynical, corrupt, shallow, decadent, self-absorbed, lecherous. Yet when the choice comes--when there is a chance to do something that will delay by a month or so the Long Night of the barbarians that will come after the fall of the cruel, unjust, murderous, rapacious Terran Empire--Flandry does find that he is a patriot, and that truly dulce et decorum pro patria mori. The decadent sybarite stands up like Horatius at the Gate, grabs his spear to face impossible odds, and declaims:

Then out spake brave Horatius,
The Captain of the Gate:
"To every man upon this earth
Death cometh soon or late.
And how can man die better
Than facing fearful odds,
For the ashes of his fathers,
And the temples of his gods...?"

For me, the frustrating narrative hole was always Flandry's insufficient motivation: Why is this decadent sybarite also Horatius at the Gate? (Let's not ask why Macaulay is impelled to write the poems that Romans would have written had the Romans been illiterate Scots.)

So for me, A Knight of Ghosts and Shadows did not lift any burden, but seemed more like a bizarre hall of mirrors. Dominic Flandry falling in True Love? The lifetime appreciator of High Culture and defender of the possibility of civilization turning into the Greatest Vandal of All Time? Flandry in this book is a different man from the Flandry in earlier books. It's not good to write a story in which a new character inhabits the skin and bears the name of an old one.

And what possible reason--save that of transparent plot device to set up a cruel dilemma--could Flandry's son ever have had to learn the location of Aycharaych's homeworld? Not to mention the disproportion of the response: to answer an uncovered espionage-and-assassination plot with large cross-border destructive raids by battlefleets is a dangerous climbing of the ladder of escalation. It is not something that the Roidhunate of Merseia would ever have taken lying down.

The jerky clockwork was, to me at least, much more visible and the suspension of disbelief much less possible in A Knight of Ghosts and Shadows than in the other Flandry stories.

Yet more evidence that reading is something that takes place between the ears. Your mileage can and will vary widely...

By contrast, Tau Zero. Now there is a science-fiction novel!

1They turned to ashes in my mouth too, but for very different reasons. For me, it was the cheap Cold War polemics. Flandry is fighting to delay the victory of the barbarians--to keep the star-spanning civilization alive a little longer, so that life can be less nasty, brutish, and short. Enter the Roidhunate of Merseia, a young expanding civilization and species confident in itself: strong and aggressive. Who better to pass the torch too? Who better to hold back the Long Night? Yes, the Roidhunate has enormous flaws. But are they worse than the flaws of the Terran Empire?

That's not how Poul Anderson plays it. He plays it like this: Merseia = Russia. "Peaceful coexistence" is impossible. Those who say that Brezhnev is not Stalin = deluded fools. Those who propose detente with Merseia or even a watchful peace rather that recognizing that permanent, total war has already begun = Commie-loving unpatriotic American liberals like Henry Kissinger.

Thus what starts as a meditation on variations on themes from the Age of Septimius Severus turns into a John Birch Society tract. It simply does not fit. If the major theme is that defending the Bad is necessary to hold back the Worst, you cannot suddenly intrude American Angels vs. Russian Commie Devils without causing... laughter.

Yet more evidence that reading is something that takes place between the ears...

Posted by DeLong at 11:44 AM | Comments (0) | TrackBack

Dials Moving Into the Red Zone

At the end of 2000 I said that while the U.S. trade deficit was a worry, there was still plenty of time to deal with it. It was very important that it be resolved by the world economy "balancing up" rather than "balancing down." And I would have put the chance of a major dollar-based financial crisis at only one-in-a-thousand.

By the end of 2003 I said that the chance of a major dollar-based financial crisis was one-in-a-hundred, and it was time for keeping that probability from growing any higher to become the highest economic policy priority.

By the end of 2004 I thought that the chance of a major dollar-based financial crisis was one-in-ten.

Now I think that the chances are one-in-five. It is still possible that we may escape unscathed: the dollar could fall by nearly half without foreigners ever demanding an expected-depreciation premium in interest rates, the foreign currency-denominated value of U.S. foreign debt could melt away, and the exchange rate stage could drive an export-driven boom that brought trade into balance as higher import prices shrunk imports. We did it in the late 1980s, after all--although starting from a disequilibrium only half as large as our current one.

Brad Setser writes:

Brad Setser's Web Log: Don't worry, be happy. Trade deficits do not matter so long as US hhousehold wealth is rising: Michael Mandel thinks I am making a big mistake, albeit a very, very common one - worrying about rising US external debt rather than celebrating rising US household wealth.

Brad is making the very very common mistake of taking the value of U.S. assets--that is, our wealth--as a fixed number, so that everything that goes to foreigners is less for Americans. That is, he's treated wealth as a zero-sum game.

In fact, U.S. wealth has historically grown at a pace which far exceeds the size of the current account deficit. As the economic pie gets bigger, there's enough to feed our foreign friends while keeping an ever-growing piece for ourselves.

Since 1952 household net worth--that is, assets minus liabilities--has increased by an average of 7.4% annually, or 3.7% in real terms. That includes real estate booms and real estate busts, bull markets and bear markets. This annual percentage gain translates into a huge increase in net worth, in dollars. Household net worth today is just under $50 trillion, according to the Federal Reserve.

...If US household wealth is rising, should we worry if US external debt is also rising?... [W]hat would happen if US... long-term rates... were to rise substantially?... Too much of US household wealth depends on the interest rate for me to feel very comfortable. At some point, the United States foreign creditors are likely to want an interest rate high enough to compensate them for the risk of future dollar depreciation. A country that outsources savings will likely have to offer foreign investors a positive real return (over time) in terms of their local currency, not in dollar terms....

The US likely will have a current account deficit of close to 7% of GDP by the end of 2005, and even if that deficit started to fall, the US would still need to finance a very large current account deficit for some time. That might not be much fun if interest rates were high.

Of course, there are scenarios where the US trade deficit falls and US interest rates stay low. For example, the US consumer could give out, pushing the US economy into a recession.... But low interest rates, constant household wealth, no growth and stagnant (if not falling) household income is hardly a comforting prospect....

The US net international investment position... is likely to be more like 30% of US GDP at the end of 2005. And it is poised to keep on rising so long as the US runs large trade deficits. Exports as a share of US GDP, in contrast, are no higher now than they were in 1997, when the US had a lot less external debt. I think that matters. Remember that external debt ultimately is a claim on the United States future export revenue. New homes -- and higher prices on existing homes -- won't help pay the interest on the US external debt. A new Boeing production line would.... It is not clear that the United States capacity to generate future export revenue to pay its external debt is set to rise as fast as its external debt looks likely to rise. Call me old fashioned. I think the external debt to exports ratio still matters.

Posted by DeLong at 11:43 AM | Comments (0) | TrackBack

Why Grassley Can't Move

Senator Grassley sees no way forward on Social Security:

Radio Iowa: Grassley says Social Security reform stalled: Republicans on the U.S. Senate Finance Committee can't agree on how to reform Social Security, and the panel's chairman, Iowa Senator Chuck Grassley, says they may be close to failure, though he says he's not giving up yet. Grassley, a Republican, says most Democrats agree Social Security is in sad shape, but he says no one's coming up with any better ideas on how to fix the program.

Grassley says "There's no point in us doing anything until we get Democrats to the table and if we don't get Democrats to the table then we might not do anything because, right now, there hasn't been a single Democrat, either on the issues of solvency or personal accounts, come to the table to talk about anything." Grassley has proposed a bill he says would slow the growth of Social Security benefits for most workers while raising the retirement age and freezing the maximum benefit for the nation's highest-paid workers, but he says it's stalled. Grassley says "We're kind of in a situation where, considering the fact it's impossible to get anything through the Senate that's not bipartisan, we could be at a standstill on the issue of Social Security even though 100 senators know there's a problem we have to deal with." He says he'll continue to work toward consensus on the key elements, like solvency and personal accounts, with the issue going before the committee again on Thursday.

Grassley's problem is that whatever deals he strikes in the Senate will be reversed when the bill goes to the conference committee. He needs a commitment from the Republican House leadership that they will pass the Senate bill unaltered. That's where the breakdown of legislative process has gotten us. That's a piece of paper Grassley needs to have in his hand before he can move anything that isn't partisan posturing out of his committee.

It would be nice if some print journalist somewhere would write something about how the present gridlock is in large part a result of the use made of conference committees since the start of 2001.

Posted by DeLong at 11:38 AM | Comments (0) | TrackBack

Ivo Daalder Is Really Shrill

Ivo Daalder is really shrill:

TPMCafe || No Treaties, No Summits, No Diplomacy: Let me get this straight: our secretary of state, having "made no secret of her desire to cut down on the routine summitry that clogs the calendar of top diplomat," has decided to skip the annual meeting of Association of South-East Asian Nations (ASEAN) -- the first time in 20 years America's top diplomat won't be there.

Apparently, we not only don't do treaties in this administration, we now also don't do summits. And, of course, we've never done diplomacy. So can someone please tell me why we have a secretary of state?

Posted by DeLong at 11:35 AM | Comments (0) | TrackBack

Utter Stupidity

Matthew Yglesias observes that the competition among National Review writers for the "stupidest man alive" crown is quite fierce:

TPMCafe || Light, Sweet, Canadian Crude: ...yet another person who doesn't seem to understand how oil markets work... James S. Robbins in National Review Online:

...energy is both a critical requirement for the U.S. economy, and also an element of national power.... The United States should exploit its power by... imposing free market discipline on the oil bazaar. The OPEC cartel would be the ultimate target of this strategic focus.... Diminishing or ending OPEC's influence over the oil market... tax incentives for non-OPEC purchases... outright restrictions on importation of OPEC oil. The United States should also... shift [oil] purchases away from unstable regions.... Dollars flowing to Canada or Norway, for example, are unlikely to be converted into national security threats....

[O]il is a global commodity sold on an open market.... [W]e don't... import a huge proportion of our oil from the Middle East... the Middle East is closer to Europe and East Asia... it doesn't make a huge amount of sense to ship Middle Eastern crude all the way over here.... That notwithstanding, if we shifted our purchases away from the Middle East even further, we would only crowd out buyers of non-ME oil and lead them to increase their purchases of Middle Eastern oil. The only relevant features of the situation are global demand and global supply. Even a country that doesn't import any Middle Eastern oil -- indeed, even a country that doesn't import any oil at all -- would still see prices skyrocket in the wake of a major supply disruption in Saudi Arabia...

Yet more conclusive proof that being not-stupid, or even being stupid and yet knowing something, is a positive disability as far as writing for National Review is concerned. People who are not-stupid are unlikely to be able to make whatever arguments the Bush administration wants made today with a straight face. People who are stupid yet who know something are likely to slip, and accidently say something about the world that's inconsistent with Bush fantasies.

From the standpoint of the editors of National Review, only those who are both stupid and enmeshed in fantasy are safe.

Posted by DeLong at 11:33 AM | Comments (0) | TrackBack

Our Political Press: A Bunch of Stenographers?

Let me pick a small bone with what Matthew Yglesias writes about the Washington press corps

TPMCafe || Ooo! Questions!: In my experience, a lot of blogospheric commentary on the media grants the reporters who write these stories all too much agency. Insofar as I've had any conversations with people who cover the White House, or even conversations with people who work with people who cover the White House, this is a group of pretty sharp people who have a pretty good grasp of what's going on. It just isn't reflected in their stories. Not because they secretly love George W. Bush or pray to Dick Cheney idols in the corners of their bedrooms but because they define their job in a very narrow, rather misguided kind of way.

The Bush team has gotten remarkable good press because they understand the mechanism by which newspaper political coverage is generated and have successfully devised means of systematically manipulating that mechanism. Editors and reporters have it in their power, of course, to change the way the mechanism works (and they should do it!), but they're not going to wake up one day and do it just because they're mad at Karl Rove.

The issues here, fundamentally, run much deeper than the subjective attitudes of the press corps vis-à-vis the White House. It has to do with the conception of journalism as primarily a stenographic activity, concerned with duly recording official statements and, perhaps, balancing those statements with contradictory quotations from official or quasi-official members of the opposition....

I disagree. I think that the press does have considerable agency--that it is not acting as a stenographer, but as an unindicted co-conspirator with the Slime Machine. Let me give two examples.

The first comes from the Washington Post, a quote from a story by Mike Allen published on January 11, 2004 on page A-13:

O'Neill: Plan to Hit Iraq Began Pre-9/11: A senior administration official said O'Neill's "suggestion that the administration was planning an invasion of Iraq days after taking office is laughable. Nobody listened to him when he was in office. Why should anybody now?"

Here Mike Allen isn't being a stenographer--isn't taking down what his sources are saying in their normal course. Allen is... taking dictation of a poison-pen letter: printing something that his source does not dare say in his own proper persona, for attribution. He's not a victim. He's an active co-conspirator.

The second example also comes from the Washington Post, a story by Jonathan Weisman and Ben White, "Bush's Social Security Plan Assumes Much from Stocks," printed on page E1 on February 9, 2005. It is one that I know extremely well indeed.

Weisman and White write about the Bush administration's claim that its private-accounts proposals are a good deal for beneficiaries because expected real stock returns are 6.5% per year. Weisman and White write of:

http://www.washingtonpost.com/ac2/wp-dyn/A9090-2005Feb8?language=printer: a heated debate among economists, who divide sharply between those who believe the stock market cannot meet the president's expectations and those who say investor demand from a faster-growing developing world will keep stock prices rising...

Which economists? On my side--the side of those who believe that slow projected growth and high projected equity returns are inconsistent^--Weisman and White list a whole bunch of us.

And on the other side? They have Social Security actuary Steve Goss. They have "Bush's Council of Economic Advisers... [which] predicted that gains from the stock market, over the long term, will continue to be healthy." And they have unnamed "White House economists [who] say [DeLong's] calculations are absurd because they ignore global economic growth and investment in countries unaffected by the demographic slowdown." Only those who work for Bush endorse the administration's 6.5% projected equity return.

Moreover, even their endorsement is--call it qualified. I've been told that people would appreciate it if I were careful and drew a distinction: "say that the executive branch accepts the 6.5% forecast of the Social Security actuary, but don't say that the executive branch made the forecast." And whatever White House economist says that our calculations are "absurd"--well, he won't say it to our faces--or even with his name attached--perhaps because claiming in public that bad news about economic growth is not bad news about stock returns is a seriously career-limiting move.

Thus once again we have Washington Post reporters who do not fit inside the box of "stenographer." Presumably Bush's White House economists drew the same distinctions talking to Weisman and White that they did talking to me--that they accept the 6.5% forecast but do not endorse it. That's why Weisman and White say that the CEA projects that stock returns "will continue to be healthy" and don't say that the CEA projects that real stock returns will average the 6.5% per year assumed in the Social Security plan. You have to read carefully to notice that the CEA and Steve Goss are not aligned: that's not stenography. And, once again, there's the poison-pen element: if Weisman and White had asked to attach a name to the quote, they wouldn't have gotten the word "absurd" into the article. That's not stenography either.

So I don't think that Matthew Yglesias is correct in saying that the Washington political press corps goes astray because they conceive of journalism as primarily a stenographic activity. Stenographers do not write in a code ("continue to be healthy") that only those who read their morning papers with Talmudic intensity will crack. Stenographers do not take poison-pen dictation. Stenographers do not conspire with sources to juice up their stories at the expense of telling things as they really happened.

Say corruption or cynicism or editorial pressure for sizzle or laziness or apathy. Don't say "stenography."

^For the current last word on this, see http://www.j-bradford-delong.net/movable_type/2005-3_archives/001192.html and http://www.j-bradford-delong.net/movable_type/pdf/BDK-BPEA_20050629.pdf

Posted by DeLong at 11:32 AM | Comments (0) | TrackBack

Anne of a Thousand Days

Miriam Burstein is reading an awful lot of novels about Ann Bullen:

The Little Professor: Anne Boleyn, Ongoing: [Y]ou hope against hope that Anne Boleyn might keep her head, just this once--not out of any particular sympathy for her position, but because you begin to yearn for a little variety in the plotline.*... [F]ifteen novels in, the potential directions for the final article have begun to crystallize. We have representations of Anne, and then we have the questions those representations raise.... [W]hile some historical novelists clearly see themselves as doing full-fledged historical research (e.g., Mary Renault), many are simply trying to do enough research. Enter Anne Boleyn. When last I wrote, I noted that the links between these novels--mostly historical romances--and the actual scholarship on Anne were sometimes difficult to locate. It's now become even clearer that the Anne of the historical romances has become a self-perpetuating entity. We have a "received" Anne, who is given to hysteria, often sexually frigid (albeit flirtatious for reasons of policy), and improperly ambitious, but nevertheless innocent.... The occasional deviations from this Anne--either Annes who behave relatively sensibly or Annes who have sex lives apart from Henry VIII--cannot be explained by reference to historical scholarship; they're products of narrative necessity....

And then there are problems relating both to narrative structure and to popular ideas of historical agency. We're in the world of historical romances, after all, and historical romances usually involve, er, romance.... True Love (or Twu Wuv?).... Obviously, this sort of generic imperative poses certain obstacles for a novel about Anne Boleyn, given such inconveniences as political machinations, Catherine of Aragon, Henry's notoriously wandering eye, Jane Seymour, and the minor problem of Anne winding up rather reduced in height.... [A]ll of the novels have imposed some very twentieth-century notions about marriage for love, public vs. private behavior, and domestic space as an ideally depoliticized "private sphere" on sixteenth-century maneuverings that firmly resist any such scripts.... I cannot see how Henry VIII's married life can be rewritten as a "private" affair; all of his machinations in that area make hash of our own public/private distinctions. If anything, "the personal is the political" takes on new meaning when applied to [Henry's] relationship with Anne....

[A]ll of these novels... are effectively "post-Christian": none of them represents a world in which Catholicism might be both omnipresent and taken for granted. Characters tend to be either saints... or the equivalent of Thomas Huxley (somewhat early in the historical record, to be sure).... With just two or three exceptions, Anne is always represented as being a skeptic with a purely opportunistic interest in Lutheranism; Henry VIII, however, is usually diagnosed with a bad case of Bulstrodism.**... At the same time, the novelists are acutely conscious of the divorce's momentous importance for English national history. They thus have to balance hindsight with the characters' own cluelessness--or, alternatively, they grant the major players some awareness of the importance of their decisions.... I'm wondering to what extent this strategy is meant to somehow mitigate the narrative's tragic effect.

And so, onward. Still looking to finish up the novels before the beginning of fall.

*--Actually, there is a novella in which Anne stays alive: Nancy Kress' "And Wild for to Hold."

**--"There may be coarse hypocrites, who consciously affect beliefs and emotions for the sake of gulling the world, but Bulstrode was not one of them. He was simply a man whose desires had been stronger than his theoretic beliefs, and who had gradually explained the gratification of his desires into satisfactory agreement with those beliefs." (Middlemarch, ch. LXI).

Clearly I have to go read Nancy Kress's "And Wild for to Hold."

Posted by DeLong at 11:24 AM | Comments (0) | TrackBack

Four Out of Five Indicators Say the Job Market Really Is Weak

General Glut writes:

General Glut's Globblog: Yes, the job market really is weak: A small debate has ensued between James Hamilton of Econbrowser and Pro-Growth Liberal of Angry Bear over the interpretation of recent employment data, with the central dispute over whether current employment levels are 'good enough'.

Rather than wrestling over the distorting effects of teenage employment or the question of whether a return to the total employment levels of 2000 is either realistic or desirable, I suggest focusing in on a group of workers who over time are almost always in need of work, who do not wax and wane with educational or retirement opportunities, nor with social trends toward greater workforce participation rates: men age 25-64.

The below graph shows the quarterly employment-to-population ratio without seasonal adjustment for men age 25-64, from 1977:I to 2005:II. As you can clearly see, at the peak of the last two economic cycles the ratio topped out in the 85.5-86.0 range. Currently the level is just 83.2, right where it was three years ago and nowhere close to the levels of the late 1990s.

Perhaps more distressingly, today's EP ratio is still below the 4-quarter moving average trough of the mid-1990s and around the levels of the early-1980s trough (save the disaster of 1983:I). The chart also shows that the late 1990s was hardly an anomaly in terms of employment for "working age" men. In fact, the late 1990s saw a slightly lower peak than the late 1980s did.I think there's no doubt about it: this job "recovery" needs a recovery of its own.

It's not just employment-to-population ratios. It's real wage growth. It's the relative amount of long-term unemployment. It's payroll employment. We have four of five indicators telling us that the state of the job market is not that good and only one--the unemployment rate--reading green.

Posted by DeLong at 11:21 AM | Comments (0) | TrackBack

Laugher Curve

PGL of Angry Bear writes:

Angry Bear: Thoma v. Luskin: The recent good news on tax revenues has led to renewed discussions of Laffer's cocktail napkin. For good rebuttals, see Mark Thoma http://economistsview.typepad.com/economistsview/2005/07/some_simple_fis.html and Paul Krugman http://www.nytimes.com/2005/07/11/opinion/11krugman.html.

Of course, Donald Luskin has attempted a rebuttal of Krugman. Luskin cannot deny that tax revenues have fallen so he provides a graph of projected nominal Federal tax revenues where revenues in 2009 was projected to be 10% higher than they were in 2000. You might be wondering what his graph would have looked liked had it been constructed in terms of real Federal revenues per capita. Our graph shows the 1991 to 2004 historical record. And if one deflates the 2009 estimate by prices and express it in per capita terms, projected real Federal revenues per capita for 2009 would still be below the 2000 level. Mr. Luskin knows this, but he's hoping his readers are too stupid to understand the simple point.

One really does wonder what the editors and writers of National Review think that they are doing. Tactical advantage on transitory political issues is--as it must be--transitory. Loss of credibility is forever.

Posted by DeLong at 11:19 AM | Comments (0) | TrackBack

Toyota Votes with Its Feet for the Canadian Model

Brayden King observes Toyota voting with its feet for the Canadian rather than the American model:

Pub Sociology: More concern about the costs of employing U.S. workers: Via the apostropher and Blog on the Run, I found this story about a new Toyota plant being built in Woodstock, Ontario... despite the offer of millions of dollars in subsidies to put the plant in the U.S.... Toyota is tired of training ignorant (i.e. illiterate) American workers, and the second is that in the long run it's cheaper to operate in Canada because of the reduction in corporate health care costs.

Industry experts say Ontarians are easier and cheaper to train - helping make it more cost-efficient to train workers when the new Woodstock plant opens in 2008, 40 kilometres away from its skilled workforce in Cambridge. "The level of the workforce in general is so high that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the southeastern United States," said Gerry Fedchun, president of the Automotive Parts Manufacturers' Association....

He said Nissan and Honda have encountered difficulties getting new plants up to full production in recent years in Mississippi and Alabama due to an untrained - and often illiterate - workforce. In Alabama, trainers had to use "pictorials" to teach some illiterate workers how to use high-tech plant equipment....

In addition to lower training costs, Canadian workers are also $4 to $5 cheaper to employ partly thanks to the taxpayer-funded health-care system in Canada, said federal Industry Minister David Emmerson.

"Most people don't think of our health-care system as being a competitive advantage," he said.

...Universal health care might not be the anti-business gateway to socialism that some on the right want you to believe.... Other countries increasingly have a comparative advantage in production industries because their workers are better trained (or at least as well trained) and less costly.... [P]art of the U.S. disadvantage comes because the standard of living in the U.S. is so much higher... but if we offer a superior level of human capital we should be able to find a niche... when even that advantage begins to deteriorate (AND health care costs serve as a disincentive), we should be worried.

Posted by DeLong at 11:18 AM | Comments (0) | TrackBack

No Wonder George W. Bush Likes Tommy Franks

Phil Carter assigns us summer reading:

INTEL DUMP - Relearning old lessons the hard way: In the July/August issue of the Washington Monthly, you can find my review of Sean Naylor's brilliant book "Not a Good Day to Die" -- a chronicle of Operation Anaconda, the largest battle fought thus far by U.S. forces in Afghanistan... a damn good read... this book belongs on your bookshelf.... [T]here are also many lessons to be learned...

In the weeks leading up to Anaconda, intelligence officers thought they had learned everything.... But disturbing rumors persisted that there might be more.... As it turned out, there may have been 10 times as many, and they weren't just in the valley but on the tactically crucial high ground above.... [W]rites Naylor, "[chief planner Maj. Paul Wilie] acknowledged that writing the plan had been such a painful process of compromise and negotiation that nobody could face the prospect of tearing it up... simply because the enemy might not be where they were supposed to be."

Perhaps the biggest problem was the Rube Goldberg command structure created by Gen. Franks. The war was run from Tampa... by video teleconferencing. Decisions were made by committee and on Eastern Standard Time... with an eye towards how the decisions would be briefed to the press at the Pentagon. Naylor quotes a deputy commanding general...

"When SecDef started having a [press] briefing every day, it meant that for hours of that day you could not talk to the CENTCOM staff... to make a decision at CENTCOM because they were tied up prepping themselves for the SecDef's briefing.... They had a morning telephone call... an afternoon telephone call... for a couple of hours before that telephone call, you could not get [Gen. Franks's directors of operations or intelligence].... [I]f the SecDef went to a briefing and we had reported that we had captured 14 Al Qaeda and it really turned out to be 12 or 16... it would be easier to let two go or go back and capture two more rather than to try to change the OSD [Office of the Secretary of Defense] number."

At least some of the failures might have been averted had Franks and his team tapped the right field commander. Naylor clearly thinks that choice should have been someone like Delta Force Lt. Col. Pete Blaber... the Pentagon chose Air Force Brig. Gen. Gregory Trebon, who had never before commanded a ground operation, with Navy Lt. Cmdr. Vic Hyder as his deputy.... Hyder went so far as to communicate with his subordinates using a radio frequency he knew Blaber would not be monitoring. Trebon and Hyder were convinced that satellite feeds from Predator drones delivered to Navy and Air Force bases hundreds of miles away would be sufficient to run things. "The battle would," in Naylor's withering words, "be 'controlled' by officers watching video screens on a desert island and 'commanded' by a man who had made his name flying transport aircraft."

Two years after Anaconda, military analysts are still debating why those choppers on Takur Ghar never got close air support, and whether the Air Force provided enough firepower for the conventional infantry that followed the commandos. The Air Force, according to Army Special Forces troops, had promised to "soften" enemy targets with a 55-minute aerial bombardment while Air Force officers at Bagram Air Force base say they were aware of no such plans. Having left their artillery at home, the Army's conventional infantry depended on aircraft for heavy firepower. As often happens in combat, the best-laid plans went awry, leaving hundreds of infantrymen to fight with only the weapons they had carried in on their backs....

I had one of Martin Sheen's monologues as CPT Willard in Apocalypse Now in mind:

Charley didn't get much USO. He was dug in too deep or moving too fast. His idea of great R&R was cold rice and a little rat meat. He had only two ways home: death, or victory.

Likewise, today's adversaries in Afghanistan are skilled and tenacious fighters; they also see death or victory as their only exit strategies.... Al Qaeda's tactical intelligence moves as fast as their social networks and cell phones can move it, and that's pretty damn fast. They don't worry about parochial chains of command or the long-term budgetary impact of giving the mission to a certain unit from a certain branch of service; they just fight...

Posted by DeLong at 11:14 AM | Comments (0) | TrackBack

July 12, 2005

Signs that the Fed Believes Interest Rates Still Need to Rise

More signs that the Federal Reserve thinks that we are now quite close to full employment. Mark Thoma watches Bloomberg:

>Fed's Lacker Says Rate Increases Likely to Continue: Fed Speak signals more rate increases ahead:

Fed's Lacker Says It's 'Early' to Stop Raising Rates (Update1), Bloomberg: It's too early to expect a pause in Federal Reserve interest rate increases, Fed Bank of Richmond President Jeffrey Lacker said today.... “I think it's still too early to be foreseeing a pause” in Fed rate increases... “I'm comfortable with the measured pace characterization right now.” While “inflation expectations seem well contained,” economic growth appears “fairly solid.”... He said he is watching inflation data to see whether rising oil prices spur price increases for other goods and services.... “Oil prices always pose a bit of a concern to the extent that sharp increases pass through to core inflation,” he said. The inflationary effect of higher oil prices in recent years has been “fairly limited,” he said. “The more likely risk, although it is a small one at this point, is an acceleration of unit labor costs.”... “In recent months, we've had some core PCE numbers that have been higher than I would like to see sustained, but I like where we are on a year-over-year basis,” Lacker said. “The general anticipation is for the monthly numbers to settle back down in the second half of the year.” With the economy continuing to expand at a “fairly solid pace,” the Fed can keep up its campaign to prevent inflation from rising, he said. “In that kind of situation, following through is probably the order of the day,” he said. “It's going to be data driven. It's going to depend on how things unfold.”

David Altig reports probabilities that agree with this assessment. However, the qualification at the end is worth noting. Full steam ahead until the data say otherwise.

The fall in the employment-to-population ratio, the stagnant pace of real wage growth, and the remarkably high relative level of long-term unemployment all say that there is still considerable slack in the labor market. Only the unemployment rate--now hovering near five percent--says that we are near full employment.

Posted by DeLong at 03:58 PM | Comments (0) | TrackBack

Schroedinger's Orzel

This is a very good example of something that is not seen often enough: an intelligent outsider's guide to how a particular subdiscipline's research seminars work. Somebody should encourage the writing of these, and compile them.

From Chad Orzell's "Uncertain Principles", as he provides such a guide for Synthetic Chemistry (that doesn't mean "not-natural chemistry" or "not-real chemistry" or "ersatz chemistry," but "chemistry where the point is to make (synthesize) things":

Notes Toward a User's Guide to Synthetic Chemistry Talks: In principle, I think this is a very good idea.... In practice... I wind up sitting through a lot of nearly incomprehensible talks, most of them dealing with the synthesis of some molecule or another.... [M]y conclusions about synthetic chemistry talks....

There's no foolproof way to know for sure what you're in for.... Various "-tion" words ("methylation," "intercalation," "purification") are pretty good markers.... Active verbs are likewise a hint.... These talks always follow the same basic form, and can be broken down into four stages:... "Here's this thing we're trying to make." This is usually accompanied by a picture consisting of a bunch of hexagons.... "Here's the stuff we start with." This will include a couple of diagrams showing different arrangements of hexagons... almost all the strange words will be names of different parts and sub-parts of molecules.... "Here are the steps in the process." This will include at least one slide showing multiple diagrams of hexagons, with arrows between them... all the strange words will refer to methods of sticking pieces of molecules together.... "Here are some graphs to prove we ended up what we wanted."... pictures of chart recorder traces, blobby photographs of electrophoresis gels, or pictures of pencil marks made on chromatography films.... The key to interpreting the data plots is that they always come in pairs (at least). There will be one picture showing the signal from the initial reactants, which will consist of a set of peaks, or little photographic blobs, or pencil marks. Then there will be a second set, showing the signal from the same method applied to the products of the reaction. This will be a different set of peaks, blobs, or pencil marks.

The entire point of this section of the talk is to note that the peaks, blobs, or pencil marks in the second picture are in different places than the peaks, blobs, or pencil marks in the first picture. Success is defined as the disappearance of the peaks, blobs, or pencil marks corresponding to the reactants, and the appearance of the peaks, blobs, or pencil marks corresponding to the products.

Peaks, blobs, or pencil marks that are in the same places in both pictures are invariably due to solvents. The speaker will often pretend that these don't exist. Humor them....

If you absolutely need to ask a question.... If the speaker hasn't mentioned the yield specifically, you can't go wrong asking "What's the yield like?" If they have stated the yield, ask "How does the yield stack up against other methods of producing this stuff?" If they have stated the yield, and compared it to existing methods, and you still feel a need to ask a question, ask about the solvent peaks/ blobs/ pencil marks. Questions of the form "Why are you trying to make this stuff in the first place?" are usually considered unsporting....

[S]imilar guides could easily be prepared for various categories of physics talks... the Generic Quantum Information Question is either "What about scalability?" or "What about the decoherence rates?"

I take it that the answer to "What about scalability?" is: "It doesn't scale. If it did, we would have turned the Moon into Smart Matter by now, it would have taken over, and we would be its enthusiastic willing slaves--if it deigned to notice us at all." I take it that the answer to "What about the decoherence rates?" is: "If the decoherence rate was slow enough to be really interesting, you would now know what it's like to feel quantum interference from different versions of yourself listening to different versions of this talk."

Posted by DeLong at 03:48 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Idiots? (Yet Another Bushies-in-Iraq Edition)

Larry Diamond is hyper-shrill. From Liberals Against Terrorism:

Posted by DeLong at 03:46 PM | Comments (0) | TrackBack

"Small, Hairless, Blind, and Dependent on a Larger Rodent for All His Information

Snark! Snark! Snark!

Scott McClellan Wanders Off Reservation, Is Shot and Killed:

The Sweat Just Starting To Break Out We would like to apologize for our characterization yesterday of Scott McClellan as a puppy dog. Thanks to the New York Times, we were able to review all of his statements on the Rove-Plame matter and now we feel that a more accurate analogy would be that Scott McClellan is like a hapless baby rodent of some kind. Perhaps a gerbil or a weasel. Small, hairless, blind, and dependent on a larger rodent for all his information. So it's true, McClellan did, in extreme flustered mode, yelp out such regrettable declarations as "I've made it very clear, [Rove] was not involved, that there's no truth to the suggestion that he was," and "The president knows that Karl Rove wasn't involved," and, more brazenly, "There has been absolutely nothing brought to our attention to suggest any White House involvement."

These statements are all in sharp contrast to the more maturely weasely statements of the President and Rove himself, around which there is enough wiggle room for a fat, bald man to slither through and stay employed for at least three more years. All this proves is that no one tells Scotty anything. It's not really his job to know anything. His job is to say what he's told to say, or, in some extraordinary cases, what he intuits they might say with the power of his mind:

I've known Karl for a long time, and I didn't even need to go ask Karl, because I know the kind of person that he is, and he is someone that is committed to the highest standards of conduct.

Like we said, he doesn't know anything.

Past White House Briefings on C.I.A. Leak Case [NYT]
Earlier: The Rove Show, with Scott McLellan as Old Yeller [Wonkette]

Posted by DeLong at 03:42 PM | Comments (0) | TrackBack

The High-Wage Model

CostCo. If only we could once again have a tight labor market, CostCo would be likely to eat WalMart for lunch:

FT.com / Business life - Pile high, sell cheap and pay well: By Jonathan Birchall: “If we have a floating inflatable ring for towing behind a boat, it will be the biggest there is . . . it will be 10ft across . . . and it will only cost $49.99,” Mr Galanti says, speaking with rapid enthusiasm in his modest office at Costco’s headquarters in the nearby suburb of Issaquah. But, in the world of US retail, it is not just Costco’s “stack ’em high, sell ’em cheap” approach to higher quality items such as organic spinach and balsamic vinegar that merits attention.

In a country where the retail industry has been convulsed over the past decade by the rise of Wal-Mart and rival discounters, Costco’s discount warehouse club is part of the revolution. But unlike Wal-Mart, whose low-cost labour model has provoked increasingly vocal criticism, Costco has managed to remain competitive while providing its workers with the highest wages and best healthcare plans available anywhere in the US retail industry.

In the anti-Wal-Mart camp, “Costco is seen as the White Knight to Wal-Mart’s Darth Vader,” says Nelson Lichtenstein, a University of California professor of labour history, who is editing a new book on Wal-Mart’s rise.

Costco was founded by Jim Sinegal, chief executive and president, and Jeff Brotman, company chairman, in 1983 – the year that Sam Walton, founder of Wal-Mart, opened Sam’s Club, a rival warehouse club. Both follow the same broad philosophy, developed for small business operators, rather than for individual shoppers: sell a limited number of items in bulk to reduce handling overheads, use mass orders to win attractive pricing from suppliers and sell membership subscriptions to boost returns and guarantee customer loyalty....

“Anything we can do to lower the expenses translates into being able to sell the merchandise for lower cost,” says Mr Galanti. “So that we are the extreme value proposition for quality goods.”... But Costco’s frugality does not extend to pay and working conditions. The average hourly wage for a full and part-time US employee is $17.41, according to the company. At Wal-Mart’s Sam’s Club, the sum for a similar employee is around $12 an hour. “It’s important to pay people a fair living wage,” says Mr Galanti, “and if you do, and it’s better than everybody else, you’re going to get better people – and they’re going to stick around longer, and we see that.”

Costco has a staff turnover rate of 17 per cent annually... compared with 70 per cent seen in the rest of the sector. Only six per cent of new staff leave within the first year, which again reduces costs. “First and foremost, it’s the right thing to do,” says Mr Galanti. “And long-term, we know it pays dividends.”...

70 percent annual turnover cannot be good--the incentives for the business to nickel-and-dime the workers is just too great when the overwhelming proportion of them aren't going to be around for long.

Posted by DeLong at 03:37 PM | Comments (0) | TrackBack

Unspinning the Budget Deficit

Paul Krugman on the budget deficit outlook:

Un-Spin the Budget - New York Times: By PAUL KRUGMAN: Later this week the White House budget director plans to put on an aviator costume, march up to a microphone and declare Mission Accomplished in the war on deficits.... [T]he administration is poised to do the same thing on the budget that it has done again and again in Iraq: claim that a modest, probably temporary lull in the flow of bad news shows that victory is around the corner....

So let me do some pre-emptive de-spinning and debunking.

To understand where the budget deficit came from, you can't do better than the Jan. 18, 2001, issue of the satirical newspaper The Onion, which predicted the future with eerie precision. "We must squander our nation's hard-won budget surplus on tax breaks for the wealthiest 15 percent," the magazine's spoof had the president-elect declare. "And, on the foreign front, we must find an enemy and defeat it."

And so it has turned out. President Bush has presided over the transformation of a budget surplus into a large deficit, which threatens the government's long-run solvency. The principal cause of that reversal was Mr. Bush's unprecedented decision to cut taxes... [in] an expensive war.

Where's the good news? Well, for the past four years actual tax receipts have consistently come in below expectations, so that the deficit is even bigger than one might have predicted.... Recent tax numbers, however, finally offer a positive surprise.... The usual suspects on the right are already declaring victory over the deficit....

But... revenue remains far lower than anyone would have predicted before the tax cuts began. In January 2001 the budget office forecast revenues of $2.57 trillion in fiscal 2005... the actual number will be at least $400 billion less.... Ed McKelvey of Goldman Sachs believe[s] that even the limited good news on the budget is a temporary blip.... Douglas Holtz-Eakin, the director of the Congressional Budget Office... declares that... "[for] 2008, 2009 or 2010, that vision is the same today as it was two months ago."...

[T]he upside surprise in tax receipts is coming from... tax payments from corporations, up both because last year corporate profits grew much more rapidly than the rest of the economy and because... a temporary tax break... expired. Both are one-time events. The other source of increased revenue is nonwithheld income taxes... capital gains on stocks and real estate... bonuses.... Again, this revenue boost looks like a temporary blip....

[W]e're still deep in the fiscal quagmire, with federal revenues far below what's needed to pay for federal programs. And we won't get out of that quagmire until a future president admits that the Bush tax cuts were a mistake, and must be reversed.

Posted by DeLong at 03:35 PM | Comments (0) | TrackBack

Keep Alberto Gonzales Off the Supreme Court

Michael Kinsley doesn't want Alberto Gonzales on the Supreme Court:

Gonzales' Fatal Flaw: Because of his central role in decisions taken by the administration to flout international law... Gonzales was a poor choice for the attorney general's office... and... would... be a disastrous choice for the Supreme Court. As White House counsel, Gonzales... was intent on pushing an exceedingly narrow definition of torture that allowed for prisoner mistreatment.

Had he been a responsible counselor to his client, Gonzales would have urged Bush not to take the expedient shortcuts that led to the scandals at Abu Ghraib and elsewhere, and the unlawful detention of U.S. citizens denied access to counsel...

Posted by DeLong at 03:34 PM | Comments (0) | TrackBack

Karl Rove

I've been told the same thing as Duncan Black has: Karl Rove did not call Matt Cooper and say, "I really mean it when I say that you are free of any obligation to me not to testify." Instead, the loudness of Karl Rove's and his lawyer's claims that he had freed reporters who talked to him of any obligation pushed Cooper beyond the limit:

Eschaton: [The] New York Times article on the Rove case is typically clear as mud, but after reading it several times and consulting with a handful of liberal intellectuals, I've gained new respect for Matt Cooper. Basically, he got fed up with Rove's lawyer lying to the press, and figured that combined with the waiver he'd previously received and the emphasis Luskin placed on it, was enough.

In other words, Rove's lawyer, acting as an agent of Rove, mounted a too extreme PR campaign on behalf of his client, and sufficient deceptive remarks led Cooper to say f*** it. Luskin thought Cooper wouldn't testify no matter what he said, and he was wrong.

Good for Cooper.

Posted by DeLong at 03:29 PM | Comments (0) | TrackBack

Eliot Cohen Crosses the Aisle and Joins the Reality-Based Community

The word was always that Eliot Cohen was a very smart man, and a wise one--even though he was, for some impossible-to-grasp reason, a neoconservative. Here the Belgravia Dispatch catches him crossing the aisle back to the reality-based community:

THE BELGRAVIA DISPATCH: A Neo-Con Speaks Out: Eliot Cohen speaks very openly to the WaPo in a short Q&A. It has become increasingly rare to find bright (neo)conservatives willing to buck party orthodoxy and the approved talking points ("last throes"!)--who have the requisite integrity to be honest and forthright about some of the missteps that have rendered so difficult the Iraq effort.


But a pundit should not recommend a policy without adequate regard for the ability of those in charge to execute it, and here I stumbled. I could not imagine, for example, that the civilian and military high command would treat "Phase IV" -- the post-combat period that has killed far more Americans than the "real" war -- as of secondary importance to the planning of Gen. Tommy Franks's blitzkrieg. I never dreamed that Ambassador Paul Bremer and Gen. Ricardo Sanchez, the two top civilian and military leaders early in the occupation of Iraq -- brave, honorable and committed though they were -- would be so unsuited for their tasks, and that they would serve their full length of duty nonetheless. I did not expect that we would begin the occupation with cockamamie schemes of creating an immobile Iraqi army to defend the country's borders rather than maintain internal order, or that the under-planned, under-prepared and in some respects mis-manned Coalition Provisional Authority would seek to rebuild Iraq with big construction contracts awarded under federal acquisition regulations, rather than with small grants aimed at getting angry, bewildered young Iraqi men off the streets and into jobs.

I did not know, but I might have guessed.

Another passage:

Question: Your son is an infantry officer, shipping out soon for Iraq. How do you feel about that?

Cohen: Pride, of course -- great pride. And fear. And an occasional burning in the gut, a flare of anger at empty pieties and lame excuses, at flip answers and a lack of urgency, at a failure to hold those at the top to the standards of accountability that the military system rightly imposes on subalterns.

It is a flicker of rage that two years into an insurgency, we still expose our troops in Humvees to the blasts of roadside bombs -- knowing that even the armored version of that humble successor to the Jeep is simply not designed for warfare along guerrilla-infested highways, while, at the same time, knowing that plenty of countries manufacture armored cars that are. It is disbelief at a manpower system that, following its prewar routines, ships soldiers off to war for a year or 15 months, giving them two weeks of leave at the end, when our British comrades, more experienced in these matters and wiser in pacing themselves, ship troops out for half that time, and give them an extra month on top of their regular leave after an operational deployment.

It is the sick feeling that churned inside me at least 18 months ago, when a glib and upbeat Pentagon bureaucrat assured me that the opposition in Iraq consisted of "5,000 bitter-enders and criminals," even after we had killed at least that many. It flames up when hearing about the veteran who in theory has a year between Iraq rotations, but in fact, because he transferred between units after returning from one tour, will go back to Iraq half a year later, and who, because of "stop-loss orders" involuntarily extending active duty tours, will find himself in combat nine months after his enlistment runs out. And all this because after 9/11, when so many Americans asked for nothing but an opportunity to serve, we did not expand our Army and Marine Corps when we could, even though we knew we would need more troops.

A variety of emotions wash over me as I reflect on our Iraq war: Disbelief at the length of time it took to call an insurgency by its name. Alarm at our continuing failure to promote at wartime speed the colonels and generals who have a talent for fighting it, while also failing to sweep aside those who do not. Incredulity at seeing decorations pinned on the chests and promotions on the shoulders of senior leaders -- both civilians and military -- who had the helm when things went badly wrong. Disdain for the general who thinks Job One is simply whacking the bad guys and who, ever conscious of public relations, cannot admit that American soldiers have tortured prisoners or, in panic, killed innocent civilians. Contempt for the ghoulish glee of some who think they were right in opposing the war, and for the blithe disregard of the bungles by some who think they were right in favoring it. A desire -- barely controlled -- to slap the highly educated fool who, having no soldier friends or family, once explained to me that mistakes happen in all wars, and that the casualties are not really all that high and that I really shouldn't get exercised about them.

There is a lot of talk these days about shaky public support for the war. That is not really the issue. Nor should cheerleading, as opposed to truth-telling, be our leaders' chief concern. If we fail in Iraq -- and I don't think we will -- it won't be because the American people lack heart, but because leaders and institutions have failed. Rather than fretting about support at home, let them show themselves dedicated to waging and winning a strange kind of war and describing it as it is, candidly and in detail. Then the American people will give them all the support they need. The scholar in me is not surprised when our leaders blunder, although the pundit in me is dismayed when they do. What the father in me expects from our leaders is, simply, the truth -- an end to happy talk and denials of error, and a seriousness equal to that of the men and women our country sends into the fight...

Impeach George W. Bush. Impeach Richard Cheney. Do it now.

Posted by DeLong at 03:20 PM | Comments (0) | TrackBack

The Republican Social Security Proposal Tries to Evolve

There's certainly no sign here of Intelligent Design. Mark Thoma writes:

Economist's View: Social Security Reform Follies Not Yet Iced: I thought I’d take a few minutes to bring you the latest I can find on Social Security reform... this from The Washington Times. If this is accurate, the reform effort isn't dead yet:

Republicans retrench on Social Security fix, By Amy Fagan, The Washington Times: Six months after Republicans began selling Social Security reform, they all but acknowledge that wide-scale changes won't happen this year. But knowing they must do something, they are pushing a narrower Social Security proposal... a solvency fix... doesn't seem likely... leaders couldn't achieve consensus in the House... but they also couldn't face the 2006 electorate without acting on the president's wishes. Therefore... they combined private accounts, which most Republicans support, with the popular idea of stopping the government from raiding the Social Security surplus.... "If it works, you've got a great victory. If it fails [in the Senate], well you don't get hurt," he said....

...It looks like the strategy is to get something to a vote, anything, then blame Democrats for obstructing reform...

And, of course, the DeMint proposals don't do anything about "stopping the government from raiding the Social Security surplus": no pay-go, no sequesters, no procedural changes to make it hard or impossible to run an on-budget deficit.

It's not clear whether Amy Fagan doesn't know that this DeMint proposal doesn't do anything to protect the Social Security surplus, or knows and doesn't care that what she writes is not accurate.

Posted by DeLong at 03:17 PM | Comments (0) | TrackBack

Fine Print!

Some very fine print. From the Seacliffe Best Western Hotel in Aptos, CA:

HOTEL GUEST COMPLIMENTARY BREAKFAST.... Fresh Fruit Parfait--Granola and yoghurt topped with Fresh Fruit OR Two farm fresh eggs, scrambled (Only) with choice of Bacon or Sausage. Served with country potatoes and a Croissant. Toast is not included with Hotel breakfast, Nor can it be substituted for the Croissant, however it can be purchased for $1.95. Coffee, Tea, Milk, Lemonade, Orange Juice, Apple Juice, or Pass-O-Guava Juice Only Is included with Hotel Breakfast Please No substitutions on Hotel breakfast. A $3.95 credit will be applied to other entries on the breakfast menu if you choose outside the box.

I don't know about you, but after reading that somehow I don't feel very complimented.

Posted by DeLong at 03:16 PM | Comments (0) | TrackBack

Republican Family Values

Digby catches a story from the New Republic:

Hullabaloo: William Kristol, as always, is the slickest guy around.

William Kristol, The Weekly Standard: Whether he personally believes in evolution: "I don't discuss personal opinions.... I'm familiar with what's obviously true about it as well as what's problematic.... I'm not a scientist.... It's like me asking you whether you believe in the Big Bang."

How evolution should be taught in public schools: "I managed to have my children go through the Fairfax, Virginia schools without ever looking at one of their science textbooks."

I would not have thought anyone would be so bad a parent as to care so little about what their children were doing.

Republican family values once again.

Posted by DeLong at 03:15 PM | Comments (0) | TrackBack

Yglesias Comments on Thin Support for CAFTA

Matthew Yglesias comments on the thin support for CAFTA:

TPMCafe || Who Killed Free Trade?: By Matthew Yglesias: I think my American Prospect colleague Harold Meyerson (who, conveniently, isn't around to help out...) is wrong to attribute Democratic opposition to CAFTA primarily to the success of AFL-CIO lobbying efforts. The AFL-CIO is an important voice on these issues, of course, but the decisive actor here has been George W. Bush.

First, Bush decided to let the pharmaceutical and media industries run amok and produce an agreement that is much more important as an intellectual property deal than as a trade deal.

Second, he froze the traditional leaders of the pro-trade faction of House Democrats out of the negotiations.

Third -- and most crucially -- he gutted the traditional Trade Adjustment Assistance provisions of the package even though the House New Dem caucus specifically told him that this would cost him their votes.

The basic picture is that having killed the Doha Round of the WTO with his farm subsidies, Bush had lost about all his free trade street cred. As a result, he wanted to create a situation where the Democrats would look even less interested in promoting the free exchange of goods in the eyes of the business community. Hence, he put together a deal that's pretty trivial as a substantive matter (we're talking about tiny economies) but was specifically designed to get as few Democratic votes as possible.

In a way, this is a strange -- indeed, unique -- instance of the Bush White House and the AFL-CIO working hand in hand to kill off the free trade Democrats.

Posted by DeLong at 03:12 PM | Comments (0) | TrackBack

The Day of the Blackberries...

My standard line about our property is that it has two acres in grassland (a good deal of which is taken over by the Dread Armenian Yellow Star Thistle in August and September), two acres in seasonal creek and creekside oak forest (plus about fifteen twenty year-old redwoods planted in a location that is not quite moist enough for them), and one acre of blackberry thicket.

My description is now out of date.

It is now 1.5 acres of blackberries.

They have been slowly expanding for a while. But the pace has accelerated. The blackberries have used scrub jay-transported air assault to establish an airhead on the property just to the south of ours, have consolidated their hold, and are now coming through the fence--sending runners across the driveway asphalt.

Under cover of the extraordinarily wet and long spring, the main body of blackberries has sent runners out down the creekbed. Advancing this spring at a pace of nearly 3" per day, they have established outposts throughout much of the creekbed which they are threatening to consolidate--especially just upstream of the rude bridge by the small swingset.

Our local deer are useless--they are desperate to get even semi-ripe blackberries, but they won't seriously chomp on the thorny stems at all.

And we have only one truly heavy-duty long-handed clipper.

Clearly a trip to the garden store and a mid-summer counteroffensive are in order...

But what aobut the long term? Should we talk to the genetic engineering people about possibilities for blackberry control via special blight? Should we be thinking about contracting with Goats 'R' Us?

Posted by DeLong at 03:07 PM | Comments (0) | TrackBack

A Few Unemployment Details

Barry Ritholz talks about unemployment:

The Big Picture: Drilling beneath the BLS Headlines : One of the fascinating things about the US Goverment's data producers... is that they don't seem to hide anything.... Its all there if you have the temerity to dig.... The amazing thing is that most people don't bother... economists, journalists, strategists and fund managers who trade off of this data. So let's do a little digging....

  • Once again, we see the Birth Death adjustment -- thats the hedonic guesstimate which supposes the number of new jobs created by businesses so new they have yet to be measured -- actually exceeded the number of new jobs. This month, its 184k. That's about on par with last June's B/D adj....
  • Household survey shows another 240,000 people left the Labor Force last month.... We still see unemployment going down because more people are dropping out of the labor than obtaining new jobs. That's hardly cause for celebration.
  • U-6, the broadest measure of unemployment, actually ticked up to 9.0%. This measure includes: Total unemployed, plus discouraged workers, plus all other marginally attached workers, plus total employed part time for economic reasons.
  • Lastly, here's an oddity I just noticed: The jobless rates by race shows that Whites are no longer enjoy the lowest unemployment rate.... Asians: 4.0%. Whites 4.3%. Hispanics 5.8%. Blacks 10.3%...

Posted by DeLong at 03:05 PM | Comments (0) | TrackBack

Mark Thoma Finds William Poole and Milton Friedman Thinking About the Greenspan Succession

Mark Thoma writes about people's preliminary thoughts on the Greenspan Succession--not people but processes. Noteworthy is Milton Friedman's shift of ground from rigid quantity targets--as things that ought to produce good results and that cannot be gamed--toward some version of inflation-rate targeting:

Economist's View: William Poole and Milton Friedman on Inflation Targeting and the Post-Greenspan Fed: Interesting comments by St. Louis Federal Reserve Bank President William Poole on his support of inflation targeting, the transition to a new Fed chair and how that might affect the Fed’s credibility, his discomfort with language such as “measured,” and other matters. Comments by Milton Friedman in support of inflation targeting are also noteworthy given his long-standing advocacy of quantity targets...

A paragraph from Poole:

As far as I know, there has been no comprehensive study of the characteristics of the Greenspan regime. To extend the regime will require an understanding of just what the regime is. My purpose is to outline some thoughts on that issue by discussing four key characteristics of the Greenspan regime. First on my list is low-inflation credibility--that is, market confidence that the Federal Reserve will conduct policy to yield low inflation averaged over any span of a few years. The other three characteristics of the Greenspan regime are successful crisis management, empirical understanding of the economy, and predictability of monetary policy. I'll comment on all four, but concentrate on predictability issues as these are, I believe, the most interesting of the characteristics of the Greenspan regime...

Posted by DeLong at 03:02 PM | Comments (0) | TrackBack

Offshoring: Salary Differences in Tech Support and Related Occupations

The high-tech salary gulf:

Hard salary numbers for offshoring | News.blog | CNET News.com: Entry-level workers at Vietnamese tech outsourcing operations earn an average of $3,276 a year, compared to $5,443 for such workers in India, $5,616 in Romania and $25,338 in Canada. Those stats are among the juicy nuggets that can be snagged from a report released Wednesday by consulting firm neoIT. But the salary information must be put in context, neoIT cautions.

"Salary differences are huge when comparing IT jobs onshore versus offshore, but taken in isolation they don't provide an accurate picture of the total cost of offshoring since it requires a more complex management and governance structure in order to ensure that goals are met," Atul Vashistha, CEO of neoIT, said in a statement. According to the report, firms have realized net cost savings in the range of 10 to 35 percent by outsourcing IT operations to lower-cost offshore and "nearshore" locations. Examples of "nearshore" nations include Hungary, Israel and Ireland, according to neoIT.

Of 18 outsourcing countries, India had the highest year-over-year growth in average salary for IT outsourcing professionals in 2004, at roughly 13 percent, the report found.

Posted by Ed Frauenheim

Posted by DeLong at 02:48 PM | Comments (0) | TrackBack

Mrs. Tilton Says 'Corporate Governance' in German

Mrs. Tilton of the Sixth International surveys German corporate governance:

A Fistful of Euros: How do you say 'corporate governance' in German?: ...corporate governance as it is (or is not) implemented in Germany... two particularly interesting items: a corporate governance scandal of colossal proportions at a major firm, and now a significant governance reform that is unlikely to make top German managers very happy.

First, the scandal... Volkswagen.... If asked for a concrete example of the peculiarly German consensus approach -- ’partnership’ among capital, labour and state -- that drove the Wirtschaftswunder, not a few people would point to VW.... So imagine the fun had by all as amazing revelations began to emerge from Wolfsburg. VW management, it seems, had a long-term policy of keeping the Betriebsrat -- the works council -- sweet. Sensible enough, you might say, and in keeping with that German consensus approach. But even Ludwig Erhard would surely have scowled at some of the sweeteners: front firms set up to ladle secret cash to top labour representatives; all-in junkets to Brazil, including (if the rumours are true) the services of a profession rather older than auto-making....

Prof. Baums of Frankfurt, who has long crusaded for better corporate governance, thinks that state involvement is to blame... state involvement ’transfers the role of the risk-bearing owner with a personal stake to a functionary who is not affected [by the success or otherwise of the firm].’... the problem Baums notes is nothing new, and nothing peculiar to state involvement; Berle and Means made it the centrepiece of their seminal work even before the regime under which VW was founded came to power....

Now for the good news, unless you are managing director of an exchange-listed German firm.... This morning the Bundesrat, the German parliament’s upper house, appoved a bill that will require listed corporations, as from the 2006 fiscal year, to make detailed disclosure of executive compensation on an individual basis.... This isn’t something that will go away if and when Angela Merkel becomes chancellor in September....

If you hold shares in a firm (or are considering buying some), surely you are entitled to know how much you are paying the people who manage your property for you. In particular, you’d want to know how much of their pay was variable (bonuses, options, SARs and similar schemes), and under what conditions they get their swag. All too often firms shovel money at managers who are destroying the firm’s value. As a shareholder, there might be little you can do to stop this; but armed with adequate disclosure, you can at least decide to sell (or decline to buy in the first place).

Posted by DeLong at 02:47 PM | Comments (0) | TrackBack

Open CRS Network - CRS Reports for the People

The Open Congressional Research Service Website:

Open CRS Network - CRS Reports for the People: About Open CRS: American taxpayers spend nearly $100 million a year to fund the Congressional Research Service, a "think tank" that provides reports to members of Congress on a variety of topics relevant to current political events. Yet these reports are not made available to the public in a way that they can be easily obtained. A project of the Center for Democracy & Technology through the cooperation of several organizations and collectors of CRS Reports, Open CRS provides citizens access to CRS Reports already in the public domain and encourages Congress to provide public access to all CRS Reports....

Posted by DeLong at 02:46 PM | Comments (0) | TrackBack

The Stock Market Suffers from Money Illusion

Randy Cohen politely inquires why I haven't read his--excellent--Modigliani-Cohn paper in the QJE.

Ummm... Indolence? Forgetfulness?... It is embarrassing because it is directly on point to what I regard as one of my core competences, and because I now remember that Bob Hall was praising it at lunch at the Women's Faculty Club in... April?

You may be interested to know that Tuomo Vuolteenaho did not feel his paper with John Campbell on Modigliani and Cohn closed the case. The problem was that although their results are compelling, they admit of a plausible rational explanation: high-inflation periods are times of high risk, and so the equity premium is rationally high at those times. To test this possibility, Tuomo, Christopher Polk and I wrote the attached paper, which is in the May 2005 QJE. The paper takes advantage of the fact that if the equity premium is high for risk-related reasons, then there is a cross-sectional implication: high-beta stocks should greatly outperform low-beta stocks in these periods. On the other hand, if M-C are right the inflation-driven mispricing will apply to all stocks equally, causing all stocks to be equally underpriced. The tests clearly show the latter is the case. This provides powerful confirmation of M-C, since it relies on a prediction about the relative performance of high- and low-beta stocks which was almost certainly not considered by M-C when they formulated their hypothesis.

As a side benefit, the paper shows that the basic failure of the CAPM (the failure of high-beta stocks to have much higher returns than low-beta) is explained by the M-C hypothesis. Indeed this failure only occurs in the high-inflation periods of the past century; the rest of the time the beta-return relationship works as the CAPM predicts.

Here's the abstract:

Randolph B. Cohen, Christopher Polk, and Tuomo Vuolteenaho (2005), "Money Illusion in the Stock Market: The Modigliani-Cohn Hypothesis," Quarterly Journal of Economics (May): Modigliani and Cohn [1979] hypothesize that the stock market suffers from money illusion, discounting real cash flows at nominal discount rates. While previous research has focused on the pricing of the aggregate stock market relative to Treasury bills, the money-illusion hypothesis also has implications for the pricing of risky stocks relative to safe stocks. Simultaneously examining the pricing of Treasury bills, safe stocks, and risky stocks allows us to distinguish money illusion from any change in the attitudes of investors towards risk. Our empirical resuts support the hypothesis that the stock market suffers from money illusion.

There is, I think, one potential hole: the possibility that times of high inflation are times of high perceived political risk--of confiscatory corporate taxation, for example--but that this risk has a very different distribution across corporations than "normal" beta-systematic risk.

Posted by DeLong at 02:43 PM | Comments (0) | TrackBack

July 08, 2005

We Mourn with the Citizens of London

We mourn with the citizens of London.

We pledge to help track down and kill the perpetrators, the planners, and their helpers.

We note that it is 46 months after September 11, 2001, and that Osama bin Laden is still alive and at liberty. That somebody can plan September 11, 2001 and remain alive and at liberty provides powerful encouragement to those who think of following in his footsteps--including those who planned, aided, and carried out today's atrocity in London.

More attention to Osama bin Laden and his ilk, please. And less attention to using Osama bin Laden as a pretext for launching hair-brained neoconservative schemes, please.

Posted by DeLong at 11:37 AM | Comments (0) | TrackBack

More Reason Not to Buy Anything from Microsoft

Company behaving very badly:

Boing Boing: MSFT acquires spyware firm, changes antispyware app to ignore its products: Microsoft recently acquired a spyware company called Claria (known for its spyware product, Gator). They have since updated Windows' antispyware app so that it advises users to ignore Gator spyware. Spyware researchers have noticed that the Windows antispyware application has downgraded Claria's Gator detections and changed the recommended action from 'quarantine' to 'ignore.'...

Posted by DeLong at 11:35 AM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Jonathan Weisman Leaves Ezra Klein Flabbergasted Edition)

Aha. A correspondent writes that Daniel Drezner does not have a reading comprehension problem, he just didn't read far enough to notice that the body of the article contradicts its lead paragraphs:

Twelve years ago, amid heated rhetoric over job losses and heavy union pressure, the House passed the North American Free Trade Agreement with 102 Democratic votes. This month, as President Bush pushes the far less economically significant Central American Free Trade Agreement, he will be lucky to get more than 10.

A long, slow erosion of Democratic support for trade legislation in the House is turning into a rout, as Democrats who have never voted against trade deals vow to turn their backs on CAFTA. The sea change -- driven by redistricting, mounting partisanship and real questions about the results of a decade's worth of trade liberalization -- is creating a major headache for Bush and Republican leaders as they scramble to salvage their embattled trade agreement. A trade deal that passed the Senate last Thursday, 54 to 45, with 10 Democratic votes, could very well fail in the House this month.

But the Democrats' near-unanimous stand against CAFTA carries long-term risks for a party leadership struggling to regain the appearance of a moderate governing force, some Democrats acknowledge. A swing toward isolationism could reinforce voters' suspicions that the party is beholden to organized labor and is anti-business, while jeopardizing campaign contributions, especially from Wall Street.

Without control of the White House or either chamber of Congress, the "competition for the microphone" has intensified in the party, said Dave McCurdy, a former Democratic congressman from Oklahoma who heads the Electronic Industries Alliance. And the moderates are losing...

A lead that did a better job of telling the real story would make these points:

(i) Bush makes trade policy subservient to the intellectual-property interests of the drug companies, (ii) Bush shows great concern for CAFTA's effect on sugar-baron campaign contributor and no concern for potential losers among American workers, (iii) Bush doesn't even consult the free-trade Democrats (like my own representative Ellen Tauscher) whose votes he needs to pass CAFTA, but instead (iv) tries to smear them as anti-business in order to drive them into his corner, and (v) it doesn't seem to be working as the overwhelming majority of Democrats who are usually safe votes for trade agreements balk.

UPDATE:Ezra Klein's reads it, and his mind boggles as he confronts this Jonathan Weisman special from the Washington Post:

Ezra Klein: Why Is This Trade Bill Different Than All Other Trade Bills? :

This, from the Washington Post's big piece on CAFTA, strikes me as a very strange paragraph:

But the Democrats' near-unanimous stand against CAFTA carries long-term risks for a party leadership struggling to regain the appearance of a moderate governing force, some Democrats acknowledge. A swing toward isolationism could reinforce voters' suspicions that the party is beholden to organized labor and is anti-business, while jeopardizing campaign contributions, especially from Wall Street.

First, what's up with "acknowledge"? Doesn't that mean to recognize a truth? Aren't newspapers supposed to pretend that there is no truth, or at least that they don't know what it is? So called liberal media indeed. Second, is there really some voter roundtable desperately puzzling out whether Democrats are too beholden to Big Labor? As I remember it, voters didn't exactly reward us for passing NAFTA in 1993. 1994 was not our finest year.

The rest of the article is the usual spin from the usual suspects, decrying Democratic swings from moderation and divining the deepest, most hidden, and surprisingly sophisticated values judgments being made by the average voter. Of course, no mention is given to the many polls showing the public's split on NAFTA. The article simply speaks to those who know that on a truer, more subconscious level, the American voter flees the protectionist politician...

The fact that the White House likes a lead that says:

Democrats are not voting for Bush's CAFTA and are thus demonstrating that they are not responsible: isolationists, union puppets, not to be trusted with office, extremists.

is not a reason for a *Post* editor to let such lead paragraphs into the newspaper.

Posted by DeLong at 11:34 AM | Comments (0) | TrackBack

London Pride

Daniel Davies writes:

Crooked Timber: Noel Coward was a fine Englishman:

London Pride has been handed down to us.
London Pride is a flower that is free.
London Pride means our own dear town to us,
And our pride it for ever will be.

Oh Liza! See the coster barrows,
Vegetable marrows and the fruit piled high.
Oh Liza! Little London sparrows,
Covent Garden Market where the costers cry.

Cockney feet mark the beat of history.
Every street pins a memory down.
Nothing ever can quite replace
The grace of London Town.

There's a little city flower every spring unfailing
Growing in the crevices by some London railing,
Though it has a Latin name, in town and country-side
We in England call it London Pride.

London Pride has been handed down to us.
London Pride is a flower that is free.
London Pride means our own dear town to us,
And our pride it for ever will be.

Hey, lady! When the day is dawning
See the policeman yawning on his lonely beat.
Gay lady! Mayfair in the morning,
Hear your footsteps echo in the empty street.

Early rain and the pavement's glistening.
All Park Lane in a shimmering gown.
Nothing ever could break or harm
The charm of London Town.

In our city darkened now, street and square and crescent,
We can feel our living past in our shadowed present,
Ghosts beside our starlit Thames who lived and loved and died
Keep throughout the ages London Pride.

London Pride has been handed down to us.
London Pride is a flower that's free.
London Pride means our own dear town to us,
And our pride it for ever will be.

Grey city! Stubbornly implanted,
Taken so for granted for a thousand years.
Stay, city! Smokily enchanted,
Cradle of our memories and hopes and fears.

Every Blitz your resistance toughening,
From the Ritz to the Anchor and Crown,
Nothing ever could override
The pride of London Town.

Posted by DeLong at 11:27 AM | Comments (0) | TrackBack

Things Not to Do, Part XXVI

Exclaim loudly, while looking at the wine bottle, "Why! It's Two-Buck Chuck!"

Other dinner guests are not as interested in the economics of low-margin distribution of Charles Shaw wines as you are.

Posted by DeLong at 11:19 AM | Comments (0) | TrackBack

The Psychotic Creeps of Fox News (Why Oh Why Can't We Have a Better Press Corps?)

Duncan Black follows the psychotic creeps at Fox News so we don't have to:

John Gibson of Fox: [P]eople have been saying to me, "Wasn't it great they didn't pick Paris?" And I've been saying, "No, no, no."

Paris was exactly the right place to pick and the Olympic committee screwed up. Why? Simple. It would have been a three-week period where we wouldn't have had to worry about terrorism.

First, the French think they are so good at dealing with the Arab world that they would have gone out and paid every terrorist off. And things would have been calm.Or another way to look at it is the French are already up to their eyeballs in terrorists. The French hide them in miserable slums, out of sight of the rich people in Paris.

So it would have been a treat, actually, to watch the French dealing with the problem of their own homegrown Islamist terrorists living in France already.... But, alas, they picked London. I like the Brits. I like London. I hate to see them going through all this garbage when it would have been just fine in Paris.

C'est la vie. Goes to show the Olympic committee doesn't recognize the perfect opportunity when it presents itself.

That's My Word.

Posted by DeLong at 11:14 AM | Comments (0) | TrackBack

The Stars of Casablanca

It is a fact that we are nine minutes into the movie "Casablanca" before we first catch sight of Humphrey Bogart. And we are twenty-five minutes into the movie before we catch sight of Ingrid Bergman, or of the third headliner, Paul Henried.

This means that for the first nine minutes, first-time viewers have--unless they are keyed-in enough to 1940s Hollywood to no that because no star has yet appeared they are being held in suspended animation--no clue as to what the movie is going to be about. From minute ten on, it is clear that the movie is going to be about Humphrey Bogart--Rick Blaine--and what happens to him. But it is not until almost half an hour is gone that we have the first beginnings of an inkling of what has happened and will happen to him, as--in Rick Blaine's words--"Of all the gin joints in the world, she had to walk into mine."

Would anything like that happen today? Would anyone in Hollywood today construct a movie in which the female lead is offstage for nearly the first half-hour? Would anyone in Hollywood today construct a movie in which the first ten minutes are starless? The first ten minutes--Casablanca under Vichy--are marvelous, perhaps in large part because the camera's attention is fixed on supporting players like Peter Lorre, Claude Raines, and Sidney Greenstreet. The next fifteen minutes--Rick Blaine: the man who sticks his neck out for nobody--are brilliant too as character study and puzzle-posing.

Now I'm curious. Anybody have any examples of "modern" Hollywood movies in which the stars are kept offstage for so long in the beginning?

Posted by DeLong at 11:13 AM | Comments (0) | TrackBack

Charismatic Fauna

There are fifteen quail chicks--and two hens--on the road, milling about and peeping.

The California quail is "threatened" (although we must have some 25 or so on our property alone).

The California quail is "threatened" because it nests on the ground. Its evolutionary strategy appears to be to nest on the ground, have lots of chicks, and hope that the local predators are sated before they have eaten all the chicks. The problem is that we East African Plains Apes have added a lot of local predators--cats and dogs--to the California mix.

Its sole advantages are (a) that even young chicks can run quite fast, and (b) that we have lots of blackberry bushes with thorns that make up a fearsome barrier to coyotes, raccoons, cats, dogs (but not rats). The adults are amazing runners, and can fly--although they do so only at the last extremity.

We won't speak of the one among our adult male quails that has two legs but only one foot. Its days appear quite numbered...

Posted by DeLong at 11:11 AM | Comments (0) | TrackBack

July 06, 2005

The "Hold Your Nose and Vote for CAFTA" Caucus

Bruce Bartlett and Tyler Cowen are the "hold your nose and support CAFTA" caucus:

Bruce Bartlett: ...the Central American Free Trade Agreement. The White House is putting heavy pressure on Congress to support this agreement, which it should. But one cannot help feeling that the Bush administration’s own missteps on trade are what have gotten it to the point.... The problem for many free traders, like myself, is that the Bush administration has played politics with trade since day one. This has done serious damage to the fragile alliance that still supports free trade. The administration imposed utterly unjustified tariffs on steel, torpedoed the Doha round of multilateral trade talks by supporting a huge increase in agriculture subsidies, and has never missed an opportunity to demagogue China for all our trade woes.

Having destroyed the prospects for a multilateral trade agreement, which was primarily to be about eliminating agriculture subsidies, the Bush administration has tried to salvage some semblance of a free-trade agenda by pursuing bilateral trade agreements... the results are not very great.... Jagdish Bhagwati, America’s leading trade economist, has gone so far as to call [bilateral] free trade agreements “a sham” that are actually undermining the world trading system.... A 2003 study by the Congressional Budget Office found that the economic potential of bilateral agreements is very limited....

Indeed, it would appear that foreign policy is the best reason to support CAFTA. It is clearly in this country’s interest to encourage economic growth and reform in Central America even if the economic benefit for us is minimal. It also keeps alive the principle of free trade, which this administration has done so much to undermine....

Free traders have no choice but to support CAFTA. Its failure would be seen as a victory for protectionism and would crush the hopes of economic reformers throughout Latin America. I agree with economist Tyler Cowen: “This is probably a treaty we should pass, but it is not a treaty we should be proud of.”...

Posted by DeLong at 03:11 PM | Comments (0) | TrackBack

A Real Ownership Society

Matthew Yglesias calls for a real Ownership Society:

He writes:

TPMCafe || Capital and Inequality: [Such] policies... would help curb inequality in the rather straightforward way that they involve net transfers of money from richer people to poorer people.... [W]hy... would [you] do this through... asset ownership and special accounts rather than cash benefits[?]... [P]olitical culture. Americans are very taken with the idea of "equality of opportunity"... [so] it's always useful to frame efforts to help poor people as efforts to help poor children who are innocent of whatever sins against the Protestant ethic and the spirit of capitalism poor adults are imagined to be guilty of....

[I]t's more politically powerful to put together programs with universal benefits.... Handing out cash benefits on a universal basis, however, is illogical in a way that handing out a universal lump-sum of assets at birth isn't... a "property-owning democracy" brought down into the muck of real-world policymaking.... [S]ubsidizing the purchase of wealth-generating assets... [is] America's historical approach to public policy...

Posted by DeLong at 03:09 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Yet Another New York Times Edition)

The mind boggles:

The Quiet Man - New York Times: The Op-Ed page in some copies of Wednesday's newspaper carried an incorrect version of the below article about military recruitment. The article also briefly appeared on NYTimes.com before it was removed. The writer, an Army reserve officer, did not say, "Imagine my surprise the other day when I received orders to report to Fort Campbell, Ky., next Sunday," nor did he characterize his recent call-up to active duty as the precursor to a "surprise tour of Iraq." That language was added by an editor and was to have been removed before the article was published. Because of a production error, it was not. The Times regrets the error. A corrected version of the article appears below.

In what kind of circus is an "error" like this even possible?

Posted by DeLong at 03:01 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Yet Another New York Times Edition)

The mind boggles:

The Quiet Man - New York Times: The Op-Ed page in some copies of Wednesday's newspaper carried an incorrect version of the below article about military recruitment. The article also briefly appeared on NYTimes.com before it was removed. The writer, an Army reserve officer, did not say, "Imagine my surprise the other day when I received orders to report to Fort Campbell, Ky., next Sunday," nor did he characterize his recent call-up to active duty as the precursor to a "surprise tour of Iraq." That language was added by an editor and was to have been removed before the article was published. Because of a production error, it was not. The Times regrets the error. A corrected version of the article appears below.

In what kind of circus is an "error" like this even possible?

Posted by DeLong at 03:00 PM | Comments (0) | TrackBack

So Who Are the Activists? - New York Times

Gewirtz and Golder on "judicial activism":

So Who Are the Activists? - New York Times: By PAUL GEWIRTZ and CHAD GOLDER: WHEN Democrats or Republicans seek to criticize... nominees, they often... say that the judge is "activist." But the word "activist" is rarely defined.... [W]e've identified one reasonably objective and quantifiable measure of a judge's activism, and we've used it to assess the records of the justices on the current Supreme Court.... How often has each justice voted to strike down a law passed by Congress?

Declaring an act of Congress unconstitutional is the boldest thing a judge can do.... Until 1991, the court struck down an average of about one Congressional statute every two years. Between 1791 and 1858, only two such invalidations occurred....

Since the Supreme Court assumed its current composition in 1994, by our count it has upheld or struck down 64 Congressional provisions... justices vary widely in their inclination to strike down Congressional laws.... The tally for all the justices appears below.

Thomas 65.63 %
Kennedy 64.06 %
Scalia 56.25 %
Rehnquist 46.88 %
O%u2019Connor 46.77 %
Souter 42.19 %
Stevens 39.34 %
Ginsburg 39.06 %
Breyer 28.13 %

...[T]hose justices often considered more "liberal" - Justices Breyer, Ruth Bader Ginsburg, David Souter and John Paul Stevens - vote least frequently to overturn Congressional statutes, while those often labeled "conservative" vote more frequently to do so.... To say that a justice is activist under this definition is not itself negative... some activism is necessary and proper. We can decide whether a particular degree of activism is appropriate only by assessing the merits of a judge's particular decisions....

These differences in the degree of intervention and in temperament tell us far more about "judicial activism" than we commonly understand from the term's use as a mere epithet...

Posted by DeLong at 02:58 PM | Comments (0) | TrackBack

A Real Ownership Society

Matthew Yglesias calls for a real Ownership Society:

He writes:

TPMCafe || Capital and Inequality: [Such] policies... would help curb inequality in the rather straightforward way that they involve net transfers of money from richer people to poorer people.... [W]hy... would [you] do this through... asset ownership and special accounts rather than cash benefits[?]... [P]olitical culture. Americans are very taken with the idea of "equality of opportunity"... [so] it's always useful to frame efforts to help poor people as efforts to help poor children who are innocent of whatever sins against the Protestant ethic and the spirit of capitalism poor adults are imagined to be guilty of....

[I]t's more politically powerful to put together programs with universal benefits.... Handing out cash benefits on a universal basis, however, is illogical in a way that handing out a universal lump-sum of assets at birth isn't... a "property-owning democracy" brought down into the muck of real-world policymaking.... [S]ubsidizing the purchase of wealth-generating assets... [is] America's historical approach to public policy...

Posted by DeLong at 02:51 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Idiots? (Social Security Edition)

From the Carpetbagger Report, who (which?) reads the Washington Times:

Carpetbagger Report: I have assumed for months that the White House, and probably the president himself, are aware of the fact that the drive to privatize Social Security is a complete debacle. Perhaps I misjudged their capacity for self-deception.... [T]hey can read polls just like everyone else, and surely they know this is a fiasco, right? Apparently not.

When congressional leaders met with Mr. Bush last week, they were surprised that the president didn't know how much trouble his plan was in, said a source close to the meeting who requested anonymity. "The more he talked about it, the worse it got," said the source, who worked in previous Republican administrations. "This White House does not encourage negative feedback. You know that Bush's legislative affairs office is dysfunctional because they weren't bringing any of the warning signs back to the White House."

When Bush speaks on the issue publicly, I expect him to deny reality and insist he's making progress on privatizing Social Security. This president has no policy expertise, so cheerleading is expected when he holds publicly-funded private rallies with pre-screened sycophants. But when he meets with his fellow Republicans on the Hill, and there are no cameras or reporters, Bush should be willing to acknowledge reality and adapt for the future.

Except he's not. Bush apparently isn't even aware of the political problem he's created for himself and his party. It's stunning...

Posted by DeLong at 02:49 PM | Comments (0) | TrackBack

Why No Democratic Support for CAFTA?

Daniel Drezner has a reading comprehension problem.

He writes:

danieldrezner.com :: Daniel W. Drezner :: Free trade democrats, R.I.P. (1934-2005): Beginning with the passage of the 1934 Reciprocal Trade Agreements Act, there has always been a signifcant contingent of Democrats who supported the expansion of foreign trade -- even when Republicans were mostly protectionist. That was then.... Look, CAFTA is not perfect.... [W]hile it's undoubtedly true that one can point to protectionist Republicans who are members of Congress, one can't say that the entire party is behaving in a protectionist manner. That's no longer true of Congressional Democrats.

Drezner's wrong. And the story he cites does not say what he claims it says. It does not say that free-trade Democrats are gone. Its conclusion is very different, very different indeed:

CAFTA: [A] core group of as many as 50 pro-trade Democrats are voting against CAFTA.... They complain that the administration failed to consult them during negotiations, taking their votes for granted. And they say past trade agreements were accompanied by increased support for worker-retraining programs, education efforts and aid to dislocated workers -- support that the president has not provided.

"Free and open trade is an important component to widening the winner's circle for all Americans, but it's not a Johnny One Note part of the puzzle," said Rep. Ellen Tauscher (Calif.), a co-chairman of the centrist New Democrat Coalition, who voted for the most contentious trade bills of the past half-dozen years....

When Clinton pushed permanent normalized trade relations with China in 2000, he secured the support of 73 Democrats.... The tally on CAFTA, expected after the Fourth of July recess if the White House can find the votes, could yield just 10 Democratic supporters.... [O]pponents say the deal steps back from previous commitments to stronger environmental and labor standards....

Administration officials are inoculating themselves against Democratic attacks with a letter from former president Jimmy Carter imploring support for CAFTA. "Some improvements could be made in the trade bill, particularly on the labor protection side," Carter wrote, "but, more importantly, our own national security and hemispheric influence will be enhanced" by passage. Other Democratic supporters include a who's who list from the Clinton administration, including former national security adviser Samuel R. "Sandy" Berger and Cabinet members Warren M. Christopher, Henry G. Cisneros, Dan Glickman, William J. Perry and Donna E. Shalala, not to mention the presidents of the CAFTA countries....

Two business lobbyists -- one Republican, one Democrat -- said some corporate groups will be sympathetic to the Democrats' position. In a highly charged partisan atmosphere, Republicans intentionally marginalized free-trade Democrats during negotiations and then presented them with a take-it-or-leave it deal, goading them to oppose it, said the lobbyists, who spoke on the condition of anonymity to avoid harming relationships on Capitol Hill....

Posted by DeLong at 02:23 PM | Comments (0) | TrackBack

Catalan-Trans-Pacific-California Cuisine

Q: Is Va de Vi as good as they say it is?

A: The place next to Tiffany's in Walnut Creek? Yes.

Q: Is it important that it's next to Tiffany's?

A: I think Tiffany's is losing a bet here. If I were them I'd stay open late--or at least have a pushcart outside Va de Vi for people coming out after finishing dinner. The wine list is good enough that they could rely on a healthy flow of post-dinner impulse purchases...

Posted by DeLong at 02:19 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Very Strange People? (Social Security Edition)

Stan Collender is once again bemused by the Republicans in Congress:

BUDGET BATTLES: Budget Buffet: By secollender@nationaljournal.com Stan Collender, NationalJournal.com: You have to admire the audacity of the latest Social Security proposal. After months of the White House saying that there is nothing but worthless IOUs in the Social Security trust fund, the latest congressional Republican plan proposes to use those worthless IOUs to pay for the private investment accounts.... In other words, there is no trust fund surplus -- but we're going to use it to pay for the trillions of dollars in Social Security changes we are seeking....

This latest Social Security proposal also makes it clear that the White House's insistence that its plan will not increase the deficit, federal spending, or government borrowing is wrong. Using the Social Security trust fund to pay for private accounts will increase the spending in that program, reduce the surplus it was projected to run in the coming years and increase the unified federal budget deficit.

The Office of Management and Budget projected in the most recent Bush budget that the overall deficit in fiscal 2006 would be $390 billion. That included a $560 billion "on-budget" deficit and about a $170 billion "off-budget" surplus. Almost all of that surplus is in Social Security. But if some of the fiscal 2006 trust fund surplus is used to pay for anything... the unified budget deficit increases.... [I]f the private accounts require $100 billion... the 2006 federal [unified] budget deficit would be $490 billion instead of $390 billion. This would be financed with additional borrowing from the private sector....

The problem with funding Social Security private accounts is... due to the Bush administration's own choices. Back in 2001, the White House used what it said was a $5.6 trillion budget surplus over the coming decade to pay for the tax cuts the president wanted.... [W]hen the administration and Congress repeatedly chose tax cuts over Social Security, that choice was eliminated and the die was cast...

Posted by DeLong at 02:18 PM | Comments (0) | TrackBack

July 05, 2005

On the "Ownership Society"

Mark Schmitt's view of economic security:

TPMCafe || Politics, Ideas & Lots Of Caffeine: Beyond Mush and Muddle By Mark Schmitt: I don't want to limit the question to Social Security or retirement security. When I say that we need a broader vision of economic security, I mean the whole system of social insurance that can protect working Americans from the sharpest edges of capitalism, without impeding the dynamism of capitalism. Even if you wouldn't change anything about the specific program known as Social Security (and I'll come back to that), there are more risks than just old-age poverty.

To take an example of a program that should be updated for the present, consider Unemployment Insurance. UI provides 26 weeks of income support to a very limited number of established workers. Why? Because it was designed for a very particular economic situation: the U.S. manufacturing sector of the 1950s....

The cornerstone of an economic security platform would be a system that protects you when you lose your job for any reason -- technology, trade, business cycle, outsourcing, even incompetence -- by which I mean not only your boss's incompetence, but the possibility that you weren't adequately trained for the demands of the job. It would involve income support (like UI and trade adjustment), but also opportunities for retraining, and it might be partially based in private accounts, partly in a competitive system that rewards the companies or community colleges that were most successful at placing people back in the workforce, and partly in a traditional social insurance model....

I would retain the core social insurance function, virtually unchanged... but I would develop a private account system, which would either be an add-on, or could serve to finance early retirement, at 62, on s simpler version of the model proposed by my colleagues Phil Longman and Ted Halstead, so that people could use an account either to retire early or to supplement their later income.... But that narrow policy proposal raises the question: Why might some form of private account be appropriate to the current circumstances, when it wouldn't have been in an earlier decade? The answer, I think, lies in the tremendous imbalance between the returns to capital in the current economy, and the returns to labor. One way to boost the security of individual workers is to help them share in those returns to capital....

[But] why shouldn't labor get its reward, even its reward at the 1970 level? Are private accounts and "ownership" just a way of covering up the fact that only "ownership" currently captures any of the value of the productivity gains in the economy? Would we be better off forcing some of the returns to shift to labor, which would lead to policies such as living wage (e.g. $10/hour instead of the shocking level of $5.15), universal health care, and real pensions?

These are real alternatives, not "mush and muddle." But they also imply choices -- one approach is confiscatory, the other probably more regulatory. Either one can form the basis for a new vision, but the choice cannot be avoided.

Let me briefly comment on this--particularly on Mark Schmitt's apparent belief that boosting "ownership" through having wage-earners save more is a way to a less unequal distribution of income.

I think Mark is wrong.

I don't think that an "ownership society" in any form is a way of equalizing the distribution of income. Capital income is currently very high, yes. But asset prices are also currently very, very high. Buy capital, and you get expected returns that are lower looking forward than they have been on the past. You see, the value of the large future income streams flowing to capital that people anticipate are already largely incorporated into the prices of the assets you buy with your "ownership society" money: there is (probably) some money on the table--the poorer half of Americans should have some stock-market investments, and right now they don't--but there's not enough money on the table to shift the income distribution in anything but the smallest ways.

In my view, the answer to Mark's question, "Why weren't [add on] private accounts appropriate in earlier decades?" is simple: they were appropriate. They would have been a good idea. Nothing has changed to boost the rewards to savings that has changed whether add-on private accounts are a good idea or not.

Posted by DeLong at 05:42 PM | Comments (0) | TrackBack

The Ideal Social Security System

Josh Marshall asks a question:

TPMCafe || Politics, Ideas & Lots Of Caffeine: By Josh Marshall: Imagine there were no Social Security and there never had been. And figure we were starting from scratch. Why would we pick a program more or less like the one we have to today with Social Security? What parts of today's economy would be reacting to? Assuming we would pick a system more or less like this one, why? And how would we argue for it?

If this isn't the system we'd pick I think we should have the courage to play out that conversation too. But assuming we would want to create Social Security again, let's refine the arguments for why we would do so. Once we can do that, I think a lot of our broader 'narrative' will fall into place.

I think we would design a system in which:

  1. Substantial prefunding--that is, a large trust fund balance protected by keeping the program "off budget" in the sense of making it illegal to spend any government monies to calculate, publish, or disseminate budget or debt totals that count Social Security taxes as revenues or offsetting receipts, or that do not include Social Security assets as liabilities of the government.
  2. A substantial mandatory "defined benefit" component, very much like that of our current Social Security system.
  3. Automatic adjustments to tax rates, benefit formulas, and retirement ages to keep the system in automatic long-run balance.
  4. A substantial optional (but encouraged and default) add-on system in which a proportion of your payroll earnings into a low-fee diversified unchurnable private account invested in index funds--unless you check the "I do not wish to participate" box on your IRS form 1040.

The system we would design would have substantial prefunding because our current national savings rate is very low and our economic growth rate is not high enough to make pay-as-you-go clearly the best option. The system we would design would have a Social Security-like "defined benefit" component because people really value a retirement income component not heavily subject to market vicissitudes, and the government is the only organization that can offer such a "defined benefit" plan. The system would have automatic adjustments to prevent episodes when it falls out of actuarial balance to provide an excuse for clown shows like the one the Bush administration is still putting on. The system would have add-on private accounts because it is a scandal and a disgrace that the poorer half of Americans have essentially no investments in the stock market.

It is a shame that we have been unable to use this year's debate to move us closer to an ideal system. But--given the manifold incompetencies and mendacities of the Bush administration--it was never more than a one-in-twenty shot anyway.

Posted by DeLong at 05:32 PM | Comments (0) | TrackBack

Educational Offshoring

Offshoring of the educational system, part XVIIII:


Enter the next phase of outsourcing: online math education. Not only does the U.S. increasingly lag behind other countries on international math scores, it's also short of qualified math teachers. This could make it tough for America to improve its grade and retain the competitive edge that keeps good jobs at home.

Into the breach step a handful of Indian companies like Career Launcher India Ltd., which provide math tutoring through two U.S. online tutoring companies and directly to students like Ms. Basu...

Posted by DeLong at 05:21 PM | Comments (0) | TrackBack

The People Pawning Their Grey Flannel Suits

Louis Uchitelle writes what is, I think, one of the best summary articles in the Peter Gosselin vein--that is, on class and insecurity in America today:

Were the Good Old Days That Good? - New York Times: By LOUIS UCHITELLE: TOM RATH, the protagonist in Sloan Wilson's 1955 novel, "The Man in the Gray Flannel Suit," certainly had his share of troubles: the stressful conformity, the constant striving for success, the superficial suburban friendships, the war experiences he kept hidden from his wife. It all ate away at him. But Tom, like most Americans in the first three decades after World War II, took a rising standard of living for granted.... Tom didn't fret about medical bills, job security or the quality of public schools for his three children.

Fast forward to Tom and Marie DeSisto in 2005. They are real people in their early 50's, living in a three-bedroom condominium in Newton, Mass.... Pushed into early retirement last year by his employer, Verizon, Mr. DeSisto's salary plummeted from more than $100,000 as a manager to $36,000 as a first-year math teacher at Newton High School. His wife, on the other hand, has just been promoted to director of nursing in the Framingham public schools. Her salary rose by nearly $4,000, to $67,000 a year, but she is also adding eight working days a year to handle the additional responsibilities.... [T]he DeSistos sold their four-bedroom colonial.... "We planned carefully," Mrs. DeSisto said, "and we downsized successfully."

So, did the Raths, that quintessential 1950's family, enjoy a higher standard of living than middle-class families like the DeSistos do today?... No economist, demographer or historian would make that case. Living standards, after all, almost never go backward, at least not in a material sense. Indeed, the economy today is growing, consumer spending is plentiful and new technologies - from the Internet to laparoscopic surgery - make life better than ever, as they do in every generation. BUT for the DeSistos and their contemporaries, the trajectory is no longer the steadily upward line that the Rath family enjoyed....

"When you talk about living standards, you have to focus on people in the middle," said Robert Gordon.... "A lot of the goodies that we think of as raising living standards have gone to the people at the top at the expense of the broad mass of Americans in the middle.".... Life expectancy in the United States, while still rising, has fallen behind that in France, Germany and Japan. Home ownership is at a record high for the population as a whole, but it has dropped since the 1970's for some groups - working families with children, for example.... And in many cases, public services are not holding their own. "Thirty years ago a lot of public goods were free, and now they are fee-based," said Michael Hout, a sociologist at the University of California, Berkeley....

The revival that started in 1995 brought productivity growth back to its old rate of increase, and for five years incomes also rose smartly. What happened next is tough for economists to explain. The productivity growth rate has stayed strong - rising at an average annual rate of just under 3 percent since 1995, according to the Bureau of Labor Statistics. But starting in 2000, median income, adjusted for inflation, has grown more slowly every year - and this year the increase is almost imperceptible. "There is no question that a huge gap has opened up between productivity and living standards," said Jared Bernstein, a senior labor economist at the Economic Policy Institute. Not since World War II have productivity and income diverged so sharply, yet that phenomenon barely registers in public opinion surveys....

"We had much less income inequality in the first couple of decades after World War II because of strong unions, restricted trade and a decline in immigration," Mr. Gordon said. "Then all three reversed, which means that the income from productivity falls to the bottom line and for the time being stays there." To him and others, living standards cannot be truly rising if the improvement is so unevenly distributed; in addition, they say, earning a living has become increasingly stressful....

The quality of public school education, measured by test scores, is in fact holding up quite well, on average. The National Assessment of Education Progress, a federally sponsored testing program that started in the 1960's, periodically measures the skills and achievements of students at the ages of 9, 13 and 17. Scores have risen slightly since the early 1980's, on average, but so, too, has the disparity in school performance. "The variation is extraordinary across school districts and even across schools in the same district," said Richard Murnane, an economist at Harvard's Graduate School of Education, "so when you ask about how good the schools are, the measure of central tendency is less interesting than the variation around the average."...

Posted by DeLong at 05:12 PM | Comments (0) | TrackBack

Metaphysical Cage Match!

In this corner, Mark A.R. Kleiman, assisted by an anonymous professional philosopher!

Mark A. R. Kleiman: Wittgenstein on religous belief: A reader who is a professional philosopher writes:

...Wittgenstein held a view of religious belief quite similar to your own. From Culture and Value.... "Christianity is not based on a historical truth; rather, it offers us a (historical) narrative and says: 'now believe!' But not, 'believe this narrative with the belief that is appropriate to a historical narrative', rather: 'believe, through thick and thin, which you can do only as the result of a life'. Here you have a message!--don't treat it as you would another historical message! Make a quite different place for it in your life.--There is nothing paradoxical about that!


"Queer as it sounds: the historical accounts of the Gospels might, in the historical sense, be demonstrably false, and yet belief would lose nothing through this: not, however, because it has to do with 'universal truths of reason'! Rather, because historical proof (the historical proof-game) is irrelevant to belief..."

In that corner, St. Paul, who thinks that the truth of the historical narrative has everything to do with belief!

Douay-Rheims Bible Online, First Epistle Of Saint Paul To The Corinthians: He rose again the third day... was seen by Cephas... after that by the eleven... by more than five hundred brethren at once: of whom many remain until this present.... After that... James, then by all the apostles. And last of all... by me....

[I]f Christ be not risen again, then is our preaching vain, and your faith is also vain. Yea, and we are found false witnesses of God: because we have given testimony against God, that he hath raised up Christ; whom he hath not raised up.... [I]f Christ be not risen again... you are yet in your sins... they also that are fallen asleep in Christ, are perished. If in this life only we have hope in Christ, we are of all men most miserable...

To those who say that his teachings are historically false but metaphysically true, St. Paul gives this answer: "[I]f Christ be not risen again, then is our preaching vain, and your faith is also vain. Yea, and we are found false witnesses of God..."

Posted by DeLong at 04:47 PM | Comments (0) | TrackBack

For the Bushes, Loyalty Runs One Way Only

Susan Madrak watches the submissive Tony Blair in action:

Susan Madrak: You really have to wonder what's going on in this S&M relationship:

LONDON, July 4: President Bush told British Prime Minister Tony Blair to expect no favors at this week's Group of Eight summit of major industrialized countries in return for backing the war in Iraq. Blair, who has made tackling global warming and relieving African poverty the goals of his year-long presidency of the G-8, will host fellow leaders at the Gleneagles Hotel in Scotland from Wednesday to Friday.

"I really don't view our relationship as one of quid pro quo," Bush told Britain's ITV1 television in an interview. "Tony Blair made decisions on what he thought was best for keeping the peace and winning the war on terror, as I did."

Silly Tony Blair. Didn't anybody tell him that where the Bush family is concerned, loyalty runs one way and one way only?

Posted by DeLong at 04:34 PM | Comments (0) | TrackBack

Where Oh Where Is Our Peak-Load Electricity Pricing?

On the radio, right now, a cricket is chirping in an attempt to convince me to "flex my power" and buy a more energy-efficient washing machine. This kind of campaign is driving Jim Hamilton (and me) up the wall:

Hamilton writes:

Econbrowser: Some like it hot: And thus we continue in the great tradition of California regulators, who seek with great diligence, earnestness and, dare I say, ingenuity, to try to balance supply and demand every day by telling each one of us exactly what we need to do. As long as we all maintain the proper spirit and check up on the Conserve-O-Meter as the day progresses, I'm certain that all Californians can be counted on to do the right thing, ensuring the equality of supply and demand as a result of conscientious attention to civic duty.

I suppose that it's because I'm an economist that I find this mindset a bit baffling. I do not understand why the California Energy Commission assumes that people will pay more attention to "flex your power now" alerts than they would to something that actually affects their pocketbook. Call me cynical, but I somehow figure that adding to the dandy phrase "flex your power now" the explanatory sequel "because if you don't, it will cost you more" could give the program just a bit more effectiveness.

As noted by Peak Oil Optimist, some stabs at peak load pricing are being explored in the state on a piecemeal basis, such as our local San Diego supplier's plan to charge the largest electricity users a higher rate when the need for conservation is greatest. But there seems to be considerable reluctance to implement such schemes for all electricity users. In part I suppose this represents the view that regular people (as opposed to heartless big companies) don't like to have to pay for more for electricity at some times than others. But regular people don't like to turn down their air conditioners when it's hot, either, and they like it even less when there's a general blackout and nothing happens when you flip any switches. My big idea is to let people choose between (a) and (b) in order to make sure that (c) doesn't happen.

Or maybe the regulators reckon that companies are smart enough to figure out how to lower their electricity use when there's a strong enough financial incentive to do so, but ordinary people aren't. Though one wonders, if they trust me with a Conserve-O-Meter, why don't they trust me with an electric bill?...

Posted by DeLong at 02:14 PM | Comments (0) | TrackBack

Poverty Reduction in China

Simon World reads Ravallion and Chen on poverty in China:

Simon World :: China's (Uneven) Progress against poverty: Martin Ravallion and Shaohua Chen (2004), "China's (Uneven) Progress Against Poverty" (Washington: World Bank Policy Research Working Paper No. 3408): During the discussion about China's New Left, Dylan pointed out the above working paper from a couple of economists at the World Bank. Over the weekend I finally had time to read it, and it is a remarkable piece of work for anyone interested in China's income gap, the split between rural and urban and the remarkable poverty alleviation in China. Worth reading in full if you have the time (skip the equations), but Dylan nicely summarised...

  1. China has made huge progress against poverty, but it has been uneven progress. Half of the decline in poverty achieved since reform and opening up came in the first few years of the 1980s. Poverty reduction stalled in the 1990s.
  2. Inequality has been rising. In marked contrast to most developing countries, relative inequality is higher in China's rural areas than in urban areas. Absolute inequality has increased appreciably over time between and within both rural and urban areas.
  3. The pattern of growth matters. Growth in the primary sector (mainly agriculture) did more to reduce poverty and inequality than either the manufacturing or service sectors. Rural economic growth reduced inequality in both the urban and rural areas, as well as between them.
  4. Inequality is a concern both for economic growth and poverty reduction. With the same historical economic growth rates and no rise in inequality in rural areas alone, the number of poor in China would have been less than 1/4 of its actual value today.... [P]eriods of more rapid growth did not bring more rapid increases in inequality... more unequal provinces will face a double handicap... lower growth and poverty will respond less to that growth.

... Putting some numbers on... poverty fell from 76% in 1980 (thank you, Mao) to 23% in 1985. But... the late 80s and early 90s actually saw rises in poverty before another fall in the mid 90s. Most interestingly coming into the late 90s there were signs of rising poverty in rural areas.... Unsurprisingly the authors find that growth in the agricultural sector has been the primary driver of poverty alleviation....

The authors... conclude there is no sign of a short-term trade off between growth and equity.... [T]he only growth that matters for China's poor is in agriculture.... Most interesting of all is the assertion it would appear reasonable to attribute the bulk of rural poverty reduction between 1981 and 1985 to this set of agrarian reforms. Which reforms? De-collectivization and the privitisation of land use rights. That's right. Simply undoing the worst of Mao's madness and giving people some kind of property rights resulted in the biggest reduction of poverty in human history... 77% of the total poverty reduction.

Next comes the government's agricultural prices policy. Raising the compulsary purchase prices of agricultural goods (effectively a tax cut)... reduced poverty....

When it comes to regions... Guangdong, home to Shenzhen (the first "liberated" Chinese city), saw significant and outsized reductions of poverty compared to everywhere else.... Guangdong... showed no uptrend in inequality and thus had the highest rate of poverty reduction despite only slightly above average growth and relatively high initial inequality. The rest of China needs to learn from Guangdong...

Ravallion and Chen's belief that agricultural productivity is the entire game as far as poverty reduction in China is concerned is true in the past, but my guess is that it is unlikely to be true in the future. At some point more rapid urban growth is going to make surplus agricultural labor go away, and start raising the wages and living standards of those in the countryside without access to good land. When? Within a decade is my guess, if present trends continue.

Posted by DeLong at 01:09 PM | Comments (0) | TrackBack

July 04, 2005

Why Oh Why Can't We Have a Better Press Corps--and Better Brookings Senior Fellows? (Yet Another Kevin Drum vs. Diane Ravitch Edition)

Kevin Drum writes:

The Washington Monthly: [Re] Diane Ravitch's op-ed about math instruction in the Wall Street Journal, I've now learned of two [more errors]: [Ravitch writes:] "Attempts to solve problems without basic skills caused some critics, especially professional mathematicians, to deride the 'new, new math' as 'rainforest algebra'." This is woefully misleading. The person who coined the term "rainforest algebra" was Marianne Jennings. She isn't a professional mathematician, she's a business professor at Arizona State University and a well known conservative columnist. [Ravitch writes:] "A new textbook, Rethinking Mathematics: Teaching Social Justice by the Numbers, shows how problem solving, ethnomathematics and political action can be merged." Rethinking Mathematics is not a textbook. It's a collection of articles that provide suggestions for math projects to be used at various grade levels.... "Textbook" implies a primary text... suggests that it's meant to be the sole text used. A resource book, conversely, is meant for occasional use.... There's nothing insidious about a math resource book that focuses on social justice, just as there's nothing insidious about a resource book aimed at Christian schools that focuses on math problems taken from the Bible. I Kings 7:23 might make a good geometry unit, for example.*

That's three factual errors in the first four paragraphs of Ravitch's op-ed. This is not a good track record.

But this quality work is about what we have seen over and over again from the Wall Street Journal editorial page, no? The surprising thing is not that a writer for the Journal editorial page is so... misleading, but that the Brookings Institution doesn't have better... quality control.

*Kevin is undertaking high-class snark here, intelligible only to those who know the Hebrew Bible extremely well. The verse is:

And [Solomon] made a molten sea, ten cubits from the one brim to the other: it was round all about, and his height was five cubits: and a line of thirty cubits did compass it round about.

It's round--it's a circle. It's ten cubits across. It's thirty cubits in circumference. In short, the Hebrew Bible says pi = 3. Not 3.14, 3. Not 22/7, 3.

Posted by DeLong at 05:49 PM | Comments (0) | TrackBack

Modigliani-Cohn's Hypothesis that the Stock Market Is Confused Receives More Support

Expertly done. Campbell and Vuolteenaho take sides with Modigliani and Cohn: the U.S. stock market simply doesn't--or didn't--understand the difference between nominal and real interest rates. Since nominal rates are real rates plus inflation, this means the stock market is low when inflation is high, and high when inflation is low.

Their model does, however, does not work for the 1990s: the close association between their estimates of mispricing and inflation breaks down in the past decade and a half.

John Y. Campbell and Tuomo Vuolteenaho (2004), "Inflation Illusion and Stock Prices" (Cambridge: NBER Working Paper 10263) http://www.nber.org/papers/w10263.

ABSTRACT:* We empirically decompose the S&P 500's dividend yield into (1) a rational forecast of long-run real dividend growth, (2) the subjectively expected risk premium, and (3) residual mispricing attributed to the market's forecast of dividend growth deviating from the rational forecast. Modigliani and Cohn's (1979) hypothesis and the persistent use of the "Fed model" by Wall Street suggest that the stock market incorrectly extrapolates past nominal growth rates without taking into account the impact of time-varying inflation. Consistent with the Modigliani-Cohn hypothesis, we find that the level of inflation explains almost 80% of the time-series variation in stock-market mispricing.

Other related references:

Posted by DeLong at 04:57 PM | Comments (0) | TrackBack

Optimal Amounts of Foreign Travel

Alex Tabarrok heads for Machu Picchu:

Marginal Revolution: Lunch Matters: At lunch with Bryan and Tyler last week the question arose as to what we would do differently if we were immortal. After a nerdy discussion to clarify what sort of immorality we were talking about; the kind where you can't be killed but can be imprisoned or the kind where you are forever young but may be hit by a truck? (it was the former) - I answered that I would travel more.

Later the question was asked, what would you do differently if you found out you had only a short time to live. I answered again that I would travel more. Click, buzz, whirr...does not compute, does not compute. Even before Bryan or Tyler could point out the inconsistency I realized there was a problem. Given that I would travel more if I was to live either less or more the probability that I was at just that level of mortality that I should not be traveling now must be vanishingly small. >I leave for a solo trek to Machu Picchu July 25. Lunch matters.

Posted by DeLong at 03:27 PM | Comments (0) | TrackBack

The Battle of Ideas

Even the neoconservative New Republic agrees that the Democrats have won the battle of ideas!

Ezra Klein quotes from the excellent Jonathan Chait:

Ezra Klein: Ideas: In a piece full of very good parts, this has to be my favorite of Jon Chait's many perfect paragraphs knifing the "Democrats lack ideas" meme:

A related assumption is that new ideas are better than old ones. This meme has gained particular currency during the Social Security debate. For instance, conservative privatization advocate Peter Ferrara dismissed liberal foe Robert Ball as a "well-meaning gentleman who hasn't had a new idea in 40 years." The accusation resonates with many liberals. The Democrats' economic policy, as labor leader Andrew Stern told Matt Bai of The New York Times Magazine, "is basically being opposed to Republicans and protecting the New Deal. It makes me realize how vibrant the Republicans are in creating twenty-first-century ideas, and how sad it is that we're defending 60-year-old ideas."

The elevation of new over old is one of those beliefs that can only survive as a background assumption, without any critical scrutiny. Nobody tries to explain why new is inherently better, because the notion is obviously ridiculous. Take Social Security, for instance. Whatever you think of the general virtues of privatization, the program has actually grown more, not less, suited to the character of the U.S. economy over the last several decades. Social Security is designed to safeguard individuals from various risks. As the economy has grown significantly riskier, the need for a program that offers people a risk-free financial bedrock has grown stronger, and the case for subjecting the program itself to more market risk has grown more dubious.

And goes on to say:

I can't tell you the enjoyment I get from watching professed followers of Edmund Burke demand that Democrats stop protecting old ideas and realize the many virtues of newness. That no policy or idea can last more than 70 years without requiring radical overhaul is such a violent attack on the philosophical foundations of conservatism, not to mention the dictionary's definition of the word, that it's beyond belief, particularly in a party where so many sniff about their deep immersion in conservative intellectual traditions. But as Chait says elsewhere in the piece, the conservative superiority in "ideas" often reflects nothing more than a greater capacity for hypocrisy. Seems the same would go for their advantage in philosophy...

Posted by DeLong at 03:20 PM | Comments (0) | TrackBack

Declaration of Independence

In Congress, July 4, 1776

The Unanimous Declaration of the thirteen United States of America

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect for the opinions of mankind requires that they should declare the cause which impel them to the separation.

We hold these truths to be self-evident: that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed.

That whenever any Form of government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundations upon such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shown, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent shall be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accomodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants alone.

He has called togethe rlegislative bodies at plaes unusual, uncomfortable, and distant from the depository of the public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavored to prevent the population of these States; for that purpose obstructng the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migration hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing judiciary powers.

He has made judges dependent on his Will alone, for their tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.

He has kept among us, in time of peace, Standing Armies, without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For quartering large bodies of armed troops among us:

For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us, in many cases, of the benefits of Trial by Jury:

For transporting us beyond the Seas to be tried for pretended offences:

For abolishing the free system of English Laws in a neighboring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:

For taking away our Charters, abolishing our most valuable Laws, and altering Fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War agains us.

He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy of the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high seas to bear arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes, and conditions.

In every stage of these Oppressions We have Petititioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people. Nor have We been wanting in atentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

WE, THEREFORE, the REPRESENTATIVES of the UNITED STATES OF AMERICA, in General Congress, Assebled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the name, and by Authority of the good Poeple of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be FREE AND INDEPENDENT STATES; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally disolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do.

And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.

John Hancock--Geo. Taylor--Button Gwinnett--James Wilson--Lyman Hall--Geo. Ross--Geo. Walton--Caesar Rodney--Wm. Hooper--Geo. Read--Joseph Hewes--Tho. M. Kean--John Penn--Wm. Floyd--Edward Rutledge--Phil. Livingston--Thos. Heyward, Jr.--Fras. Lewis--Thomas Lynch, Jr.--Lewis Morris--Arthur Middleton--Richd. Stockton--Samuel Chase--Jno. Witherspoon--Thos. Stone--John Hart--Charles Carroll of Carrollton--Abra. Clak--Josiah Bartlett--George Wythe--Wm. Whipple--Richard Henry Lee--Saml. Adams--Th. Jefferson--John Adams--Benj. Harrison--Robt. Treat Paine--Thos. Nelson, Jr.--Elbridge Gerry--Francis Lightfoot Lee--Step. Hopkins--Carter Braxton--William Ellery--Robt. Morris--Roger Sherman--Benjain Rush--Sam. Huntington--Benj. Franklin--Wm.Williams--John Morton--Oliver Wolcott--Geo. Clymer--Matthew Thornton--Jas. Smith

Posted by DeLong at 03:15 PM | Comments (0) | TrackBack

Why Is Nobody Willing to Kill Over the Language of Administration in Strassburg?

The highly-intelligent Daniel Nexon restates the "realist" position in foreign affairs, and brings to mind all the reasons that I think it is profoundly misguided:

The Duck of Minerva: Rising Powers, War and the Economists: Given that war is always costly (in terms of revenue, resources, lost consumer production, damage, death, etc.) two rational actors always ought to find some negotiated settlement preferable to going to war. Of course, the presence of an indivisible issue, incorrect information about a rival's objectives, or the inability of one (or both) sides to make a credible commitment to upholding the settlement all may lead rational states to opt for war.

Moreover, we often forget just how close Germany came to winning World War I. The Schlieffen Plan almost worked. Germany would probably have won the war - and, ironically, the next few decades would almost certainly have been much better for humankind - if the United States had not intervened on the side of the Entente. I am not suggesting the war would have been "worth it" in economic terms... but that's the whole problem with Angell's and Brad's analysis: wars are almost never worth the costs, and yet states keep on fighting them.

It seems to me that Daniel's final claim--that "wars are almost never worth the costs" they impose on both sides--is simply false before 1850 or so. To the decision makers and to those who choose them, wars before 1850 or so are not negative-sum but positive-sum contests:

Before 1850, most leaders simply did not care about the death and destruction that make modern democratic states regard wars as negative-sum contests, or do not care enough for those considerations to outweigh others--different beliefs about the will of God, domestic political benefits from war, gaining a reputation as a tough guy in foreign affairs more broadly, or regarding battle as an honorable human enterprise and a short but glorious life as better than a long one--that make wars positive-sum contests.

Since 1850 things have changed. The death-and-destruction costs of war--even non-nuclear war--have multiplied beyond previous imagining. Those who choose leaders are now a broad set of voters rather than a narrow coterie of aristocrats. We--at least we who live in democracies--ought to have outgrown war outside of the limited cases of (i) Osama bin Laden and his ilk, and (ii) missions of mercy to overthrow tyrants.

Have we? Well, quite possibly.

It has been a hundred and ninety years since Britain and the United States fought a war--in spite of sharp conflicts of geopolitical interest and the usual "indivisible issue[s], incorrect information... inability... to make a credible commitment." It has also been a hundred and ninety years since Briton fought Frenchman (save for certain unpleasantnesses involving elements of the French fleet after the French surrender of 1940)--if you'd told the Duke of Wellington on the evening of June 18, 1815 that it was the beginning of more than 190 years of Franco-British peace, he would have choked on his soup. It has been eighty-five years ago since a U.S. president decided to send armed force across the Rio Grande to "teach the Mexicans... to elect good men." It has now been sixty years since an army crossed the Rhine bearing fire and sword. How long do you have to go back to find a previous period of sixty years without a watch on the Rhine? I think you have to go back to the second century BC, before the Cimbri and the Teutones crossed the Rhine to challenge the armies of the Consul Gaius Marius for control of the Rhone Valley.

Before I read any more "realists" writing about a Chinese-American cold (or hot) war in Asia, I want them to come up with an explanation of why the War of 1812 was the last Anglo-American war. Why not 54'40" or fight? The claim that "wars are almost never worth the costs, and yet states keep on fighting them" doesn't seem to apply to relationships between some states since 1850 or so.

The "realist" school has absolutely no clue as to why there has been no Franco-British or Anglo-American war in 190 years, no Mexican-American war in 85, and no Franco-German war in 60. The language of administration in Strasbourg is simply not something that people are willing to kill or die for these days. Which kinds of states study war (against each other at least) no more? And why not? Those are, I think, the most interesting questions in the academic study of international affairs.

Posted by DeLong at 02:07 PM | Comments (0) | TrackBack

New Math

Kevin Drum writes:

The Washington Monthly: MATH FOLLOWUP.... Normally I'd just post this as an update, but it seems like it deserves a separate post of its own. Yesterday I excerpted a Diane Ravitch op-ed about mathematics textbooks from the Wall Street Journal. One of the paragraphs in the op-ed was this one:

In a comparison of a 1973 algebra textbook and a 1998 "contemporary mathematics" textbook, Williamson Evers and Paul Clopton found a dramatic change in topics. In the 1973 book, for example, the index for the letter "F" included factors, factoring, fallacies, finite decimal, finite set, formulas, fractions and functions. In the 1998 book, the index listed families (in poverty data), fast food nutrition data, fat in fast food, feasibility study, feeding tours, ferris wheel, fish, fishing, flags, flight, floor plan, flower beds, food, football, Ford Mustang, franchises and fund-raising carnival.

That sounded pretty amusing indeed, but last night I got the following via email:

The 1998 "contemporary mathematics" textbook referenced [by Ravitch] actually has two distinct indexes -- one is called Index of Contexts, the other is called Index of Mathematical Topics. Now, let's see, in which index might a discerning reviewer look for a list of mathematical topics that start with the letter "F"?

This seems to be a hard question for Ravitch, Evers, and Clopton. They chose to look in the Index of Contexts. Let's use a bit more insight and look in the Index of Mathematical Topics. Under the letter "F" we find the following topics listed for this integrated mathematics textbook: Faces, Face-views (3-D drawing), Finding equations (using points, using regression, using situation, using slope and intercept), Five-number summary, Formula (area, perimeter, surface area), Four-color problem, Fractal, Fractional exponents, Frequency table, Front view (3-D drawing), and Function.

I don't know if Ravitch is an innocent victim of deliberate deception by Evers and Clopton, or if she knew what they were up to and passed it along anyway. In either case, it seems as if she and the Wall Street Journal owe their readers a retraction.

And the follow-up:

The Washington Monthly: ALGEBRA TEXTBOOK FINALE....Thanks to reader MH, we now have a definitive answer to last night's algebra textbook question: it turns out that Contemporary Mathematics in Context does indeed have two indexes, a "topic" index and a "context" index. The "F" section of the topic index is shown on the right, and it appears to have a fairly standard collection of high school math entries. A scanned image of both the topic and context indexes is here (warning: large PDF).

MH also provides a possible explanation for the initial citation of the wrong index by Evers and Clopton:

It is possible that Evers' and Clopton's error was inadvertent.... If they looked for the index... [by] open[ing] the book to the last page and flip[ping] backwards... they would encounter the context index first...

That could be. In any case, it appears that Evers and Clopton highlighted the index primarily as a substitute for a fair discussion of the books themselves. In fact, their main substantive complaint was about CMiC's lack of emphasis on factoring polynomials, and a reader who has contributed to CMiC emailed to explain that this was deliberate:

[Older texts use] what we would call a theory of equations approach (aka traditional with heavy emphasis on factoring)....That is, everything that you do is directed towards writing x= __.

....[CMiC] and other NSF funded projects...generally take approaches called the functions-based approach. The idea there is that you think about functions and analyze the relationship between input and outputs. It is only in the context of functions that you start to ask: where does this function hit the x-axis? Or, how can I make a function that hits the x-axis in these places (we'd call that interpolation)?

So, traditionally, students were exposed to page after page of 'how to factor this specific form' whereas in [CMiC] students are expected to make use of factoring, but it's not a huge focus.

I don't have any independent opinion about which approach is correct, since that's obviously a pretty technical pedagogical question. [Let me put in my two cents' worth: in the fifteen-year-old's--excellent--Algebra 1 course, they put a little too much emphasis on factoring and a little too little on functions and where they hit the x-axis.] Regardless, citing the context index as a measure of frivolity while ignoring the topic index is clearly unfair and misleading. Ravitch, Evers, Clopton, and the Wall Street Journal owe their readers a retraction.

But is it possible at this date for Diane Ravitch to be an "innocent victim of... deception" in her use of people from the Cato-Heritage-AEI-Hoover Republican smoke machine as sources? I think not. Surely nobody normal presumes that the Republican smoke machine is especially competent, or cares about playing it straight, or even knows what it is to work carefully.

Whenever you have good reason to suspect that your sources may be misleading, you have a duty to verify. Ravitch is old enough to know this.

Posted by DeLong at 02:04 PM | Comments (0) | TrackBack

Democratizing China in the Long Run

Greg Ip and Neil King have thoughts on Wilhelmine China:

Is China's Rapid Economic Development Good for U.S.?: By GREG IP and NEIL KING JR.: Chinese oil company Cnooc Ltd.'s takeover bid for Unocal Corp. has brought into sharp relief two opposing American views on China's rapid economic development. Many in Congress and the Pentagon think it may hasten an inevitable clash between the U.S. and China for economic and political leadership in the world. Many businessmen and academics, however, think China's growing wealth and international economic ties will make it more democratic and a force for global stability. Both have history on their side.

Brad DeLong, an economic historian at the University of California at Berkeley, sees a useful parallel in Britain's policy toward the emerging industrial colossus of the United States in the 19th century.... As late as the 1840s, he notes, the U.S. and Britain -- then the world's sole superpower -- came close to war over territorial disputes in the Pacific Northwest and the lucrative fur trade there. But in subsequent decades Britain chose to accommodate, rather than suppress, the U.S. By 1900, the notion of conflict was widely regarded "as silly, simply because the trade and economic connections were so tight and the political systems so compatible," Mr. DeLong said. Similarly, he argues the world will be safer if the Chinese in time see the U.S. as having aided, rather than hampered, their economic development.

History, though, also offers counterexamples. Germany was catching up to Britain at the same time as was the U.S. but that relationship ended in war. Similarly, Japan was more open to imports and foreign investment before World War II than after, yet its rapid industrialization, especially later under a nationalist military government, ultimately made it a more formidable adversary of the U.S. "There is no deterministic relation" between economic advance and war or peace, said Charles Maier, a Harvard University historian....

During the 1920s, Japan had low import tariffs and its democratic, civilian government encouraged domestic alliances with European and American companies to hasten Japan's technological catch-up, said Hideaki Miyajima, a Japanese economic historian at Waseda University in Tokyo and a visiting scholar at Harvard. General Motors Corp. and Ford Motor Co. operated Japan's only major automobile assembly plants. The heads of Japan's "zaibatsu" -- urban industrial conglomerates -- were pro-Western. Many sent their children to U.S. universities. But these pro-Western elites were too weak to resist the forces of militarism and imperial expansion.... In 1932, military-backed right-wing nationalists assassinated both Japan's prime minister and one of its leading business figures, Takuma Dan, the Massachusetts Institute of Technology-educated manager of the Mitsui Group zaibatsu. In 1936-37, the military completed its takeover....

Germany's rivalry with Britain is similarly complex.... Britain's old-line industrial elites saw Germany as a threat, while its emerging financial elites saw it as an opportunity. Within Germany, Ruhr-based heavy industry favored the army buildup and were more willing to risk conflict with Britain, while Hamburg-based trading interests were more pro-British, though supportive of the German fleet buildup....

The most important point, however, is that both Germany's and Japan's decisions to go to war were catastrophic mistakes. They lost. Moreover, Norman Angell was right: the decision to risk war was overwhelmingly stupid. They would still have been catastrophic decisions even had Germany or Japan won: nothing Germany could have gained from victory in World War I or Japan from victory in World War II would have been worth the suffering.

Later on in the article, Thomas Barnett tells something interesting:

The widely differing views of China were vividly evident in 2001 when military and Wall Street officials came together at the World Trade Center in New York to share thoughts on the impact of China's economic and military rise. The organizer, Thomas Barnett, then a teacher at the U.S. Naval War College, hoped to bring the two constituencies closer together. Instead, their opposing views were reinforced. Mr. Barnett, now a writer and consultant, says the Wall Street participants concluded, "'When I think of the security issues I realize how a strategic partnership with China is all the more imperative,' and the military guys would say, 'Wow, realizing all the economic competition, war with China is that much more inevitable.'"...

Posted by DeLong at 01:58 PM | Comments (0) | TrackBack

CAFTA and the Drug Lobby

CAFTA not as free trade but as intellectual property protection:

Drug Lobby Got a Victory in Trade Pact Vote - New York Times: By STEPHANIE SAUL: The sidewalk between the drug industry's headquarters in Washington and the United States trade representative's office has been taking a pounding from the wingtips of industry lobbyists. The work of these drug industry courtiers, who represent what is arguably Washington's biggest and wealthiest lobby, appears to have succeeded in the Central American Free Trade Agreement. The agreement would extend the monopolies of drug makers and, critics say, lead to higher drug prices for the mostly impoverished people of the six Latin American countries it covers....

The six countries affected by the pact "understand that the net effect of these pharmaceutical provisions will be to raise the price of medicine," said Frederick M. Abbott, a professor of international law at Florida State University. "The way they have to view it is that they're getting something out of the agreement that will give them a net trade benefit." The problem with such an analysis, Professor Abbott said, is that the textile employers and agricultural producers gain, but the economic benefits may never flow down to the people who cannot afford medicines....

In defending their efforts to extend intellectual property protection abroad, industry officials point out that pharmaceutical companies subsidize treatment for millions of people in developing countries. Bristol-Myers, for example, has invested $150 million to set up AIDS clinics and other charitable programs in Africa....

One of the most contentious provisions in the trade pact is a requirement that gives brand-name manufacturers market exclusivity for five years after a drug is registered in the countries, even if the 20-year patent has expired. A similar five-year period exists in the United States, but the trade agreement would require countries to enforce the five-year period even if the exclusivity period in the United States has already expired. During that period, manufacturers who ultimately wanted to register a generic equivalent to the drug in that country would be barred from using the animal and human test data submitted for the drug's approval, a provision that critics say could delay the approval of generics beyond the five-year period....

Critics of the trade agreement say it sets up barriers to compulsory licensing in the countries it covers - the Dominican Republic as well as Nicaragua, Guatemala, El Salvador, Honduras and Costa Rica...

Posted by DeLong at 01:56 PM | Comments (0) | TrackBack

July 03, 2005

100 Interesting Mathematical Problems, Exercises, Puzzles, and Diversions

Rudbekia Hirta has worries about problems that turn her students off math:

Learning Curves: Contest Problems: I've also been given a book produced at the University of Delaware in 1986 called "Resource Problems to Enhance the Teaching of Mathematics." Here's a randomly selected problem:

In a 5 by 12 rectangle, one of the diagonals is drawn and circles are inscribed in both right triangles thus formed. Find the distance between the centers of the two circles.

I can't use problems like this. Most of the problems in the book are what I would categorize as contest problems for general-population high school students. These might be fine for high school students who already like math, but those are not my students. I'll definitely have a bunch of pre-engineers who need to learn an ambitious amount of calculus in a short period of time (dictated by the departmental syllabus), and the other bunch is an unknown. The regular gen-ed class would mutiny over this sort of problem (these are the students so averse to doing unfamiliar problems that they will leave questions blank on the exam and leave early). The honors version of the gen-ed class does not have a math placement prerequisite -- just an overall standardized test score -- so I have no information about how good they are at math. I'm guessing, though, that if I were to give them puzzle problems that they'd be more appreciative of the LSAT puzzle problems or problems from the quantitative section of the GMAT.

This book also features word problems about completely fanciful nonsense situations:

Sally is having a party. The first time the doorbell rings, one guest enters. If on each successive ring a group enters that has two more persons than the group that entered on the previous ring, how many guests will have arrived after the 20th ring?

It's problems like this that make my weaker students hate word problems....

So what are some problems that have clear and immediate payoffs, or that will be of interest to somebody with a normal level of curiosity? This question is of interest to me as well, for two reasons:

  1. I want the sophomores and juniors I teach to understand that math is a useful tool--which means assigning them problems that they can do and understand the substantive payoff.
  2. I want to persuade the kids that the payoff to math is high.

I used to have a wiki that I hoped would become a place where people could contribute and edit interesting math problems. But, alas, it got caught in the great wiki-crash of 2004, as the spam-robots became more and more sophisticated. I had to shut it down.

This is as far as I had gotten:

One Hundred Interesting Math Calculations: How do you convince adolescents that there is a big long-run payoff from math? Teaching them (mine at least) that there is a huge short-run payoff from reading and a huge medium-run payoff to writing is easy. But math is harder.

  1. [World War II Bomber Pilot Survival Odds]
  2. [How Many Extraterrestrial Civilizations Are There?]
  3. [Gravity and "Weighing the Earth"]
  4. [Economic Growth Since 1500]
  5. [Exponential Growth and Human Populations]
  6. [How Much Blood Is There in the World?]
  7. [Julius Caesar's Last Breath]
  8. [The Birthday Fact]
  9. [The False-Positive Problem]
  10. [The Grass-Is-Greener Paradox]
  11. [The All-Knowing Alien Paradox]
  12. [Repeating Decimals]
  13. [Introduction to Compound Growth]
  14. [Elementary Ballistics: The Kinematics of Falling Bodies]
  15. [Elementary Ballistics: What Goes Up Must Come Down]
  16. [How Rich Is Fitzwilliam Darcy?]
  17. [The Clock Hands Problem]
  18. [Sunscreen, or the Freak Mutant Near-Albino Problem]
  19. [The Distributive Law, or the Get-Out-of-the-Way Problem]
  20. [The Federal Reserve Problem]
  21. [The Ancestor Problem]
  22. [Strategy Secrets of ENRON]
  23. [The Muddy Parent Problem]
  24. [The Kissing Problem]
  25. [Understanding "Risk Arbitrage"]
  26. [Orbiting the Earth]

And here are some suggestions from others for problems it would be interesting to write up:

Suggestions For Entries:

  1. How long can Moore's Law go on? Starting from the average distance between atoms in a silicon crystal, find the time when chip features will be (supposedly) one atom wide.
  2. Intro to counting and combinatorics. Suppose there were 14 (or 12) cards in one suit. Suppose there were 5 (or 3) suits in a standard deck of playing cards. How would the relative ranking of poker hands change? They don't all scale the same way. Do most of the work by cancellation, so you don't have to perform a lot of the (tedious, error-prone) multiplication.
  3. Simple bits of probability, especially conditional probability from games -- card games (poker), dice games (craps), whatever. For example, understanding why it is harder to make your point the hard way (with a pair) when it is 8 rather than 4. As a grad student, I spent a lot of time teaching basic concepts to undergrads (at MIT!) that I mastered in middle school because i thought about the games i spent my time playing.
  4. Consider the mathematics of triage versus parity policies as described by Garrett Hardin in Chapter 4 of "Promethean Ethics," University of Washington Press, 1980.
  5. If you try something unlikely a few times, you might fail every time -- but it's commonly said "Even if the odds are a thousand to one against you, you try it a thousand times, you're sure to get it." Right? Wrong. If the odds are 50-50, and you can have two tries, you've got a 75% chance of a win. But it's downhill from there. One in a thou chance with up to a thousand tries? Only a 63.23% chance of a win. One in a million over a million tries? You're down to 63.21%, and it keeps dropping from there. How low can it go?
  6. Xeno's paradox came about because the Ancient Greeks did not know how to sum an infinite series. I've always used it to illustrate the concept of limits approaching infinity, because it puts the complex math on the side of common sense.
  7. For "Exponential Growth and Human Populations" set the end point as filling up the Americas by a colonizing group of 100 people, it's more interesting.
  8. Richard Dawkins has an interesting calculation on human ancestors in the book "River out of Eden" (1995). Figuring 20 years per generation, calculate the number of ancestors you have 2000 generations ago if none of your ancestors appear more than once in your family tree (no inbreeding).
  9. If the kids are into science fiction, have them work out dimensions of their favorite space ship based on extrapolation from the sizes of particular features (e.g. if the bridge of the Enterprise is so many feet across, how long is the whole ship?). Have them make upper and lower bound estimates to teach them error margins. It's not so great for web page presentation, though...
  10. Small business economics. Next time you and the kids are at the ice cream shop or other restaurant, have them work out the typical number of customers per hour (from typical customers-in-store and customer-visit-time). From this and the amount spent by a typical customer you get typical revenue. Guess at employee wages and commercial space leasing costs. Ask them why the place closes at 9 instead of staying open all night.
  11. Bridges of Konigsberg. Requires an illustration. The fundamental problem of graph theory.
  12. Predator/Prey? balancing over time.
  13. The different coin problem. N coins or objects of the same weight, one object of a different weight (in the simpler form lighter or heavier is known, in the slightly more difficult, just that it is "different"), a scale, and a limited number of weighings. Teaches binary group comparions. (Similarly, the switchback problem - You are at a fork in the road. You know your destination lies an unknown distance from the fork down one fork. What is the fastest way to surely find your destination?)
  14. Gabriel's Horn. A mathematical object with finite volume, but infinite surface area. Thus you can conclude that if you wish to paint Gabriel's horn, it's much wiser (and less costly) to fill the horn with paint than to try to coat the outside. Full appreciation will require calculus experience. [Link] [Link]

Gabriel's Horn, alas! is too sophisticated for my purposes--but it is wonderful:

Gabriel's Horn - Wikipedia, the free encyclopedia: Gabriel's Horn (also called Torricelli's trumpet) is a figure invented by Evangelista Torricelli which has infinite surface area, but finite volume. Gabriel's horn is formed by taking the graph of y = 1/x, with the range x ≥ 1 (thus avoiding the asymptote at x = 0), and rotating it in three dimensions about the x axis...

Posted by DeLong at 08:02 AM | Comments (0) | TrackBack

July 01, 2005

A "Greenspan Put"?

Four years ago Barry Eichengreen and I wondered whether the "Greenspan Put" had been a powerful force pushing up lending to high-risk countries in the mid-1990s and pushing up stock prices during the dot-com bubble. But we found a problem: we couldn't find significant evidence that this was the case--indeed, we couldn't find that many mentions of the "Greenspan Put" in the financial press or the financial newsletters in the first place. If it was part of the Zeitgeist, it wasn't in any place very visible to us.

The idea of an important "Greenspan Put" lost plausibility as the Federal Reserve did not take steps to lower interest rates as the NASDAQ fell, but instead waited until it saw signs of slackening investment growth. How could anyone in the aftermath of the NASDAQ crash could speak--as John Makin does--of the Fed as providing "free insurance for aggressive risk-taking"?

Nevertheless, the Washington Post's Nell Henderson thinks it is back. But she rapidly gets badly confused between the effects of (i) good, stabilizing monetary policy which should make one optimistic about the future and cause appropriate rises in asset prices (which seems to be what James Grant is talking about), and (ii) the "Greenspan Put" proper--the belief that government rescues are in the offing--which would cause inappropriate rises in asset prices (which seems to be what John Makin is talking about).

And so the article dissolves into incoherence.

Backstopping the Economy Too Well?: Some Experts Worry Greenspan's Success Bequeaths Risky Overconfidence. By Nell Henderson: In financial markets, they call it "the Greenspan put" -- a belief that if stock or bond prices fall too much, the Federal Reserve will help prop them up with quick interest rate cuts to pump more cash into the system.... But according to some Fed observers, this confidence is a worrisome legacy after Greenspan's nearly 18 years helping to steer the economy through a variety of storms... people can take bigger financial risks because the chairman can and will save them if their bets go sour.

Greenspan... and other Fed officials have expressed concern about increasingly risky financial behavior, stepping up their warnings about exotic investment strategies, real estate speculation and loose lending practices. The chairman even felt compelled to state recently that he cannot foresee the future and prevent all bad things from happening. "The economic and financial world is changing in ways that we still do not fully comprehend," Greenspan told a bankers' conference in Beijing. "Policymakers accordingly cannot always count on an ability to anticipate potentially adverse developments sufficiently in advance to effectively address them."

Now you tell us.

"The essential Greenspan legacy . . . is the idea that the Fed will allow nothing to go really wrong," said James Grant.... Investors have come to perceive the Fed's policies of recent years as "free insurance for aggressive risk-taking," said John H. Makin, an economist at the American Enterprise Institute. "Who doubts that a sharp drop in the market for housing or in the stock market would cause Fed [credit] tightening to stop or even to be reversed?"

See also Mark Thoma: Economist's View: The "Greenspan Put" and Excessive Risk Taking.

Posted by DeLong at 03:24 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Way of the Leprechaun Edition)

Henry Farrell is unhappy with Tom Friedman's belief that six-week vacations and stable employment are bad for Europe:

The Way of the Leprechaun: Posted by Henry Farrell: An indubitable Airmiles [i.e., Tom Friedman] classic:

There is a huge debate roiling in Europe today over which economic model to follow: the Franco-German shorter-workweek-six-weeks'-vacation-never-fire-anyone-but-high-unemployment social model or the less protected but more innovative, high-employment Anglo-Saxon model preferred by Britain, Ireland and Eastern Europe. It is obvious to me that the Irish-British model is the way of the future, and the only question is when Germany and France will face reality: either they become Ireland or they become museums. That is their real choice over the next few years -- it's either the leprechaun way or the Louvre.

Now those familiar with leprechauns will recall that they%u2019re untrustworthy little bastards.... The same is true of dodgy generalizations constructed around trite metaphors... by someone who clearly doesn't know what he's talking about.... Ireland is not an exemplar of the "Anglo Saxon model."... Lane Kenworthy... argues convincingly that Ireland doesn't fit well into either the Anglo-Saxon... or Rhenish... models.... Ireland is an especially poor fit with the Anglo-Saxon model in the area of labour market policy, a fact which rather undercuts the argument Friedman is trying to make. Again, Dr. Kenworthy:

beginning in the late 1980s and continuing throughout the 1990s, [Ireland] has had a highly coordinated system of wage setting (Baccaro and Simoni 2004). In addition, Ireland has higher levels of employment and unemployment protection than other liberal market economies and longer median job tenure (Estevez-Abe et al. 2001, pp. 165, 168, 170).

Finally... it is exactly the non-Anglo-Saxon features of the Irish economy -- and in particular the systematized concertation between trade unions, management, government and other social actors -- that was at the heart of Ireland's economic success in the 1990's. This system, unbeloved of free market economists, set the broad parameters for wage and income tax policy, and provided Ireland with the necessary stability for economic growth. It's now coming under strain... but insofar as [Ireland] does set an example, it isn't the kind of example that Friedman thinks it is.

I confess I too had a "Huh?" moment here. Ireland in the past decade and a half looks, I think, more like a Scandinavian economy than like Great Britain.

Posted by DeLong at 03:23 PM | Comments (0) | TrackBack

Ed Glaeser on New York City

The Very Smart Edward Glaeser on New York City:

Edward L. Glaeser (2005), "Urban Colossus: Why is New York America's Largest City?" (Cambridge: NBER Working Paper 11398).

Abstract: New York has been remarkably successful relative to any other large city outside of the sunbelt and it remains the nation's premier metropolis. What accounts for New York's rise and continuing success? The rise of New York in the early nineteenth century is the result of technological changes that moved ocean shipping from a point-to-point system to a hub and spoke system; New York's geography made it the natural hub of this system. Manufacturing then centered in New York because the hub of a transport system is, in many cases, the ideal place to transform raw materials into finished goods. This initial dominance was entrenched by New York's role as the hub for immigration. In the late 20th century, New York's survival is based almost entirely on finance and business services, which are also legacies of the port. In this period, New York's role as a hub still matters, but it is far less important than the edge that density and agglomeration give to the acquisition of knowledge.

...the distribution of employment in Manhattan in 2002. 28 percent of the payroll of the city is in a single three digit industry: "security, commodity contracts and like activity." This level of concentration is higher even than the commitment of the city to the garment trade during the height of that industry. Another 28.5 percent of total payroll is in three other industries: business, scientific and services (mostly lawyers and accountants), credit intermediation and company management. Together, these four industries account for 56.6 percent of total payroll in the isle of Manhattan. When Benjamin Chinitz (1961) compared agglomeration in New York and Pittsburgh, he emphasized the remarkably diverse nature of the New York economy. This is no longer the case. Manhattan employment is remarkably depended on finance, business management and business services.

This is not true in the outlying boroughs that are primarily in non-traded service sectors... health care, for example... these are both much smaller economic areas and are much more oriented towards providing services towards the residents of the greater New York area.

New York’s move into finance and management is not really paralleled by any of the other older cities. Perhaps the closest parallel to New York is Chicago which, during the last decade, has somewhat remade itself around business services. Boston’s post-1980 renaissance is completely different and should be seen as the result of small scale entrepreneurship in a number of disparate, high human capital sectors. The other large cities are still in decline and cannot be said to have found any meaningful replacement for the manufacturing firms that once employed thousands of their citizens.

The success of New York as a financial city suggests three questions. How did New York become the financial capital of the world? Why has New York’s dominance managed to expand in the modern era? Will New York manage to continue to survive on the basis of its financial industries?...

Posted by DeLong at 03:04 PM | Comments (0) | TrackBack

Vain Hopes for International Policy Coordination

Brad Setser quotes from Martin Wolf--and I find that Martin Wolf's reactions to the BIS are (a) very smart, and (b) close--embarrassingly close, in fact--to what I have written in a column that has not yet appeared...

Brad Setser's Web Log: More wisdom from Martin Wolf: More wisdom from Martin Wolf Having laid out the problem on Monday, Martin Wolf offers his solutions in tomorrow's Financial Times. He presents three answers to the question "what is to be done":

One answer... nothing. Let each country choose the policies that make sense to it.... The problem: Without big change in policies, the situation seems certain to deteriorate: US net liabilities will continue to rise in relation to GDP; and so, quite possibly, will the current account deficit. The longer this goes on, the larger the ultimate adjustment will be.

Option 2... the US would bully China into making a big adjustment of its exchange rate and macroeconomic policies. The problem: First, China is far from the only country that needs to change its policies... the Chinese... would almost certainly do the bare minimum, which would exacerbate ill will without rectifying the situation.

Which leaves only one viable policy course:

Serious multilateral discussion in which the US leads but does not attempt to dictate... discussing their responsibility for the health of an open world economy on which all depend. As a rising power, China should be invited to share in these discussions, by both exercising its voice and implementing its share of policy changes. Those changes must be large. They should include reform of the International Monetary Fund, to make it relevant to today's world, and a radical restructuring of the increasingly absurd Group of Eight. A forum must be found, together with a permanent secretariat, that makes possible serious discussion of how to proceed among the players that matter.


The US cannot dictate the policy changes or the pattern of global payments it desires to its partners. It must rely on institutions of co-operation, instead. The exchange rate and macroeconomic policies of east Asia are indeed destabilising. But a... successful response... [requires] a shared recognition of the dangers.... [and] determination to reach an agreed solution. US leadership is missing in action but remains indispensable....

That strikes me as right.

The odds of it happening strike me as low.

The difference between me and Wolf is that Wolf believes in institutions and secretariats whereas I believe in pressure to get the hegemon--the United States--to fulfill rather than ignore its leadership role. I am, after all, a student of Charlie Kindleberger.

The failure, in my mind at least, is not that we lack international institutions. It is that we here in the U.S. lack a Treasury and an OMB who are powerful and committed to fiscal sanity; it is that we lack economic advisers within the White House willing to say "worry a lot: be very unhappy" about the budget outlook and its consequences; it is that we lack finance and banking legislative committees that take their oversight-of-economic-policy role seriously; and it is that we have no political advisors who dare tell Bush that he should think about how the political careers of Carlos Salinas de Gortari and Suharto came to an end.

Posted by DeLong at 03:03 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Another New York Times Edition)

Tim Noah has some questions:

Malek's Free Ride, Cont'd. - Think the New York Times might be interested in a story about anti-Semitism? Naaah. By Timothy Noah: Page One New York Times story by Sheryl Gay Stolberg about the inevitable partisan battle over who will get to own the Nationals... an attack by Rep. Tom Davis, a Virginia Republican, on George Soros, who is a minority investor in a group led by Jonathan Ledecky, a Washington, D.C.-based financial tycoon who used to be part owner of Washington's hockey and basketball teams (and who, like Soros, gives a lot of money to Democrats). Here is what Davis said would happen if a sale to a group includin Soros went through, "I don't think it's the Nats that get hurt. I think it's Major League Baseball that gets hurt. They enjoy all sorts of [antitrust law] exemptions."...

Stolberg didn't quote this... lending credence to Davis'... false claim that "he never intended any threat." But... [Stolberg] repeated the... objection to Soros (apparently he was convicted of insider trading in France; Soros is appealing the decision) while... [calling] Fred Malek—-who leads the Washington Baseball Club, the group Davis clearly wants to prevail--... "a major Republican donor" and "a former aide to President Richard M. Nixon."... Fred Malek.... I'll let [Sally] Jenkins tell it: "You want a wart? Malek... was summoned by Nixon to discuss a 'Jewish cabal' in the Bureau of Labor Statistics.... He wanted to know how many Jews there were in the bureau, and he wanted Malek to count them. Malek... produced a list. Some of them were later demoted or transferred."...

If you're going to write about Republicans saying George Soros is unfit to be minority owner of a baseball team because of an insider-trading conviction, you're morally obliged to point out the mote-beam problem inherent in this line of attack...

Posted by DeLong at 03:00 PM | Comments (0) | TrackBack

Cooking in California

My sister says that, in California, cooking is largely superfluous. Oh, you do have to heat-treat some foods in order to make them soft enough for weaky East African Plains Ape teeth and to break down some of the big molecules so they are simple enough for weaky East African Plains Ape stomachs. But otherwise? No. Cooking is what you do when you have to find some way to make yet another round of cabbage half-appetizing, or to make yet another round of dried corn into something the family can face, and have nearly-unlimited supplies of oppressed and exploited low-market-value female household labor at your disposal.

And in California that's simply not necessary.

Looking at these heirloom tomatoes that I am now chopping, I agree with her: I am gilding the lily here.

On the other hand, the gazpacho that results should be very, very good indeed...

Posted by DeLong at 02:34 PM

The Leisure of Europe's Middle Class

Nicely done:

Alberto Alesina, Edward Glaeser, and Bruce Sacerdote (2005), "Work and Leisure in the U.S. and Europe: Why So Different?" (Cambridge: Harvard University).

Abstract: Americans average 25.1 working hours per person in working age per week, but the Germans average 18.6 hours. The average American works 46.2 weeks per year, while the French average 40 weeks per year. Why do western Europeans work so much less than Americans? Recent work argues that these differences result from higher European tax rates, but the vast empirical labor supply literature suggests that tax rates can explain only a small amount of the differences in hours between the U.S. and Europe. Another popular view is that these differences are explained by long-standing European “culture,” but Europeans worked more than Americans as late as the 1960s.

In this paper, we argue that European labor market regulations, advocated by unions in declining European industries who argued “work less, work all” explain the bulk of the difference between the U.S. and Europe. These policies do not seem to have increased employment, but they may have had a more society-wide influence on leisure patterns because of a social multiplier where the returns to leisure increase as more people are taking longer vacations.

Posted by DeLong at 02:22 PM | Comments (0) | TrackBack

Hausmann, Rodrik, and Velasco on Growth Constraints

Stephen Smith from GW writes to say:

I think that http://ksghome.harvard.edu/~drodrik/barcelonafinalmarch2005.pdf is very smart and well done... a nuanced way to think about identifying and responding to a sequence of constraints on growth. Even in East Asia it is not a matter of finding and getting onto a single high growth path, but of a set of strategies for relaxing a sequence of binding constraints...

Posted by DeLong at 02:15 PM | Comments (0) | TrackBack

DeLong Smackdown Watch

Julian Sanchez gives an effective critique of (i) DeLong's version of preference utilitarianism and of (ii) attempts to figure out how to implement it by asking people what makes them happy.

Notes from the Lounge: No problem, say the utilitarian theorists (and economists), we'll switch to preference utilitarianism, wherein "utility" or "happiness" are defined in terms of the satisfaction of preferences. This has the virtue of realigning the object of maximization with what people subjectively value, which makes for a sturdier fact/value bridge. It has the disadvantage of making it much less clear whether that appealingly simple maximizing structure is still a good fit for the task. Even rendering the very different forms of satisfaction and dissatisfaction people are capable of feeling comparable seemed a bit of a stretch. (How many of the bon vivant's wild nights on the town does it take to equal the same amount of "utility" in the monk's serene satisfaction in a day of contemplation?) Preferences over states of the world that need not be experience by the subject who prefers them make things a much bigger tangle. And should we think it's better for people to have more (and more intense) preferences, so that more of them can be satisfied? But I digress.

DeLong's problem seems to be that he's using this second, preference-based sense of "happiness." But this isn't the colloquial sense of the word.... DeLong is like a Ptolemaic astronomer who... [claims] the proposition that the earth revolves around the sun... [is the same as] the absurd proposition that the earth doesn't exist, since "the earth" is defined as the thing at the center of the universe. Now, if we're defining happiness in terms of preferences, then DeLong's semantic objection isn't as wacky as it initially seemed: The claim that freedom might be more important than happiness amounts to the claim that one prefers freedom to the satisfaction of one's preferences.

But DeLong then goes on to argue in terms of "regret" and "being happy" when contemplating one's future life, which certainly sounds as though he's conflating the preference-based and experiential senses of happiness.... [T]he discussion further blurs the line between a technical, preference-based sense of happiness in which DeLong's claim sounds right, with happiness as a sort of feeling about how things will go for you. But if we want to stick with the preference-based version of "happiness", then (and this certainly runs against the grain of ordinary English) it no longer makes much sense to talk about "being happy", since "happiness" might be maximized by the choice that leads to my being killed instantly....

[Layard's] book is described as making use of a series of psychological studies about how satisfied people are. And it's only the experiential sense of "happiness" that's going to turn up in studies like that: First, because if you ask people how "happy" they are, then everybody but Brad DeLong is going to interpret that question in the colloquial way....

Powerful and well-argued, but (to me) ultimately unconvincing. For other philosophical traditions have equal or greater weaknesses when used as foundations on which to build discussions of the good life or the good society. And the question, after all, is whether Richard Layard's book should be ignored because of incoherence in its philosophical underpinnings...

Posted by DeLong at 02:13 PM | Comments (0) | TrackBack

The South Asian Tiger

India's economic growth, from the FT:

FT.com / World / Asia-Pacific - Indian GDP boosted by strong manufacturing: By Jo Johnson in New Delhi: India’s economy surged by 7 per cent in the fourth quarter of 2004-05, lifting the full-year growth to the 6.9 per cent predicted by the government, as strong manufacturing and services output compensated for a weak performance by the agricultural sector.... Manufacturing grew at 8.6 percent in the January-March quarter.... Farm sector output was up 1.8 percent in January-March... well below the 4 per cent targetted in India’s latest five-year economic plan....

Montek Singh Ahluwaliah, deputy-chairman of India’s Planning Commission, on Thursday lamented that agriculture growth had “run out of steam” since the 1990s and called for greater investment in irrigation and moisture retention infrastructure. In many of India’s states, water charges cover only a fraction of operational and maintenance cost, leading to substantial underinvestment in the irrigation network and shortages caused by wasteful consumption by inefficient farmers. “Nobody is actually talking about user charges covering capital cost,” Mr Ahluwaliah said. “But there is a strong case for user charges covering operations and maintenance cost."...

NCAER says 13 per cent of India’s population will have an annual income of £2,439-£12,500 by 2009-10, compared with 3 per cent in 1995-96. The improved competitiveness of Indian industry, particularly the manufacturing sector, is another reason for the decoupling of industrial production from agricultural output. Exports grew 21.4 per cent in 2003-04 and 24.4 per cent last year.

Soaring sales of motorcycles in rural areas also illustrate growing availability of consumer finance in villages has smoothed consumption in weaker years and lessened the relationship between farm incomes and rural expenditure on manufactured goods.

Posted by DeLong at 02:04 PM | Comments (0) | TrackBack

The Fed Moves Up to 3.25%

Ed Andrews reports:

Fed Continues to Raise Rates at a 'Measured' Pace - New York Times: As investors had already assumed, the central bank raised the federal funds rate on overnight loans between banks by a quarter point, to 3.25 percent. The central bank also repeated previous declarations that monetary policy is "accommodative," which means that interest rates are still lower than officials want, and it said interest rates could still rise at a "measured" pace.... Today's decision marked the one-year anniversary of the Fed's effort to reverse the easy-money policies after 2001, when the central bank was fighting off an economic slowdown and a collapse of the stock market bubble...

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