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August 30, 2005

Outsourcing!

To China:

Simon World :: United's Chinese Engineers: In a vast country like China, even amidst poor standards for a host of products, China's semiconductor foundries and now an aircraft maintenance firm are demonstrating that it can handle the pressures of high precision and reliability.

At least, that is the faith United Airlines is showing in Ameco Beijing: a story on CNN has United sending all 52 of their 777 aircraft to Beijing for repairs and maintenance for the next five years. Let us not misrepresent Ameco - it is a joint venture between Air China and Lufthansa German Airlines, and many of China's joint ventures have worked wonders (I even tried an excellent red wine from the Chengyu vineyard the other day - miracles never cease)...

Posted by DeLong at 04:17 PM | Comments (0) | TrackBack

It's a Close Race!

Daniel Gross believes that Steven Moore has snatched the Stupidest Man Alive crown:

MOORE-ON: It would be nice if an agent with human intelligence edited the articles that appeared on the Wall Street Journal editorial page. If one did, we wouldn't have lines like this.

Stephen Moore, a member of the Journal's editorial board, writes in today's paper:

The explosion of benefits paid to workers is in large part an artifact of the federal tax code, which allows employers to deduct from taxes pensions, health care, child care, and the like, but not wages.

Read it twice. Stephen Moore apparently thinks companies can't deduct wages paid to their workers from their taxable income the way they can deduct pension, health care, and child care costs. And apparently nobody at the Journal's op-ed page knew enough, or thought enough, to correct him.

Posted by DeLong at 04:15 PM | Comments (0) | TrackBack

Daniel Gross Sees the End of the Housing Boom

Daniel Gross writes:

HOME STRETCH: Among the flood of data suggesting high-end housing may be a bit overpriced, a few items have caught my attention in the past few days.

  1. High-end home builder Toll Brothers reported a fine quarter last week. But in a follow-up story, Kemba Dunham of the Wall Street Journal noted that "about 38% of buyers during the third quarter had interest-only mortgages, up from 19% a year ago."
  2. Business Week had a small graphic showing that in California, almost 20 percent of households spend more than half their income on housing in 2003. For the rest of the U.S., fewer than 10 percent spend more than half their income on housing.
  3. Westportnow.com, the website that covers all doings in my home town, reports that a home for sale in what should be the sweet spot of the local market -- about $1.5 million -- is offering a free Mini Cooper as an inducement.

Posted by DeLong at 04:13 PM | Comments (0) | TrackBack

Let's Blame Ronald Reagan!

Bush blames 9/11 on Ronald Reagan (and others). He even blames it on himself: he was the one who decided not to retaliate after the attack on the U.S.S. Cole:

Think Progress: From his address today in San Diego:

They looked at our response after the hostage crisis in Iran, the bombings of the Marine barracks in Lebanon, the first World Trade Center attack, the killing of American soldiers in Somalia, the destruction of two U.S. embassies in Africa, and the attack on the USS Cole. They concluded that free societies lacked the courage and character to defend themselves against a determined enemy. After September the 11th, 2001, we've taught the terrorists a very different lesson: America will not run in defeat and we will not forget our responsibilities...

Posted by DeLong at 04:11 PM | Comments (0) | TrackBack

I Don't Think Doc Searls Is Ever Going to Pay Another Cent to Quicken

He writes:

The Doc Searls Weblog : Tuesday, August 30, 2005: Customer Relationship Mismanagement: My accountant has been on the phone, mostly on hold, for 20 minutes (so far) trying to get Quicken to give her the info she needs to restore her copy of QuickBooks after the program disabled itself for want of registration information that is in no obvious place and appears to require talking with a series of customer support personnnel in some other country over a bad phone connection. Now (half an hour later), a Quicken person is telling her she'll have to wait until tomorrow or later to get help recovering from the worsening of the situation, caused by an apparently incorrect registration number provided by an earlier "service" person.... At this point the customer service person was required to ask us to express our satisfaction with her performance, and then shunted us to an automated system that asked us two questions about this person's performance, but NOTHING about the hell we went through before we got to a person who could solve our problem.

The whole system is f*d up in so many ways I don't know where to begin, so I won't. I will say it's lame in the extreme for a CRM system to put the whole evaluation burden on one individual, rather than the hold-and-transfer chain that leads to that person. Total time wasted: one hour and ten minutes.

My sympathies. I won't ever pay another cent to Adobe after wasting an hour and a half on phone support because a screen said "Enter Go-Live serial number" when it should have said "Enter PageMill serial number." It would take a personal phone call from the COO before I would pay them another cent for anything.

Posted by DeLong at 04:10 PM | Comments (0) | TrackBack

The Poverty Report

Matthew Yglesias writes:

TPMCafe || Economic News: As if the hurricane wasn't bad enough, we learn today that poverty is up for the fourth year in a row, median income is still flat, and the only thing preventing an explosion in the number of the uninsured is that federal programs the GOP is busy trying to eliminate are picking up the slack. This is bad stuff. The AP describes all this as happening "[e]ven with a robust economy" but, honestly, how robust is the economy if incomes are stagnating while poverty grows? Not very, I would think.

I expect this bad news will be met with a torrent of mumbo-jumbo, so one should state outright that there are various questions that could be raised about the accuracy or adequacy of the Census Bureau's statistics. That notwithstanding, these statistics are very good at capturing trend lines with a good deal of accuracy, so things are definitely getting worse.

Matt: The mumbo-jumbo started yesterday, with Jonathan Weisman's lead:

Measuring the Economy May Not Be as Simple as 1, 2, 3: The Census Bureau tomorrow will release the latest statistics on poverty in the United States, the income level of an average household and the number of Americans still lacking health insurance.

Don't believe the numbers.

Posted by DeLong at 04:08 PM | Comments (0) | TrackBack

Dean Baker Is Not an Alan Greenspan-Worshipper

Dean Baker says that Alan Greenspan-worshippers (like me) are deluded:

MaxSpeak, You Listen!: GREENSPANFEST 2005: BE GLAD YOU WEREN'T INVITED: The Federal Reserve Board is having its annual retreat at Jackson Hole, Wyoming and the agenda this year is devoted to a retrospective of Greenspan's 18-year tenure as Fed chairman. The world has not seen a greater display of obsequiousness since the death of Leonid Brezhnev....

1) Mr. Greenspan ignored the stock bubble.... The tens of millions of people who saw much of their retirement savings disappear in the crash are just out of luck, as are the pension funds that are now insolvent because their managers somehow didn't see the bubble.

The proper remedy for the bubble was actually very simple -- talk. If Greenspan used his Congressional testimony and other public speaking opportunities to lay out the case for the bubble, there is little doubt that it would have deflated long before it reached such outlandish proportions.... A fund manager that ignored Greenspan, and kept most of a portfolio in a bubble market, would undoubtedly be sued for negligence by their clients and probably have to pay every penny they owned in damages....

2) Mr. Greenspan promoted the housing bubble... Greenspan's tool for getting out of the recession created by the collapse of the stock bubble was to promote a bubble in the housing market. He did this most blatantly back in the summer of 2002.... When the housing bubble bursts, we will see the loss of $5 trillion in housing bubble wealth.... The economic fallout will also be enormous....

5) Finally, he did not tell the truth when he endorsed President Bush's tax cut in 2001....

Okay, I close with my own praise of Alan Greenspan. In 1995 and 1996 he lowered interest rates and kept them low. This allowed the unemployment rate to fall below the 6.0 percent level.... The decision to allow the unemployment rate to fall to levels that most economists thought would trigger inflation gave millions of people jobs.... The tight labor market of the late nineties allowed for the first sustained growth in real wages for most of the country's workers since the early seventies. We will benefit from this decision for years to come... the country benefited hugely because [of] Alan Greenspan..

I think Dean Baker understates how big a win Greenspan's decision to go for growth in 1995-1996 was. I agree with Dean's criticism (5): Greenspan did not understand how much damage the Bush administration was going to do to America's long-term fiscal stability, and should have worked much harder to aid the deficit-hawk wing of the Bush administration.

(1) and (2) are, I think, harder questions. Dean Baker wants Alan Greenspan to have taken on the role of investment adviser to America--telling Americans when assets are overvalued. Alan Greenspan would say that that is not his role, and that he's not very good at that role: he thought that stocks were overvalued in December of 1996, and high-tech stocks now--long after the end of the dot-com bubble--are twice what they were then. I don't think that it was as simple as "talk."

I also reject the claim that Greenspan should have raised interest rates and added to unemployment in the late 1990s to cool off stocks and in the early 2000s to cool off housing. That seems to me to be a clear loser, and a bad thing.

Where I would criticize Greenspan is in his failure to use his regulatory authority to brake some of the enthusiasm for first high-tech stocks and then housing. Organizations making it easier for individuals to make risky and ill-considered bets are creating systematic risk--and should be subject to heightened scrutiny and raised capital requirements as a result. That both stabilizes the system and potentially cools off the bubble. And that wasn't done.

But my thoughts critical of Greenspan--except in fiscal policy--are unformed. I think that of the three kinds of policy--monetary, fiscal, and financial asset--that Greenspan was concerned with, monetary policy was most important. And Greenspan has done a masterly job at monetary policy.

Posted by DeLong at 04:06 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Don't Believe Jonathan Weisman Department)

Today the Census Bureau reports:

Real median earnings of men age 15 and older who worked full-time, year-round declined 2.3 percent between 2003 and 2004, to $40,798. Women with similar work experience saw their earnings decline by 1.0 percent, to $31,223.... There were 37.0 million people in poverty (12.7 percent) in 2004, up from 35.9 million (12.5 percent) in 2003.... The Midwest was the only region to show an increase in their poverty rate.... The South continued to have the highest poverty rate....

The percentage of the nation’s population without health insurance coverage remained unchanged, at 15.7 percent in 2004. The percentage of people covered by employment-based health insurance declined from 60.4 percent in 2003 to 59.8 percent in 2004. The percentage of people covered by government health insurance programs rose in 2004, from 26.6 percent to 27.2 percent, driven by increases in the percentage of people with Medicaid coverage, from 12.4 percent in 2003 to 12.9 percent in 2004. The proportion and number of uninsured children did not change in 2004, remaining at 11.2 percent or 8.3 million...

Yesterday in the Washington Post's Jonathan Weisman told his readers that they shouldn't believe the Census Bureau:

Measuring the Economy May Not Be as Simple as 1, 2, 3: The Census Bureau tomorrow will release the latest statistics on poverty in the United States, the income level of an average household and the number of Americans still lacking health insurance. Don't believe the numbers.

What reasons does Weisman give to support the lead of his article--to support his warning that we should not believe the numbers in today's report?

  1. David Malpass wishes that the Commerce Bureau of Economic Analysis had a change-in-wealth rather than a financing-of-investment definition of saving.
  2. A number of those without health insurance could afford it, but prefer to spend their money on other things.
  3. Marilyn Bryant, making $20,000 a year in Washington D.C., "earns too much money to qualify for any federal assistance" but has a very low standard of living because she lives in an expensive area and pays $5,000 a year in child support to her ex-husband.
  4. Because successive White Houses have stuck with the Orshansky measure of poverty, "officially, the poverty rate has drifted upward since 2000, from 11.3 percent to 12.5 percent in 2003. But a more sophisticated measurement... shows the official rate has consistently understated poverty... the percentage of Americans below the poverty line has risen from 12.8 percent in 2000 to 14.2 percent in 2003."
  5. We aren't spending enough money collecting economic statistics, and Rahm Emmanuel thinks we should set up a commission to overhaul our statistical agencies.
  6. Successive White Houses have stuck with the simple to calculate and interpret Orshansky poverty measure rather than move to a more accurate but less transparent measure.
  7. The Consumer Price Index is a fixed-weight index, rather than a chained-weight cost of living index--and if the government used a cost of living index to index Social Security and tax brackets, we would collect more in taxes and pay out less in benefits.
  8. The 45-million count of those without health insurance is overstated by a relatively constant 5 to 10 million.
  9. "Since poverty levels are not adjusted for regional costs of living, the working poor in expensive urban centers like Washington are routinely excluded from federal programs because their income lifts them above the official poverty line."

Weisman's reason (1) is simply irrelevant: that David Malpass wishes that Simon Kuznets had set the National Income and Product Accounts in a different way doesn't make the BEA's numbers unbelievable. Reason (2) is irrelevant as well: that some people who lack health insurance could afford to buy it does not make estimates of the number who lack health insurance unbelievable. Reason (3) is also irrelevant: that Congress bases program eligibility on income rather than income minus child support does not make the Census Bureau's numbers wrong. Weisman's reason (4) is simply wrong: there are more sophisticated alternative poverty measures that show higher rates of poverty and measures that show lower rates. All measures, however, do show very similar trends and patterns. Reason (5) is bizarre: we should spend more money collecting economic statistics, but that our estimates are not as detailed and informative as we would wish does not mean mean that we should not believe the numbers we have.

Weisman's reason (6) is a reason to report and consider a range of different poverty-level estimates and concepts, and to be cautious in interpreting reported levels of poverty. But it is not a reason to dismiss the trends and movements in poverty over time that the Census Bureau reports. Reason (7) is a reason to adjust real earnings estimates upward: on the most appropriate cost-of-living index basis, full-time year-round median male real earnings probably fell by only 1.5% rather than 2.3% in 2004. Reason (8) is, once again, a reason to adjust the level of uninsured--but not to doubt the trends in health insurance gaps and in the erosion of the employer-sponsored health-insurance system that we have seen over time.

Only reason (9) is truly cogent in the way that Weisman claims: differences in regional and local costs of living do make comparisions of regional and local poverty estimates unreliable, and do channel less federal poverty-support money to people living in high-cost areas.

The conclusion we should draw? Don't believe Jonathan Weisman. When Weisman says, "Don't believe the numbers" the Census Bureau released today on "poverty... income... and the number of Americans still lacking health insurance," he is not playing it straight. The numbers are quite good. The biases in their levels are relatively small. And they are accurate indicators of changes, trends, and patterns.

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

Department of "Huh"? (Sources of the Business Cycle Department)

PGL at Angry Bear writes:

Angry Bear: Robert Hall discusses Separating the Business Cycle from Other Economic Fluctuations at the Federal Reserve Bank of Kansas City's annual Jackson Hole conference. David Altig claims Hall explained it all. But what does Hall say about the most recent weakening of the labor market?

For example, all practical accounts of the recession of 2001 emphasize the huge decline in high-tech investment. In earlier recessions, declines in home-building were prominent features. On the other hand, more theoretically inclined macroeconomists tend to take a decline in productivity--or at least a pause in the normal growth of productivity--as the central driving force.

There is, however, a problem:

But what decline in productivity--or at least a pause in the normal growth of productivity--does Hall think that we are supposed to see in 2001, and identify as the driving force of the subsequent weakness in the labor market?

It is difficult to label something that doesn't exist as the "principal cause" of a business-cycle downturn...

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

Don't Answer That Department

Is there anybody else in the world who regularly confuses Robert Heilbroner with Robert Heinlein?

Posted by DeLong at 03:57 PM | Comments (0) | TrackBack

The Main Econ 101b Website

The main Economics 101b website will be here.

Posted by DeLong at 03:55 PM | Comments (0) | TrackBack

Brad DeLong's Schedule This Fall

This is my schedule for this fall. The distressing thing is that nobody has told me where the PEIS thesis seminar is supposed to meet...

Posted by DeLong at 03:52 PM | Comments (0) | TrackBack

From Teosinte to Corn

Tyler Cowen reads Charles Mann (2005), 1491: New Revelations of the Americas Before Columbus (New York: Knopf: 140004006X) http://www.amazon.com/exec/obidos/asin/140004006X/braddelong00.

Marginal Revolution: 1491:

At the DNA level, all the major cereals -- wheat, rice, maize, millet, barley, and so on -- are surprisingly alike. But despite their genetic similarity, maize looks and acts different from the rest. It is like the one redheaded early riser in a family of dark-haired night owls. Left untended, other cereals are capable of propagating themselves. Because maize kernels are wrapped inside a tough husk, human beings must sow the species -- it cannot reproduce on its own...no wild maize ancestor has ever been found, despite decades of search. Maize's closest relative is a mountain grass called teosinte that looks nothing like it...And teosinte, unlike wild wheat and rice, is not a practical food source; its "ears" are scarcely an inch long and consist of seven to twelve hard, woody seeds. An entire ear of teosinte has less nutritional value than a single kernel of modern maize...

...the modern species [of maize] had to have been consciously developed by a small group of breeders who hunted through teosinte strands for plants with desired traits. Geneticists from Rutgers University...estimated in 1998 that determined, aggressive, plan breeders -- which Indians certainly were -- might have been able to breed maize in as little as a decade...modern maize was the outcome of a bold act of conscious biological manipulation -- "arguably man's first, and perhaps his greatest, feat of genetic engineering," [Nina Federoff]..."To get corn out of teosinte is so -- you couldn't get a grant to do that now, because it would sound so crazy...Somebody who did that today would get a Nobel Prize! If their lab didn't get shut down by Greenpeace, I mean."

That is from 1491: New Revelations of the Americas Before Columbus, by Charles C. Mann. I loved this book, which also tells you why Norte Chico, at its peak, may have been as advanced as the Sumerians. Do note the author is a journalist, the book covers much of the New World, and the evidence in this area is in general muddy. So the book almost certainly contains mistakes. But the judgments are generally well-reasoned, the author is remarkably well-read, and the area I know the best -- the Nahua culture of early Mexico -- is presented in a sober and balanced manner.

How does he have enough time to still be reading brand-new nonfiction books printed three weeks ago? Doesn't he know that the semester is starting? Don't they teach at George Mason?

Posted by DeLong at 03:50 PM | Comments (0) | TrackBack

Economics 101b: Fall 2005: First-Half Syllabus

Brad DeLong delong@econ.berkeley.edu Office Hours: W 11-1 Evans 601, or by appointment http://www.j-bradford-delong.net/

Suresh Naidu snaidu@santafe.edu Office Hours: MW 11-12 place tba

Lecture Meets: MWF 10-11, 70 Evans
Sections Meet: MW 9-10, WF 8-9, 41 Evans

This is the syllabus for the first half of Economics 101b, Macroeconomics. It carries the course up until October 12. The syllabus for the second half will be distributed at the end of September. It will depend on (a) how well the class does in the month of September, and (b) what are currently "hot topics" in the economic news. The U.S. budget deficit, the looming possibility of a major U.S. dollar-financial crisis, the dilemmas of Federal Reserve policy, and the ongoing industrial revolutions in East and South Asia will certainly be on the second-half syllabus, but there will be other topics as well.

This is the go-faster and do-more version of macroeconomics--the study of the determination of output, production, income, employment, and prices in the economy as a whole. Four books are required:

  1. The intermediate macroeconomics textbook I am most comfortable with is the one that I and Marty Olney have written. DeLong and Olney (2005), Macroeconomics 2nd ed. (New York: McGraw-Hill/Irwin) http://www.amazon.com/exec/obidos/asin/0072877588. Here is our explanation of why we wrote it the way we did: http://www.j-bradford-delong.net/Teaching_Folder/manifesto.html
  2. The Economic Report of the President, available online at http://w3.access.gpo.gov/eop/. (You might also browse, for recent economic data, the CEA-JEC Economic Indicators http://www.access.gpo.gov/congress/eibrowse/broecind.html.
  3. Robert Heilbroner's The Worldly Philosophers (New York: Touchstone) http://www.amazon.com/exec/obidos/asin/068486214X/.
  4. Alan Blinder and Janet Yellen's (2001) The Fabulous Decade (New York: Century Foundation) http://www.amazon.com/exec/obidos/asin/0870784676.

If you want alternative takes at the subject matter, let me recommend two alternative textbooks: Greg Mankiw's Macroeconomics http://www.amazon.com/exec/obidos/ASIN/0716752379, and Olivier Blanchard's Macroeconomics http://www.amazon.com/exec/obidos/ASIN/0131860267/.

Since this is a go-faster do-more course, we will go faster and do more. As a group, the class will be made up of people comfortable using calculus, so we'll feel free to use it in lectures, handouts, and in problem sets (and on exams). If you aren't comfortable using calculus, you probably don't belong here and may well not have a good time...

We--Suresh Naidu and I are keenly aware that almost everybody signing up for this course could alternatively take and do very well in Economics 100b. We are anxious not to have students vote with their feet for an easier course and learn less because they fear the consequences of lowering their grade point average. Therefore this course will have a high curve: the idea is that nobody should get a lower grade than they would have gotten had they decided to take Economics 100b instead: Grades will be based on the following:

No makeup exams will be offered. Students who miss one of the three exams will have their scores for the other exams reweighted to add up to 70%. Students who miss two of the three exams should not expect to pass.


Preliminaries

Readings:

Classes:

M Aug 29: Introduction to Course, and National Income Accounting
W Aug 31: The Index Number Problem, and Key Economic Variables F Sep 2: How Macroeconomists Think (problem set 1 issued)

Sections: erosion of Okun's Law Handout http://www.j-bradford-delong.net/movable_type/2003_archives/002121.html.


Long-Run Economic Growth

Readings:

Classes:

W Sep 7: Patterns of Economic Growth and Divergence: Facts
F Sep 9: Theories of Economic Growth and Divergence: The Solow Model (problem set 2 issued/problem set 1 due)

Sections: only one section this week.

M Sep 12: Using the Solow Model
W Sep 14: Inadequacies of the Solow Model
F Sep 16: Extensions and Puzzles (problem set 3 issued/problem set 2 due)

Sections: Kremer (1993) QJE on the question was an industrial revolution inevitable?


If There Were No Business Cycles Proper

Readings: DeLong and Olney (2005), Macroeconomics, chs. 6-7.

Classes:

M Sep 19: Components of Aggregate Demand: C, I, G, NX
W Sep 21: Flexible-Price Equilibrium
F Sep 23: Using the Flexible-Price Model (problem set 3 due/mock midterm handed out)

Sections: Go over problem set 2. Cover wealth in the consumption function; behavioral theories of consumption; cash flow and investment.


Monetary Economics When Prices Are Flexible

Readings: DeLong and Olney (2005), Macroeconomics, ch 8.

Classes:

M Sep 26: The Quantity Theory of Money
W Sep 28: FIRST MIDTERM EXAM

Sections: one section only this week.


Business Cycles Proper

Readings:

Classes:

F Sep 30: Sticky Prices, Consumption, and the Multiplier (problem set 4 issued)
M Oct 3: Investment and the IS Curve
W Oct 5: Using the IS Curve to Understand the Economy
F Oct 7: Inflation and the Phillips Curve (problem set 5 issued/problem set 4 due)

Sections. Go over midterm. Cover Blanchard (1981).

M Oct 10: The Natural Rate of Unemployment and the Federal Reserve
W Oct 12: From the Short Run to the Long Run
F Oct 14: Understanding American Business Cycles Using the Phillips Curve/Monetary Policy framework (problem set 6 issued/problem set 5 due)

Sections: go over problem set 4, and supply shocks.

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

Military Capacity (Why Oh Why Can't We Have a Better Press Corps? Edition)

Matthew Yglesias reads David Brooks:

TPMCafe || Capacities, Anyone?: [W]e have to think in the long term. For fear of straining the armed forces, the military brass have conducted this campaign with one eye looking longingly at the exits.

And Matthew's head explodes. He writes:

To me, this is a lot like acknowledging that the real reason we haven't embarked on interstellar colonization is that our rocketships can't travel to other stars and then slamming NASA for timidity. Why shouldn't the military brass fear straining the armed forces? It's nice to point out that if America's capacities were much larger than they actually are, that if we used those capacities cleverly we could do all kinds of stuff, but what does it really mean at the end of the day? Not much, as far as I can see.

David Brooks's attempt to shove responsibility from the Bushies to the military is indeed the most idiotic thing I've seen this month.

Posted by DeLong at 03:45 PM | Comments (0) | TrackBack

Trout!

When looking for food in Jackson Hole, the preferred options are:

  1. Go down to the Snake River, catch a trout, build a wood fire by the bank, cook the trout, and eat it.
  2. If that's not possible (either because of a lack of time, a lack of fire-making skills, or a fear of a close encounter with an ursus horribilis in the mood for either trout or east African plains ape), catch a trout, carry it back to a restaurant, and ask them to cook it for you.
  3. If that's not possible, go to a restaurant and order trout.
  4. If that's not possible, grab the pre-cooked trout from the buffet steam table.
  5. If that's not possible, think about how good trout would taste.

In other news from Jackson Hole, I was pleased to see Janet Yellen standing up for the eastern face of the Sierra Nevada as the equal of--and perhaps superior to--the eastern face of the Grand Tetons in beauty and majesty. Federal Reserve bank presidents should stand up for the mountains of their own Federal Reserve districts.

Posted by DeLong at 03:41 PM | Comments (0) | TrackBack

Fiscal Policy: the Clinton and Greenspan Legacies (Why Oh Why Can't We Have a Better Press Corps? Department)

Ah. Nell Henderson in the Washington Post:

Rubin Praises Stance Of Greenspan on Deficits: Greenspan "stands for the principle of fiscal discipline," Rubin said in an interview before he delivered a speech at the symposium here on Greenspan's legacy at the central bank.Bush administration officials dispute Rubin's explanation for the current budget deficits.

"The greatest single cause of the fiscal surplus of the 1990s was the stock market bubble, which led to an unsustainably high level of economic activity and tax revenues," said Ben S. Bernanke, the chairman of Bush's Council of Economic Advisers.

Together with the 2001 terrorist attacks and the war on terror, the collapse of the bubble was the major cause of the shift toward deficits after 2000, said Bernanke, who is attending the conference.

The Fed is supposed to craft monetary policy independent of political pressures from the White House or Congress, something economists agree it has done under Greenspan.... Rubin, in his prepared remarks... [said:] "I believe the Fed should not only pursue sound and disciplined monetary policy, but should also stand for the principle of sound and disciplined fiscal policy." Bernanke declined to respond to Rubin's suggestion that the Fed should oppose budget deficits. Rubin praised Greenspan for advocating deficit reduction in 1993, both in discussions with Clinton and in his public comments. And he said Greenspan "never engaged, correctly in my view," in the political debate about Clinton's proposals to reduce the deficit through specific tax increases....

[Greenspan] warned [in 2001] that the forecasts could be wrong and suggested the [tax] cuts be structured with "triggers" that would alter them automatically if deficits reappeared. Greenspan never endorsed Bush's tax cut proposal specifically, but his general support for tax cuts helped win passage of the president's package, which was enacted without such triggers. Greenspan has said since that it is unfair for critics to blame him for the deficits, since his advice on triggers was ignored. Rubin described Greenspan's 2001 testimony as offering "a truly complex framework for making the decision" and added, "The framework, on balance, was right."

The strange thing--the very strange thing--is Ben Bernanke's comment. Of the swing in the federal budget from a deficit of 4.7% in 1992 to a surplus of 2.4% in 2000--a swing of 7.1 percentage points--approximately 2.0% is due to a booming economy, an extra 1.0% to the high value of capital gains taxes paid in 2000 because of the high value of the stock market, 3.0% to the effects of the Clinton 1993 deficit-reduction package, and 1.0% to the effects of the 1990 Bush-Mitchell-Foley deficit reduction package. At most 1/3 of the extra revenues from a booming economy can be attributed to the bubble. Some of the fact that the economy was booming--that we had a high investment recovery--was due to the fact that, because of the deficit-reduction packages, the federal government was no longer draining the financing away from American business.

How Ben Bernanke converts a maximum of 1.7 percentage points of deficit reduction into "the greatest single cause of the fiscal surplus" is a mystery to me. Why Nell Henderson doesn't remember enough about the 1990s to even question Bernanke's assertion is a riddle. And why Nell Henderson couldn't be bothered to take the two minutes that would be necessary to find one of the many people in Jackson Hole--me or Gene Sperling or Alan Blinder or Larry Summers or a host of others--who have these numbers near their fingerprints and could de-bamboozle her... that's an enigma.

Posted by DeLong at 03:39 PM | Comments (0) | TrackBack

When Offering Explanations Is a Bad Thing...

Hilzoy of Obsidian Wings thinks about explanations vs. justifications and unwillingly draws the bright line between "explaining" and "justifying":

Obsidian Wings: Explanation, Justification, Blah Blah Blah: I was so hoping not to write anything about Brad DeLong's post on explanation v. justification -- it is, after all, my day job. But.... To start with the basics: explanation and justification are two quite different things. When you explain something, you try to say why it happened. You do not need to take a position on whether it was good or bad that it happened; you just try to figure out what caused it. When you justify something, you try to say why it was right that something happened. You may be interested in its causes, but only insofar as these affect the moral question involved.... We can try to explain anything that happens.... When rational agents are involved, however, sometimes the right explanation of their conduct refers to their reasons -- why they thought that they were justified in acting as they did. This is not, obviously, a form of explanation that's available to us when we try to understand the motions of the planets....

When we explain the behavior of people using reasons, we normally think not just that they're set up to be able to get the right answer, as my calculator is, but also that they're capable of understanding those reasons and acting on them, as my calculator is not. So explaining via reasons isn't just a heuristic shortcut, as in the case of a calculator.... [And] what matters is not whether the reasons are good ones, but just that they believed them....

If this is right, then there is a clear and obvious difference between explanation and justification. So why do people tend to confuse the two? One easy reason is that both, when applied to people, can cite the reasons why those people did what they did. They will, of course, cite them in different ways.... Both the role of reasons and the form of necessity appealed to in explanation and justification are different, but people aren't always completely clear about this....

The basic view of moral responsibility underlying this is: if you do something which you have every reason to believe could lead to some bad outcome, and if, given what you know at the time, you should not do this thing, and if it does lead to the bad outcome, then you are responsible for that outcome.... This general view explains why responsibility is not zero-sum. The fact that some bad decision of mine helped to produce some state of affairs does not imply that no bad decision of anyone else's helped to produce it as well.... [W]hen someone says... that our decision to go into Iraq with too few troops contributed to the breakdown of order and the murder of innocent Iraqis, what she says does not imply, in any way, that anyone else is less responsible... that Iraqi insurgents are not fully responsible for what they do....

She then goes on to point out that there are circumstances under which it is definitely not OK to offer certain kinds of explanations:

Just because something is true doesn't mean that it's OK to say it in a given situation. For instance: suppose you decide to play blind man's buff on a fifth-floor balcony, and end up falling over the railing onto the sidewalk below, and, as luck would have it, I am standing nearby. And suppose that instead of calling an ambulance, or yelling for a doctor, or tending to your wounds myself, I say: that was really stupid of you, or: I just finished cleaning this sidewalk, and now you've gotten blood all over it.... Just because they're true, however, doesn't mean that there are not other grounds for criticizing me for saying them. I am heartless, more concerned with pointing out your failings than with saving your life, etc.... If my first response to the sight of you bleeding on the sidewalk should be to tend to your wounds, not to tell you how dumb you were, then by the same token my first response to 9/11 should have been to tend to, or (if I wasn't in a position to help directly) at least to mourn with, the dead and injured and those who loved them. It should not have been to point out America's role (if any) in the genesis of terrorist movements; and anyone whose first response to 9/11 was not horror but blaming America would, I think, have shown real moral ugliness....

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

Edmund Andrews Covers the Jackson Hole Conference

He writes:

Greenspan Chides Investors - New York Times: Even as he was being praised for fostering two decades of rising prosperity, Alan Greenspan, the chairman of the Federal Reserve, warned on Friday that people have been unrealistic in believing that the economy has become permanently less risky. In the first of two speeches at a Fed symposium about the "Greenspan legacy," the Fed chairman implicitly took aim at both the torrid run-up in housing prices and at the broader willingness of investors to bid up the prices of stocks and bonds and accept relatively low rates of return. Both trends reflect what Mr. Greenspan said was the increased willingness of investors to accept low "risk premiums, a willingness based on a complacent assumption that the low interest rates, low inflation and strong growth of recent years are likely to be permanent."

"Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher prices," he said. "This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums." Mr. Greenspan also noted that consumers were more willing to spend money based on an apparent increase in wealth, rather than increases in their earnings, when part of that wealth was based on gains from stocks or real estate that could readily disappear....

Many Fed officials are expecting President Bush to decide on a successor this fall to give financial markets time to prepare and to allow the confirmation process to be completed in the Senate by the time Mr. Greenspan's term expires. The anxiety about a new Fed chairman reflects worries about Mr. Greenspan's nearly mythic reputation as the most powerful and effective central banker of modern times. But it also reflects the challenges that he will be leaving behind, among them issues being much discussed here like the United States' large current-account deficit and rapidly rising foreign indebtedness; the possibility of a major plunge in the dollar; and the prospect of today's big deficits swelling in the absence of fiscal discipline by either the White House or Congress.

President Bush has given no hint of his intentions. Almost all of the most widely rumored candidates were in Jackson Hole: Martin Feldstein, an economist at Harvard; R. Glenn Hubbard, a top former economic adviser to President Bush; and Ben S. Bernanke, a former Fed governor and the chairman of the Council of Economic Advisers. Another possible candidate, Lawrence B. Lindsey, a former director of Mr. Bush's National Economic Council, did not attend.

In his comments on Friday, Mr. Greenspan did not appear to be signaling a new desire by the Fed to pop a potential bubble in housing prices or to curb other forms of risk-taking. But he and a growing number of Fed officials do appear more intent on talking investors down from what they see as a potentially dangerous level of optimism and complacency. Housing prices have climbed far faster than overall inflation and far faster than household incomes for the last five years, partly in response to the Fed's policy of keeping interest rates low but also because of speculative behavior that is increasingly reminiscent of the frenzy over technology stocks just before the market bubble collapsed in 2000. But Mr. Greenspan was also alluding to a much broader pattern of economic behavior, an increased hunger among investors to look for higher profits wherever they might be and to pay higher prices for everything from bonds of Latin American nations to shares in risky hedge funds.

Mr. Greenspan's remarks also hark back to what he has called the "conundrum" of long-term interest rates declining even as the Federal Reserve has been systematically raising the overnight federal funds rate on loans between banks. The conundrum has been somewhat less in evidence lately, as interest rates on long-term 10-year Treasury bonds have edged higher. Still, long-term rates are no higher now than they were just before the Fed began raising overnight lending rates in June 2004.

Mr. Greenspan has adamantly insisted, despite criticism from some economists, that the Fed's job is not to pop speculative bubbles because bubbles are extremely difficult to define and because the Fed's tools - like a sharp increase in interest rates - could cause more damage to the economy than they might prevent. But his comments nevertheless did suggest that the central bank wants to preach a new gospel of caution that might damp what Mr. Greenspan once called the "irrational exuberance" of investors.

As he has many times in the past, but with somewhat more urgency in this speech, Mr. Greenspan pleaded for policy makers to resist the temptation to set trade and financial barriers to protect jobs from foreign competition. The openness and flexibility of the United States, he said, had allowed it to weather the shocks of terrorist attacks in 2001 with only a mild recession and had thus far allowed the country to endure the escalation of oil prices with little disruption. "The more flexible an economy, the greater its ability to self-correct in response to the inevitable, often unanticipated disturbances," he said.

The symposium here this weekend, a select gathering of about 100 economists and central bank officials, attracted an unusually stellar crowd, in part because it is the last such gathering before Mr. Greenspan steps down. Xiaochuan Zhou, governor of China's central bank, spent much of the day huddled in meetings with American and European officials. Jean-Claude Trichet, president of the European Central Bank, and Mervyn A. King, governor of the Bank of England, were here as well. Robert E. Rubin, Treasury secretary under President Bill Clinton, sang Mr. Greenspan's praises at lunch.

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

The "Cognitive Elite"

Matthew Yglesias writes:

TPMCafe || Holds Up Well?: For all I know, the uncontroversial parts of [Herrnstein and Murray's The Bell Curve book] (which I understand to have been the clear majority of the text) hold up just find, but the controversial stuff about race and IQ doesn't hold up at all...

Ummm... No.

The "uncontroversial" parts of the book are a set of claims that:

  1. Genetically-inherited intelligence is the really important driver of socioeconomic success or failure in America.
  2. American society is or is about to become highly stratified by genetically-inherited intelligence.
  3. An important consequence of this is that there is nothing we can do to prevent the children of the rich and powerful from being rich and powerful themselves.
  4. Because the reason they are rich and powerful is because they are members of a genetic cognitive elite.

These are all wrong too. As Bowles and Gintis report:

Brad DeLong's Semi-Daily Journal: Why Oh Why Can't We Have a Better Press Corps? (Michael Barone: Intellectual Garbage Scow Edition): If the heritability of IQ were 0.5 and the degree of assortation, m, were 0.2 (both reasonable, if only ball park estimates) and the genetic inheritance of IQ were the only mechanism accounting for intergenerational income transmission, then the intergenerational correlation [of lifetime income] would be 0.01, or roughly two percent [of] the observed intergenerational correlation [of lifetime income between parents and children].

Yes, America is an increasingly stratified society. Yes, a huge amount of inequality is inherited. No, differences in IQ--acting both directly on job performance and indirectly because higher IQ people get more education--is not a terribly important source of income inequality. No, inheritance of genetic factors shaping IQ is not more than a trivial source of the intergenerational transmission of income inequality.

Posted by DeLong at 03:33 PM | Comments (0) | TrackBack

Intellectual Garbage Pickup: Andrew Sullivan Needs to Do Some Remedial Work

He writes:

www.AndrewSullivan.com - Daily Dish: One of my proudest moments in journalism was publishing an expanded extract of a chapter from [Herrnstein and Murray's] "The Bell Curve" in the New Republic before anyone else dared touch it. I published it along with multiple critiques (hey, I believed magazines were supposed to open rather than close debates) - but the book held up, and still holds up as one of the most insightful and careful of the last decade...

The impeccably right-wing Thomas Sowell certainly doesn't think so. And Thomas Sowell knows a hell of a lot more about these issues than Andrew Sullivan does:

Notes: What Thomas Sowell Thinks of The Bell Curve: Archive Entry From Brad DeLong's Webjournal: Strangely, Herrnstein and Murray refer to "folklore" that "Jews and other immigrant groups were thought to be below average in intelligence. " It was neither folklore nor anything as subjective as thoughts. It was based on hard data, as hard as any data in The Bell Curve. These groups repeatedly tested below average on the mental tests of the World War I era, both in the army and in civilian life. For Jews, it is clear that later tests showed radically different results--during an era when there was very little intermarriage to change the genetic makeup of American Jews.

My own research of twenty years ago showed that the IQs of both Italian-Americans and Polish-Americans also rose substantially over a period of decades. Unfortunately, there are many statistical problems with these particular data, growing out of the conditions under which they were collected. However, while my data could never be used to compare the IQs of Polish and Italian children, whose IQ scores came from different schools, nevertheless the close similarity of their general patterns of IQ scores rising over time seems indicative--especially since it follows the rising patterns found among Jews and among American soldiers in general between the two world wars, as well as rising IQ scores in other countries around the world.

The implications of such rising patterns of mental test performance is devastating to the central hypothesis of those who have long expressed the same fear as Herrnstein and Murray, that the greater fertility of low-IQ groups would lower the national (and international) IQ over time. The logic of their argument seems so clear and compelling that the opposite empirical result should be considered a refutation of the assumptions behind that logic....

A man who scores 100 on an IQ test today is answering more questions correctly than his grandfather with the same IQ answered two-generations ago, then someone else who answers the same number of questions correctly today as this man's grandfather answered two generations ago may have an IQ of 85.

Herrnstein and Murray openly acknowledge such rises in IQ and christen them "the Flynn effect," in honor of Professor Flynn who discovered it. But they seem not to see how crucially it undermines the case for a genetic explanation of interracial IQ differences. They say:

The national averages have in fact changed by amounts that are comparable to the fifteen or so IQ points separating blacks and whites in America. To put it another way, on the average, whites today differ from whites, say, two generations ago as much as whites today differ from blacks today. Given their size and speed, the shifts in time necessarily have been due more to changes in the environment than to changes in the genes.

While this open presentation of evidence against the genetic basis of interracial IQ differences is admirable, the failure to draw the logical inference seems puzzling. Blacks today are just as racially different from whites of two generations ago as they are from whites today. Yet the data suggest that the number of questions that blacks answer correctly on IQ tests today is very similar to the number answered correctly by past generations of whites. If race A differs from race B in IQ, and two generations of race A differ from each other by the same amount, where is the logic in suggesting that the IQ differences are even partly racial?

Herrnstein and Murray do not address this question, but instead shift to a discussion of public policy:

Couldn't the mean of blacks move 15 points as well through environmental changes? There seems no reason why not--but also no reason to believe that white and Asian means can be made to stand still while the Flynn effect works its magic.

But the issue is not solely one of either predicting or controlling the future. It is a question of the validity of the conclusion that differences between genetically different groups are due to those genetic differences, whether in whole or in part. When any factor differs as much from Al to A2 as it does from A2 to B2, why should one conclude that this factor is due to the difference between A in general and B in general?...

A remarkable phenomenon commented on in the Moynihan report of thirty years ago goes unnoticed in The Bell Curve--the prevalence of females among blacks who score high on mental tests. Others who have done studies of high- IQ blacks have found several times as many females as males above the 120 IQ level. Since black males and black females have the same genetic inheritance, this substantial disparity must have some other roots, especially since it is not found in studies of high-IQ individuals in the general society, such as the famous Terman studies, which followed high-IQ children into adulthood and later life. If IQ differences of this magnitude can occur with no genetic difference at all, then it is more than mere speculation to say that some unusual environmental effects must be at work among blacks. However, these environmental effects need not be limited to blacks, for other low-IQ groups of European or other ancestries have likewise tended to have females over-represented among their higher scorers, even though the Terman studies of the general population found no such patterns.

One possibility is that females are more resistant to bad environmental conditions, as some other studies suggest. In any event, large sexual disparities in high-IQ individuals where there are no genetic or socioeconomic differences present a challenge to both the Herrnstein- Murray thesis and most of their critics.

Black males and black females are not the only groups to have significant IQ differences without any genetic differences. Identical twins with significantly different birthweights also have IQ differences, with the heavier twin averaging nearly 9 points higher IQ than the lighter one. This effect is not found where the lighter twin weighs at least six and a half pounds, suggesting that deprivation of nutrition must reach some threshold level before it has a permanent effect on the brain during its crucial early development.

Perhaps the most intellectually troubling aspect of The Bell Curve is the authors' uncritical approach to statistical correlations. One of the first things taught in introductory statistics is that correlation is not causation. It is also one of the first things forgotten, and one of the most widely ignored facts in public policy research. The statistical term "multicollinearity," dealing with spurious correlations, appears only once in this massive book.

Multicollinearity refers to the fact that many variables are highly correlated with one another, so that it is very easy to believe that a certain result comes from variable A, when in fact it is due to variable Z, with which A happens to be correlated. In real life, innumerable factors go together. An example I liked to use in class when teaching economics involved a study showing that economists with only a bachelor's degree had higher incomes than economists with a master's degree and that these in turn had higher incomes than economists with Ph.D.'s. The implication that more education in economics leads to lower incomes would lead me to speculate as to how much money it was costing a student just to be enrolled in my course. In this case, when other variables were taken into account, these spurious correlations disappeared. In many other cases, however, variables such as cultural influences cannot even be quantified, much less have their effects tested statistically...

Posted by DeLong at 03:32 PM | Comments (0) | TrackBack

Charismatic Mammalian Megafauna

They are out there in abundance: lots of bison bison, alphes alphes, cervus canadensis, and canis latrans. The racks on the cervi are very impressive: you wonder why they don't get caught on trees and hinder their mobility.

The canes are very impressive as well--they are big. These are not scrawny garbage-eating coyotes. These are animals that are clearly and rapidly evolving to a larger size: a bigger body mass is a great help in keeping warm through the winter.

And now that fires have opened up some of the sight lines, you can see Mt. Moran all the way from Lake Lewis in Yellowstone...

Posted by DeLong at 03:30 PM | Comments (0) | TrackBack

The Future of the Dollar

It was in the late spring of 1985 that one of my elders explained to me that I was grossly ignorant: that the magnitude of the U.S. current account deficit was such that a hard landing was inevitable. Foreigners would be unwilling to finance the U.S. trade deficit for long. The dollar would fall. As the dollar fell, foreigners would demand high expected depreciation premia. As the dollar fell, rising import prices would push up American inflation. The FOMC would have no good options: it would have to choose inflation or recession--and if it was unlucky, it would have both plus financial crisis and depression as well.

I was convinced.

But somehow from 1987 to 1990 the U.S. made it through a 3-percentage-points-of-GDP decline in its trade deficit without a blip in inflation, and with barely a blip in asset prices and interest rates.

How was this reversal of two decades ago accomplished without severe macroeconomic upset? And is there anything different about today that makes the Plaza-Louvre experience a bad model?

Posted by DeLong at 03:28 PM | Comments (0) | TrackBack

In the "Wilderness"...

Teton County, Wyoming, ranks sixth in the United States in per capita income--behind Marin (north of San Francisco), Manhattan, Falls Church, Virginia (think lobbyist central), Pitkin County, Colorado (don't know much about it), and Fairfield County, Connecticut (think "Greenwich").

Cell phone reception at the Jackson Lake Lodge is amazing.

Posted by DeLong at 03:26 PM | Comments (0) | TrackBack

Thinking About the Greenspan Era

There is one sentence in Alan Blinder's and Ricardo Reis's paper on the Greenspan era that I wish had been greatly expanded, into a page, or a section--or a book. It is: "we are perfectly comfortable with the long-standing practice of central bankers all over the world to rail against excessive fiscal deficits." The principal criticism that future historians may make of today's Federal Reserve is that it has not been vocal enough on this issue. In the long-run the Federal Reserve must fail to provide price stability if nominal government debt grows significantly faster than real GDP. Our High Politicians in Washington have dismantled the institutional and procedural mechanisms--for example, the Budget Enforcement Act--that effectively constrained government debt growth. Unless these mechanisms can be rebuilt--which will, I think, require that future Federal Reserves take a more active and aggressive role in lecturing High Politicians on their fiscal fecklessness--future FOMCs may well find that effective price stability is unattainable. The long-run stakes are very high. There is no sign that our executive and legislative branches understand them.

Posted by DeLong at 03:23 PM | Comments (0) | TrackBack

Bob Hall at the Federal Reserve's Jackson Hole Conference

He says:

I would like to thank the organizers of this conference for taking the highly-productive step of banning PowerPoint from this conference. This promises to double the speed at which we can learn...

Posted by DeLong at 03:19 PM | Comments (0) | TrackBack

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

Kenneth Chang digs himself deeper into his hole. He defends himself against the charge that the "there's a fight!" headline and the "Intelligent Design people make serious arguments" lead of his "Intelligent Design" article are misleading and unprofessional:

Brad DeLong's Semi-Daily Journal: Why Oh Why Can't We Have a Better Press Corps? (Kenneth Chang Edition): Chang: "I don't think anyone reading just the first eight paragraphs [of the article] would come to that conclusion" that there was "'a raging scientific controversy' or 'The New York Times blesses intelligent design'," but anyone who was only interested enough to read eight paragraphs probably wasn't going to be swayed one way or the other no matter what I wrote."...

Once again, here is the lead:

In Explaining Life's Complexity, Darwinists and Doubters Clash: At the heart of the debate over intelligent design is this question: Can a scientific explanation of the history of life include the actions of an unseen higher being? The proponents of intelligent design, a school of thought that some have argued should be taught alongside evolution in the nation's schools, say that the complexity and diversity of life go beyond what evolution can explain. Biological marvels like the optical precision of an eye, the little spinning motors that propel bacteria and the cascade of proteins that cause blood to clot, they say, point to the hand of a higher being at work in the world.

In one often-cited argument, Michael J. Behe, a professor of biochemistry at Lehigh University and a leading design theorist, compares complex biological phenomena like blood clotting to a mousetrap: Take away any one piece - the spring, the baseboard, the metal piece that snags the mouse - and the mousetrap stops being able to catch mice. Similarly, Dr. Behe argues, if any one of the more than 20 proteins involved in blood clotting is missing or deficient, as happens in hemophilia, for instance, clots will not form properly.

Such all-or-none systems, Dr. Behe and other design proponents say, could not have arisen through the incremental changes that evolution says allowed life to progress to the big brains and the sophisticated abilities of humans from primitive bacteria. These complex systems are "always associated with design," Dr. Behe, the author of the 1996 book "Darwin's Black Box," said in an interview. "We find such systems in biology, and since we know of no other way that these things can be produced, Darwinian claims notwithstanding, then we are rational to conclude they were indeed designed."...

As a number of people have noted, the ID-side Discovery Institute is happy with Chang's article; the assembled biologists of the world are not.

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

Andrew Samwick Says: Don't Linger in this CAFE

Andrew Samwick gives a very good version of the economists' rant against the CAFE standards. I, too, was abashed to discover that my Subaru Legacy is an "SUV."

From Congress's point of view, CAFE is useful because it keeps people from thinking that Congress is taxing them. What CAFE does is to impose a tax on fuel-inefficient vehicles which is then rebated as a subsidy on fuel-efficient vehicles. This tax, however, is collected and then rebated by the auto manufacturers themselves--they reduce prices on fuel-efficient vehicles below what they would otherwise be in order to meet their CAFE targets, and make it up by raising margins on fuel-inefficient vehicles.

Thus Congress is far from the scene of the tax. The problem is that, as Andrew says, it is a lousy tax to be levying. What we want to tax is gasoline usage, and taxing fuel-inefficient vehicles is a lousy substitute.

Twelve years ago the Clinton administration proposed such a tax--an energy usage ("BTU") tax. Think how much better off we would be on how many dimensions if that tax had been passed back in 1993.

Vox Baby: Don't Linger in this CAFE: ...driving an SUV... a vehicle subject to the lower standards of fuel economy for light trucks under the CAFE regulations. Like many of my liberal friends in rural New England, I drive a Subaru Outback. I had no idea at the time I purchased it that it qualifies as a light truck.... I think the CAFE standards are lunacy as currently conceived, and I'll cite three issues. The first issue, as I've alluded to earlier, is that the problem we care about is total usage of gasoline. Total use is the amount of miles driven divided by fuel economy. CAFE standards, at best, address fuel economy, but they provide no incentive to economize on the number of miles driven. This is why a gas tax is better--it allows people to decide how they want to conserve on fuel usage, fewer miles or fewer gallons per mile.

The second issue is that the CAFE standards operate at the level of a fleet of vehicles produced by one manufacturer.... Why provide an incentive for Toyota to make larger cars just because it happens to make good small cars? If the objective is to regulate the average fuel economy of all cars on the road, then there ought to be a tradable permit system established. We would get a better variety of cars on the market, though not at any one particular dealer. Pure welfare gain.

The third issue is that the CAFE standards operate in a hidden fashion, and as a result there have been plenty of abuses. CAFE standards are negotiated behind the scenes with a few entities (the manufacturers). They lobby for complexity and then exploit loopholes, like the different standards for cars and light trucks or, as I fear, all these new flavors of SUV. Lack of transparency is the enabler of bad policy. Is there anything more transparent than a gas tax at the pump?

Keep it simple. Scrap CAFE, set a higher gas tax, and return the aggregate revenues from that gas tax through lower income taxes in a progressive fashion.

Posted by DeLong at 03:14 PM | Comments (0) | TrackBack

Memo to Self

Memo to self: In Jackson Hole on August 26, the sun rises not at 6 AM but at 6:39 AM. It is 30F outside. Stay inside the Jackson Lake Lodge, drinking coffee and talking to reporters trying to find a news hook in Alan Greenspan's embargoed remarks, until 6:25 or so. Only moose have any business being outside at 6 AM.

Sunrise over the Tetons is, however, absolutely beautiful as the first rays illuminate Grand Teton and then Mt. Moran.

Posted by DeLong at 03:10 PM | Comments (0) | TrackBack

Google Sells More Shares

Alan Murray tells investors: if Google's insiders are selling, is there any reason for you to be buying?

WSJ.com - Business : Google's Stock Sale Mystery Is Simply Solved: There Are Buyers: Google's decision to issue $4 billion in new stock has been greeted with surprise and stupefaction by the army of analysts who are overpaid to divine happenings within the Googleplex. It is an impenetrable mystery, they say. The company already has nearly $3 billion in cash; why does it need more? Are the Googlers planning to build a global wireless network? Dive headlong into Internet telephony? Construct an elevator into space?...

Hello?

Let's try a little test. If I offer you $100,000 for your Honda Civic, how would you respond? Here are your choices:

a) "No, thank you, my checking account is already full."

b) "Maybe, but let me look around first to see if there is another car I'd like to buy."

or

c) "Here are the keys."

If you answered a) or b), you have the makings of a Google analyst.

There is no mystery here, folks. When companies think their stock is undervalued, they buy it back. The Googlers are in the opposite fix. Their stock is overvalued, so what do they do?

Sell more. Quickly. Before sanity returns to the marketplace.

Now I know there are a number of hypothetically smart people out there who think that at $285 a share, Google still is a bargain. Some were quoted in the pages of my favorite newspaper last week. "We think it's extremely cheap at this level," said Jason Schrotberger of Turner Investment Partners Inc.... In recent months, the top Googlers have sold off nearly $3 billion of their own holdings. These insider sales all have been on the up and up, conducted under a so-called 10b5-1 plan that allows them to sell a predetermined number of shares over a given period. Diversifying their riches in this way would be a wise strategy for the Google boys under any circumstances. But it is particularly wise if you suspect your stock has a touch of hot air.

They also have been changing their compensation plans, moving away from reliance on stock options, which become worthless if the stock drops. Instead, they have started using Google stock units, or GSUs. That is Googlespeak for restricted stock that takes four years to vest, but will continue to hold value even if the share price swoons. The company issued 61 million GSUs in its second quarter...

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

Mark Thoma Reads

He reads Ken Rogoff on the Greenspan succession:

Economist's View: Have No Fear, The Non-Activist Fed Will Still Be Here: Kenneth Rogoff of Harvard University and former chief economist at the International Monetary Fund shares his thoughts in The Financial Times on Greenspan’s days at the Fed. That he sees Greenspan as the Michael Jordan of central bankers gives you an idea of his view of Greenspan's tenure...

As Alan Greenspan’s fifth and final term as Federal Reserve chairman comes to a close in January next year, more and more people are asking the question: “What were the secrets of his extraordinary success and can he pass them on to his successor?”... [I]f one looks at how the science of monetary policy has evolved over the past two decades, there is cause for optimism.... Alan Greenspan is the Michael Jordan/Lance Armstrong/Garry Kasparov of modern-day central bankers.... [H]e took charge of a great team of economists and made them better.... The enormous prestige and respect he has brought to the job has, in turn, been a huge tool in recruitment and retention of top talent....

By and large, Fed policy is aimed at maintaining a stable inflation rate, except in the face of clearly discernable big shocks.... Some of Mr Greenspan’s most influential calls have come precisely from explaining how changing trends in productivity and globalisation were affecting the interest rates required to maintain price stability... The salient effects of the Fed’s stabilising strategy, and similar ones followed by most other leading central banks around the world, have been stunning. The risk premium on long-term interest rates is down sharply, helping fuel sustained growth and expansion.... One only has to look at countries such as Mexico and Brazil....

Paradoxically, then, the Greenspan Fed has succeeded by reducing the role of monetary policy, rather than by enhancing it....

And he reads about the Swedish welfare state:

Economist's View: What Inferiority Complex? The Swedish Welfare State : We don’t need no stinkin’ US style capitalism! Sweden tells Europe to hold its head high:

In defense of the welfare state, by Jonathan Power, International Herald Tribune: (Stockholm) The statistics had arrived on the Swedish prime minister's desk … It was good news. Goran Persson, now in his ninth year of office, told me that the growth rate for this year will be near 3 percent and next year more than 3 percent - enough, he said, to maintain Sweden's trajectory of the last decade, which was "above the average for the European Union" and, in particular, "as good as the Anglo-Saxons, Britain and the U.S."... This raised the first question - how does this self-confessed socialist state do it? What is the secret for success when Swedish taxes are the highest in the world and the welfare state is the country's single largest employer?... "If you have a free economy," explained the prime minister, "a highly educated work force, a very healthy people, very high productivity and a sound environment then you can create the critical size of resources to create good growth. "That has to be joined with adequate public financing of universities, research and development. As long as we are efficient and constantly challenging ourselves we continue to be productive. "Then if we produce successful growth, the government gets the public's support for high taxes. If the quality of the public sector is good, then a prosperous people will continue to vote for funding it."...

"Europe has a lack of confidence vis-à- vis the U.S.," he said. "The U.S. is competitive, but not as competitive as we think. We are too self-critical in Europe, even though we have a much better social system and in Sweden are just as productive. On unemployment, it is overlooked that the U.S. has approaching two million people in jail and out of the labor market."...

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

Prudence

Tim Geithner is a prudent man:

Fed Officials Summon Wall St. Firms to Discuss Derivatives - New York Times: By RIVA D. ATLA: The Federal Reserve Bank of New York has called a meeting of top Wall Street firms to discuss practices in the booming, if opaque, credit derivatives market.... The meeting, which will be held on Sept. 15, is being called three months after global stock and bond markets were rattled by fears that some of the largest banks were caught wrong-footed on some credit derivatives bets.... A letter went out this month from Timothy Geithner, the president of the New York Fed, to executives at 14 dealers inviting them to discuss "a range of issues in the credit derivatives market," said Peter Bakstansky, a spokesman for the New York Fed. The meeting will focus in particular on issues tied to the processing of these trades, he said. Mr. Bakstansky declined to list the banks invited to the meeting, but the largest participants in the market include J. P. Morgan, Deutsche Bank, Goldman Sachs and Morgan Stanley.

Representatives of the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the New York State banking department will attend the meeting, Mr. Bakstansky said. Banking regulators from Britain, Switzerland and Germany have also been invited. The rapid growth of the credit derivatives market was a major focus of a report in July by the Counterparty Risk Management Group, a team of top bankers originally formed at the request of the New York Fed to assess market risk... the financial services industry "has had very limited experience with settling large numbers of transactions following a credit event," like a corporate default or bankruptcy...

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

Policy by Early Show

WTF? Bush Advisor Dan Bartlett declares that America will not tolerate the Saudi Dictatorship:

Think Progress: Yesterday on CBS's Early Show, senior presidential advisor Dan Bartlett took the "opportunity to clarify what President Bush is saying" about the war on terrorism:

BARTLETT: Not only after 9/11 do we have to go after Osama bin Laden and the people who perpetrated the act on 9/11, but also we had to change our policy in the Middle East. The policies of stability in tolerating dictatorships got us 9/11 in the first place. The status quo has to change.

(CROSSTALK)

SMITH: So you're talking about Saudi Arabia then?

BARTLETT: Absolutely.

Posted by DeLong at 02:55 PM | Comments (0) | TrackBack

History, Politics, and Moral Philosophy

My wise ex-teacher Jeff Weintraub asks whether I really wish to endorse (see http://delong.typepad.com/sdj/2005/08/kitten_blood.html) the:

specific formulation you quoted approvingly from... Lindsay Beyerstein... that there are "very, very few" westerners "who make excuses for brutal theocratic thuggery." [That] doesn't hold up under serious examination. Instead, it's the kind of polemical overstatement that slides into its own form of absurdity and outright... and, I suspect, it amounts to a distortion and trivialization of what you yourself actually believe. OK, perhaps she really meant to say something else, and just didn't get around to refining this formulation.... But if we take this claim seriously as stated, then I would have to say to anyone who found it plausible--I know people who do, and I read others--that they are describing a different planet from the one I'm living on.

Jeff lives on a planet on which he sees many Westerners "who defend the Iraqi insurgents, or at least justify their actions as being a supposed campaign for self-determination, allegedly justifiable rage at Western misbehavior, and so on." He proposes a list of people he thinks fall into this group: "Ken Livingstone, Naomi Klein, Nathan Newman, Michael Burawoy, anti-Orientalists... a lot of people whose stuff I read in obscure fringe publications like the Nation, the Guardian, the New Statesman."

I think I do agree with Lindsay Beyerstein. But I do agree that I need to think about these issues much more deeply than I have done so to date.

I think I live on a planet on which I think I see relatively few such Westerners who "defend... or justify" or excuse. I don't think that many of those whom Jeff regards as "defend[ing]... or at least justify[ing]" the brutal theocratic thuggist terror-bombings wrought by Iraqi insurgents or by the favored children of Yasir Arafat are in fact defending or justifying. I think that they are explaining.

What's the difference? Let's back up to Niccolo Machiavelli, who started a form of argument that we fall into quite naturally these days. This form of argument starts with the assumption that we--the writer and his readers--are rational analysts and moral agents who care about consequences and understand what good states of the world would be. We are trying to figure out what to do in order to bring about as good a state of the world as possible. Outside this charmed circle of writer and readers, however, is everybody else. We do not think of the people who make up "everybody else" as rational analysts and moral agents. We analyze them as stimulus-response zombie-automata, who act in certain predictable ways when circumstances push certain of their buttons. We consider them "as they are, and not as we would wish them to be." Most of the consequences of our actions are the reactions they induce in other people. Thus key to figuring out how we should act is to understand what their hot buttons are, and how we can push the right ones to generate the reactions that we want to produce the consequences we desire.

Now things quickly get complex. One important button for us to push is to appeal to their belief that they are moral agents, and urge them to be their best selves. Another important button for us to push is to convince them that we are not rational analysts and moral agents who care about consequent states of the world, but are instead ourselves zombie-automata motivated by honor or revenge or pride--"we will never negotiate with the terrorists!" Explanations tend to leak into moral judgments and so become excuses because of our tendency to grade not on results but on effort: "Given who they are and where they were brought up, we should give them credit for their decision not to burn but only imprison witches." And when the charmed circle within which we demand moral agency is drawn not around us but around them, truly perverse conclusions follow. (Consider Noam Chomsky, who condemns the U.S. government and Israel but nobody else. The U.S. government and Israel are moral agents to be scorned and condemned for their failings. Everybody else... well, they're just reacting to stimuli and there's no point in judging them.)

Nevertheless, the underlying conceptual distinction is clear. We are trying to be our best selves, and are making moral choices. They are pre-wired and are reacting to stimuli. What are the right actions for us depends critically on what their internal wiring from buttons-to-actions happens to be--we take other people as they are, and not as we wish them to be. And for us to act in a way that predictably produces bad consequences because they act like the people they are rather than the people we wish them to be--that's a moral failing on our part.(1)

Where explaining crosses into justifying--or excusing--is when you go on to say not just "we have pushed their buttons in ways that have, predictably, generated bad consequences" but also to say either that "in acting as they have, they have been their best selves and acted from praiseworthy and moral motives," or that "given their circumstances, we cannot condemn them for not being their best moral selves." Where I sit, I see many arguing that brutal theocratic thuggist terror-bombers are being (predictably) human, and that we ought to recognize that people will be human in calculating what we should do. I see very few Westerners arguing that brutal theocratic thuggist terror-bombers are being moral, or even that it is unfair to blame brutal theocratic thuggist terror-bombers for not being their best selves.

Where I sit, I see considerably more Westerners trying to spread ignorance by condemning explanations which they dislike as "excuses."


(1) Of course, their failure to be their best selves--who we wish them to be--is a fatal moral failing on their part.


Jeff replies:

I think it would be a good idea, in principle, for you to post something along these lines. The issues are important, and you're right that they underlie a lot of moral and political debates, blogospheric & otherwise. So they deserve more careful attention, and it would be useful and enlightening for you to deal with them.... [But] you... [need] to complexify and refine it a bit, precisely because the issues are important--and also, in some ways, more complex than either you or the (mostly right wing) people who were the polemical targets of the "Kitten Blood" post present them as being....

(1) I think [you present] my own position... in a slightly misleading way... in part because it eliminates some conceptual and empirical distinctions I tried to make, and conflates some of my points that are related but not identical....

(2) Even in terms of presenting your own argument, including the key distinction on which it's based--i.e., between "explaining" a phenomenon and "defending" or "justifying" it (or, I would add, straightforwardly endorsing it at one pole and absolving, whitewashing, apologizing for, and/or making excuses for it at the other)--I think you will want to refine and complexify your analysis a bit. (This is quite aside from whether or not, or how much, I think I will agree with your argument in the end.)...

In my humble opinion, the alternatives as you currently present them are misleadingly oversimplified, both conceptually and empirically (let me emphasize, not just oversimplified, but substantively misleading). 

You want to make the point that there is, in principle, an analytical difference between "justifying" and "defending" certain phenomena (including terrorism, mass murder, dictatorship, torture, jaywalking, failure to wear seat belts, plagiarism, student cheating, systematic lying by the Bush administration, murdering abortion doctors, etc.) and merely "explaining" them. I agree completely, of course, and it would be foolish to suggest otherwise. (OK, there are all those epistemological/axiological arguments about whether the fact/value distinction can really be made to hold up, and there's something to those arguments, but in the present context we shouldn't get too persnickety.)

However, it is also true that there are different ways to "explain" things. While it is certainly correct, and worth saying, to point out that NOT ALL analyses presented as "explanations" are always or necessarily identical to justifications, it does not logically follow that NO "explanations" (or pseudo-explanations) are intended to serve as justifications, apologies, or extenuations... or that they don't wind up being close to identical in practice, even when the people making such arguments aren't entirely aware of the conceptual slide themselves. 

I believe it was Madame de Stael who said that to understand all is not to pardon all. But the reason she took the trouble to say this is that many people DO believe that once you have "explained" something it is no longer possible to judge or condemn it, so that in practice an "explanation" falls somewhere between an excuse, an apology, or an outright justification. This is especially true when such a strategy of extenuating "explanation" is applied to SOME people, groups, actions, or institutions... but not others. Then what is going on falls somewhere between fallacy and hypocrisy, or some combination thereof.

Nor is this a purely hypothetical or uncommon phenomenon. I would go so far as to say that it pervades journalistic & blogospheric discussion on certain issues, on all sides... so thoroughly that it's almost difficult to decide on specific examples. Over the past year or so, Norman Geras (for example) has gone through the tedious process of identifying a large number of examples and analyzing the pseudo-"arguments" involved to demonstrate where and how these particular fallacies manifest themselves. (Just a few of the most recent examples are http://normblog.typepad.com/normblog/2005/08/mccarthyism_at_.html http://normblog.typepad.com/normblog/2005/08/roots_of_steele.html http://normblog.typepad.com/normblog/2005/08/asking_the_righ.html http://normblog.typepad.com/normblog/2005/08/kens_unfair_bal.html http://normblog.typepad.com/normblog/2005/08/apology_and_its_1.html... but let me emphasize that these are NOT at all the most significant or penetrating examples, just the ones that happened to be most recent. So if these particular examples don't convince you, Geras has dozens more from the past few years.)

At all events, in order to adequately address the issues that concern you, it is conceptually insufficient and misleading to rely exclusively on a simple binary distinction between "explanation" and "justification... or even between pure-explanation-without-justification and deliberate "explanation"-as-justification. There are a lot of intermediate steps between these two ideal-typical poles--and they happen to capture most of the actual debates in question, so that the binary distinction you want to use, while potentially a useful and clarifying opening step in a polemical response to simplistic attempts to equate all analysis with apologia, becomes a misleading (and even ideologically mystifying) false dilemma if it is used to shut out all the actual forms that most of the real arguments take.

(For example, consider the following possibility in purely conceptual terms. A typical fellow traveler--not a CP member--says in the 1930s about Stalinism in the Soviet Union:

Well, of course I think murdering millions of people and suppressing civil liberties isn't nice, and it would be false and despicable to suggest that I condone it in any way. At the same time, we have to recognize that Stalinist industrialization works, and you can't make an omelette without breaking eggs... and, anyway, it's clear that all the excesses of this process are completely explained--I'm just explaining them, not justifying them--by the effects of capitalist encirclement, anti-Communism, the need to suppress Trotskyite wrecking, etc.... and anyway, what about the history of western colonialism, the oppression of negroes in the US south, and other distracting subjects that I can multiply indefinitely? Superficial moralism is all very well, and I used to be a little uneasy myself about all those stories I heard about concentration camps and the rest, but I have just explained that everything happening in the USSR is necessary and inevitable, however regrettable... and it wouldn't be happening at all if world capitalism would just be good enough to curl up and die. So if anyone actually criticizes, condemns, or opposes Stalinism in the Soviet Union, they ought to be denounced as naively destructive at best, and in most cases as objectively fascist. And anyone who accuses me of justifying dictatorship, mass murder, and political repression is either confused, or else a liar who should probably be sued for libel. All I've done is to explain why everything that's going on--and maybe it's not really going on, anyway--is necessary and inevitable.

I'm not asking whether you think these quite typical kinds of arguments were factually valid and/or moraly defensible. I'm simply asking whether you think someone who offered these arguments was "making excuses" for the crimes of Stalinism, or "defending" them, or even perhaps "justifying" them. If your answer to all three is no, then we have a real disagreement--but frankly, I find the possibility that you would actually deny the undeniable in this case quite non-credible.)

(3) Regarding the argument you are trying to develop in order to draw the key distinctions ...

Where explaining crosses into justifying--or excusing--is when you go on to say not just "we have pushed their buttons in ways that have, predictably, generated bad consequences" but also to say that "in acting as they have, they have been their best selves and acted from praiseworthy and moral motives." I see very few Westerners crossing that line. I see many arguing that brutal theocratic thuggist terror-bombers are being (predictably) human, and that we ought to recognize that people will be human in calculating what we should do. I see very few Westerners arguing that brutal theocratic thuggist terror-bombers are being moral.

This is intriguing and has interesting possibilities, but I also think it still needs some work. Even after it's refined a bit, I think I'm still not going to agree that this is the most appropriate or illuminating way to draw the line--conceptually, factually, or morally. (The criteria for "justifying" here is so demanding and exclusive that, in my humble opinion, it obscures the real isues rather than clarifying them.) But that's not my main point here at the moment. Even in its own terms, I think you want to reformulate your argument a bit to convey what you really have in mind. More on this later ...

(4) And then in empirical terms, I think you need to take more account of the fact that while pure-explanation-without-justification-or-moral-extenuation is certainly possible in principle, and sometimes even an accurate description of what specific people are doing in concrete cases, the mere fact that someone CLAIMS that this is what they're doing (or that third parties, on their behalf, claim that this is what they are doing) is not sufficient, by itself, to immunize them from criticism. In the real world, ideological polemics don't work that way. In some cases, claims of this sort are genuine and valid. In other cases, they are more properly described as examples of logical fallacy, bullshit, self-deception, and/or outright dishonesty. If you appear not to have noticed this distinction, that will simply weaken the force of your argument, and make it easier for the pseudo-moralists of the loudmouth right to dismiss the valid criticisms you are making. And once this distinction is recognized, it requires some argument to plausibly support the idea that certain of the people I mentioned really belong in the first category rather than the second. (In a lot of cases, as I noted above, Geras has established pretty conclusively that they belong in the second category, so it might be worth considering his painstakingly accumulated pile of examples. I think I've demonstrated that in a number of specific cases, too, by the way ... but not in such a thorough or painstaking way, or in a way that focuses so tightly on these specific issues.)

By contrast, I think (rightly or wrongly) that the blanket absolution you are currently offering does no service to our understanding of the realities of the situation or of the genuine issues at stake....


Addendum: Jeff Weintraub writes:

I didn't actually expect Brad to post this particular exchange of messages (I thought we were just in the middle of discussing the issues, and we hadn't even gotten to the concrete cases yet), but life is full of surprises, and no harm done. Reading it does seem to have boggled some people's minds, which can be a good thing. On the other hand, judging from the comments, the results often generated more heat than light, since very few of the comments had much to do with any of the arguments that Brad and I were actually making.

The main reason seems to be that some readers didn't quite understood what this exchange was about. In line with the topic of Brad's post, I'm willing to make some excuses for them--and they were indeed partly excusable--since they came into the middle of a conversation, and the larger context for these particular messages was missing. (For reasons of space, Brad also had to quote from my messages selectively, and there's no way he could link to the whole message.) So some readers were a bit bewildered, and they went looking for things in my message that belonged to different parts of the discussion, and sometimes they responded to things they assumed I was saying that weren't really there, confused me with Bill O'Reilly, and in other ways let their imaginations run riot.. Brad said he intended to invite people into a high-level virtual seminar, but sometimes things don't work out exactly as planned. Well, so it goes.

At this point, it's probably not worth trying to reconstruct the larger conversation that Brad and I were actually engaged in. But here are a few accumulated responses to some of the comments. Basically, all I'm asking is (1) that both pro-Bush and anti-Bush people should make more careful distinctions and avoid wild exaggerations, and (2) that if we're going to have serious arguments about these issues (about which there are a lot of legitimate positions) we should begin by facing reality, recognizing the obvious, and not trying to deny (or obfuscate) the undeniable.

None of my responses below is very extensive, but the ones to Arjun, Jim Dandy, meno, Bruce Wilder, and AlanDownUnder touch on the most important substantive issues.

Yours for reality-based, politically intelligent, and morally serious discourse,

Jeff Weintraub


Hi Bill,

obscure fringe publications like the Nation, the Guardian, the New Statesman"

Doesn't that formulation raise anybody else's eyebrows?

Posted by: here@now.netBill Jones | Aug 24, 2005 1:19:36 PM

This is what we call irony. My point was precisely that these are NOT "obscure fringe publications" ... so people can't evade these issues by saying that they're just lunatic-fringe positions that nobody of any significance actually holds.

Hi Jim Dandy,

Cutting through all this sophistry, it is worth asking Weintraub a very simple and practical question, for instance: how (whether) he “explains”, “justifies” or “defends” the occupation of Palestinian lands by Israeli settlers. This would be an interesting test, specifically on the philosophical issue of moral relativism that’s imbedded in this discussion.

Posted by: no@name.eduJim Dandy | Aug 24, 2005 11:35:04 AM

Where did you get the impression that I would want to defend the occupation? It so happens that I think one can explain that without justifying it--in fact, you can explain something and also condemn it. This may seem like a simple point ... but if a lot of people actually understood it, they wouldn't make so many silly arguments, and Brad and I wouldn't have had to go though such a long discussion (of which he posted just a part).

Since you were focused on points that neither Brad nor I made, you seem to have missed the points I was actually trying to make. If f you're really interested, then for a start see http://jonathanderbyshire.typepad.com/blog/2004/09/the_meaning_of_.htmlthis, then for an expanded version http://normblog.typepad.com/normblog/2004/09/the_meaning_of_.htmlthis, along with http://normblog.typepad.com/normblog/2005/08/bad_excuses_the.htmlthis & http://www.juancole.com/2004_09_01_juancole_archive.html#109419064196351096this & http://www.juancole.com/2004_09_01_juancole_archive.html#109419064196351096this.

He may or may not be “morally bankrupt”. It’s rather that he avoids addressing the real philosophical problem of moral relativism/absolutism by covering it up with the sophistry of “conceptual” distinctions.

OK then, since he is apparently concerned, as he says, with “understanding of the realities of the situation or of the genuine issues at stake”, let’s hear him respond to a very specific and practical test about any real situation. Let’s have him state (“explain”, “justify”, “defend”) his own position on any reality/issue of historical or contemporary relevance.

Posted by: no@name.eduJim Dandy | Aug 24, 2005 3:16:51 PM

Well, if you like, and the items linked to above aren't enough for you, there are a few more random examples http://normblog.typepad.com/normblog/2004/10/was_there_any_m.htmlhere & http://normblog.typepad.com/normblog/2004/09/not_an_illegal_.htmlhere & http://hurryupharry.bloghouse.net/archives/2004/08/28/sistanis_triumph.phphere & http://normblog.typepad.com/normblog/2005/01/the_iraqi_elect.htmlhere & http://normblog.typepad.com/normblog/2004/12/some_implicatio.htmlhere & http://normblog.typepad.com/normblog/2005/04/remember_afghan.htmlhere & http://www.petitiononline.com/j141789/petition.htmlhere.

Hi Ralph,

"...brutal theocratic thuggery"? I thought this was going to be an item on Pat Robertson, who has lots of defenders.

Posted by: x@x.comRalph | Aug 24, 2005 11:39:42 AM

No problem. In my earlier message to Brad, I emphasized that "brutal theocratic thuggery" covers a multitude of sins, including people who bomb abortion clinics and murder doctors who work there. There are people who "make excuses" for them, too. So that just strengthens my point.

Hi Arjun,

What an absurdly long post for a not-important couple of points.

  1. Some explanations are justifications.
  2. Some explanations are not justifications.

Posted by: aj@yahoo.comArjun | Aug 24, 2005 12:28:06 PM

Absolutely right ... and a good starting point for discussing the issues, that would avoid a lot of pseudo-problems and false dilemmas. Then the next step is to talk seriously about concrete debates. The points you make may seem obvious, and especially the fact that we don't have to choose between 1 & 2 ... but as I just said to Jim Dandy, if a lot of people really understood it, and also understood what it implied in making moral & political arguments, then they probably wouldn't make so many silly and pointless arguments.

Hi wml,

What's wrong with accidently or even purposely slipping from explanation to justification?  [....]

Posted by: cydmab2@hotmail.comwml | Aug 24, 2005 1:59:19 PM

There's nothing at all necessarily wrong with it, and in fact it often makes good sense ... as long as we understand what we're doing, and don't pretend that we're not doing it. Brad was the one trying to draw a sharp distinction between the two, not me. (And sometimes is also makes sense to try to draw those sharp distinctions. Again, it's important to know what you're doing, and not to fool either yourself or others about it.)

Hi bakho,

If Jeff whacks a hornets nest and get stung, does that make the hornets bad? Should Jeff assign moral agency to the hornets with their little bee brains?  [....]

Posted by: bakho@excite.combakho | Aug 24, 2005 2:28:17 PM

So humans and hornets are precisely the same, and neither hornets nor people are ever moral agents? OK, now I understand. Thanks for clearing that up.

On the other hand, you seem to think that Bush is a moral agent, with something bigger than a bee brain, so we should "assign moral agency" to him. How come?

Hi meno,

Yawn.

Been there, done that, seen this all before when I TA'ed freshman philosophy. Lots of people get confused by the fact that the blame-game is non-zero-sum. So lets drag out a simpler analogy:

I borrow your ferrari, and leave it sitting running with the keys in while I pop into the shop, and it gets nicked. Then I say "Why are you blaming me? The thief's the one who nicked it! Stop being an apologist for brutal ferrarri-theiving regimes!" That's confused.

I'm right that the thief is still doing something morally wrong, and my screwup doesn't let him off at all. But you have full right to blame me for what I did to create the situation: I am morally culpable for the loss of your ferrarri because I was careless.

Blame is non-zero-sum.

Posted by: junk@sean.geek.nzmeno | Aug 24, 2005 4:31:00 PM

Absolutely right, and nicely put. 

And at one level, this is such an obvious point that no one can blame you for yawning. But one of the implications of Brad's discussion, after all, is that a lot of people argue as if this point never occurred to them. (That would include both pro-Bush and anti-Bush people, incidentally, and also a lot of the people who wrote comments on Brad's blog about our exchange.) The only difference between Brad and me on this point is that he seems to think that, in the process, he is somehow defending people who argue this way against my criticisms. In fact, as you make clear, what he's shown is that they're simply confused (or disingenuous), and they either don't understand or pretend not to understand the elementary logical mistakes they're making..

See also my responses to Jim Dandy and Arjun.

Oh, in case I was unclear: This is why the 'explanations' of the insurgency/roots of terrorism are not morally neutral. There's real moral blame being attached to the US's actions.

Not only do some aspects of US foreign policy lead to more terrorism: you are morally culpable if you are through your stupidity causing more terrorism.

Which doesn't justify the terrorists' acts at all.

Posted by: junk@sean.geek.nzmeno | Aug 24, 2005 4:37:30 PM

Again, all this is right and admirably clear-headed. That's what arguments of this sort are really about, and these are the sorts of criteria they ought to be using. (We might want to go on to argue about whether the 2003 Iraq war, for example, was on balance a good idea or a bad idea. But at least that would be an intelligent and honest argument, as opposed to the usual sloganeering from all sides.)

Hi Ken,

I wonder what Weintraub would say about this:

"The US president [Bush] also said that he did not consider all the Iraqis fighting the US occupation to be "terrorists".

Weintraub would say that, in this case, "the US president [Bush]" actually said something that was clearly correct.. Weintraub would also say that, in general, Bush and a lot of other people throw around the word "terrorist" far too loosely and indiscriiminately--and they're not the only ones.

If Weintraub were then to say to Ken, "So what?" ... then I wonder what Ken would say.

"The suicide bombers are, but the other fighters aren't. They just don't want to be occupied. Not even me, nobody, would want to be. That's why we're giving them their sovereignty. We are guaranteeing them complete sovereignty from June 30," he said.

The US president also said that he did not consider all the Iraqis fighting the US occupation to be "terrorists"."

Is Bush explaining or justifying the Iraqi insurgents?

Both, up to a certain extent. And this was precisely my point. In real life, trying to pretend that there is always a sharp and clear distinction between "explaining" people's actions, on the one hand, and either defending, justifying, excusing, whitewashing, or extenuating them is untenable. Sometimes there is a sharp difference, sometimes there isn't. Usually, there is some mixture, and in itself there's nothing at all wrong with that, as long as people are honest about what they're doing. It all comes down to HOW we do it. 

For example.... It pains me to say a good word about Bush, and his public statements are rarely models of clarity or logic, but in all fairness, the statement just quoted makes a fair amount of sense. Bush is saying that some of the insurgents (not all) have motivations that are understandable and even valid to some degree, whereas the motivations and tactics of others in the insurgency are completely unjustifiable. Therefore, the US should try to address the potentially legitimate grievances of the first set, while continuing to condemn and fight against the second set. Sorry, but what's the problem here?

Ken's position seems to be, more or less, either you're for us or you're against us. Or have I misunderstood?

Hi AlanDownUnder,

Skimming the comments for continued comic relief, I came across your remarks.

We have a set of verbs which includes "support", "justify", "defend", "excuse" and "explain". When the objects of these verbs are controversial, arguments about correct verb usage arise. The more argument centers on verb not object, the less light is shed. For verbs we already have the dictionary.

I agree with all of this. My only point is that these verbs (we could add "whitewash" and "trivialize") mean different things ... which implies, among other things, that just because someone makes excuses for something doesn't necessarily mean that he or she actively supports or advocates it. The reverse also holds. Just because someone isn't actively advocating something, that doesn't necessarily mean that he or she isn't either justifying it, defending it, excusing it, or whitewashing it. (Politicians and press secretaries do these all the time, don't they?) Just because someone CLAIMS that he or she isn't whitewashing something, just "explaining" it, that doesn't automatically get them off the hook. We have to look at the actual cases.

All of this should be pretty obvious and non-controversial, and establishing it should be the BEGINNING of a concrete discussion. I think you and I actually agree on that. But if this point were really so obvious to everyone, then people wouldn't be making so many silly arguments, and very bright and thoughtful people like Brad wouldn't slip into the temptation of posing some misleading false dilemmas--e.g., either someone is "justifying" something OR they're purely "explaining" it, with no combinations and no possibilities in between. Brad doesn't really believe that, of course ... but some of the people engaged in the debates we've been talking about it (both pro-Bush and anti-Bush) seem to believe it, along with some of the people who read Brad's blog.

Jeff may not confine the correct use of "explain" to "because they hate our freedom", or indeed even accept the sole official state-sanctioned explanation, but after all that has been written this is just charitable assumption.

Posted by: flyhalf@dodgeit.comAlanDownunder | Aug 25, 2005 8:17:41 AM

Pardon me ... written by whom, where?

Hi Bruce,

An excellent post. The "we" moral agents vs "them" zombies analytical frame is useful.  [....]

Posted by: http://comingperfectstorm.blogspot.com/Bruce Wilder | Aug 24, 2005 1:03:00 PM

Do you mean that this "analytical frame" captures the way that many people argue (a point on which I agree) ... or that this is a "useful" framework for actually making sense of the world and for dealing with real moral and political issues? Do you really think it's either correct or illuminating to regard everyone else in the world (except for some flexible "us") as "zombies"? More generally, do you really believe that's useful or illuminating to divide up the world between some people who are "moral agents" and others who are "zombies"? OK, if you say so. 

I happen to think that the mode of thinking about political issues that Brad identifies, based on this kind of crude dichotomy, definitely exists ... but that it is precisely part of the problem. I also believe that, in the real world, most people are neither completely free, unencumbered, totally autonomous agents unaffected by different cultures and social constraints NOR pure "zombies" and "automatons who simply respond to external stimuli. Instead, most people most of the time fall somewhere in between, in different ways and different degrees--and this is true of both "us" and "them."

Posted by DeLong at 02:52 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Kenneth Chang Edition)

Kenneth Chang of the New York Times writes:

Kenneth Chang: I can understand that you don't like the article, and I won't suggest that you're a horrible reader for not liking it. If I left you the impression of a raging scientific controversy, then the article failed at some level.

Chang is correct. His article is a catastrophic failure.

Here are the lead paragraphs of Chang's article:

In Explaining Life's Complexity, Darwinists and Doubters Clash: At the heart of the debate over intelligent design is this question: Can a scientific explanation of the history of life include the actions of an unseen higher being? The proponents of intelligent design, a school of thought that some have argued should be taught alongside evolution in the nation's schools, say that the complexity and diversity of life go beyond what evolution can explain. Biological marvels like the optical precision of an eye, the little spinning motors that propel bacteria and the cascade of proteins that cause blood to clot, they say, point to the hand of a higher being at work in the world.

In one often-cited argument, Michael J. Behe, a professor of biochemistry at Lehigh University and a leading design theorist, compares complex biological phenomena like blood clotting to a mousetrap: Take away any one piece - the spring, the baseboard, the metal piece that snags the mouse - and the mousetrap stops being able to catch mice. Similarly, Dr. Behe argues, if any one of the more than 20 proteins involved in blood clotting is missing or deficient, as happens in hemophilia, for instance, clots will not form properly.

Such all-or-none systems, Dr. Behe and other design proponents say, could not have arisen through the incremental changes that evolution says allowed life to progress to the big brains and the sophisticated abilities of humans from primitive bacteria. These complex systems are "always associated with design," Dr. Behe, the author of the 1996 book "Darwin's Black Box," said in an interview. "We find such systems in biology, and since we know of no other way that these things can be produced, Darwinian claims notwithstanding, then we are rational to conclude they were indeed designed."

If you keep reading down Chang does actually quote some scientists. Here's the first such quote, in context:

But mainstream scientists say that the claims of intelligent design run counter to a century of research supporting the explanatory and predictive power of Darwinian evolution, and that the design approach suffers from fundamental problems that place it outside the realm of science. For one thing, these scientists say, invoking a higher being as an explanation is unscientific.

"One of the rules of science is, no miracles allowed," said Douglas H. Erwin, a paleobiologist at the Smithsonian Institution. "That's a fundamental presumption of what we do."

That does not mean that scientists do not believe in God. Many do. But they see science as an effort to find out how the material world works, with nothing to say about why we are here or how we should live...

If I set out to write a weak refutation of the scientific claims of ID, I could do no better--that is, no worse--than Chang has managed to do in these three paragraphs.

Posted by DeLong at 02:50 PM | Comments (0) | TrackBack

Fear the Influenza Virus!

Alex Tabarrok is terrified at the power of influenza:

Marginal Revolution: Modern Germs: I was surprised to learn from John M. Barry's excellent book The Great Influenza that germs continued to have a disproprtionate influence on the civilizations well into the twentieth century and perhaps even today. The great influenza of 1918 probably killed 100 million people, about five percent of the entire world's population. An even higher percentage of young people died and most shockingly all of this occured in about 12 weeks. Death was not evenly distributed:

The Western world suffered the least, not because its medicine was so advanced but because urbanization had exposed its population to influenza viruses so immune systems were not naked to it. In the United States, roughly 0.65 percent of the total population died, with roughly double that percentage of young adults killed. Of developed countries, Italy suffered the worst, losing approximately 1 percent of its total population....

The virus simply ravaged the less developed world. In Mexico the most conservative estimate of the death toll was 2.3 percent of the entire population, and other reasonable estimates put the death toll over 4 percent. That means between 5 and 9 percent of all young adults died.... One doctor visiting Inuit in Alaska found everyone dead in 3 villages and 7 other villages with a death toll of 85%. We don't know how many people died in India and China but the rates were certainly higher than in the more urban United States....

Addendum: Bill Johnson at UVA points me to, "Is the 1918 Influenza Pandemic Over?" (NBER), a very recent paper by Douglas Almond. From the abstract:

In the 1960-1980 Decennial U.S. Census data, cohorts in utero during the height of the Pandemic typically display reduced educational attainment, increased rates of physical disability, lower income, lower socioeconomic status, as well as accelerated adult mortality compared with other birth cohorts. In addition, persons born in states with more severe exposure to the Pandemic experienced worse outcomes than those born in states with less severe Pandemic exposures. These results demonstrate that investments aimed at improving fetal health can have substantial long-term effects on subsequent health and economic outcomes.

Posted by DeLong at 02:45 PM | Comments (0) | TrackBack

Anatole France

"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."

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

Steven Bodzin Writes About the Repeal of the Public Utility Holding Companies Act

Steven Bodzin writes about the dismantling of another part of the New Deal: the PUHCA, the Third New Deal's attempt to diminish the potential for monopoly power in utilities. I've never been able to figure out whether the economies of scale the PUHCA's opponents claimed were there really were there in the 1930s. It's pretty clear to me, however, that today large-scale utility mergers would be "market power" mergers rather than "economic efficiency" mergers.

A Tiny Revolution reads the LA Times and summarizes:

A Tiny Revolution: Actual Journalism: The Los Angeles Times has been running some actual journalism, thanks to their reporter Steven Bodzin. One of Bodzin's most interesting recent stories is about the repeal of an obscure but genuinely important law regulating utilities:

What enabled the regulators to shield Portland General Electric from the Enron debacle was the Public Utility Holding Company Act, a New Deal-era federal law requiring companies that owned electric utilities either to incorporate in the state where they sell power or to accept tight regulation by the federal Securities and Exchange Commission...

But after more than 20 years of agitation from industry financiers and free-market advocates, the 1935 law will be repealed when President Bush signs the energy bill, which he is expected to do Monday at a ceremony in Albuquerque.

Wall Street analysts and energy industry observers expect the repeal to accelerate the industry's consolidation, with more utilities being bought by national -- and even foreign -- electricity companies and by oil, construction and service companies.

Basic utilities like electricity aren't commodities like apples or DVD players. People can choose to buy oranges instead of apples, or choose not to buy a DVD player. But hospitals can't choose not light their operating rooms, and grocery stores can't chose not to refrigerate meat. That's why, left to their own devices, corporations will use their leverage to gouge their customers as hard and long as they can. That's just good business.... Eventually, once enough billions have been stolen and enough people have died, we'll reregulate everything. Then we'll slowly forgot why we did it and deregulate everything again around 2075.

Yes: I am an old, grumpy man. But you should still read all of Steven Bodzin's article.

P.S.: Yes, Steven Bodzin made very welcome and lively contributions to my American Economic History course last spring.

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

August 22, 2005

The Economist on the Budget Deficit

The Economist reminds me of how good it can be in a short space, as it pities the poor fools who write for the Wall Street Journal editorial page:

The budget deficit | Cocktail-bar calculations | Economist.com: [T]he latest projections from the legislature's non-partisan budget-watcher have excited a few of Mr Laffer's fans. The federal budget deficit, the CBO reckons, will narrow to $331 billion this fiscal year (which ends on September 30th), from $412 billion the year before. Tom DeLay, the Republican majority leader in the House of Representatives, was quick to offer a Laffer-like explanation: "Lower taxes and spending discipline spur economic growth, which in turn cuts the deficit," he opined.

In fact, spending discipline is still rather lacking. Government outlays will increase by $181 billion (or 8%) this year, a figure that does not include the cost of the pork-stuffed highway bill, signed by the president on August 10th....

Is Mr DeLay right to attribute any of these gains to the seductive curves of supply-side economics? In December, Gregory Mankiw, who used to be chairman of Mr Bush's Council of Economic Advisers, and Matthew Weinzierl, a colleague at Harvard University, published a "back-of-the-envelope guide" to tax rates and revenues.... [B]y their reckoning cutting taxes on labour would generate enough growth to recoup about 17 cents on the dollar, and a tax cut on capital could pay for more than half of itself. The government would take a thinner slice of a bigger pie.

Left out of these calculations is any guide to what happens when taxes are cut but spending is not. The budget deficits that ensue will tend to "crowd out" investment, slowing growth. The CBO calculates that every extra dollar of federal borrowing reduces investment in the economy by 36 cents.

The White House['s]... latest forecast... assumes (absurdly) that Congress will not add a single dollar to its discretionary spending on anything except defence and homeland security from 2006 to 2010. It also leaves out of its projections any extra money for Iraq, Afghanistan or the war on terror...

The failure to take account of what happens "when taxes are cut but spending is not" makes Mankiw and Weinzierl a bad guide to the likely future effects of the Bush tax cuts.

Posted by DeLong at 05:51 PM | Comments (0) | TrackBack

Republican Goals for Social Security

MediaMatters reminds us what they are:

"Kill Social Security!": Promotions for the August 13 edition of Fox News' Forbes on Fox included on-screen text exclaiming "Kill Social Security!" and featuring a Social Security card with "R.I.P." superimposed over it. The Forbes on Fox segment, hosted by David Asman, featured a panel of editors and writers from Forbes magazine discussing the merits of abolishing Social Security...

Republican economists talk about bringing Social Security's commitments into balance with funding, and with providing incentive-compatible retirement insurance. But the Republican activists have a very different view of what the goal is.

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

Why Oh Why Can't We Have a Better Press Corps? (Chris Matthews Calls B---s--- on His Own Show Edition)

If Chris Matthews says that what pro-administration right-wingers say--unchallenged--on his show is b---s---:

Hardball with Chris Matthews - MSNBC.com: MATTHEWS: What I keep doing here is asking people on and off camera who come on this program, high-ranking officers, enlisted, former officers. I get sometimes, not all the time, two different versions, the version they give me on the air and the version they give me the minute when we‘re off the air.

The version they give me when we‘re on the air is gung-ho, we‘re doing the right thing, everything is moving along. The version they give me off the air is, Rumsfeld is crazy. There aren‘t enough troops over there. We‘re not taking this seriously enough, or, we shouldn‘t be there, sometimes.... It isn‘t always a straight scoop when you go on television with people...

who am I to argue?

Still, shouldn't he have told this to all of us years ago?

Posted by DeLong at 05:47 PM | Comments (0) | TrackBack

The Onion Is a Priceless National Treasure

It has the latest bulletin from Kansas:

The Onion | Evangelical Scientists Refute Gravity With New 'Intelligent Falling' Theory: Scientists from the Evangelical Center For Faith-Based Reasoning are now asserting that the long-held "theory of gravity" is flawed, and they have responded to it with a new theory of Intelligent Falling. "Things fall not because they are acted upon by some gravitational force, but because a higher intelligence, 'God' if you will, is pushing them down," said Gabriel Burdett, who holds degrees in education, applied Scripture, and physics from Oral Roberts University.

Burdett added: "Gravity--which is taught to our children as a law--is founded on great gaps in understanding. The laws predict the mutual force between all bodies of mass, but they cannot explain that force."... The ECFR, in conjunction with the Christian Coalition and other Christian conservative action groups, is calling for public-school curriculums to give equal time to the Intelligent Falling theory. They insist they are not asking that the theory of gravity be banned from schools, but only that students be offered both sides of the issue "so they can make an informed decision."

"We just want the best possible education for Kansas' kids," Burdett said. Proponents of Intelligent Falling assert that the different theories used by secular physicists to explain gravity are not internally consistent. Even critics of Intelligent Falling admit that Einstein's ideas about gravity are mathematically irreconcilable with quantum mechanics... gravity is a theory in crisis.... "Closed-minded gravitists cannot find a way to make Einstein's general relativity match up with the subatomic quantum world," said Dr. Ellen Carson, a leading Intelligent Falling expert known for her work with the Kansan Youth Ministry. "They've been trying to do it for the better part of a century now, and despite all their empirical observation and carefully compiled data, they still don't know how."

Posted by DeLong at 05:40 PM | Comments (0) | TrackBack

A Tight Labor Market!

Ah. The tight labor market of the Bush boom!

Calculated Risk writes:

Calculated Risk: More on Labor Slack: Ken Melvin directs us to some comments in an article in the SF Gate:

Want a Wal-Mart job? Join the crowd 11,000 apply for 400 openings at retailer's new Oakland store. "It's not about Wal-Mart -- it's about the rest of the labor market," [Stephen Levy, an economist for the Center for Continuing Study of the California Economy] said. "If the rest of the labor market was strong, you wouldn't have 11, 000 people applying for 400 jobs." During the dot-com boom, Levy said, businesses like Starbucks bumped up wages to recruit employees in the middle of a hot job market. But now the situation has reversed, and more people are willing to take whatever they can get.

That sure sounds like slack in the labor market.

Posted by DeLong at 05:37 PM | Comments (0) | TrackBack

Gross Domestic Product and Gross Domestic Income

Everyone should read Daniel Gross's "Economic View" column this forthcoming Sunday: he's trying to make sense of the fact that estimates of National Product show productivity growth reverting to its average post-1995 pace, while estimates of National Income continue to show more rapid productivity growth. It's an important topic, and it's bound to be a good column.

Meanwhile, here's a short squib from Business Week on the issue:

On Aug. 9, the Bureau of Labor Statistics said that in the second quarter, the most widely followed measure of productivity, output per hour in the nonfarm business sector, grew at a 2.2.% annual rate from the first quarter. Over the past year, productivity increased just 2.3%, down sharply from the 5% yearly pace seen at the end of 2003.... [B]ut the BLS actually calculates a second broad measure of productivity, one that shows a more robust trend... covers only the nonfinancial corporate sector... shows productivity in the first quarter grew 5.4% from a year ago... faster than the 4.5% yearly clip recorded at the end of 2003....

Neither set of data is necessarily better.... They just use different measures... gross domestic product... [and] gross domestic income. Theoretically, the value of products and the income they generate should be the same....

What raises this debate into the realm of policy importance is that, in the past, Greenspan has tracked this second set of productivity data closely....

In the nonfarm business measure, smaller gains in efficiency are no longer offsetting increases in labor compensation. As a result, it now costs businesses far more to make and sell one unit of their product. Last quarter, nonfarm unit labor costs... were up 4.3% from a year ago, the fastest yearly clip in nearly five years.... But within the nonfinancial [corporate] sector... unit labor costs are up by just 1.4% from a year ago.... Which is right?.... [O]ne advantage of the nonfinancial corporate numbers is that... they give more of an "apples and apples" comparison between compensation and output.... [T]he surprising strength of profits so far this year suggests that the more sanguine reading of unit labor costs from the nonfinancial sector may well be closer to the truth....

And here's a graph showing the ratio of (measured) national product to (measured) national income:

From 1995 to 2000 the ratio of product to income shrank as measures of product grew more slowly than measures of income. This was important: for five years measures of productivity on the income side grew 0.8% per year faster than measures of productivity on the product side. Then for three years measures of product grew 0.9% per year faster than measures of income. And in the past four quarters it looks like it has turned around again, with income growing 0.6% per year faster than product.

It's a data issue I don't understand. It's a vitally important data issue--especially if you have a view of the world that gives some weight to what's going on with unit labor costs as a look into the guts of the inflation-unemployment relationship and to the current level of the natural rate of unemployment.

I am not a happy camper.

Posted by DeLong at 05:31 PM | Comments (0) | TrackBack

Clueless in Gaza

For more than thirty years Ariel Sharon has worked tirelessly to raise these demons. Now he is trying to deal with them.

FT.com - Israeli pull-out inflames passions: Harvey Morris in Neve Dekalim, Gaza: Settlers comparing Mr Sharon to Adolf Hitler, or the police and soldiers who have come to evict them to Jewish death camp collaborators, appeared to have lost all sense of history.... Their perspective may have been skewed... by years of being feted as Isral's new pioneers, particularly after the right-wing Likud party came to power for the first time in 1977.... [T]he settlers could in the past always count on political allies, not least Mr Sharon, to advance their cause.... "There's a crack in the people and that's what this government wants," said Yehuda Glick, head of the Temple Institute in Jerusalem that looks forward to the rebuilding of the Jewish Temple on the site of the al-Aqsa mosque complex in Jerusalem....

"The true Zionists are the people who hang tough here," said a former Wall Street tax attorney, who would only give his first name, Michael.... "I stand here as a Zionist with full faith in God that this will not happen."... Jabotinsky's Zionist Revisionists, spiritual forerunners of Mr Sharon's Likud, whose territorial aspirations once even included what is now Jordan.... As a poster alongside the burning barricades outside the Neve Dekalim synagogue read: "Bush and Sharon have declared war on God and his Bible."

We wish him luck.

Posted by DeLong at 05:29 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Yet Another WSJ Editorial Edition)

Brendan Nyhan reads the WSJ editorial page so the rest of us don't have to:

Brendan Nyhan: WSJ agitprop on CBO report: The WSJ continues

A second fact you won't see in many other newspapers is that the federal budget deficit has also declined to close to its modern average. CBO says the deficit will fall to 2.7% of national output in the fiscal year that ends at the end of next month. It is expected to continue to fall to 2.4% of GDP next year and 2.0% in 2010, even if the Bush tax rates stay in place.

But... the Journal's 2010 date is cherrypicked -- the effects of extending President Bush's tax cuts... explode over the next five [years]. Once again, the lesson here is simple: never trust the Wall Street Journal editorial page.

A lesson to place alongside "never get involved in a land war in Asia," "never play poker with a man named 'Doc'," and "never accept a battle of wits where iocane powder is a factor."

Posted by DeLong at 05:25 PM | Comments (0) | TrackBack

August 17, 2005

The Deficit Outlook

The Economist writes:

The not-so-incredible shrinking deficit | Economist.com: GEORGE BUSH has the dubious distinction of presiding over the largest negative budget swing in American history: from a surplus of $236 billion in 2000, the year he was elected, to a deficit of $412 billion, or 3.6% of GDP, when he stood again in 2004. Even in an economy with output of around $12 trillion, $648 billion is a lot of money to misplace.

Analysts were aghast when the Bush administration's Office of Management and Budget (OMB) projected [in February] that the fiscal year to September 2005 would bring bigger deficits still: $427 billion.... The more cynical observers suggested that the administration was simply releasing a gargantuan number for the pleasure of later telling voters that the budget deficit was closing faster than expected. In support of their argument, figures released by the Congressional Budget Office (CBO) in March projected a deficit of only $365 billion.

When the OMB revised its numbers sharply downward in July, to $333 billion, the doubting Thomases seemed to have a good case. Now, however, the CBO, which is generally seen as more level-headed, has followed suit. In its Budget and Economic Outlook, released on Monday August 15th, the CBO's projections moved roughly into line with the administration's, forecasting a shortfall of $331 billion, or roughly 2.7% of GDP.

Say not that the CBO has followed the administration's suit but that the administration has come back in line with reality. There has been about $34 billion of good budgetary news since February. That would have led a--normal--administration to lower its deficit forecast by $34 billion. But the administration lowered its deficit forecast by $94 billion. There's an extra $60 billion of fudge factor here.

The Economist's interpretation contained in its "however"--that the fact that OMB agrees with CBO now means that the OMB estimates last February that didn't agree with CBO's estimates were in fact on the level--simply doesn't follow.

Where the Economist does good is in pointing out that the this-year's deficit number is not where attention should be focused:

Douglas Holtz-Eakin, the CBO’s director, gave a warning that the improvement, while welcome, seemed to be largely temporary... an unexpected surge in corporate income tax receipts... stem[ming] from short-lived changes to the tax code. Further out into the forecast period, the CBO says its outlook is largely unchanged....

[M]any of the assumptions that the CBO makes, or is forced [by law] to make, seem rather far-fetched... that discretionary spending grows only at the rate of inflation... as if all of Mr Bush’s tax cuts were destined to expire on schedule, when in fact there is considerable interest in making them permanent.

But there’s one prediction it is making with a high degree of confidence: Social Security and Medicare... will eat up an increasing share of federal spending.... Social Security, Medicare and Medicaid, America’s health-care programme for the poor, will together account for more than half of federal spending by 2015....

And that Bushist economic policy is lousy:

[E]ven Mr Bernanke has stressed that deficit-reduction should still be a priority. “Not catastrophic” seems a poor guideline for fiscal policy, government or personal. For now, however, it appears to suit America’s politicians and consumers just fine.

Posted by DeLong at 11:17 PM | Comments (0) | TrackBack

David Brin Has a Weblog

David Brin's The Transparent Society is an excellent meditation on the dilemmas of the surveillance society. His Startide Rising is the second-best space opera ever written. And his "Thor Meets Captain America" is the best alternate-history story I have ever read.

Contrary Brin: This blog has (as I feared) turned into a major time sink. While I am impressed with the intelligence and cogency of many participants, I have no idea whether there are enough of you to merit such effort, at some cost to writing novels. What HAS been positive is that I've been inspired to dredge up some older projects to put online...

Posted by DeLong at 11:15 PM | Comments (0) | TrackBack

Another Book: Economic Change in China, c. 1800-1950

Another one to add to the pile:

Economic Change in China, c. 1800-1950: Philip Richardson (1999), Economic Change in China, c. 1800-1950 (Cambridge: Cambridge University Press: 0521635713). Reviewed for EH.NET by Debin Ma, Institute of Economic Research, Hitotsubashi University, Tokyo, Japan and Department of Economics, University of Missouri, St. Louis.

Richardson shows there are relatively firm statistics indicating that foreign trade and investment grew enormously in the nineteenth and twentieth centuries. Industrial output, particularly the modern sector, also exhibited an impressive growth record during the twentieth century. But these elements were far from altering the basic structure of the economy dominated by the giant agricultural sector where traditional technology prevailed and estimates of per-capita output growth are dubious due to the lack of consistent aggregate time series data.... "The major long-term influences... were the pressure of population on the land, the intensification of commercialized market mechanisms, contact with the outside world and the role of state. By the middle of the twentieth century those factors had... produce[d]... significant elements of modernization but not... sustained growth....

I believe there is still room for Richardson to push his assessment a little bit.... [M]odern economic growth... had clearly taken root in regions where modern industrial sectors clustered and agriculture was most commercialized.... China was farther along on the path toward modern economic growth in the 1930s or 1950 than in 1890 or 1850.

I do have some reservations about Richardson's assessment of Chinese agricultural conditions in the 1930s.... The relatively reliable data on rice yield per acre in the 1930s shows that the Chinese level was still about 60-70% of the contemporaneous Japanese level... equivalent to... early Meiji Japan... average farm size in China was comparable to... Japan, Taiwan and Korea.... [P]er-capita gross value added of farm output... peak.... The 1930s per-capita level was only surpassed after de-collectivization and the diffusion of the household responsibility system in the 1980s China.

Chinese farmers may have been poor in the 1930s, but they were not much poorer than those in Japan, Taiwan and Korea in their early stages of development. Very likely, they were just as well-off as the Chinese farmers in the late 1970s....

Citation: Debin Ma (2000), "Review of Philip Richardson Economic Change in China, c. 1800-1950" Economic History Services http://www.eh.net/bookreviews/library/0255.shtml

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

Factory Tours

Factory Tours

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

The Soft Bigotry of Low Expectations at the Department of State

Bradford Plumer writes:

MoJo Blog: Condoleeza Rice: Francophile: Fred Kaplan is trying to figure out what to make of Condoleeza Rice's first term thus far. After rattling off a bunch of her accomplishments--including the resumption of nuclear talks with North Korea (a feat that probably had more to do with South Korea's offer of electricity than American diplomacy) and crafting a "war crimes" resolution against Sudan--he calls her accomplishments "considerable." I'd disagree--in fact, measures like the UN resolution against Sudan, which was then followed by absolutely no international action, may have done more harm than good--but Kaplan's right on when he says: "Yet these feats are only stirring because of who she's working for. They are the sorts of things--conducting diplomacy, entering negotiations, dealing with international organizations--that secretaries of state in most administrations do routinely."

Right on, but more to the point, most of these steps were things that John Kerry was practically pleading with George W. Bush to take all during the 2004 campaign. Now fair enough, the election's over, and it's hard to get upset over the fact that the Bush administration has essentially adopted Kerry's foreign policy, after spending a year telling the electorate how weak-kneed it was, and how unsafe it would make America. I just wish the press would actually make note of this fact, so that, you know, they could call foul the next time a presidential candidate gets depicted as a flower-strewing wimp for pointing out that, hey, maybe doing nothing while Kim Jong Il develops nuclear weapons isn't the best idea after all. But that's probably hoping for too much.

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

Why Oh Why Are We Ruled by These Liars? (Estate Tax Repeal Con Game Edition)

Edmund Andrews tells his readers what they need to know about the Republican con game that is estate tax repeal:

Death Tax? Double Tax? For Most, It's No Tax - New York Times: WHEN Congress comes back from its summer recess, one of the first things Senate Republicans will try to do, again, is kill the estate tax.... As Michael J. Graetz and Ian Shapiro of Yale recount in "Death by a Thousand Cuts" (Princeton University Press), their entertaining account of the repeal movement, opponents of the estate tax have already achieved a remarkable political feat by building broad public support for abolishing a tax that currently affects only 2 percent of all estates.

But repeal would be costly - more than $70 billion a year... the populist arguments in favor of repeal are misleading. If estate or inheritance taxes were frozen at today's levels, they would have almost no impact on family farmers and most small-business owners.... [M]many of the earnings that are subject to it were never taxed in the first place.... Killing the estate tax is one of President Bush's top priorities, and the House of Representatives has already passed a repeal measure four different times. But Senate Republicans, despite attempts to cut a deal with conservative Democrats before the summer recess, have been stalled on the issue.

Unable to muster the 60 votes they need to overcome a Democratic filibuster, Senate leaders are now vowing to push for full repeal as soon as they come back in September.... "The I.R.S. hits this greatest generation with an unjust double tax, the death tax," the narrator intoned in an ad aimed at North Dakota. Viewers are urged to "tell Kent Conrad," the state's Democratic senator, to "change his vote."...

[T]he battle is over a very large amount of money held by a very small number of families.... The [Estate Tax] limit rose to $1.5 million in 2004... only 13,771 estates - fewer than 1 percent - would have been subject to the tax. All but 740 of them would have had enough in liquid assets to cover estate tax liabilities....

[I]t is misleading for opponents of the estate tax to claim that it is a double tax on earnings that have already been taxed once. In many cases, that's not true. "A lot of assets that passed through very large estates have never been taxed and never will be," said Mr. Graetz of Yale. "It's a very big issue." For thousands of single-digit millionaires, that could be a very good deal indeed...

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

Real Forecasts of Bush Budget Deficits

The Concord Coalition acts like itself, and produces an estimate of the budget deficits we really expect Bush administration policies to produce:

http://www.concordcoalition.org/issues/fedbudget/charts/0508-plausible-baseline.pdf

Nice to see.

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

Why Oh Why Can't We Have a Better Press Corps? (Washington Post Budget Coverage Edition)

Ah. Max Sawicky's comments on the budget raise a question: are the Washington Post's budget reporters short-sighted, uninformed, and incompetent, or just pretending to be so because not being short-sighted, acting informed, or writing competently gets them hit on the snout with a rolled-up newspaper?

MaxSpeak, You Listen!: NAUGHTY BUDGET BITS: The Washington Post story begins: "The federal budget-deficit picture turned brighter Monday as congressional scorekeepers released new estimates showing the level of red ink for the current fiscal year would drop to $331 billion."...

The purported "brightening" depends on:

  • Discretionary spending falling from 7.8 percent of GDP in 2005 to 6.8 by 2009. This will probably not happen....
  • A built-in revenue increase due to the cessation of the annual short-term fixes for the Alternative Minimum Tax (AMT) that prevent it from growing.
  • A temporary surge in corporate income tax (CIT) revenues, about which more below....

The vaunted improvement in the year-over-year 2005 deficit -- which marks the limit of the Post's fiscal horizon -- comes in large part from a big jump in corporate income tax payments -- about $80 billion. This jump is bigger than the growth in actual corporate profits, so in this sense the vast bulk of the increase cannot be attributed to economic growth. (CBO attributes just $1 billion of the revenue jump to the economy.) Part of the increase is due to the provisions of the 2002 tax cut, which included a depreciation benefit....

Rarely is the question asked, how goes our Republican Era of Hard Work for Limited Government? Discretionary spending for FY2005 is now estimated at $962 billion. In 2001 it was $649 billion, for an average annual rate of growth of 10.3 percent, warming the hearts of communists all over this great land of ours. People said this would happen if you voted for Al Gore, and they were right!... Since January, discretionary legislative action increased total outlays by $34 billion for this fiscal year (ending in September), and by $1.2 Trillion-with-a-T over the next ten years. Most of this is defense spending.

To be sure, some of this spending was for worthy purposes in the national interest. Our personal favorite, previously noted here, is for a museum commemorating the noble Packard automobile.

The cover of the CBO report shows combined spending for Medicaid, Medicare, and Social Security rising from between eight and nine percent of GDP in 2005, to between ten and eleven percent of GDP in 2015. Inside there is a little table showing the 2004 trade deficit at $666 billion.... Whatever happens to the 2005 or 2006 deficit is not even a sideshow. It's a flea circus. The U.S. economy is facing two giant imbalances: the projected gap between tax revenues and Federal spending, and the current, growing gap between what the U.S. buys and what it sells to the rest of the world. The measure of our political system's vacuity, fed by a brainless commercial media, is the inability to put these issues on the table. When forced by a crisis to do so, the remedies will likely by short-sighted, panicked, and stupid...

Posted by DeLong at 11:02 PM | Comments (0) | TrackBack

A Few Words About Shrillblog

A few words about Shrillblog:

The Ancient and Hermetic Order of the Shrill is for all of us who have been driven into shrill unholy madness by the mendacity, stupidity, incompetence, recklessness, and idiocy of the Bush administration and its allies. Recent inductees--voluntary and involuntary--include Ginmar, Dexter Filkins, Michael Moss, Eliot Cohen, Burton Lee, Zbigniew Brzezinski, and Joe Gandelman.

Should you qualify, your personal copy of the Krugmanomicon (along with additional promotional material containing many valuable offers) will soon be on its way. Do not read more than ten pages a day, under pain of falling even further into shrill unholy madness. When you are in your non-human form, or even if you just believe that you are in your non-human form, remember not to devour any endangered amphibians. We had some... problems with the former regional director of the EPA.

Pray vainly to the dead, uncaring stars at least once a month, preferably when the moon is in the second decant.

The Miskatonic University homecoming, pep rally, barbecue (really don't ask), leaf-watching, and eldritch horror viewing will be held on October 33. Driving directions to picturesque Arkham, Massachusetts will follow. Beware Shoggoths on the road near South Campus at moonrise. On no account allow Yog-Sothoth to divert you from the South Gate to the Nadir Gate.

We continue to work on understanding the fell and arcane mysteries. For example: Richard Cheney. Thirty years ago Richard Cheney was the White House Chief of Staff who ran Gerald Ford's tough-but-fair policy process, and was the best friend of Paul O'Neill. Thirteen years ago Richard Cheney was a determined opponent of America's getting sucked into the Iraqi quagmire. Today?... Well, we all know. What has happened? Replaced by a fell servitor beast casting a hypnotic glamour? Controlled by implants from afar implanted by uebermenschen escaped from a Charlie Stross novel? Or was his mind sucked out and replaced by the mere act of reading the dread Book of PNAC?

Posted by DeLong at 11:01 PM | Comments (0) | TrackBack

The Message Must Be Meant for Los Angelenos...

It weirds me out to hear the PG&E announcer's voice over the radio, telling me to "To conserve energy, please don't turn your thermostat below 78F."

I mean, the outside temperature is 65F.

This is northern California, after all.

Posted by DeLong at 11:00 PM | Comments (0) | TrackBack

I Do Give a Fig

The figs are truly wonderful this year.

That is all.

P.S.: In what society did the expression, "I don't give a fig..." evolve. I mean, I do give a fig--especially for figs like these.

Posted by DeLong at 10:58 PM | Comments (0) | TrackBack

La Longue Duree

From the excellent Robert Darnton (1984), "Peasants Tell Tales: The Meaning of Mother Goose," in The Great Cat Massacre and Other Episodes in French Cultural History (New York: Basic Books: 0394729277):

To reconstruct the way peasants saw the world under the Old Regime... one should begin by asking... what experiences they shared in the everyday life of their villages.... [T]hat question can be answered... with qualifications and restricted to a high level of generalization.... The density of monographs can make French social history look like a conspiracy of exceptions trying to disprove rules. Yet... if one stands at a safe enough distance... a general picture begins to emerge....

Despite war, plague, and famine, the social order that existed at village level remained remarkably stable during the early modern period in France. The peasants were relatively free--less so than the yeomen who were turning into landless laborers in England, more so than the serfs who were sinking into a kind of slavery east of the Elbe. But they could not escape from a seigneurial system that dnied them sufficient land to achieve economic independence and that siphoned off whatever surplus they produced. Men labored from dawn to dust, scratching the soil on scattered strips of land with plows like those of the Romans and hacking at their grain with primitive sickles... to leave enough stubble for communal grazing. Women married late... twenty-five to twenty-seven... gave birth to only five or six children, of whom only two or three survived to adulthood. Great masses... lived ina sate of chronic malnutrition... porridge made of bread and water with some occasional home-grown vegetables.... They ate meat only a few times a year, on feat days or after the autumn slaughtering if they did not have enough silage to feed the livestock over the winter. They often failed to get the two pounds of bread (2000 calories) a day they needed to keep up their health... had little protection against... grain shortage and disease. The population fluctuated between fifteen and twenty million, expanding to... forty souls per square kilometer... [and] forty births [per year] per thousand inhabitants... only to be devastated by demographic crises. For four centuries... [until] the 1730s... French society remained trapped in rigid institutions and Malthusian conditions... l'histoire immobile.

That phrase now seems exaggerated, for it hardly does justice to the religious conflict, grain riots, and rebellions... that disrupted the late medieval pattern of village life.... But... the notion... of structural continuity... la longue duree... served as a corrective.... While ministers came and went and battles raged, life in the village continued unperturbed, much as it had always been since times beyond the reach of memory....

Grain yields remained at a ratio of about 5-to-1... in contrast to modern farming, which produces fifteen or even thirty.... Farmers could not raise enough grain to feed large numbers of animals, and they did not have enough livestock to produce the manure to fertilize the fields to increase the yield. This vicious circle kept them enclosed within... triennial or biennial crop rotation... fallow. They could not convert the fallow to... clover... [to] return nitrogen to the soil because they lived too close to penury to risk the experiment... [and] had no notion of nitrogen. Collective methods of cultivation also reduced the margin for experimentation.... [C]ommon gleaning and common grazing... common lands and forests... pasture, firewood, and chestnuts or berries. The only area where they could attempt to get ahead by individual initiative was the... backyard attached to their household plots....

The backyard garden often provided the margin of survival.... [S]eigneurial dues, tithes, grand rents, and taxes.... [T]he wealthier peasants rigged the collection of the main royal tax, the taille, in accordance with an old French principal: soak the poor....

Many of them went under... took to the road for good... milked untended cows, stole laundry... joined and deserted regiment after regiment... smugglers, highwaymen, pickpockets, prostitutes... pesilential poor houses, or else just crawled under a bush or a hay loft and died....

Death came just as inexorably to families that... kept above the property line.... 236 of every thousand babies died before their first birthdays.... 45 percent of Frenchmen born in the eighteenth century died before the end of ten.... Terminated by death... marriages lasted an average of fifteen years.... Stepmothers proliferated everywhere... [not] stepfathers, as the remarriage rate among widows was one in ten....

The peasants of early modern France inhabited a world of stepmothers and orphans, of inexorable, unending toil, and of brutal emotions. The human condition has changed so much since then that we can hardly imagine the way it appeared to people whose lives really were nasty, brutish, and short. That is why we need to reread Mother Goose...

I think that Darnton misses one important point. Life in early modern France, or Germany, or Britain, or the Low Countries, or elsewhere with the western European late marriage pattern according to which women did not get married until their boyfriends acquired cottages of their own which usually meant they were in their mid-twenties (or in places with similar patterns, like the lower Yangtze valley, where men couldn't get married until their older brothers believed that the lineage household could afford another woman), was quite good for a preindustrial agrarian human society. In most times and places marriage came earlier--not five or six but eight births--but more famines, worse nutrition, and thus greater mortality from disease gave the same two to three surviving to adulthood.

Posted by DeLong at 10:56 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Michael Barone: Intellectual Garbage Scow Edition)

Mark Thoma does intellectual garbage pickup on the overrated Michael Barone.

He tackle's Barone's claim that "maybe" the fall in social mobility in America is due to the fact that a high IQ genetic elite has risen to the top of the fair meritocracy that is our society. And Mark's head explodes:

Economist's View: Does Michael Barone Believe the Poor Lack the Genetic Intelligence and Drive Needed to Compete in the Emerging U.S. Meritocracy?: Am I reading this column by Michael Barone correctly? Does it blame being poor on lack of intelligence? Do you believe, as he does, that if you are poor it is most likely because your parents were unintelligent?... Read it yourself....

Michael Barone: [P]olls show that Americans think their chances of moving up are better than a generation ago. Statistics tell a different story: There is a higher correlation today between parents' and children's income than in the 1980s, and the income gap between college graduates and non-graduated doubled between 1979 and 1997.

"America," concludes Parker, "is becoming a stratified society based on education: a meritocracy."... [This] is exactly what Richard Herrnstein and Charles Murray predicted for America in their controversial book The Bell Curve, published 11 years ago. Herrnstein and Murray noted that intelligence is both measurable and in some large but unquantifiable part hereditary, an unexceptionable finding for experimental psychologists but maddening to social engineers. As college education becomes open to all with the requisite intelligence, graduates will tend to marry graduates and produce children with similar intelligence, while others will tend to produce children without it.

"Unchecked, these trends," Herrnstein and Murray wrote, "will lead the U.S. toward something resembling a caste society, with the underclass mired ever more firmly at the bottom and the cognitive elite ever more firmly anchored at the top."... Are we there yet?... [M]aybe so.

Yet should we be so gloomy?... Not everyone has an emotional need to be on top: How many people, if they thought seriously about it, would really want the burdens of a CEO, however lavish the pay?... As Murray has written, all you need to do to avoid poverty in this country is to graduate from high school, get and stay married, and take any job. The intelligence needed to get a place in the cognitive elite may become more concentrated in a fair meritocratic society, but the personal behaviors needed to find a valued place in society are available to everyone. Meritocracy may mean less mobility, but that is bearable if, as Brooks says, "America is becoming more virtuous."...

The inheritance of inequality is strikingly large in America today: if the father's lifetime was 100% above the American average for his day, the son's lifetime income will on average be 65% above the American average for his day. That's a lot of inherited inequality. Is this unequal distribution of wealth, income, and status in the United States today the result of the fact that a genetic elite has risen to the top in a "fair" IQ-driven meritocracy?

No.

This high degree of inherited inequality isn't because high IQ genetic eliteness genes are being passed down from fathers to sons. As Samuel Bowles and Herbert Gintis (2002), "The Inheritance of Inequality," report:

The direct effect of IQ on earnings... presented in Bowles, Gintis, and Osborne (2002a)... is 0.15, indicating that a [one] standard deviation change in the cognitive score, holding constant... remaining variables... changes... earnings by about one-seventh of a standard deviation.... An estimate of the causal impact of childhood IQ on years of schooling... is 0.53 (Winship and Korenman 1999). A rough estimate of the direct and indirect effect of IQ on earnings... is then... 0.15+(0.53)(0.22) = 0.266....

h is the heritability of IQ.... The value cannot be higher than 1, and most recent estimates are substantially lower, possibly more like a half or less.... [C]ouples tend to be more similar in IQ than would occur by random mate choice.... [The] genetic correlation of parent and offspring [is] (1 + m)/2....

Using the values estimated above, we see that the contribution of genetic inheritance of IQ to the intergenerational transmission of income is (h2(1+m)/2)(0.266)2 = .035(1 + m)h2. If the heritability of IQ were 0.5 and the degree of assortation, m, were 0.2 (both reasonable, if only ball park estimates) and the genetic inheritance of IQ were the only mechanism accounting for intergenerational income transmission, then the intergenerational correlation [of lifetime income] would be 0.01, or roughly two percent the observed intergenerational correlation [of lifetime income between parents and children].

Two percent is simply not a large number. Factors that currently account for two percent of lifetime earnings inequality are simply not yet a big deal, and cannot be responsible for the fall in social mobility.

If there is ever to be a genetic elite, its members will surely exhibit two behavioral traits: a facility with math, and a near-intinctive tendency to do back-of-the-envelope quantitative checks of assertions. We can conclude only one thing from Barone's column: neither he nor his descendents (unless they get really lucky in their mates) are plausible candidates for membership in any "genetic elite".

It is worth pointing out that neither Richard Herrnstein nor Charles Murray are plausible candidates for membership in any "genetic elite" either. Let me turn the microphone over to impeccably right-wing Jim Heckman, who comments on The Bell Curve:

The Book fails for five main reasons. 1. The central premise of this book is the empirically incorrect claim that a single factor - g or IQ - that explains linear correlations among test scores is primarily responsible for differences in individual performance in society at large.... There is much evidence that more than one factor -- as conventionally measured -- is required to explain conventional correlation matrices among test scores.... They do not emphasize how little of the variation in social outcomes is explained by AFQT or g. There is considerable room for factors other than their measure of ability to explain wages and other social outcomes. 2. In their empirical work, the authors assume that AFQT is a measure of immutable native intelligence. In fact, AFQT is an achievement test that can be manipulated by educational interventions. 3. The authors[']... implicit assumption of an immutable g that is all-powerful in determining social outcomes leads them to disregard a lot of evidence that a variety of relevant labor market and social skills can be improved. 4. The authors present no new evidence on the heritability of IQ or other socially productive characteristics.... [T]hey... [compare] IQ... [to] a crude measure of parental environmental influences. This comparison is misleading. It fails to recognize the crudity of their environmental measures and the environmental component that is built into their measure of IQ, which biases the evidence in favor of their position. Moreover, the comparison as they present it is intrinsically meaningless. 5. Finally, the authors' forecast of social trends is pure speculation... the social policy recommendations have an ad hoc flavor to them.... The appeal to Murray's version of communitarianism as a solution to the emerging problem of inequality among persons is a deus ex machina flight of fancy that is not credibly justified.

And take a look at http://www.j-bradford-delong.net/movable_type/2003_archives/001975.html as well.

Posted by DeLong at 09:35 PM | Comments (0) | TrackBack

Fool Me Once, Shame on You...

Paul Krugman says that the Bush record on Social Security reform carries important lessons. For, in the words of George W. Bush: "Fool me once, shame on you. Fool me... fool me twice... [pause] We can't get fooled again!"

Social Security Lessons - New York Times: I'd like to revisit Social Security for a moment, because it's important to remember what Mr. Bush tried to get away with. Many pundits and editorial boards still give Mr. Bush credit for trying to "reform" Social Security. In fact, Mr. Bush came to bury Social Security.... Over time, the Bush plan would have transformed Social Security from a social insurance program into a mutual fund, with nothing except a name in common with the system F.D.R. created.

In addition to misrepresenting his goals, Mr. Bush repeatedly lied about the current system. Oh, I'm sorry - was that a rude thing to say? Still, the fact is that Mr. Bush repeatedly said things that were demonstrably false and that his staff must have known were false.... [T]he administration politicized the Social Security Administration and used taxpayer money to promote a partisan agenda. Social Security officials participated in what were in effect taxpayer-financed political rallies, from which skeptical members of the public were excluded....

[This] is still going on. Last week Jo Anne Barnhart, the commissioner of Social Security, published an op-ed article claiming that Social Security as we know it was designed for a society in which people didn't live long enough to collect a lot of benefits. "The number of older Americans living now," wrote Ms. Barnhart, "is greater than anyone could have imagined in 1935." Now, it turns out that an article on the Social Security Administration's Web site, "Life Expectancy for Social Security," specifically rejects the idea the Social Security was originally "designed in such a way that few people would collect the benefits," and the related idea that the system faces problems from "a supposed dramatic increase in life expectancy in recent years." And the current number of older Americans as a share of the population is just about what the founders of Social Security expected. The 1934 report... projected that 12.7 percent of Americans would be 65 or older by the year 2000. The actual number was 12.4 percent....

[T]he campaign for privatization provided an object lesson in how the administration sells its policies: by misrepresenting its goals, lying about the facts and abusing its control of government agencies. These were the same tactics used to sell both tax cuts and the Iraq war. And there are two reasons to study that lesson. One is to be prepared.... [T]here's still room for another big domestic initiative, probably tax reform. Forewarned is forearmed: the real goals of reform won't be as advertised, the administration will say things about the current system that aren't true, and the Treasury Department will function in a purely partisan capacity...

Posted by DeLong at 09:32 PM | Comments (0) | TrackBack

The Reality-Based Community

Ah. At least one member of the Bush administration wants to rejoin the reality-based community. Of course, he cannot admit in public that he wants to "shed the unreality" and still keep his job.

Kevin Drum reports:

The Washington Monthly: REALITY vs. UNREALITY.... The Bush administration, then and now:

Summer 2002, a senior Bush official to Ron Suskind: "[Establishment liberals] believe that solutions emerge from your judicious study of discernible reality. That's not the way the world really works anymore. We're an empire now, and when we act, we create our own reality."

Summer 2005, a senior Bush official to Robin Wright and Ellen Knickmeyer: "What we expected to achieve [in Iraq] was never realistic given the timetable or what unfolded on the ground. We are in a process of absorbing the factors of the situation we're in and shedding the unreality that dominated at the beginning."

Posted by DeLong at 09:29 PM | Comments (0) | TrackBack

Kitten Blood

From Lindsay Beyerstein, I learn that:

Majikthise : Puppy blood: Eugene Volokh affirm[s] that the Iraqi insurgency is bad and emphasize[s] that Westerns who make excuses for brutal theocratic thuggery are bad, too. [He a]cknowledge[s], when pressed, that there are very, very few Westerners in this category, but insist[s] that these people are nevertheless bad. Bravo.

Let me say "Bravo" to Eugene as well. That is a brave and true thing for him to be willing to say.

I for one, would like to also denounce adherents of the Republican Party who pretend to "adopt" kittens from animal shelters, and then kill them and dissect their little kittenish bodies with knives. I acknowledge that rather few Republicans are in this category, but I insist that these people are very bad.

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

Why Oh Why Are We Ruled by These Incompetents? (Support Our Troops Edition)

Fire Donald Rumsfeld. Impeach George W. Bush. Impeach Richard Cheney. Do it now.

U.S. Struggling to Get Soldiers Improved Armor - New York Times: MICHAEL MOSS: [T]he Pentagon is struggling to replace body armor that is failing to protect American troops from the most lethal attacks by insurgents. The ceramic plates in vests worn by most personnel cannot withstand certain munitions the insurgents use. But more than a year after military officials initiated an effort to replace the armor with thicker, more resistant plates, tens of thousands of soldiers are still without the stronger protection because of a string of delays in the Pentagon's procurement system....

"We are working as fast as we can to complete it as soon as we can," Maj. Gen. Jeffrey A. Sorenson, the Army's deputy for acquisition and systems management, said Wednesday in an interview at the Pentagon.... [B]ody armor remains critical to the military's goals in Iraq. Gunfire has killed at least 325 troops, about half the number killed by bombs, according to the Pentagon.... [T]he Pentagon is relying on a cottage industry of small armor makers with limited production capacity. In addition, each company must independently come up with its own design for the plates, which then undergo military testing. Just four vendors have begun making the enhanced armor, according to military and industry officials.... "Nobody is happy we haven't been able to do it faster," Maj. Gen. William D. Catto, head of the Marine Corps Systems Command, said Wednesday in the interview. "If I had the capability, I'd like to see everybody that needs enhanced SAPI to have it and at the rate we have now, we're going to have months before we get the kind of aggregate numbers we want to have," General Catto said, referring to the thicker plates, known as the Enhanced Small Arms Protective Insert. "That's just a fact of life because of the raw materials paucity and the industrial base."...

Body armor arose as an issue in Iraq shortly after the invasion in March 2003, when insurgents began attacking American troops who had been given only vests and not bullet-resistant plates. The Army had planned to give the plates only to frontline soldiers. Officials now concede that they underestimated the insurgency's strength and commitment to fighting a war in which there are no back lines. The ensuing scramble to produce more plates was marred by a series of missteps in which the Pentagon gave one contract to a former Army researcher who had never mass-produced anything. He was allowed to struggle with production for a year before he gave up. An outdated delivery plan slowed the arrival of plates that were made. In all, the war was 10 months old before every soldier in Iraq had plates in late January 2004.

Four months later, the Pentagon quietly issued a solicitation for the enhanced plates that would resist stronger attacks. At the same time, it worked to make improvements to the vests, including adding shoulder and side protection...

Posted by DeLong at 09:26 PM | Comments (0) | TrackBack

WSJ.com - High Oil Prices Put Pressure On U.S. Trade Balance in June

Yes. The dollar is overvalued:

WSJ.com - High Oil Prices Put Pressure on U.S. Trade Balance in June: Soaring prices and high demand for foreign crude oil put renewed pressure on the U.S. trade balance in June, the government reported Friday.... The Commerce Department said the U.S. deficit in international trade of goods and services grew 6.1% to $58.82 billion. Exports were basically unchanged, advancing to $106.83 billion from $106.78 billion in May, and imports rose 2.1% to $165.65 billion, a record high.... The value of crude-oil imports rose to a record $14.58 billion in June as the average price per barrel climbed $1.32 to $44.40. That marked the second highest price ever; the highest was $44.76 in April.... The U.S. paid $19.93 billion for all types of energy-related imports in June.... Deficits with major trading partners also got bigger in June, Commerce said. The U.S. shortfall with China widened to $17.59 billion from May's $15.75 billion. The U.S. trade deficit with Japan grew to $6.95 billion from $6.58 billion in May. The trade gap with the euro area increased to $8.19 billion from $8.12 billion. The deficit with Canada widened to $5.40 billion from $4.75 billion. The U.S. gap with Mexico rose to $4.76 billion from $4.48 billion....

Posted by DeLong at 09:24 PM | Comments (0) | TrackBack

National Review Strikes Again!

Mark Thoma http://economistsview.typepad.com/ tells us that the know-nothings at National Review are launching hit pieces on Ben Bernanke. Mark attempts the tas of cleaning out the entire stable. I'm just going to deal with the first piece of horsesh-t I come across:

John Tamny on Ben Bernanke and the Federal Reserve on NRO Financial: Bernanke asked how much demand in the latest quarter “appears to have been satisfied out of inventories rather than from new production.” But supply-siders don’t even consider this — they don’t because they know that products are ultimately bought with other products. “Demand” will always exist, as human wants are unlimited. But what Bernanke deems “demand” is in fact producers offering up their surpluses for those of others. In the supply-side model, what Bernanke sees as a fall in aggregate demand is in fact a fall in production — something supply-siders agree results from governmental meddling along the lines of excessive taxation, regulation, and unstable money...

Bernanke's point is that in the second quarter households, the government, and investing businesses bought one-half percent more goods and services than U.S. producers made and U.S. businesses (net) imported. Thus inventories are now below levels that businesses think they need to run their operations efficiently. In the next several quarters, therefore, businesses are going to ramp up production in order to build their inventories back to a comfortable level. This is an important thing to notice. It is not a contentious or a disputed point--except to the likes of John Tamny.

Tamny is enraged that Bernanke is thinking about fluctuations in employment and capacity utilization at all. We, Tamny says, "don't even consider this" because "'[d]emand' will always exist, as human wants are unlimited.... [W]hat Bernanke sees as a fall in aggregate demand is in fact a fall in production..." Let us not comment on the fact that Tamny is too stupid to notice that what Bernanke is talking about is not a fall but a rise in aggregate demand: that's just too embarrassing for words. Let us, instead, comment that Bernanke is talking about a fact about the world--that spending was larger than production in the second quarter. And Tamny's response is that that fact doesn't exist: because "products are ultimately bought with other products," spending cannot be anything other than equal to production. In Tamny's world, theory proves that fluctuations in unemployment and capacity utilization are logically impossible.

Now there was an economic theory that held that fluctuations in unemployment and capacity utilization were logically impossible: that supply was automatically equal to demand. That theory is called "Say's Law," after nineteenth-century French economist Jean-Baptiste Say. That theory wrong: there are fluctuations in unemployment and capacity utilization. And because that theory is wrong, we have the Federal Reserve. One way to think about the Federal Reserve's mission is that it's job is to try to make sure that spending is matched to production--to make Say's Law true in practice, even though it is not true in theory.

Bernanke's attention to the details of aggregate demand is, of course, on of the reasons that he is exceptionally highly qualified to chair the Federal Reserve.

Posted by DeLong at 09:23 PM | Comments (0) | TrackBack

Mirrors of Wildernesses

Kevin Drum writes:

The Washington Monthly: STATE DEPARTMENT MEMO UPDATE....Walter Pincus is too subtle for me, but I think Armando at Daily Kos may have correctly deconstructed the point of Pincus's story today about who sent Joe Wilson to Niger. Here's the nickel version:

  1. In July 2003, Karl Rove and Scooter Libby told reporters that Wilson's wife, Valerie Plame, had been responsible for sending him on his fact finding trip to Niger the previous year.
  2. However, virtually every source says that's not true. The CIA maintains that senior officials in the counterproliferation division chose Wilson, and that Plame's only role was to write a memo about his credentials that they asked her to write.
  3. In fact, as of July 2003, there was only one source that said the trip was Plame's idea: the State Department's Bureau of Intelligence and Research, which had written a memo in June about the affair.
  4. Therefore, that State Department memo must have been Rove and Libby's source of information about Plame -- and if that's the case, it's bad news for the White House since the memo clearly marked the information about Plame as classified. (Further tidbit: Is it possible that this memo was what Rove was talking about when he told Time's Matt Cooper that "material was going to be declassified in the coming days that would cast doubt on Wilson's mission"?)

Do I believe this theory? Maybe. It certainly sounds plausible. Do I believe this was Pincus's point in writing his article? Possibly.

Posted by DeLong at 09:22 PM | Comments (0) | TrackBack

Film

Well, after getting the children to think that we might actually know something about movies with "Doctor Strangelove," we then blew our credibility sky-high with "2001: A Space Odyssey."

Will "American Graffiti" restore our credibility, or further damage it?

Posted by DeLong at 09:21 PM | Comments (0) | TrackBack

Views on the Greenspan Succession

Tim Annett takes a poll of economists:

Tim Annett: Economists were divided on the question of whom they would prefer succeed Mr. Greenspan, who is expected to retire from the Fed early next year. Ben Bernanke, a former Fed governor and current chairman of President Bush's Council of Economic Advisors, drew the support of 30% of the economists, while Martin Feldstein, president of the National Bureau of Economic Research, and Fed governor Donald Kohn each received the backing of 15% of the group. Former White House economic advisor and Columbia University professor Glenn Hubbard and Clinton administration Treasury Secretary Robert Rubin each were selected by 11% of the group...

Posted by DeLong at 09:16 PM | Comments (0) | TrackBack

Global Excess Liquidity?

I don't understand the argument that even though inflation is not accelerating, the world nevertheless suffers from "global excess liquidity":

Economics focus | A working model | Economist.com: Is the world experiencing excess saving or excess liquidity?: WHEN The Economist's economics editor studied macroeconomics in the 1970s, the basic model for understanding swings in demand was the so-called IS-LM framework, invented by Sir John Hicks in 1937 as an interpretation of Keynes's General Theory. In recent years it has gone out of fashion.... That is a pity, for... the model... casts useful light on why bond yields are so low.

America's Federal Reserve raised short-term interest rates again this week, to 3.5%, its tenth increase since June 2004. Yet over that period, long-term bond yields have fallen.... The most popular explanation is that there is a global glut of savings, which has driven yields down.... An alternative explanation, preferred by some economists, is that bond prices, like other asset prices, have simply been pushed up by excess liquidity....

The IS-LM model helps us to understand these two opposing theories.... The IS (investment/saving) curve represents equilibrium in product markets, showing combinations of output and interest rates at which investment equals saving and hence the demand for goods and services equals supply. The IS curve slopes downwards, because a higher interest rate reduces spending.... The LM (liquidity/money) curve represents equilibrium in the money market, showing combinations of output and interest rates where the demand for holding money, rather than interest-bearing assets, such as bonds, equals the supply of money. This curve slopes upwards, because a rise in income increases the demand for money and so raises the interest rate.... The point at which the two curves intersect is the only combination of output and interest rates (ie, bond yields) where both the goods and financial markets are in balance....

The left-hand chart shows the economy in equilibrium at interest rate r1 and output Y1. If desired saving increases relative to investment (ie, there is excess saving), the IS curve shifts to the left to IS2. Interest rates fall (to r2), and so also will output (to Y2). This does not fit the current facts: last year the world economy grew at its fastest pace for almost three decades, and this year remains well above its long-term average growth rate. The right-hand chart illustrates the alternative theory. A loose global monetary policy shifts the LM curve to the right, to LM2. Bond yields again fall, to r3, but this time output increases. In contrast to a shift in the IS curve, the economy has instead moved along the IS curve: lower interest rates stimulate global output and hence investment. This seems to fit the facts much more comfortably....

From my point of view, the Economist's story is incomplete. As the Economist admits, the "two theories are not mutually exclusive." What happened was not a rise in savings, but a fall in investment as first the collapse of the dot-com bubble and then 9/11 increased uncertainty and diminished businesses' willingness to undertake risky investments. That shifted the IS curve to the left. In response, the Federal Reserve (and other central banks) shifted to easy money--shifted the LM curve out--like so:

Are interest rates now "too low"? The usual answer is that interest rates are too low when inflation is accelerating. As long as inflation is stable, that means that the supply of goods and services is roughly equal to the demand for goods and services (if demand were outrunning supply, inflation would be accelerating). Inflation is roughly stable. So what's the worry?

The Economist thinks there is a worry:

[C]entral banks have created too much liquidity. Despite rising short-term interest rates in America, monetary policy is still unusually expansionary. Average short-term rates in America, Europe and Japan have remained below nominal GDP growth for the longest period since the 1970s. In addition, America's loose policy has been amplified by the build-up in foreign-exchange reserves and domestic liquidity in countries that have tied their currencies to the dollar, notably China and the rest of Asia. As a result, over the past couple of years, global liquidity has expanded at its fastest pace for three decades. If you flood the world with money, it has to go somewhere, and some of it has gone into bonds, resulting in lower yields. Or, more strictly, bond prices have been bid up until yields are so low that people are happy to hold the increased supply of money...

But if it's not producing accelerating inflation, and if higher interest rates would produce higher unemployment, what's the problem?

Where I see the potential problem is that the dollar is overvalued and may--any moment--fall by 40% or more, should international currency speculators decide that the dollar's run is over and should central banks decide that keeping the value of the dollar high is now too expensive. The United States currently imports 16% of GDP. A 40% price rise in 16% of GDP is a one-shot 6 percentage point increase in the price level. The Federal Reserve is not going to let the inflation rate jump far above 3% per year: it will respond to a falling value of the dollar and the resulting accelerating inflation by raising interest rates far and fast. Thus should a sudden 40% (or more) fall in the dollar take place, a big recession follows.

The way to try to head off this potential problem is to try to make sure that the decline in the dollar takes place slowly and gradually. Slowly shrink the federal government budget deficit--even move the government budget into surplus. Take other steps to shrink gross domestic purchases relative to gross domestic product. Allow other currencies to slowly appreciate relative to the dollar so that the supply shock delivered by dollar decline is spread out and small in any one time period.

But raising interest rates is not a way to head off this potential problem. A balanced increase in interest rates would not affect the dollar, and leave the dollar overvaluation problem as serious as ever. An increase in U.S. interest rates would make dollar-denominated assets more attractive, and increase the magnitude of the dollar valuation problem. An increase in U.S. interest rates would raise U.S. unemployment. And to what gain?

Posted by DeLong at 09:14 PM | Comments (0) | TrackBack

Snarky!

The Washington Post's Sam Coates snarks out:

The Art of Telling Parties Apart: We have, it appears, a new way of distinguishing Republicans from Democrats, at least in the federal city. It emerged last week... from Tim Goeglein, White House deputy director of public liaison.... Not one [Democratic] parent, [Goeglein] said, gave an answer that would be more typical of Republicans. "Our party, in the way it is constituted, we think of medicine, we think of law, we think of business. We don't think, gee, I hope my son grows up to be a great playwright or painter or poet," he explained.

Whether a future government employee, a bureaucrat, would win the approval of a GOP parent, he did not say.

For Goeglein himself is neither a doctor, nor a lawyer, nor an entrepreneur. He has, since graduating from Indiana University, been a congressional flack, a campaign worker, and a bureaucrat--none of them things any Republican parent would approve of.

What Republican lawyer, doctor, or entrepreneur does Coates turn to next for comment? To none, of course: he turns to Republican litterateur Mark Helprin, who has a child "at Harvard studying classics -- 'not exactly law or medicine' -- while the other," a future bureaucrat, "is studying public health at Johns Hopkins."

And then Helprin says that if you are concerned mainly with the humanities "you don't have time to study how the world works. And if you have no understanding of economics, strategy, history and politics, then naturally you would be a liberal."

Helprin--of course--doesn't explain his own politics, for he has no understanding of economics, strategy, history, or politics, and yet is a conservative.

Sam Coates gets a +7 on the snarkiness meter.

Posted by DeLong at 09:13 PM | Comments (0) | TrackBack

Berkeley Economics Fall 2005 Scheduling Anomalies

Basically, we need to have the flexibility of a quarter system. So we are slowly creeping in that direction:

Scheduling Anomalies:

ECON 204 meets Monday-Friday August 8-26 with lectures from 1-4:00 in 250 GSPP. Sections will be announced in the first lecture.

ECON 210A begins October 19 and meets Wednesdays from 12:00-2:00 in 608-7 Evans Hall. Students do not officially enroll in this course until Spring 2006.

ECON 295 begins October 17 and meets Mondays from 12:00-2:00 in 608-7 Evans Hall.

Posted by DeLong at 09:02 PM | Comments (0) | TrackBack

Unstructured Procrastination

I usually am quite good at structured procrastination--working not on the thing that is most immediate and imminent on my calendar, but on the priority #3 or #4 that is actually more important in the long run and that excites me at the moment. But today this system has broken down. I have done something nobody should ever do: I have spent an hour thinking about Louis Althusser.

It's all Michael Berube's fault, but its worth it, for (highlighted below) he has the best paragraph on Louis Althusser ever written. The rest is (or ought to be) silence:

Michael Berube: ...the otherwise incomprehensible question of why anyone would think it necessary to devise a “structuralist Marxism.” Structuralism is so antipathetic to all questions of hermeneutics and historicity that one might imagine the desire for a structuralist Marxism to be something like a hankering for really spicy ice cream. And yet, in the work of Louis Althusser, spicy ice cream is exactly what we have. I don’t like it myself. But because it’s an important byway in the history of ice cream—-er, I mean the history of Marxist theory—-I still find it necessary to tell students about it, partly in order to warn them that it will very likely leave a bad taste in their mouths.... [L]et’s not jump ahead just yet; let’s work to get that bad taste in our mouths first....

[A]s Tony Judt pointed out in a devastating review of Althusser’s career (in the March 7, 1994 issue of The New Republic), Althusserian Marxism was, for a brief period, a lingua franca spoken widely on the Continent:

When I arrived in Paris as a graduate student in the late ‘60s, I was skeptically curious to see and to hear Louis Althusser. In charge of the teaching of philosophy at the Ecole Normale Superieure, the French elite academy for future teachers and leaders, Althusser was touted by everyone I met as a man of extraordinary gifts, who was transforming our understanding of Marx and reshaping revolutionary theory. His name, his ideas, his books were everywhere....

In the past, I’ve directed my students to Judt’s review as well as to various accounts (including Althusser’s) of Althusser’s late “confessions”—-that he was poorly read in Marx, that he suffered from lifelong mental illness, that his so-called “symptomatic” readings in Marxism were little more than an elaborate way of making shit up. I’ve done this... [in part] to complicate the view of Althusser one gets in the Norton, where the headnote tells us that “Althusser’s major concepts—-‘ideological state apparatuses,’ ‘interpellation,’ ‘imaginary relations,’ and ‘overdetermination’—-permeate the discourse of contemporary literary and cultural theory, and his theory of ideology has influenced virtually all subsequent serious work on the topic”.... [Presume] Althusser was speaking the truth about his lack of familiarity with the Marxist canon, and that his mental illness played a large role in his life and work. (Hardcore Althusserians have tried to set aside his “confessions” precisely by appealing to his history of mental illness, but this merely produces a Marxist-theory version of the Cretan liar’s paradox: of course you can’t believe a madman who tells you he’s mad.)...

Let nobody mistake me: I do not have a single good word to say for Louis Althusser. But at least one of Karl Marx's own Marxisms was a "structuralist Marxism" from the very beginning. Let's let German Charlie from Trier speak for himself:

To prevent possible misunderstanding, a word: I paint the capitalist and the landlord in no sense with rosy colors. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.

What Marx is saying here is that capitalists and landlords act as they do in large part because the process by which they have been raised, educated, and socialized makes it almost impossible for them to think that they should act otherwise. And, to the extent that they do wonder whether they should act otherwise, they cannot do so--not without losing their fortunes, their businesses, and their jobs, and being replaced by those who do act in a manner consistent with maintaining their economic roles. The immorality of capitalism, for Marx, lies not in the evil acts of individuals (who for the most part think that they are dealing "fairly"--buying and selling at market prices) but in the workings of the system in which they are embedded. In short:

Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like an Alp on the brains of the living.

That's "structuralism." (Now that's not all of Marx, and things like the Eighteenth Brumaire (1) are most interesting where they deviate from and build on the technology-economics-class interests-class politics structuralism that is at the bottom of the mature Marx's analysis. But that structuralism of the "base" does exist, and the more subtle analysis of the "superstructure" is built on top of and conditioned by it in a perturbation-theory way.)

I think that the attraction of Althusser lay in a very different core: Althusser's Marxism was attractive not because it was "structuralist" but because it was, as E.P. Thompson put it, "idealist."

Let me explain.

In the 1930s the Great Depression made it very easy to be a Communist: no matter what the criticism, you could answer it with, "Oh yeah? And you'd rather have the system that gave us the Great Depression." In the 1940s the extraordinary suffering of Russia during World War II and the great victories won by the Red Army made it easy to be a Communist: no matter what the criticism, you could answer it with, "Oh yeah? Without the factories of Magnitogorsk that Stalin built, Hitler would still be in Paris." (And it is certainly true that the world owes an enormous debt to the soldiers of the Red Army and the workers of Magnitogorsk that it has never honored.)

By the 1960s, it was much harder to be a Communist. The workers' uprisings were all east of the Iron Curtain--Hungary 1956, East Germany 1953. The living standard gap between the democratic industrial west and the dictatorial centrally-planned east was growing. Khrushchev was saying that Stalin was not as bad as right-wing propaganda had imagined: he was worse. Mao had starved tens of millions of people to death, did not fear nuclear war, and was launching the Cultural Revolution. And relations between the Soviet Union and China were very bad: Khrushchev and Brezhnev had more fear of (and had more reason to have fear of) Mao's atomic bombs than Johnson or Nixon did. The Marxist-Leninist theory of historical development had gone off the rails. Where was the increasing immiserization of the working class? Where was the increasingly violent struggle between imperialists for colonies whose markets they could dominate? Where was the increasing domestic political repression as working-class parties gained grass-roots strength? Where were the increasingly-violent political crises?

The easiest way, in the 1960s, to deal with all these criticisms that the Marxian framework did not explain what was going on in world politics and economics was to throw out the belief that Marxism was a set of ideas to help one understand the world, and to replace it with the belief that Marxism was the study of certain texts--that it was a logical and philosophical mistake to even ask the question of whether Marx's ideal types were a close match to actual historical developments. That's the key thing that Althusser did: he gave his students and acolytes an excuse to ignore the real economics and politics of the world, and to burrow into their own self-contained warrens of discourse.


(1) It is really unfair not to talk about the Eighteenth Brumaire here, and how Marx's attempt to understand the rise of Napoleon III is an analysis of ideological "hegemony" and "false consciousness" that provides at least as useful a pattern as one can get out of Gramsci and far more useful than one can get out of Althusser, but I've wasted too much time on this already.

Posted by DeLong at 08:47 PM | Comments (0) | TrackBack

"When Johhny Comes Marching Home" Lyrics

We were watching "Doctor Strangelove," and it turned out neither of the kids knew the original words to the background song:

"Johhny I Hardly Knew Ye" Lyrics:

While goin' the road to sweet Athy, hurroo, hurroo
While goin' the road to sweet Athy, hurroo, hurroo
While goin' the road to sweet Athy
A stick in me hand and a drop in me eye
A doleful damsel I heard cry,
Johnny I hardly knew ye.

With your drums and guns and drums and guns, hurroo, hurroo
With your drums and guns and drums and guns, hurroo, hurroo
With your drums and guns and drums and guns
The enemy nearly slew ye
Oh my darling dear, Ye look so queer
Johnny I hardly knew ye.

Where are your eyes that were so mild, hurroo, hurroo
Where are your eyes that were so mild, hurroo, hurroo
Where are your eyes that were so mild
When my heart you so beguiled
Why did ye run from me and the child
Oh Johnny, I hardly knew ye.

Where are your legs that used to run, hurroo, hurroo
Where are your legs that used to run, hurroo, hurroo
Where are your legs that used to run
When you went for to carry a gun
Indeed your dancing days are done
Oh Johnny, I hardly knew ye.

I'm happy for to see ye home, hurroo, hurroo
I'm happy for to see ye home, hurroo, hurroo
I'm happy for to see ye home
All from the island of Sulloon
So low in flesh, so high in bone
Oh Johnny I hardly knew ye.

Ye haven't an arm, ye haven't a leg, hurroo, hurroo
Ye haven't an arm, ye haven't a leg, hurroo, hurroo
Ye haven't an arm, ye haven't a leg
Ye're an armless, boneless, chickenless egg
Ye'll have to put with a bowl out to beg
Oh Johnny I hardly knew ye.

They're rolling out the guns again, hurroo, hurroo
They're rolling out the guns again, hurroo, hurroo
They're rolling out the guns again
But they never will take our sons again
No they never will take our sons again
Johnny I'm swearing to ye.

Posted by DeLong at 08:45 PM | Comments (0) | TrackBack

The Future of South Africa

Tim Burke writes:

Easily Distracted: South Africa'9s Deputy President Phumzile Mlambo-Ngcuka comments http://www.iol.co.za/index.php?set_id=1&click_id=13&art_id=qw112369500781B225 that South Africa can learn a lot from Zimbabwe's land reform, namely, how to do it faster. South Africa needs a bit of "oomph"D she says, and maybe should get some colleagues from Zimbabwe to come and advise on how to get that oomph. Polite laughter.

South Africa's an interesting case. Can a constitutional process of transition, a good political precedent in the practices of the first democratically elected leader, a political culture that prizes dissent, and the best hopes of many millions be enough to keep the consistently bad impulses of nationalist political leaders from self-destruction?

The examples of Botswana and Mauritius tell us that it is possible.

Posted by DeLong at 08:43 PM | Comments (0) | TrackBack

Continuing Labor Market Disappointment

Gene Sperling writes:

Bloomberg Columnists: No one would argue that the 207,000 gain in jobs in July beat both market expectations and was a vast improvement over typical monthly job growth during this recovery. Yet... everyone got so used to dismal job growth... that diminished expectation led many to cheer any report that was into six digits.

Consider the following: during the previous four recoveries that lasted 44 months or longer, job growth averaged 11 percent by this point. With today's workforce, that job growth rate would have meant an average of 285,000 jobs a month. But job growth in this recovery has been a fifth that rate.... I don't claim to fully understand why job growth has been so weak. But we should be willing to acknowledge its weakness and ask... "why is this job recovery weaker than all other job recoveries?"

It would be simplistic and unfair to suggest that the sole cause for such weak job performance is President George W. Bush's economic policies. It would be even more over the top to point to these weak job numbers as proof that Bush's policies are a raging success. What we need is a sober analysis of whether policies are impairing job growth or hindering a job market characterized by stagnant wages, low participation in the labor force and long-term unemployment.... [L]et's at least acknowledge these are not great times for job growth and debate why and what we might do about it.

Posted by DeLong at 08:39 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Incompetents? (Bush Labor Department Issue)

David Wessel writes about the drawbacks of having the government run by people who don't care whether or not its programs work:

WSJ.com - Capital: To qualify for wage insurance, a group of workers must declare interest when they apply for conventional trade aid, and then must show they lack easily transferable skills, a very hard-to-interpret standard.... [T]he ball moved to the Labor Department, which waited until the day the law said the program was to begin... to issue guidelines.... 38 states reported "at least some difficulty" in implementing the program....

Initially, the Labor Department trade-adjustment-assistance application form didn't even include a box to check to apply for wage insurance... the current form still requires employers... to know what "alternative trade adjustment assistance" is.

Workers laid off by VF Intimates LP of Johnstown, Pa., were denied wage insurance in September 2004 because no one checked the box. After eight months of back and forth... the [Labor] department reversed itself in May and declared the workers eligible.... [I]n contrast to some other Labor programs, wage insurance gets surprisingly little marketing. "Our federal partners haven't issued flyers or anything like that," says Curtis Morrow of North Carolina's Employment Security Commission. The Labor Department's Web site is far from user-friendly, in contrast to Agriculture and Commerce department sites for aid to farmers and firms hurt by trade.

Howard Rosen, a former Democratic congressional staffer long involved with helping workers hurt by trade, is baffled and frustrated by the administration's lack of enthusiasm for what he deems the most efficient way to help dislocated workers because it nudges them back to work. "I just wish the Labor Department was as aggressive in pursuing trade adjustment assistance as the U.S. Trade Representative is in pursuing free-trade agreements," he says.

Calling attention to workers hurt by trade is uncomfortable for free traders. They prefer to focus on benefits of low-cost imports and high-paying export jobs. But the only way to persuade the public and politicians not to erect barriers to globalization and trade is to equip young workers to compete and protect older workers who are harmed. Creating programs with a few votes in Congress, and then botching the execution, doesn't help.

Posted by DeLong at 08:36 PM | Comments (0) | TrackBack

Economics Weblogs

Barry Ritholtz of The Big Picture points us to Agnes Craine:

WSJ.com - Tracking the Numbers: [T]he floodgates are really open: The economists -- including prominent names from universities and even the Federal Reserve -- have started blogging, posting their thoughts on the Web on a variety of things, including the rise in oil prices and the future of interest rates. While many investors continue to take their cues from traditional outlets, the real news junkies -- including those who aim to get a trading idea before they hear about it from their broker -- have bookmarked the blogs, or Web logs. Even Wall Street itself is paying heed. "It's all about the 'memes,' " says Stan Jonas, head of interest rate strategy at Fimat USA in New York, employing a word that describes ideas that spread quickly by word of mouth -- or Web. "Those guys say it and about a week or two later, the guys on Wall Street pick it up."...

A current favorite is Econbrowser (www.econbrowser.com), penned by James Hamilton, a professor of economics at the University of California, San Diego, and a well-respected oil watcher. Because bloggers provide a multitude of quick-links to other online postings, a thought developed in one place can quickly jump to other sites at the click of a mouse. Investors get a variety of views and ideas -- and the bloggers get exposure. "This linking business is like a virus," says David Altig, economist and associate director of research at the Federal Reserve Bank of Cleveland who launched his site, Macroblog (http://macroblog.typepad.com), a year ago. "I linked to somebody who started reading. Somewhere down the line, he linked to me. Then I became very visible."

Visibility is what counts for many of these economists who, like other bloggers, have turned to this medium precisely to get their voices heard. "Nobody was asking me to write a column, and almost all previous attempts to even publish op-eds were denied," says Andrew Samwick, professor of economics at Dartmouth College, also known as Vox Baby (voxbaby.blogspot.com) Now he has total autonomy -- and readers.

The top blogs in terms of the number of daily visits, still belong to those writing about politics. But the economists are making headway. Longtime blogger Brad DeLong (http://www.j-bradford-delong.net/movable_type), a professor of economics at the University of California at Berkeley and Barry Ritholtz, chief market strategist at the Maxim Group and the man behind The Big Picture (http://bigpicture.typepad.com), have cracked the top 100, according to Web site http://www.truthlaidbear.com, which tracks blog traffic. Dailykos.com, a left-leaning political blog, is still No. 1.

Most economics blogs have a bias. Some even read like rants. But the medium has given voice to those that have been drowned out by established venues. And that means trading ideas. The more sober blogs, meanwhile, lend legitimacy to the medium.

Mr. Hamilton only began Econbrowser this summer, but he's already much read by his peers, and others value his analysis and frequent posts. "I did it in part because all my career I've been following oil markets," he says. Bloggers themselves also benefit from the contact with readers.

"On a professional level, I've been making contacts that I would have never made before," says Mark Thoma, associate professor of economics at the University of Oregon, Eugene. Mr. Thoma is also a self-described left-of-center Democrat and author of http://economistsview.typepad.com....

"I haven't stepped foot in a library in five years," says Nouriel Roubini, associate professor of economics at New York University's Stern School of Business and founder of the site Roubini Global Economics Monitor (http://www.stern.nyu.edu/globalmacro), a one-stop Web site of economics research and blogs.For years investors have had pretty good access to the finest economic thinkers, via research reports and print and television media.

Posted by DeLong at 08:34 PM | Comments (0) | TrackBack

Mark A. R. Kleiman Has Decided that John Roberts Does Not Belong on the Supreme Court

He writes:

Mark A. R. Kleiman: Roberts and the abortion brief: [T]he amicus [brief] was filed in support of Operation Rescue, hardly a peaceful protest movement... a civil jury in Chicago found that Operation Rescue was a racketeering enterprise.... Eugene Volokh points out that the Court, by 6-3, upheld the position in the brief, and argues that therefore the brief can't be said to have been outside the mainstream of legal thinking. Fair enough.

But that brief had political as well as legal meanings. Operation Rescue was then engaged in a violent, and largely successful, attempt to deny access to abortion to as many women as possible by closing down the clinics. The attorneys general of Virginia and New York both filed amici arguing that their states lacked the capacity to fight off Operation Rescue's efforts.

The Solicitor General's office was under no obligation to file an amicus in a civil lawsuit. Ask yourself whether the SG's office would have intervened similarly in a case involving violent protesters against U.S. support of the Contras, or Earth First, or the Animal Liberation Front, or Al Sharpton's shake-down crew, whatever the legal merits. No, I don't think so either.

If the Bush I Administration had in fact opposed anti-abortion violence and merely doubted that the anti-Klan law could properly be made to apply, it could have offered legislation making interference with the clinics a federal matter; such legislation was in fact passed under the Clinton Administration. But of course the administration did no such thing.

By arguing that the most successful terrorist campaign waged in this country since the days of the Klan was a matter for state and local jurisdiction (an echo, of course, of the argument offered against federal anti-lynching legislation in the 1930s and 1940s), Roberts and the rest of the Bush I crew was in effect backing the terrorists against their victims. That's not "excusing" violence, but it's not exactly opposing, either.

And Roberts signed the brief, and delivered the oral argument. That seems to me to be a legitimate reason for Operation Rescue to support him, and for those who support abortion rights and oppose domestic terrorism to oppose him.

Posted by DeLong at 08:32 PM | Comments (0) | TrackBack

August 10, 2005

Lobbyist Central Station

Julian Sanchez writes:

Notes from the Lounge: Et tu, TCS?: Y'know, I frequently disagree with pieces TechCentralStation runs--I expect to--but I don't usually expect to feel embarassed for them. On Monday they ran this ridiculous defense of Intelligent Design, and I'm embarassed for them.... I say this not by way of rebuttal--that would treat the article with a seriousness it scarcely merits--but just to express a modicum of dismay that a site that runs a fair amount of science reporting that, whether or not it happens to be correct on other points, is at any rate serious and interesting, would commit this kind of credibility seppuku...

Isn't that a little naive, Julian? Look at what's on the front page of TCS right now. Including the Spencer article http://techcentralstation.com/080805I.html that (rightly) makes you blush, I count six things that make me embarrassed:

I am embarrassed for them by James Glassman's mendacious defense of his Dow 36000 book: TCS: Tech Central Station - My Stalker: "By the way, none of the tumultuous events of the past six years has changed our minds about our thesis. In fact, despite terrorist attacks and a recession, price-to-earnings ratios have remained high, in historic terms, just as we predicted..." We all know that Dow 36000 predicted not that price-earnings ratios would remain at their ca. 1999 levels, but would triple over the next three to five years--i.e., by 2002-2004.

I am embarrassed for them by John Tabin's inability to grasp the point that there is good reason to fear that the private sector won't do enough basic R&D because that kind of intellectual property is hard to appropriate: TCS: Tech Central Station - Big Government Libertarianism: "It's true enough that NIH has long loomed large in funding this sort of research. But must it be so? Consider the larger research and development picture. About two-thirds of American R&D is now funded by the private sector, with taxpayers picking up the tab on the remaining third. As recently as 1970, the figures were reversed: Two-thirds of R&D funding came from Washington. Meanwhile, total R&D funding has in recent decades grown sharply. It should be no surprise that when government support stays relatively flat, the private sector more than picks up the slack. Is there any reason to think that research on embryos should be different?..."

I am embarrassed for them by Douglas Kern's strange take of U.S. history coupled with denunciations of the "apathy and indolence" of the Basrans: TCS: Tech Central Station - Hope Springs Infernal: "Consider the civil rights movement in the United States. The hagiographers of the baby boomer generation would have you believe that the enlightened preciousness of students and liberals made the civil rights revolution possible. But the true spark that lighted the fire of justice was the huge economic improvement that blacks enjoyed after World War II.... This taste of comfort provided an irresistible impetus for a growing, motivated black middle class to stand up against injustices that stood between them and the lives they had almost achieved.... [T]he average Iraqi now enjoys prospects and possibilities that were unimaginable three years ago.... The freedom to succeed and prosper is also the freedom to fall... in an underdeveloped country, failure means disease and empty bellies.... [A] thimbleful of prosperity creates a hunger for an affluence that may exceed the abilities of the current generation. Through television, through the internet cafés, and through conversation with Americans, the average Iraqi is aware of a world of colossal wealth, spectacular science, and undreamt-of desires, all seemingly within reach.... [Y]et his ability to thrive in a democratic, capitalist country grows slowly and unevenly. The ensuing envy, shame, and frustration are ripe for revolutionaries and utopians to exploit. So behold Basra: a city whose thriving middle-class citizens demand a first-world infrastructure even as they maintain third-world habits of apathy and indolence."

I am embarrassed for them by Ryan Sager's belief that we shouldn't try to set up better governmental institutions because "politicians are politicians," coupled with the declaration that Senator McCain and his Republican followers are a "front group funded by eight liberal foundations": TCS: Tech Central Station - Where Angels Fear to Tread: The FEC: "What this means, however, is that what's often called the "reform community" -- actually, it's a collection of front groups funded by eight liberal foundations -- is constantly left clucking its tongue at the "corrupt" FEC.... [T]he speech police have absolutely no standing to whine and moan when their proposed picks -- a list of uber-reformers being floated by Sen. McCain's office -- are dismissed out of hand. Politicians are politicians all of the time.... There aren't any in Congress or at the White House. And the sooner arrogant reformers like Sen. McCain and Fred Wertheimer realize that they're no angels either, the better for all of us -- and for the Constitution."

Last, I am embarrassed for them by Frederick Turner's misrepresentation of the debate over whether "Intelligent Design" should be taught in science classes as one in which both those you say "yes" and those who say "no" are equally wrong: TCS: Tech Central Station - Divine Evolution: "Religious views -- whether theistic or atheistic -- are, alas, the same: for our view to be right, all the others must be wrong. But as the evolution/design debate develops, more serious and thoughtful voices have joined in -- people whose thinking does not seem to be limited by partisan or ideological preconceptions, and who are not making the issue, as others have, a proxy for a fight about theology or atheism. Such voices include TCS's Lee Harris, James Pinkerton, and Nick Schulz, and the participants in the interesting dialogue at Natural History magazine.... A common vocabulary is emerging. The ground may now be prepared for a transformation of the debate from a partisan wrangle into a true conversation, a fruitful inquiry that includes good biological science but does not exclude the insights of other disciplines..."

Given its place in the DCI Group (see http://www.washingtonmonthly.com/features/2003/0312.confessore.html), TCS must fail to have proper intellectual controls. It must, sooner or later, commit the "gross lapse[s] in editorial judgement... [that] leave the intellectually serious casual reader fully justified in dismissing anything that appears there in the future."

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

Boredom: An Interdisciplinary Approach

Wonkette reports that the Treasury Department was underutilized (to say that it was out-of-the-loop would be to falsely imply that there was a loop) during the first Bush administration:

Wonkette - The People's Excruciatingly Tedious Business: Flush from reporting the breaking news that tourists are often confused, the Washington Post breathlessly delivers the scoop that government workers are often bored. Once we were able to get the blood rushing back to our head, we heeded Amy Joyce's tale of Bruce Bartlett's many lost afternoons as deputy assistant secretary for economic policy in the Treasury Department:

boredom occasionally drove him from his cushy Washington office to seek relief at the movie theater. One afternoon, he ran into a friend who was a senior official in another department.

"It was kind of awkward," he said.

Since I took Bruce's seat at the Treasury when the Bush administration turned into the Clinton administration, let me recount one 10:30 PM conversation I had at the Treasury in the spring of 1993 with one of the career economists. "Yeah. It was kind of boring around here for the past couple of years. We used to wish that we would be asked by the White House to do more." Pause. "I suppose the lesson is: 'Be careful what you wish for'."

Posted by DeLong at 05:34 PM | Comments (0) | TrackBack

Disaster Movies and Family Harmony

Michael Berube wrestles with "popular culture":

Invasion of the Marriage Disaster Flicks: So Janet and I saw War of the Worlds last night, a movie we wanted to see precisely because it has no emotional content whatsoever. We were pleased, however, to find out that (and I think I’m paraphrasing a reviewer here, but I can’t remember which one) a brutal alien invasion will get Tom Cruise back in touch with his children (Dakota Fanning and Justin Chatwin). I suppose there’s more to say about the film, particularly about Tim Robbins’s bizarre appearance as himself in Mystic River (apparently he’s now ready to re-enact the child molestation in the basement bit, this time with himself as the molester). But what Janet and I wanted to know, as we left the theater, was how the hell the marriage between Mary Ann (Miranda Otto) and Ray Ferrier (Cruise) could ever have happened in the first place. That’s far less plausible than a mass invasion of insect-lizard aliens driving huge tripods around the globe.

As for the closing scene, in which Cruise delivers the kids to Otto (who’s in Boston with her second husband) and Chatwin finally calls him “dad”: what is it with this narrative trope, anyway? There’s a disaster or an invasion or a lethal virus or a mysterious bunch of aliens living in our oceans, and the story ends when the family romance is completed in some way? Quoi? And pourquoi?

I’ve been wondering about this for some time, and even tried to write about it a few years ago, but I don’t really know what to do with it aside from pointing it out. So, dear readers, I cheerily invite you to give it a go. Here are your Texts for Analysis. Please remember to write legibly!...

Well, it seems to me that what what Michael and Janet regard as a strange deviation from the disaster-movie genre is an attempt by Hollywood to stretch the movie's appeal by combining typical narrative patterns expressed by preschool-age boys and girls. The boys want (and tell) stories about power, violence, chaos, and destruction. The girls want (and tell) stories about people embedded in family relationships doing things which end with the reaffirmation or restoration of the harmonious family.

Here, for example, is Agelike Nicolopoulou of Lehigh, analyzing stories told by 4-year-olds at a western Massachusetts nursery school http://www.lehigh.edu/~inpsy/nicolopoulou1997.pdf:

The preschool makes strong and deliberate efforts to create an egalitarian, nonsexist atmosphere.... [O]ne of the teachers' intentions in using this storytelling and story-acting practice is to help generate greater cohesion and a common culture.... [T]o a great extent, however, [the children]... build up two subcultures within the classroom, not one.... The kinds of stories told by the boys and girls differ systematically... in both form and content... embody two distinctive types of genuine aesthetic imagination (surprising as it may seem to assert this about preschoolers), each with its own inner logic and coherence.... The girls' stories show a strain toward order, whereas the boys' stories show a strain toward disorder....

The older girls in this group told stories that largely fit within what I call a "family genre"... start... with characters already embedded... in stable and given networks of social relations, the most favored of these being the family unit.... [T]he world outside the home may be a source of danger and disruption....

Once upon a time there was a castle, and a king and a queen and a prince and a princess and a unicorn and a pony lived in it. And they went for a walk. And they found a playground and they swang on the swings, and they slide down the slide, and then they went back home. But they had some trouble finding the way. But then a dog came to them and said, "I'll help you find the way home," and he did. The End.

[W]hen the girls do introduce a danger, threat, or surprise, they are almost always careful to resolve it in a positive way before ending the story....

In short, the girls' stories are... organized around the representation, maintenance, and restoration of order... rooted in a frameork of stable social relationships... anchored topographically in the home....

In contrast, the overwhelming majority of 4-year-old boys' stories start with isolated individual characters... defined... through their actions.... The characters most often used by boys tend to be either big and powerful animals.. superheroes, villains, and other cartoon action characters... [and] a small number of small but lethal characters.... The stories focus on struggle and destruction... straightforward descriptions of destruction and/or chaos are not uncommon:

Once there was Robin Hood. Then Batman came. Then prince John came--he's the king. Then Superman came. Superman battled with Batman and Batman died. Then he came alive again. Superman died. And then Splinter, Raphael, Donatello, and Michelangelo came. Then an Indian came on a horse with a bow and arrow. Then a cowboy came on a horse with a bow and arrow just like the Indian and shot Superman so he wouldn't ever come alive again. And they lived happily ever after. The end.

The standard action movie pattern used to be (a) that the movie ended when the antagonist had been overthrown and (b) that ending was announced by the clinch between the hero and the ingenue. This new "combinatory" narrative pattern is a shift. And I do not think it is a successful shift--the attainment of harmonious family relationships is simply grafted on, and does not emerge organically out of the central action of the movie.

Hollywood is aware that it has an audience bifurcation problem with movies like "War of the Worlds," and it is trying to figure out how to fix it, but it is failing. In spite of the restoration of harmonious family relationships at its end, "War of the Worlds" does not make it as a chick flick. "Sisterhood of the Traveling Pants" is a much better movie, even though it lacks death rays and large explosions.

Posted by DeLong at 05:28 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Vroom Vroom Vroom Department)

Hilzoy performs the painful task of reading Charles Krauthammer on stem cells. She writes:

Obsidian Wings: Krauthammer On Stem Cells: Krauthammer gets the science wrong. He writes this about the President's stem cell policy:

It failed practically because that cohort of embryos is a diminishing source of cells. Stem cells turn out to be a lot less immortal than we thought. The idea was that once you created a line, it could replicate indefinitely. Therefore you would need only a few lines. It turns out, however, that as stem cells replicate, they begin to make genetic errors and to degenerate. After several generations some lines become unusable.

In addition, there has been a new advance since 2001. Whereas stem cells in those days had to be grown on mouse feeder cells, today we can grow stem cells on human feeder cells. That makes them far more (potentially) therapeutically usable.

I don't know who the 'we' is who were surprised that when you get DNA to copy itself repeatedly, errors creep in. It certainly wasn't the scientific community, which warned against this from the get-go. The only 'we' I know of who ever thought the President's policy made enough lines available consists of George Bush, Tommy Thompson, and (apparently) Charles Krauthammer. And it's an understatement to say that lines not grown on mouse feeder cells are 'far more (potentially) therapeutically useful' than the lines the President's policy lets people work on, since the latter are almost certainly not usable therapeutically at all. I mean, you could also say that driving a car is a far better way of getting from one place to another than sitting on the ground and saying 'vroom vroom vroom'. It's true, but it rather understates the difference...

Posted by DeLong at 05:24 PM | Comments (0) | TrackBack

Tax Shifts

One of the most marvelous things about George W. Bush is how he has managed to make Max Sawicky sound like the Concord Coalition:

MaxSpeak, You Listen!: G.O.P. TAX HIKE WATCH: There are no tax cuts. Banish that phrase from your mind. You haven't seen any. Republican control of the White House and Congress has yielded trillions in tax increases since January of 2001. How can this be? Simple. When you spend more, and when you pass laws that commit the government to spending more in the future, you increase taxes, sooner or later. Spending not financed by current taxes will be financed by future taxes. A debt increase is the present value of future increased taxes. If taxpayers merely pay interest on the debt incurred, forever, the present value of the interest payments is the initial increase in debt.

Suppose you raise future spending on X but later you cut spending on Y? You have still raised taxes. If you had cut spending on Y and foregone the spending on X, taxes would be lower. To spend is to tax. There are no tax cuts. There are only tax shifts.... Exhibit A in the Hall of Bush Tax Hikes is of course the Medicare drug benefit. The cost of this over the indefinite future is $23.5 trillion-with-a-T (of which $18.2T is not matched by any dedicated financing source -- p. 112).... Exhibit B is our largest new government program, known as "Iraq." This is not nearly as big, assuming we slink out of there with our tails between our legs before the next election, proclaiming mission accomplished all the while. Approximate dollar cost to the taxpayer would be about $250 billion. The more important human cost is of course beyond ordinary economic calculation.

Exhibit C is a capital gains tax increase, otherwise known to morons as "death tax repeal." The Estate and Gift Tax termination legislation provides for the taxation of capital gains on assets bequeathed to heirs, when said heirs sell those assets (and "realize" the gains as income). Under current law, any gains up until the point of transfer are not taxed as income. For most heirs, they are not taxed under the Estate Tax either. Hence the "death tax repeal" is really a tax shift to beneficiaries of smaller estates whose bequests currently fall under the minimum taxable threshold.

Exhibit D is the merry run-up in non-defense discretionary spending, in what I call The Era of Hard Work for Limited Government. In keeping with our 'compared to what' stricture above, any assumption about a baseline rate of growth ought to be made explicit. I should stipulate that in general I welcome this sort of spending/tax increase myself. So how big is it? If we grant that this sort of spending "ordinarily" tracks GDP, then growth in excess of GDP growth should be defined as an increase....

Who will pay for these tax increases? Increasingly, as the "Bush tax cuts" (sic) focus the Federal tax system on wages, it will be current and future workers. You may recall that these are the folks upon whom we were told it would be immoral to bequath an insolvent (sic) Social Security system.

So pay no attention to rumors of tax cuts. To be sure there are rewards for assorted vested interests, as so-called tax cuts grease the skids for heavier taxation of wages in the future. Your invoice will be in your pay envelope.

Unfortunately, the Concord Coalition no longer sounds like the Concord Coalition. Its Republican members are pretty quiet.

It's no longer clear to me that there ever were many grownup Republicans. They're certainly thin on the ground today. In an average day I see more wild turkeys than I do grownup Republicans

Posted by DeLong at 05:22 PM | Comments (0) | TrackBack

Baghdad Apparently Has a New Mayor!

Matthew Yglesias writes:

TAPPED: August 2005 Archives: NICE MAYOR YOU HAVE THERE... It's a bit hard to know what to say about something like "Armed men entered Baghdad's municipal building during a blinding dust storm on Monday, deposed the city's mayor and installed a member of Iraq's most powerful Shiite militia" except that it hardly bodes well. The obvious thing to say is that we wouldn't have these problems if the administration hadn't failed to complete -- or really even attempt -- the militia demobilization process. On the other hand, the administration had perfectly good reasons for not doing so, namely that we apparently wouldn't have been able to make it work without pouring far, far more troops into Iraq than we actually did.

And, again, they had perfectly good reasons for not putting 500,000 soldiers on the ground, namely that the soldiers didn't exist and the political will to find and deploy them certainly wouldn't have existed before the war. Which is a roundabout way of saying that the real mistake here was trying to do something that we lacked the capacity to do. The fact that Shiite militias are roughly speaking "on our side" in the new Iraq is the only thing that makes our position there tenable over the short term. If we added them to our enemies list along with the Sunni Arab insurgency, we'd be in a hopeless situation. But you can't build much of a liberal democracy in partnership with Islamist militias.

Ummm... Allies. Ummm... U.N. Security Council. The biggest reasons for diplomacy--for coalition building, and for seeking U.N. blessing--are two:

  1. We are much, much more powerful and capable when we are leading a coalition that can put 500,000 Arabic-speaking military police on the ground.
  2. States that fear that the U.S. is a loose cannon--unconstrained by the Security Council and the concordium mundi--work very hard to acquire nuclear weapons once David Frum has put them on The List.

Posted by DeLong at 05:19 PM | Comments (0) | TrackBack

Ben Bernanke Goes to Crawford

Ben Bernanke reports on what he said to Bush. He apparently failed to stress two important things:

  1. Bush administration fiscal policy is way out of balance in the long run, and this is a very serious problem: if the government doesn't balance its budget (in the sense of keeping real debt growing no faster than real GDP), then the market will balance the budget for it in ways that nobody will like.
  2. Bush administration international economic policy is way out of balance as well: the administration should be doing much more than it is doing--i.e., nothing--to try to minimize the size of the financial crisis should foreigners suddenly decide to dump their dollar assets on a large scale.

These are two things that George W. Bush and his inner circle need to hear as often as possible. And I'm scared that nobody is telling them.

Here's his statement to the press:

Press Briefing by Director, National Economic Council, AL Hubbard, and Chairman, Council of Economic Advisors, Ben Bernanke: CHAIRMAN BERNANKE: Thanks, Al. I'm Ben Bernanke, the Chairman of the Council of Economic Advisors. We had a very interesting discussion this morning, as Al said. It covered a wide range of issues; went on into lunch. It fell to me as the CEA Chairman to report to the President on the state of the economy, and I was pleased to be able to report to him that the U.S. economy is in a strong and sustained expansion at this point.

I stressed for him four key indicators, which, like many other economists, I think are really central to looking at the state of the economy. First is economic growth. Economic growth delivers stronger output, stronger incomes. In the last couple of years, we've seen 4.1 percent real growth per year; 3.6 percent in the last year. This is a very strong rate of output expansion.

Second, jobs. So far this year, we've had 191,000 jobs per month added to U.S. payrolls, almost 4 million jobs since the trough for the job market in May of 2003, so the labor market is improving and getting stronger.

Third, inflation. The Federal Reserve moved today. Inflation is well contained, under control. The core inflation rate over the last year is about 2 percent, and I see inflation remaining well contained going forward.

And, fourth, the statistic which economists really think is very important and perhaps doesn't get enough attention in the media is productivity growth. Productivity growth ultimately determines how much an economy can produce, what the living standards will be, and what wages and profits will be. The U.S. economy in recent years has been remarkable in terms of productivity. We got new numbers this morning. Looking back over the last four years, the U.S. economy has averaged 3.6 percent productivity growth per year in the non-farm business sector; 5.6 percent in productivity growth in the manufacturing sector. These are remarkable numbers, much higher than long-term averages, and they bode very well for the sustainability of the economy.

We talked also about issues and problems. There certainly are risks to the economy; two I would mention. One is high energy prices. Energy prices remain very high. There's a very tight supply-demand balance for oil in the world economy, drives -- has driven crude oil prices up above $60. Those high oil prices are a burden on U.S. families, on firms, the production costs. But the good news is that at least so far the U.S. economy has not been slowed by the high energy prices. It has been a resilient economy, it's responded well. And growth has -- and job creation has proceeded apace.

The other concern which Al alluded to already is the rising cost of health care and health insurance. This is a major problem. As we discussed in our white paper that we circulated, the rising cost of health insurance is one of the reasons why rising total compensation for production workers has not translated into as great an increase in their take-home real wages. We think this is a major issue. The President has made a number of proposals to try and address health care costs, including his health savings accounts, which allow people to purchase -- purchase -- pay for medical care on a pre-tax basis.

Various programs for trying to subsidize people's purchases of insurance: health information technology, which will make doctors better able to communicate with each other and keep abreast of latest developments; changes in medical malpractice; and association health plans that allow small businesses to pool together to buy insurance on a pooled and more efficient basis.

So those are just some of the measures that we've talked about in the past. This is an area we're going to continue to look at in the future. These are two issues that remain very important. But to come back to what I said earlier, and to reiterate what Al said, coming from where we were in 2001 and 2002, following 9/11, following the corporate scandals, this economy has turned around, and it's currently on a very strong and sustainable growth path.

Posted by DeLong at 05:18 PM | Comments (0) | TrackBack

The FOMC Does Not Pause But Keeps Raising Interest Rates

Interest rates rise as the Federal Reserve keeps on its course:

WSJ.com - Fed Raises Key Rate to 3.5%, Continuing String of Increases: WASHINGTON -- The Federal Reserve, citing "elevated" price pressures in the U.S. economy, boosted its key interest rate to a four-year high Tuesday and said it aims to extend the campaign of gradual interest-rate increases it began in mid-2004.

Amid signs the economy is gaining speed despite record oil prices, Fed policy makers voted unanimously to raise the key federal-funds rate a quarter percentage point to 3.5%. The increase, the tenth since June 2004, made the campaign of rate hikes the longest since Alan Greenspan became Fed chairman in 1987.

"Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor-market conditions continue to improve gradually," the Fed's Open Market Committee said in a statement. It reasserted its previous view that "pressures on inflation have stayed elevated" but added that "core inflation has been relatively low in recent months and longer-term inflation expectations remain well-contained."

The committee hinted it intends to raise the funds rate at least once more, possibly as early as Sept. 20, saying the rate remains too low -- "accommodative" in Fed parlance. It pledged, however, to raise the rate in "measured" increments. That phrase so far has signified increases of a quarter percentage point at a time.

The decision, widely expected on Wall Street, came as economic forecasters began to reassess their views on how much more the Fed will need to raise the funds rate to hold inflation down. Until a few weeks ago, most forecasters expected the Fed to "pause" its interest-rate campaign later this year, possibly opting to forgo a rate increase in December.

Posted by DeLong at 05:16 PM | Comments (0) | TrackBack

More News About the Second Quarter

More productivity growth and less wage growth than I had thought we would see:

WSJ.com - Productivity, Labor Costs Cooled Off in 2nd Quarter: The Labor Department reported Tuesday that nonfarm business productivity grew at a seasonally adjusted annual rate of 2.2% from April through June, down from the revised 3.2% rate in the first quarter. Meanwhile, unit labor costs grew at an annual rate of 1.3% in the second quarter, the slowest increase in a year. Unit labor costs in the first quarter grew at a revised 3.6% rate.... Adjusted for inflation, compensation per hour fell at a 0.6% rate during the second quarter, compared with a revised 4.5% annual growth rate the previous quarter. Output growth edged up slightly to a 4.4% annual rate in the second quarter from a revised 4.3% in the first quarter. Workers' hours rose to a 2.1% growth rate in the second quarter from a 1.1% rate in the previous quarter.

In the nonfinancial corporate sector, the report showed productivity grew at a 3.6% annual rate in the January-March quarter, the latest for which the data are available. That was down from a revised 8.5% rate in the previous quarter. The Labor Department also lowered its estimates for productivity growth in the past three years to reflect revisions in gross domestic product announced late last month. Productivity grew by 3.4% last year rather than the previously reported 4% gain. Productivity growth in 2003 was lowered to 3.8% instead of 4.3%, and to 4% in 2002 rather than the previously reported 4.3%...

Posted by DeLong at 05:11 PM | Comments (0) | TrackBack

Why Oh Why Are We Ruled by These Idiots? (Larry Diamond's View Department)

Larry Diamond's view on what he saw after he agreed to Condi Rice's pleas to go to Iraq:

War and Piece: Larry Diamond: So I would say that the truly cardinal sin was not the war itself but the decision to go to war without adequate preparation or support: leaving Iraq to burn in chaos in the days and weeks after Saddam fell, having no effective plan for the postwar period, not having nearly enough troops, not giving them nearly enough protection and equipment, not having fully mobilized our own country for the scope of challenge we were clearly going to face in the postwar period. It was war on the cheap, war without sacrifice except by the soldiers and families asked to risk--and too painfully often to make--the ultimate sacrifice. It was war without any fiscal discipline or sense of urgency; "we're at war--let's party" as Tom Friedman wrote in a column in the months leading up to the invasion. This was truly sinful and inexcusable, what I call in the book (speaking metaphorically and morally, rather than legally) criminal negligence. I think history will render a harsh judgment on all of those responsible in this Administration.

Posted by DeLong at 04:58 PM | Comments (0) | TrackBack

Before the Storm

Rick Pearl... Paerl... Aperl... Lrep... Perlstein writes:

Just a little note to folks who've said nice things about Before the Storm. It's going out of print, at least for a while now (a new edition may be forthcoming in coordination with the release of my next book some time next year), so spread the word to those who might want to snap up a new copy while they can...

Can this be? There are hundreds of thousands of people serious and interested in politics--on the left and the right--who have not read and do not own Before the Storm.

Buy one. Buy ten, and give them to your friends.

Posted by DeLong at 04:56 PM | Comments (0) | TrackBack

European Growth

For "Nightly Business Report," August 8, 2005 [TV]:

The International Monetary Fund has recently cut its estimate of western European economic growth this year from 2.2% down to 1.3%, and its estimate of growth next year from 2.3% to 1.9%. And the IMF is optimistic: it is hoping that the second half of the year will be better than the first half has been.

This is not a recession. But it is far from a boom. And it is far below what we would hope to see for a region where, after all, the unemployment rate is still near ten percent.

The problem that the IMF sees is that local European demand growth is anemic. Jumps in oil prices have raised costs and retarded demand. Stagnant wages--themselves in part a consequence of "structural reform" have led to low consumption growth. As a result, a truly satisfactory European economic expansion requires strong demand outside Europe. The leading component of demand has to be exports if the economic expansion is to lift the boats. And that strong demand for Europe's exports does not look like it is in the cards.

Now it is not as though rising inflation prevents Europe's central bankers from cutting interest rates from their current 2% level. Forecasts inflation for the next year are low: 1.1% for Germany, 1.6% for France, and 1.5% for the Eurozone as a whole.

However--even when there are no pressures pushing up inflation--Europe's central bankers simply do not see boosting employment as an important part of their job. Here in America, we have central bankers who have a more balanced view of their role--see their mission as to to try to get both stable prices and high employment.

We here should be thankful.

I'm Brad DeLong.

Posted by DeLong at 04:54 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Calling Dr. Aristotle Edition)

We have a logic emergency here! Charging RINO quotes Morton Kondracke in Roll Call

Charging RINO: Kondracke: Centrists Must Organize: Kondracke goes on to lament the lack of a viable moderate structure within the Republican Party which could call out the GOP's leadership from going off on wild right-wing goose chases like limiting funding for stem cell research, banning emergency contraception, pushing for the teaching of "intelligent design," and limiting the rights of homosexuals to be united through civil unions.

"There's no question that the Democratic Party is just as much captive of the left as the GOP is of the right," Kondracke notes, correctly. "But the Democratic Party has an influential moderate wing, led by the Democratic Leadership Council, with which a number of 2008 presidential candidates are affiliated, including frontrunning Sen. Hillary Rodham Clinton (N.Y.)."

Let's watch that again in slow motion.

Kondracke says that the Democratic and Republican Parties are equally polarized ideologically:

"There's no question that the Democratic Party is just as much captive of the left as the GOP is of the right."

And Kondracke says that they are not equally polarized ideologically:

"The Democratic Party has an influential moderate wing, led by the Democratic Leadership Council, with which a number of 2008 presidential candidates are affiliated, including frontrunning Sen. Hillary Rodham Clinton (N.Y.)."

To the Aristotle phone, now!

Posted by DeLong at 04:54 PM | Comments (0) | TrackBack

The New Republic: Straight Out of Boston

The last piece in the New Republic that came straight out of Boston was truly bizarre and rather thin:

Greg Mankiw | Personal Dispute (print): Harvard University is, by some measures, one of the most left-wing institutions on the face of the earth. So you may be surprised to hear that it has endorsed George W. Bush's proposal for Social Security reform.... Harvard's retirement plan is essentially the nonprofit sector's version of a 401(k).... I am perfectly happy with Harvard's retirement plan.... If the liberal Harvard faculty is content with the defined-contribution structure for their private retirement income, why are liberals... so appalled that Bush would propose moving the public retirement system in the same direction?... [T]here are three reasons... the president proposed it... they could destroy one of its favorite battle cries: the alleged conflict between evil capitalists and oppressed workers... [for] much of the left's rhetoric is a less elegant paraphrase of [Karl Marx's] worldview... [and] simple paternalism.... Democrats are more averse to an economic system in which people play a larger role in taking care of themselves.... [T]he nation should take this opportunity to give all Americans a retirement system as reliable as the one Harvard gives its faculty.

The key point Mankiw overlooks is, of course, that a good program to sit on top of the defined-benefit tranche of retirement income that is Social Security is not going to be a good program to replace Social Security. And there are many reasons besides simple paternalism and warmed-over Marxism to have opposed and to keep on opposing George W. Bush's Social Security proposals. Ferguson and Kotlikoff, neither of whom has an ounce of paternalism or warmed-over Marxism in their makeup, list some, for they have a new piece in the New Republic that also comes straight out of Boston. It begins very well:

The New New Deal: President Bush's Social Security proposal looks to be dead in the water--and a good thing, too. The plan was half-baked and fiscally irresponsible. The American public took one look and realized it provided neither personal nor national financial security. Even many Republican congressmen didn't buy it. So much for the president's post-election political capital....

There were four problems with [Bush's plan]... diverting money into individual accounts would have... push[ed] the system into deficit much sooner... individual accounts would have done away with one of the biggest advantages of a state pension system, namely economies of scale and reduced risk.... [T]he president's scheme would have made an already bad position even worse for younger Americans, making them reliant on a risky, costly, and inadequate private-account alternative. Finally... it would have done nothing to address the much deeper fiscal imbalance between all the projected revenues of our government and all its existing commitments... a whole raft of other nondiscretionary expenditures, of which the Medicare system is by far the biggest....

[W]e really do have a problem: a truly grave demographic, fiscal, and economic problem. It's a problem that Bush inherited, but one he has done nothing to make better and much to make worse. We refer here to the president's three major tax cuts, his major increase in discretionary spending, his major expansion of entitlement programs, and his massive deficits. And that was just the first term.

But after this nice beginning, Ferguson and Kotlikoff's piece flags and loses coherence. Ferguson and Kotlikoff propose:

...a new New Deal--a combination of fundamental Social Security reform, health care reform, and tax reform. A new New Deal could help Democrats win the voters they failed to persuade last November. It could also help a Democratic administration deal with our country's immense demographic and fiscal problems...

They call for replacing Social Security with a Personal Security System program, replacing the income taxes with a sales tax, and replacing our current health-care system with one of government-funded vouchers plus private insurance. The end state will be a federal government that taxes and spends some 21% of GDP--or maybe (counting the PSS program) 25% of GDP: it's not completely clear.

Their plan to replace the income, payroll, and gift and estate taxes with a national sales tax plus a set of rebate checks (to make the sales tax progressive) would reduce marginal tax rates on savings in the future while double-taxing those who have saved in the past: those who have already paid income taxes on the money that they have channeled into their savings would pay another round of taxes--sales taxes--whenever they spend what they had previously saved. Such a revamping of the tax system will create lots of winners and losers, which makes me anxious when I contemplate the Ways and Means Committee writing transition rules. Would the gains be worth the costs? Ferguson and Kotlikoff argue for the plan with two sentences: "[I]t will shift spending away from consumption goods and services to investment goods, which will help the economy grow through time. As today's China and yesterday's Japan show, economies that shift from consuming to saving and investment can achieve tremendous performance." And they don't tell readers why this is a Democratic plan, rather than a Republican one.

Their proposed Personal Security System--funded by a 7.15% of payroll tax--would be a prefunded Social Security system in which "neither Wall Street nor the insurance industry would get its hands on workers' money. There would be no loads, no commissions, no fees. Nor would there be all the risks associated with individual investing. This is because PSS would continue to take advantage of the overwhelming advantages enjoyed by all state systems of social insurance: economies of scale and reduction of risk through government guarantee." If their plan did achieve genuine prefunding, such a boost to national savings would be extremely valuable plus on its side. But once again the argumentation is too thin: I think that I can follow why they wish this transformation of Social Security, but almost no other readers of the New Republic will be able to do so.

Their proposal for national health vouchers to "pay for basic inpatient and outpatient medical care, prescription medications, and long-term care over the course of each year. If you ended up costing the insurance company more than the amount of your voucher, the insurance company would make up the difference. If you ended up costing the company less than the voucher, the company would pocket the difference" is an attempt to create managed competition: to "promote healthy competition in the insurance market, which would go a long way toward restraining health care costs." They see as an added benefit that "the government could limit its total voucher expenditure to what the nation could afford. Unlike the current fee-for-service system, under which the government has no control of the bills it receives, MSS would explicitly limit its liability": if Americans wanted a more comprehensive and generous national health program, they would have to vote for politicians who would raise the tax rate. But once again the discussion goes by too fast: those who have strong views and detailed knowledge of the debate about health care and its costs will understand why Ferguson and Kotlikoff are walking down this road, but others will not.

It is as if J. Peter Scoblic and the rest of the New Republic editorial staff simply did not do their job. After every paragraph, they should have asked Ferguson and Kotlikoff two questions: (1) Have you explained to our representative reader why this proposal is a good thing? (2) Have you explained to our representative reader why this proposal is a Democratic thing?

The fact that they don't answer the second question sufficiently comprehensively is, IMHO at least, very interesting. For the article sells Ferguson and Kotlikoff's proposal not as a Republican plan (which it strikes me that it is) or a bipartisan compromise plan (which it strikes me that it could become with a little more attention to progressivity) but a a Democratic plan. I suspect that they are doing this because they too are coming to the conclusion that, policy-wise, the Republican Party is a completely lose cause.

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

August 08, 2005

Michael Kinsley Strikes Out

From the Downing Street Memo:

The secret Downing Street memo - Sunday Times - Times Online: [Britain's equivalent of the CIA Director] reported on his recent talks in Washington. There was a perceptible shift in attitude. Military action was now seen as inevitable. Bush wanted to remove Saddam, through military action, justified by the conjunction of terrorism and WMD. But the intelligence and facts were being fixed around the policy. The NSC had no patience with the UN route, and no enthusiasm for publishing material on the Iraqi regime's record. There was little discussion in Washington of the aftermath after military action....

In the New York Review of Books, Michael Kinsley continues to pretend that when Britain's intelligence head holds "talks" in Washington he does not talk to "actual administration decision makers," but instead merely learns the conventional wisdom of the chattering classes:

TomDispatch - Tomgram: Kinsley: ...the document... basically says that the conventional wisdom in Washington in July 2002 was that Bush had made up his mind and war was certain. "What," Danner asks, "could be said to establish 'truth' -- to 'prove it'?" I suggested in the column that it would have been nice if the memo had made clear that the people saying facts were fixed and war was certain were actual administration decision-makers. Danner asks, Who else could the head of British intelligence, reporting on the mood and gossip of "Washington," be talking about if not "actual decision-makers"? He has got to be kidding. In short, the DSM will not persuade anyone who is not already persuaded. That doesn't make it wrong. But that does make the memo fairly worthless...

Why Kinsley is maintaining this extremely implausible position--one that the people who have been in government who I have talked to find laughable by a count of 27-3--is not at all clear.

Posted by DeLong at 11:25 PM | Comments (0) | TrackBack

Why Are We in Iraq?

Atrios writes:

Eschaton: Iraq will be with us in '06, '08, '10.... No amount of lights and corners and tunnels will change that. I don't think all the pro-war types need to flagellate themselves publicly for their stand, but it still shocks me that in '04 more Democrats couldn't have simply said what Joe Hoeffel said when asked if he'd still have voted to authorize the war: "Absolutely not. I voted for the war because I was convinced we needed to disarm Saddam Hussein of weapons of mass destruction. I am now convinced we were lied to." Hoeffel took it further another time: "I am now convinced I was lied to, specifically by George Tenet and Condoleezza Rice, on Oct. 2, 2002, in the Roosevelt room of the White House, and generally, lied to by the president and all of his people in the White House."

If you really do care about getting good government for Iraq, you wait to invade until you have 300,000 Arabic-speaking military police in your coalition.

Posted by DeLong at 11:23 PM | Comments (0) | TrackBack

Design for Confusion

Paul Krugman writes:

Design for Confusion - New York Times: You might have thought that a strategy of creating doubt about inconvenient research results could work only in soft fields like economics. But it turns out that the strategy works equally well when deployed against the hard sciences.

The most spectacular example is the campaign to discredit research on global warming. Despite an overwhelming scientific consensus, many people have the impression that the issue is still unresolved. This impression reflects the assiduous work of conservative think tanks, which produce and promote skeptical reports that look like peer-reviewed research, but aren't. And behind it all lies lavish financing from the energy industry, especially ExxonMobil.

There are several reasons why fake research is so effective. One is that nonscientists sometimes find it hard to tell the difference between research and advocacy - if it's got numbers and charts in it, doesn't that make it science?

Even when reporters do know the difference, the conventions of he-said-she-said journalism get in the way of conveying that knowledge to readers. I once joked that if President Bush said that the Earth was flat, the headlines of news articles would read, "Opinions Differ on Shape of the Earth." The headlines on many articles about the intelligent design controversy come pretty close. Finally, the self-policing nature of science - scientific truth is determined by peer review, not public opinion - can be exploited by skilled purveyors of cultural resentment. Do virtually all biologists agree that Darwin was right? Well, that just shows that they're elitists who think they're smarter than the rest of us.

Which brings us, finally, to intelligent design. Some of America's most powerful politicians have a deep hatred for Darwinism. Tom DeLay, the House majority leader, blamed the theory of evolution for the Columbine school shootings. But sheer political power hasn't been enough to get creationism into the school curriculum. The theory of evolution has overwhelming scientific support, and the country isn't ready - yet - to teach religious doctrine in public schools.

But what if creationists do to evolutionary theory what corporate interests did to global warming: create a widespread impression that the scientific consensus has shaky foundations?

Creationists failed when they pretended to be engaged in science, not religious indoctrination: "creation science" was too crude to fool anyone. But intelligent design, which spreads doubt about evolution without being too overtly religious, may succeed where creation science failed.

The important thing to remember is that like supply-side economics or global-warming skepticism, intelligent design doesn't have to attract significant support from actual researchers to be effective. All it has to do is create confusion, to make it seem as if there really is a controversy...

Posted by DeLong at 10:59 PM | Comments (0) | TrackBack

For the Bushies, Loyalty Runs One Way Only...

Soldiers on trial for torturing and killing prisoners wonder why:

Suburban Guerrilla: The rotten apples are still at the top of the tree:

In the first interview granted by any of the accused soldiers, a former guard charged with maiming and assault said that he and other reservist military policemen were specifically instructed at Bagram how to deliver the type of blows that killed the two detainees, and that the strikes were commonly used when prisoners resisted being hooded or shackled.

"I just don't understand how, if we were given training to do this, you can say that we were wrong and should have known better," said the soldier, Pvt. Willie V. Brand, 26, of Cincinnati, a father of four who volunteered for tours in Afghanistan and Kosovo.

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

Supply Shocks

Oil prices rise further:

WSJ.com - Crude Futures Rise to Near $64 On Geopolitical, Supply Worries: Crude futures rose to a new high Monday, nearing $64 a barrel, as the U.S. government announced the closure of its embassy and consulates in Saudi Arabia due to security threats and on continued concerns that earlier shutdowns of U.S. oil refineries would reduce supply. Light, sweet crude for September delivery on the New York Mercantile Exchange rose as high as $63.95 a barrel, up $1.64 from its record close of $62.31 a barrel on Friday. Oil traders suggested $65 oil may be a foregone conclusion, as crude futures contracts for late 2005 and early 2006 shot past $65 and $66 a barrel Monday. "I guess we're going to $65 a barrel -- you can pick out almost any variable right now and it's all pointing to the upside," said Michael Guido, director of commodity strategy in New York for French bank Societe Generale. "Holding short in this market has been a losing proposition."

Posted by DeLong at 08:52 PM | Comments (0) | TrackBack

Weekend Update: An Excellent Feature

Matthew Yglesias's "Weekend Update" is always well worth reading--and very short, too. Today it tells us that the competition for the "Stupidest Man Alive" crown is indeed fierce:

TAPPED: August 2005 Archives: WEEKEND UPDATE. Running scared from a copy of Who's Who in America? Here's what you missed:

The Columnists

Nicholas Kristof. Municipal WiFi is so great that I won't even mention the giant corportions trying desperately to kill it.

John Tierney. Who cares about global warming -- tens of millions of drowning Bangladeshis can just relocate to Canada's empty arctic regions!

David Brooks. If all this is true, does it mean conservatives should stop whining all the time?

Jim Hoagland. Now that we've lost our base in Uzbekistan, it's a good time to pretend we were strong advocates for human rights there.

David Broder. It's good to be out of D.C. in August.

George Will. Why not pretend I'm a car salesman?

The Op-Ed You Actually Need To Read

Baruch Fischhoff on responding to disaster.

John Tierney's piece is the nadir--with its closing line about how after global warming is well underway "the [polar] bears would be still around, and their charisma would be making more money for the locals, not just for the WWF fund-raisers down south." Gotta keep those WWF guys from getting as rich as hedge-fund managers off of polar-bear pictures: that's a real high priority...

George F. Will manages to say with a straight face that "Worldwide, Ford is... gaining market share. But outside America, the company is not functioning as a welfare state, paying the high costs of medical and pension benefits," without it ever crossing his toadlike mind that the reason Ford doesn't pay for health insurance for its workers in Europe is that European governments do.

Brooks, Kristof, and Hoagland are embarrassing as well.

Posted by DeLong at 08:49 PM | Comments (0) | TrackBack

August 07, 2005

DeLong Smackdown Watch

A correspondent writes, challenging my claims about the Stupidest People Alive. I confess that I was in error:

Brad DeLong, you are a fool.

Donald Luskin's claim to the "Stupidest Man Alive" crown cannot be shaken.

Consider this:

The Conspiracy to Keep You Poor and Stupid: Consider this passage [from the Post editorial]:

The U.S. current account deficit has grown to an astonishing 6.5 percent of gross domestic product... This means that the nation is consuming around $700 billion more than it earns each year and paying for the difference by mortgaging or selling assets.

...focus on the factuality of the claim... that a trade deficit necessarily entails debt creation. This is simply not the case. When an American... earn[s] money... spend[s] that money on foreign goods, and (3) the foreign maker of those goods doesn't spend that money on American goods, somehow debt is created. I don't see it. Where's the debt?... There's simply no debt involved, necessarily, anywhere in the transaction. Yet the notion of debt is always evoked... some kind of overhanging Sword of Damocles... inescapable doom.... Now consider this passage....

Every year Americans sell or mortgage a slice of their productive assets to foreigners, with the result that income from those assets must flow abroad in the future

...the catastrophists... trot out this idea that when foreigners buy our productive assets... we are sacrificing all future benefits from those assets... utter misunderstanding of how such assets are priced in an efficient market.... If you take money today in exchange for that share of stock, you have captured the present value of all its future benefits... an asset's price make you indifferent between holding the price in cash and holding the asset.... America becomes no poorer when an American accepts Chinese cash for a share of IBM.... Before, the American held stock. After, the American held cash equal to the present value of the stock's future earnings potential...

Let us summarize the transaction. Chinese investors buy shares of IBM from us Americans. They pay us in yuan. We Americans take those yuan and use them to buy a bunch of frozen shrimp and a bunch of running shoes from producers in China. We eat the shrimp. We go jogging and wear out the running shoes. Next year the profits the shareholders of IBM earn are credited to some guys in China rather than to some of us. Our national product is thus reduced by the amount of the dividends and retained earnings credited to the foreign owners.

We Americans are poorer in an income sense: the trade deficit-creating transactions have reduced next year's national product (and national product in every year thereafter). We Americans are poorer in a wealth sense as well: a greater share of IBM is owned by foreigners, and there is no compensating greater share of a foreign company owned by Americans.

Donald Luskin--somehow--fails to understand this.

I will not bother to observe that Luskin's quotes from the Post nowhere say anything close to "trade deficit necessarily entails debt creation."

Posted by DeLong at 08:56 PM | Comments (0) | TrackBack

Our Virgil Speaks

Matt McIrvin, a veritable Virgil of guides through physics, brings light to those of us who dwell in darkness:

A Physics Puzzlement

Not to mention:

Some Frequently Asked Questions About Virtual Particles

And:

A Usenet post on QM interpretation

which I understand to be the observation that everything observable one might get out of the "collapse of the wave function" one has already gotten out of decoherence.

Posted by DeLong at 08:53 PM | Comments (0) | TrackBack

Electronic Text Center at UVa Library

A very nice resource:

Electronic Text Center at UVa Library .

Posted by DeLong at 08:51 PM | Comments (0) | TrackBack

Teach Both Sides!

Another possible explanation for the evolution of life that children should be taught about in schools:

It's strange. If I were a theocrat, I would want to keep my God as far away from the process of evolution as possible. What conclusions, after all, would you reach (i) after being told that evolution was guided by an Intelligent Designer and (ii) after thinking a little bit about:

?

As flies to wanton boys are we to the Intelligent Designers.

Posted by DeLong at 08:50 PM | Comments (0) | TrackBack

Learning Curves' List of August Holidays

There are four of them:

Learning Curves: There Are No Holidays in August:

August 7: Wear Your Pajamas All Day Day
August 8: Create Your Own Holiday Day
August 15: Feast of the Assumption
August 20: Unable to Attend Your Back-to-School BBQ Day

Posted by DeLong at 08:48 PM | Comments (0) | TrackBack

Stupidest People Alive: The Competition Heats Up

Donald Luskin is going to have to work very hard to keep his title. Just saying.

Here we have Charles Krauthammer, who wrote that:

Times Online: the idea of teaching intelligent design -- creationism's "modern step-child" -- was "insane". "To teach it as science is to encourage the supercilious caricature of America as a nation in the thrall of a religious authority," [Krauthammer] wrote. "To impose it on the teaching of evolution is ridiculous."

But, Krauthammer goes on to say, even though teaching it is insane, for George W. Bush to advocate teaching it is clever and good:

Times Online: [Krauthammer] added: "If you look at this purely as a cynical political move, it will help in the heartlands and people of my ilk care a lot more about Iraq than about textbooks in Kansas."

And here, from National Review, we have Cliff May positing that all spouses of American diplomats should be suspected of being undercover CIA agents:

The Corner on National Review Online: VALERIE WILSON A.K.A. VALERIE PLAME [Cliff May]From Wizbang via Instapundit: "So, via Who's Who, the name 'Valerie Plame' has been associated publicly with Joe Wilson since the Clinton era - nice secret..." Yes, and you see what this means? It means that for years, anyone who met Valerie Plame while she was "under cover" posing as an energy analyst for a private company could have very easily found out from the most open of sources that she was married to an American diplomat.

You think that might have made them a tad suspicious that she could have some kind of link to the U.S. government? Nah! Again, what this really suggests is that the agency's tradecraft had become as sloppy as its analysis...

We also have Kathryn Lopez, who cannot be described by mere words:

Roger Ailes: Kathryn Jean Lopez:

I CERTAINLY KNOW LIFE DIDN'T BEGIN IN THE FALL OF 2001, BUT... [Kathryn Jean Lopez] Am I wrong to be justifiably uncomfortable with the Hiroshima headline in the Washington Post today? "The Original Ground Zero." Anyone who's lived in America in the past few years knows what "Ground Zero" conjures up. What we dropped in Japan is such a complicated question. What was done to us on 9/11/01 has no reasonable-people-can-disagree justification. I am pretty sure I am reading way too much into that Post headline, but it left me feeling like it should have been written some other way.

"Ground Zero" at Hiroshima has been called "Ground Zero" since 1945:

Ground zero - Wikipedia, the free encyclopedia: Ground zero... in the case of a bomb designed to explode in the air, it refers to the point on the ground directly below the bomb at the moment of detonation.... [I]t is, of course, the point of highest damage. Around that spot are drawn concentric circles showing how far out from the impact point the damage is. The term has chiefly come to be associated with nuclear explosions, but is also used for earthquakes, epidemics and other disasters.

It was military slang--used at the Trinity site where the weapon tower for the first nuclear weapon was at point 'zero'--and moved into general use very shortly after the end of World War II...

Posted by DeLong at 08:46 PM | Comments (0) | TrackBack

Hiroshima Day

From Dean G. Acheson (1961), Sketches from Life of Men I Have Known (New York: Harper and Brothers):

Winston Churchill asks Harry Truman a question:

Mr. Churchill turned to the President on his right, with devastating effect: "Mr. President, I hope you have your answer ready for that hour when you and I stand before St. Peter and he says, 'I understand you two are responsible for putting off those atomic bombs. What have you got to say for yourselves?'"...

Posted by DeLong at 08:44 PM | Comments (0) | TrackBack

The State of NASA

An excellent take on the current state of NASA's manned spaceflight programs:

Idle Words: The [space] station's inordinately expensive modules have mainly come from foreign space agencies, ensuring that even a NASA administrator foolhardy enough to let the thing drop into the sea would contravene a fistful of international treaties. And the station requires a permanent crew, a trick NASA learned from the Shuttle, so that there can be no question of mothballing it or converting it into an unmanned research platform... a perfectly self-contained manned space program, in which the Shuttle goes up to save the Space Station (undermanned, incomplete, breaking down, filled with garbage, and dropping), and the Space Station offers the Shuttle a mission and a destination.... This closed cycle is so perfect that the last NASA administrator even cancelled the only mission in which there was a compelling need for a manned space flight - the Hubble telescope repair and upgrade - on the grounds that it would be too dangerous... thereby detaching the program from its last connection to reason and leaving it free to float off into its current absurdist theater of backflips, gap fillers, Canadarms and heroic expeditions to the bottom of the spacecraft....

To the uneducated mind, it would seem we could accomplish our current manned space flight objectives more easily by not launching any astronauts into space at all -- leaving the Shuttle and ISS on the ground would result in massive savings without the slighest impact on basic science, while also increasing mission safety by many orders of magnitude. It might even bring mission costs within the original 1970's estimates, and allow us to continue the Shuttle program well into the middle of the century.

But NASA dismisses such helpful suggestions as unworthy of its mission of 'exploration', likening critics of manned space flight to those Europeans in the 1500's who would have cancelled the great voyages of discovery rather than face the loss of one more ship.

Of course, the great explorers of the 1500's did not sail endlessly back and forth a hundred miles off the coast of Portugal, nor did they construct a massive artificial island they could repair to if their boat sprang a leak. And we must remember that space is called space for a reason - there is nothing in it, at least not where the Shuttle goes, save for a few fast-moving pieces of junk from the last few times we went up there, forty years ago. The interesting bits in space are all much further away, and we have not paid them a visit since 1972. In fact, despite an ambitious "Vision for Space Exploration", there seems to be no mandate or interest in pursuing this kind of exploration, and all the significant deadlines are pushed comfortably past the tenure of incumbent politicians.

Meanwhile, while the Shuttle has been up on blocks, a wealth of unmanned probes has been doing exactly the kind of exploration NASA considers so important, except without the encumbrance of big hairless monkeys on board. And therein lies another awkward fact for NASA. While half the NASA budget gets eaten by the manned space program, the other half is quietly spent on true aerospace work and a variety of robotic probes of immense scientific value.... And when some of those unmanned craft fail, no one is killed, and the unmanned program is not halted for three years....

NASA is convinced that stopping the Shuttle program would mean an indefinite end to American manned space flight, and so it will go to almost any length to make sure there is a continuous manned presence.... But this attitude... do[es] damage to... real manned space exploration. Sinking half the NASA budget into the Shuttle and ISS precludes... [other] work... their upkeep and safety requirements are becoming an expensive antiquarian exercise, forcing engineers to spend their ingenuity repairing obsolete components and devising expensive maintenance techniques for sclerotic spacecraft, rather than applying their lessons to a new generation of rockets. The retardant effect the Shuttle has had on technology (like the two decades long freeze in expendable rocket development) outweighs any of its modest initial benefits to materials science, aerodynamics, and rocket design...

Posted by DeLong at 08:43 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (Michael Barone Edition)

Via TBogg. You see, Michael Barone thinks it's funny because the story is that Chinese restaurant owners are so cheap that...

USNews.com: The National Interest: Rules to live by (8/2/05): Teddy Kennedy... is against [recess appointments] now and was for them then. You could probably easily find similar inconsistent statements by Republicans. All of which only illustrates my First Rule of Life: All process arguments are insincere, including this one. My Second Rule of Life, if you're interested is: Never eat in a Chinese restaurant next door to an animal shelter...

What a dork.

Posted by DeLong at 08:41 PM | Comments (0) | TrackBack

Watching Dr. Strangelove

I'd forgotten the Playboy model with the artistically-draped copy of Foreign Affairs.

Posted by DeLong at 08:39 PM | Comments (0) | TrackBack

From Dean Acheson

From Dean G. Acheson (1961), Sketches from Life of Men I Have Known (New York: Harper and Brothers):

General Maxwell Taylor, then Commandant of our Sector in Berlin, had a reception for me to which the other three Commandants were, of course, invited. General Chuikov, he said, would not come: he had not attended any Western social function for months. I offered a ten-dollar bet that he would. General Taylor took it. The reception had been going for an hour and my chances seemed pretty dim. Then there was a great clatter at the door and in came, not only General Chuikov, but all of his staff. (General Taylor refused to pay a bonus for staff.)

While we were exchanging noisy greetings and he was demanding [that I do my Andrei] Vyshinksy [imitation], up came a waiter with a tray of cocktails, a large tray. Chuikov took a solemn appraising look and began to drink them, before I realized his mistaken assumption of a challenge.

"You don't have to drink all of those, General," I assured him. "They're for everybody." He looked immensely relieved. "Good Lord," I went on. "You must have a tin stomach."... He shook his head. "No," he said, "steel."...

I can safely say that my life is poorer by virtue of the fact that I will never see Dean Gooderham Acheson do his Andrei Ianuarevich Vyshinsky imitation. (Vyshinsky was chief prosecutor at Stalin's show trials in the 1930s.)

General Vasily Ivanovich Chuikov was an utter bastard: he shot five times as many of his own men for desertion during the Battle of Stalingrad as allied soldiers died on D-Day.

General Vasily Ivanovich Chuikov was a very good general: we all should be very grateful for what his 62nd Army did during the Battle of Stalingrad.

Posted by DeLong at 08:37 PM | Comments (0) | TrackBack

Has George Bush already admitted defeat in Iraq?

Has George Bush already admitted defeat in Iraq? :

Michael Glitz, writing over at Americablog, has a killer post up today that really nails the heart of the matter in Iraq.

Though you wouldn't know it from my lack of political blogging over the past couple of weeks, the fact that there is a concerted effort by this administration to "rebrand" the War on Terror has not escaped my attention. The reasons were obvious to me initially: The administration is attempting to make the war, for which support is floundering in the polls and the situation on the ground has grown more and more untenable, more palatable to the American public, even as we are over a year away from the midterm elections. If the defeat of Paul Hackett in Ohio, in which a formerly 75% Republican district became a horse race in a matter of weeks, is any indication, the mood in America is not as strongly Red as it was in 2004.

Of course, in 2004, it wasn't as strongly Red as the outcome of the election made it appear to be.

And, so, the concerted effort by the Bush administration to rename the War on Terror as "A War on Extremism" (or, as Atrios pointed out today from a speech Bush gave last year, "the struggle against ideological extremists who do not believe in free societies who happen to use terror as a weapon to try to shake the conscience of the free world." How Clintonian is that?), began, as the 2006 elections (and the prospect of zero traction by the Republicans) loom on the horizon.

But Michael points out that there may be more to it.

As the New Yorker article that he links to says:

The Administration is admitting that its strategy since September 11th has failed, without really admitting it. The single-minded emphasis on hunting down terrorists has failed ("Hearts and minds are more important than capturing and killing people," Gregson said). The use of military force as the country's primary and, at times, only response has failed, and has stretched the Army and the Marines to the breaking point. Unilateralism has failed.

Whew...

Despite the constant hand-wringing on the right that the good news in Iraq is never reported (another example of the curious victim mentality that a party who holds the Presidency, the Congress, is on the verge of holding the Supreme Court, does hold the majority of judicial seats in the country, as well as most Governors and state legislators, continues to fall back on), the news is not good from Iraq. Michael lands his most devastating blow, here:

According to the last numbers of the Pentagon circa Sen. Joe Biden (numbers no one in the Bush Administration has questioned and which Bush is careful to allude to in his public comments):

Iraq has 2000 troops capable of fighting on their own. 2000.

Iraq has maybe 9000 troops who can fight with our help.

The rest of the numbers they thrown about are meaningless because those people can't fight with or without our help and there's growing evidence they couldn't be properly armed even if they were capable.

So, 2000 troops. Let's assume Bush increases that number 100% by next spring. Heck, let's make that 200%. Okay, 1000%. Fine, let's be super-generous and say 2000%. That will mean by next spring Iraq has, if they're lucky, 40,000 troops capable of fighting on their own to secure a country WE can't secure with the best fighting force in the world.

The United States, initially, took 260,000 troops to Iraq, with another 45,000 from Great Britain.

It's time that the American public took a real look at Iraq. I'm sort of ambivalent about pulling out because, if we stay or if we go, it becomes more and more apparent with each passing day that we've created such a problem for ourselves there that 25 years of American occupation may not fix it. While I have respect for the "We can't set a deadline" argument, it almost doesn't matter anymore. While we may not have lost the war against Saddam Hussein and his army, we have lost the war against terror in Iraq. It's an incredible defeat, really, seeing as there were no terrorists there before we showed up. We didn't just grab defeat out of the hands of victory: we grabbed defeat out of the hands of people who weren't fighting us there in the first place.

And it's severely crippled our ability to, truly, fight terrorism (which is an effort that all but the most pacifist of Democrats supported, from September 12, 2001 on). To try to distract the American people from Iraq by rebranding the war as something more than it is... well, it's a last ditch effort to fool us (and don't confuse my resolute tone with the fact that I don't believe that they'll be largely successful at duping an apathetic American populice who is more engaged with the facts in the Nathalie Holloway story than this).

We have lost the war in Iraq. It's that simple. The most powerful fighting force in the world has been defeated in Iraq for a myriad of reasons, not the least of which is poor planning. This defeat should be laid solely on the shoulders of George W. Bush. This isn't and issue like the economy in 2004, which Bush could blame on Clinton, or even the 9/11 attacks themselves (which they tried desperately to blame on previous administrations). This failure is one that George Bush went into alone, and he, alone, bears responsibility for the results.

Posted by DeLong at 08:34 PM | Comments (0) | TrackBack

What Are We Doing in Iraq?

Unqualified Offerings parses the U.S. military's attitude towards hearts-and-minds in Iraq:

Famous Last Words: "With a heavy dose of fear and violence, and a lot of money for projects, I think we can convince these people that we are here to help them." Lt. Colonel Nate Sassaman, quoted by Dexter Filkins in the NYT, December 7, 2003.

So what was the problem, do you think?

  1. Not enough fear and violence?
  2. Not enough money for projects?
  3. Cockamamie theory in the first place?

And:

Famous Last Words II:

David Clark Scott, writing in the Christian Science Monitor, November 26, 2003:

US soldiers trying to create goodwill in Fallujah echo the bitterness. "We thought we were doing something good when we built a soccer field," says Maj. Allen Vaught. "We brought in engineers, earthmovers, welded goal posts, and trucked in some smooth dirt." The next day looters took everything. "Goal posts, nets, and the good dirt. How can you help people who steal dirt?" he asks incredulously.

I am reliably assured that there are all kinds of libertarians with all kinds of views on the war in Iraq, the Global War on Terror and the global struggle against violent extremism. But it seems to me that any libertarian ought to have no trouble listing the conceptual errors in Major Vaught's plaint. Just to get you started: Collectivism: Lumping "people" who weren't involved in removing things from the soccer field in with "people" who were is sloppy thinking.... Dispersal of Information: A soccer field may not have been the most productive use of fertile topsoil for that town at that time. Fallujans may have been able to increase their utility by turning the piping and netting of the goals to other uses.... (The article offers no evidence that troops first asked locals, "Hey, how about we build you guys a soccer field?")...

A soccer field's worth of dirt is multiple dump truck loads. Somebody really wanted the stuff. And there was no functioning order enforcing the U.S. military's view of what should be what.

Posted by DeLong at 08:32 PM | Comments (0) | TrackBack

Cro-Magnon Communication

The Twelve-Year-Old is on strike. She refuses to write more than one paragraph of a letter detailing her day to our pre-Neolithic Revolution ancestors. Why? Because she says the idea is stupid because it cannot be done--the Singularity, you see, is not in our future but in our past.

Nevertheless it is quite a good first paragraph:

I was jigging to my iPod when my friend Noelle rode up in the front passenger seat of her family's minivan. "Will your parents let you come see 'The Wedding Crashers'?" she asked.

She has a point. "Jigging" can be gotten across. And the East African Plains Ape social dynamics can be gotten across--friends, marriage, excessive parental control of the activities of adolescent females, et cetera (although not all of them: the idea of a "wedding crasher" is a very complicated concept to get across to a hunter-gatherer who has lived in a group of 40 or so her whole life).

But the rest?

Maybe I should have reversed the assignment: What kinds of science fiction would hunter-gatherers have written?

Perhaps:

"As you know, Bob," said Throg son of Throg son of Throg, "these new flint deposits allow us to make 147% more hand-axes from each flint core. That will be a great help in butchering the mastadon carcasses and preparing for the winter. If only we could build fires on a large enough scale to make the cold of the winter less deep."

"Build enough fires to warm the whole world? There will never be enough people to build enough fires to warm the world by even 1/212 of the difference between the coldness of ice and the hotness of the cloud that comes when you forget and leave the water-pot on the fire too long!"

Or:

"But we can dream dreams. Someday, in the far future, there will be not hundreds of people but hundreds of hundreds of hundreds of hundreds!"

"No."

"And they will acknowledge the leadership of one man--a man from the hot country of the Permian Basin."

"That's just not credible. There's so little water there. Anyone who voluntarily lived there would automatically disqualify himself from leadership by virtue of obvious stupidiy."

"And he will believe that changes in the kinds of plants and animals come about not because of mutation, resulting variation, and natural selection but because they are impelled to do so by the guidance of a Great Spirit!"

"Now you've gone too far--over into complete fantasy."

Posted by DeLong at 08:30 PM | Comments (0) | TrackBack

"Hated and Not Feared"

Does anybody dispute that the Bush administration's adventure in Iraq has inflicted the worst strategic defeat on America in fifty years--the worst since Douglas MacArthur triggered Chinese intervention in the Korean War?

Stanley Kober writes:

Coalition for a Realistic Foreign Policy: Karim Sadjadpour... in Beirut's Daily Star on September 17, 2004, [writes]:

While Bush administration officials talked of how success in Iraq would change the political culture of the Middle East, few seemed to contemplate the regional repercussions for Washington if things didn't go as planned. In the case of Iran, the chaotic state of postwar Iraq has served not to intimidate Tehran's mullahs but rather to embolden them. Today, nearly 17 months after the fall of Baghdad, Iran's Islamic regime appears more entrenched than it has been in over a decade.... Tehran's ruling mullahs have far more reason to smile than their counterparts in Washington. Rather than extinguish Iran's Islamic regime, the Iraq war seems to have given it new life.

And finally... Barry Rubin in the Jerusalem Post:

Something remarkable has happened, even by the Middle East's usual standards. For the first time in history states in the region are conducting a systematic, covert war against the United States. The question is, what can America do about it? Not much....

Having gone into Iraq and found that step so controversial and relatively unsuccessful, the US is not going to undertake other offensive actions, whether or not they seem justifiable to some observers. Arguably, any gain in the "fear factor" brought about by the US overthrow of Saddam is being eroded. Those who argue, in the words of Ayatollah Ruhollah Khomeini two decades ago, that the US cannot do a "damn thing" are having that feeling reinforced today.

The Iraq war's outcome has undermined the credibility of US power no matter how long American forces remain in Iraq. Indeed, one could argue that the longer they remain, the worse the problem will become...

In his classic work, The Prince, Machiavelli wrote "a prince ought to inspire fear in such a way that, if he does not win love, he avoids hatred; because he can endure very well being feared whilst he is not hated." In other words, the best position to be in is to be feared and loved; the next best is to be feared and not hated; and the prince should avoid being hated and feared. Tellingly, Machiavelli did not even consider the possibility of being hated and not feared - presumably because a prince in that position would not be a prince for very long.

Unfortunately, that seems to be the situation in which the United States now finds itself. Fear of American power is diminishing, while animosity toward U.S. policy is increasing. We are, in short, in the worst situation possible, and as a consequence we can expect further grim challenges ahead.

Posted by DeLong at 08:28 PM | Comments (0) | TrackBack

The Mighty Intellect of Irving Kristol

Paul Krugman writes:

Design for Confusion - New York Times: Mr. Kristol... [used] The Public Interest to promote... [the] central claim - that tax cuts have such miraculous positive effects on the economy that they pay for themselves - [that] has never been backed by evidence. He would later concede, or perhaps boast, that he had a "cavalier attitude toward the budget deficit." "Political effectiveness was the priority," he wrote in 1995, "not the accounting deficiencies of government."...

Was it John Stuart Mill who said that the conservatives are the stupid party?

Posted by DeLong at 08:26 PM | Comments (0) | TrackBack

John McGowan Seeks a Guide for the Perplexed

He writes:

John McGowan: I also know that Professor DeLong is not running an Ann Landers service for the economically challenged. But I am encouraged by his having just today posted a request to the physicists of the world to help him in his perplexity about the attraction between negative and positive particles. So here’s my request...:

In its article on the energy bill last week, the Washington Post writes about “the oil and gas industry, which has seen record profits in recent months.” My question: how does the rising price of oil translate into more profits for Exxon?...

ExxonMobil owns a lot of the oil it sells. It doesn't have to buy it from anybody. Thus its costs go up by little when the price of oil goes up. But its revenues--that's a different story. The prices of the refined petroleum products it sells go way up when the price of oil goes up. And so the profits it reports go way up as well.

Furthermore, if the oil market is completely demand driven, why hasn’t the price gone up even further?... [T]he companies have got the consumer by the balls. Why not just squeeze harder?... But what keeps Exxon from maximizing what it charges for its product?...

Hard as it may to believe, the oil companies are scared enough of the antitrust authorities not to explicitly collude with each other to charge higher prices, and are inept at creating and maintaining market institutions that would support informal collusion. The only times when oil prices have been seriously and consistetly elevated well above marginal cost are (a) in the days of standard oil, (b) when the Texas Railroad Commission ruled the earth, and (c) in OPEC's heyday. What keeps Exxon from charging even more is its fear that its customers will buy their petroleum products from somebody else if it tries.

The final possibility is that the oil futures market is pricing oil way beyond its current actual cost of production. And if that’s the case, then high oil prices on that market are, at least in the short term, simply a bonanza for oil companies. Maybe that’s the case. I don’t know.

The cost of production of which oil? There is oil that costs $5 a barrel to extract. There is oil that costs $15 a barrel to extract. There is oil that costs $55 a barrel to extract. And then there are all those places with oil--oil shale, oil sands, et cetera, et cetera--where the oil would cost more than $60 a barrel to extract. The oil futures market is guessing (a) what level of demand for oil there will be in the future, and (b) how much it will cost to pump that last barrel of oil to satisfy that last little bit of demand. But for every barrel other than that last, most expensive barrel there is a wedge (and in many cases an enormous wedge) between the market price and that particular barrel's cost of production. It's an "economic rent."

I have an even larger question. Did the increased emphasis on “primary responsibility to the shareholders” since the mid-1980s bring about a marked change in what are considered acceptable profit margins for big American companies?... When I arrived in Rochester in 1984, Kodak employed 54,000 people in the Rochester area. In 1986 (or so), Kodak was the target of a hostile takeover bid because the company (an absolute model of a paternalistic employer and civic booster) was seen as “underperforming.” The company fought off that takeover bid, but within eighteen months the CEO had been fired, a new management team was brought in, and well before the recession of the early 1990s, Kodak had embarked on the downsizing that now has it employing less than 30,000 people in Rochester. Now, I know that Kodak’s transformation has many complex causes.... But Kodak’s first move toward cutting costs was not a response to direct competition or to the market’s resistance to its products. It was about increasing the profit margin. A once acceptable profit margin had now become unacceptable...

Ah. This is one of the great unresolved questions in the economic history of America in the twentieth century. There are, broadly speaking, three interpretations of what went on:

The first is the interpretation of a whole bunch of finance economists starting from Adolf Berle and Gardiner Means writing in the 1930s, and including my brother-in-law Paul Mahoney. It is that a whole bunch of changes in corporate law and financial practice in the early twentieth century culminating in the New Deal shifted a great deal of practical power away from "owners" and to "managers." Shareholders collected their dividends, yes. On those rare occasions where companies wanted to issue more stock managers were very solicitous of shareholder concerns, yes. But most of the time managers did what they wanted, chose their own successors, and set corporate policy with not that much attention to maximizing company stock prices either in the short run or the long run. And shareholders couldn't do much of anything about that: it was simply too costly and too hard to stage a successful proxy fight to throw out the incumbent managers at the company annual meeting.

Now this does not mean that shareholders were "exploited." Managers did care about the level of dividends and the price of the stock--it was a big loss of face at the country club to report poor financial numbers. But managers cared about other things as well--being pillars of their community, indulging in natural benevolence toward their subordinates, and avoiding nasty headlines in the local press, among others.

Now if you're a finance economist, you see this system as "inefficient": companies are wasting a lot of money by employing too many people in jobs that are cushier than they have to be, and while this is good for the workers of the company it also raises costs and prices, and so the gains to workers are outweighed by the losses to shareholders (who collect lower dividends) and consumers (who pay higher prices). If you're John Kenneth Galbraith, you see this technostructure--this technocratic corporate elite of managerial capitalism--as broadly a good thing, because managers are interested in the fundamentals of production and human relations rather than in prettying up their numbers for Wall Street road shows.

In any event, this system comes to an end in the 1980s as Wall Street figures out how to successfully undertake hostile takeovers, and as the threat of being subject to a hostile takeover pushes even those managers who would have been very happy under the old system to pay more attention to the bottom line as a way of boosting current stock prices and making the benefits to outsiders' undertaking a hostile takeover much less.

That's the first interpretation (in its two flavors).

The second interpretation is one that has been pushed by Larry Summers and Andrei Shleifer. It notes that organizations run on patterns of long-term trust and confidence, and that it is devastating to an organization's effectiveness for those at the top to break the established implicit long-run bargains that the organization runs on. Under this interpretation, the paternalistic-employer-and-civic-booster model of the American corporation that dominated the first post-WWII decades was an effective and efficient system of corporate organization. Come the hostile takeover, however, the corporate raiders can replace the old management that had made and kept the implicit long-run bargains with new managers who have no attachment to them, and are willing to do the bidding of the shareholders and the takeover artists. This "breach of trust" moves us to a system of corporate organization that is less efficient and effective for society as a whole--workers who don't trust their bosses won't spend time learning things that are important if you work for this particular company but not in the larger job market, firms won't invest in the community in an attempt to make it a place where workers would like to stay, et cetera. But this new form does expropriate a lot of the value of the firm that was shared with workers-as-stakeholders, and transfer the value to the bosses and the shareholders.

There is also a third interpretation: that the coming of the Volcker disinflation, the dominance of central bankers, and the elevation of price stability over full employment as a goal of governance was bound to weaken American workers' power enough to make the Kodak model clearly less profitable than the more "Hard Times" alternative.

I find that I'm 30% a finance economist, 20% a Galbraithian, 20% a follower of the Summers-Shleifer "breach of trust", and 30% a believer that the high unemployment of the Volcker disinflation was the key in its shift of power away from workers.

You will observe that I give 0% weight to the hypothesis that it was a shift in culture--a rise in the belief that managers had "primary responsibility to the shareholders"--that was responsible for the very real change that you ask about. This is a professional deformation: for 27 years I have been trained to look first at changes in technologies, resources, institutions, forms of organization, and incentives, and only after all of these have failed to give answers to throw up my hands and disappear in a "blaze of amateur sociology."

How much of a difference did this shift--whatever caused it--actually make? Here's a graph from the National Income and Product Accounts: net operating surplus of private enterprises as a share of net domestic income. It shows (a) a large and steep fall in the rate of profit at the end of the 1960s, (b) a partial jump back up in the 1980s. So figure that these changes in the 1980s, whatever caused them, look to have boosted profits by about three percent of total income.

Posted by DeLong at 08:24 PM | Comments (0) | TrackBack

WSJ.com - Search for Fed Chairman Widens

Greg Ip is overly polite:

WSJ.com - Search for Fed Chairman Widens: By GREG IP: The White House search for a successor to Federal Reserve Chairman Alan Greenspan... goes beyond the three candidates mentioned most often, said people familiar with matter. For months, the three candidates cited most frequently have been economists Martin Feldstein of Harvard University, Glenn Hubbard of Columbia University and Ben Bernanke, chairman of President Bush's Council of Economic Advisers. But the White House also is looking at other candidates, including former Bush adviser Lawrence Lindsey....

Vice President Dick Cheney and National Economic Council Director Allan Hubbard are leading the search, one former administration official said.... Fed governor Donald Kohn, a former senior staffer at the central bank and a political independent, remains a favorite of Fed staff as a potential Greenspan successor. But Mr. Bush is unlikely to nominate anyone who isn't a Republican.

One reason the White House is looking beyond the three most prominent candidates is that it is "very concerned that whoever they get not only has understanding of monetary policy, but experience working with financial markets and the ability to use business and market contacts to get ahead of the statistical economic data," said one former administration official...

Larry Lindsey has powerful strengths (and some weaknesses) as a potential Fed candidate. But his strengths do not include "working with financial markets" and the "ability to use business and market contacts to get ahead of the statistical economic data."

The message that I get from Greg Ip's article is that the Fed Chair search is yet another Cheney-led Bush initiative where they haven't a clue as to what they should be doing.

Posted by DeLong at 08:23 PM | Comments (0) | TrackBack

A Physics Puzzlement

So I reread Richard Feynman's magnificent QED: The Strange Theory of Light and Matter. At the end of which I have the warm glow that comes with understanding Quantum Electrodynamics--albeit at the level of a Mayan peasant's understanding of how the priests calculate when it's time for the festivals.

And then it hits me: I understand (kinda) how electrons and photons interact and how one electron emits and another one absorbs a photon and as a result momentum is transferred from one electron to the other and while they were getting closer together they are now drawing further apart--that is, I understand (kinda) how QED predicts that two negative charges repel each other.

But why do a positive and a negative charge attract each other? That remains a total mystery to me.

Can anybody help?

Posted by DeLong at 08:21 PM | Comments (0) | TrackBack

Fabbrica d'Armi Pietro Beretta S.p.A.

From the Beretta International Website:

[T]he Beretta Holding Group... key manufacturers of field and competition firearms and optics, as well as trading and distribution companies in Italy and abroad, with a total work force of 2,500 and an approximate annual turnover of 370 million euros.... Fabbrica d’Armi Pietro Beretta S.p.A. (Pietro Beretta arms manufacturing company), which has been handed down over fifteen generations, was active in the village of Gardone Val Trompia in the fifteenth century. Documentary evidence for the family business dates back to 1526.

From the legendary Bartolomeo (ca. 1498 to 1565/8) to Pietro (1791 to 1853), who was the first in the family to begin expansion of the business, to his son Giuseppe (1840-1903), who supervised the transition from national to international horizons, to Pietro (1870-1957), who was able to transform the artisan business into a manufacturing concern by introducing modern production techniques, to his sons Giuseppe (1906-1993) and Carlo (1908-1984), who gave the firm its multinational character, leading the Company to success in the military and commercial markets, Beretta has always produced firearms....

Now Robert Waldmann informs us of Bill Frist's concern for this fine American company, and how important it is that U.S. forces in Iraq be equipped with Beretta handguns rather than with guns from "foreign manufacturers":

Robert's Stochastic thoughts: Is Bill Frist... trying to paralyse Democrats with laughter?... Rather than allow votes on amendments to, among other things, ban torture Bill Frist pulled the defence spending bill... [and turned to] a bill protecting handgun manufacturers from lawsuits. Frist claims this [handgun liability bill] is a way to support the troops in Iraq:

...Frist said that Beretta, the manufacturer of pistols to U.S. forces in Iraq, warned that it may go bankrupt if the lawsuits are not stopped. "These frivolous suits threaten a domestic industry that is critical to our national defense," Frist said. "Given the profusion of litigation, the Department of Defense faces the very real prospect of outsourcing sidearms for our soldiers to foreign manufacturers."

Beretta, as the name suggests, is an old Italian family firm.... [M]aybe it's all a trick. Hunter [at Daily Kos] is already disabled by laughter and unable to point out the Italianess of Beretta...

No matter what Bill Frist and company do or do not do to protect firearms manufacturers in the United States, the fine old Italian firm of Beretta will still be around and still be able to support America's troops in Iraq.

Posted by DeLong at 08:20 PM | Comments (0) | TrackBack

Healing the Terrible Split within the Democratic Party

Fafblog! worries about the yawning gulf within the Democratic Party:

Fafblog! the whole worlds only source for Fafblog.: THE GREAT DIVORCE: Sometimes I just can't stop worryin about the Democratic Party an its terrible internal divisions an stuff.

On the one side you got your centrist DLC-types with their balanced budgets an their lax gun control regulation an their health care plans an their reverence for Bill Clinton.

On the other side you got your hard-core lefty Howard Dean types with their balanced budgets an their lax gun control regulation an their health care plans an their reverence for Bill Clinton.

If only there was some kinda way to bridge this vast an terrible ideological gap!

I have an idea--it just might work. Let's start a new, "third way" movement within the Democratic Party. Its platform will have four major planks:

  1. Balanced budgets.
  2. Lax gun-control regulations.
  3. Health care reform.
  4. Reverence for Bill Clinton.

Maybe this can bring both sides together.

Posted by DeLong at 08:18 PM | Comments (0) | TrackBack

Daniel Davies on George Galloway

And on the content of Millian liberalism:

Crooked Timber: You can preach from the pulpit or publish in your newspaper that group X are the spawn of Satan and that God abominates their presence. But when you start wheeling out the metaphors and stirring up the crowd, then you've crossed a line my friend; the line between trying to convince people by argument and trying to force them into your view of the world by things that are not arguments.

[George] Galloway isn't speaking truth to power on Al-Jazeera like he was in the House of Representatives; he's speaking untruths to the powerless. And if you're doing that, you mind your language or you start undercutting the basis of your right to free speech. This is hardly a first offence too, but it's the most egregious one I've seen...

Posted by DeLong at 08:16 PM | Comments (0) | TrackBack

A Bad Week in Iraq

Bad days in Iraq. Twenty marines dead:

14 U.S. Marines Killed in Iraq When Bomb Hits Their Vehicle - New York Times: BAGHDAD, Iraq, Aug. 3 - Fourteen marines were killed early today when their troop carrier struck a gigantic roadside bomb in the western town of Haditha, one of the single deadliest bomb attacks on American troops since the invasion here in March 2003.... The American command here provided few details of the attack, but said the marines had been riding in an amphibious troop carrier "during combat operations".... The vehicles are lightly armored. There were indications that the roadside bomb used in the attack was quite large; the marines said that only one of the soldiers had been wounded, while 14 had been killed. American commanders say that in recent months the insurgents have been exploding bigger and more sophisticated bombs, some of which focus the blast in a single direction.

The attack brought the number of dead marines in Haditha to 20 in less than two days. On Monday, guerrillas ambushed and killed a group of six marine snipers who were moving through the town on foot...

Also dead is one of the best American journalists in Iraq:

Unqualified Offerings: Nell e-mails the news that Steven Vincent is dead:

Mr Vincent was abducted with his female Iraqi translator at gun point by men in a police car on Tuesday.

His bullet-riddled body was found on the side of a highway south of [Basra] a few hours later.

He had been writing a book about the city, where insurgents have recently stepped up their attacks.

Vincent was the author of In the Red Zone <http://spencepublishing.typepad.com/in_the_red_zone/> and proprietor of its associated blog. He was another of the mad dreamers of the last few years who confused hopes with plans, but he stood head and shoulders above his fellows, first for his courage, secondly for his absolute refusal to start moving goalposts. He saw the liberation of Iraq as the great cause of his day. So rather than sit home and talk to anonymous bureaucrats or retype governent press releases, he went to Iraq, twice. His great passion was women's rights, in the Arab world generally and Iraq in particular. He is dead because he refused to trim his sense of justice to fit the latest fashions in colonial PR - on the ground in Basra, he reported the facts as he found them, blowing the whistle on Allied accomodation to theocracy and the increasing oppression of Iraq's women.

Posted by DeLong at 08:14 PM | Comments (0) | TrackBack

Social Security Reform

Mark Thoma wonders what kind of Social Securit reform is worth supporting:

Economist's View: AARP to Push for Reform Addressing Social Security Solvency: Whether for not a solvency crisis actually exists, it’s looking more and more like the ball is rolling towards reform addressing this issue. According to this report from Des Moines, the AARP has decided to push for reform that addresses long-run solvency and increases retirement savings.

AARP looks to refocus retirement debate, WhoTV, Des Moines, Iowa: The nation's largest group for older Americans wants to refocus the debate over Social Security on the need to keep the retirement system afloat. While much of the debate is over diverting tax money in private savings accounts, the A-A-R-P is using town meetings to discuss solvency. At a news conference in Des Moines today, spokesman Steve Carter says keeping Social Security solvent is essential because it's becoming an increasingly important component of retirement planning, due to some troubling trends. Carter says many private pension plans are eroding, and the overall savings rate is at its lowest point in decades...

With the AARP supporting reform involving solvency provisions, it looks to me like some sort of bill will come forward. Enhancing solvency requires increasing revenues or decreasing benefits. Is it time for the Democrats to coordinate behind a particular solvency plan? The politics of this are difficult. I'm not sure what the best strategy is going forward from here given my perception that the public believes that solvency is a problem and that a reform bill is likely.

Clearly the Democrats should get behind proposals that are good for the country--proposals that restore solvency in a balanced manner, set up automatic adjustments so that Social Security remains in balance, raise national savings, are competently implemented, and preserve the very valuable defined-benefit character of the current program.

A deal that I could easily get behind would:

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

David Stockman in the News

A lawsuit against former Reagan OMB head David Stockman. Mitchell Pacelle reports:

WSJ.com - Heard on the Street: [A]n institutional investor that met with Mr. Stockman in the weeks before the Chapter 11 filing has accused the onetime Reagan administration budget director and his partners of deception... contends Mr. Stockman induced it to buy debt by providing "materially false and misleading documents and information." The suit alleges that Mr. Stockman played a variety of games with the financial reports of the Troy, Mich., auto-parts giant in an effort to conceal the company's problems.

Mr. Stockman, who had remained publicly silent about the company since his May 12 resignation, denies the allegations as "unfounded and frequently irresponsible." In a written statement, he said he intends "to contest them vigorously."... Although Collins & Aikman was known earlier this year to be struggling, investors and customers alike were surprised by its rapid-fire Chapter 11 filing. As recently as mid-April, Mr. Stockman said in an interview with The Wall Street Journal that "the company has no intention of restructuring, nor do we see the need."

Between August 2004 and May 2005, MacKay Shields, which managed more than $39 billion in assets at the end of 2004, bought Collins & Aikman debt with a face value of about $153 million, the lawsuit said.... Mr. Stockman met with representatives of MacKay Shields... [on] March 23 to discuss the company's prospects. When the company sought bankruptcy protection, MacKay Shields lost "tens of millions of dollars overnight," the lawsuit said.

Mr. Stockman denies concealing the firm's woes.... He attributed the "unfortunate losses" suffered by stock and bond holders -- himself included -- to an "industry meltdown" caused by soaring raw-materials prices and the refusal of car makers to offer relief.

The lawsuit accuses Mr. Stockman of manipulating Collins & Aikman's results in four ways: improperly categorizing tens of millions of dollars of operating expenses as restructuring and impairment charges; inflating revenue by accelerating recognition of supplier rebates; creating false documentation to support phony receivables; and improperly inflating carrying values for goodwill.... The Troy manager said Mr. Stockman "improperly manipulated all of the accurate data that plant management provided to him to achieve whatever results he wanted to show to outsiders," according to the suit...

I have no information about the validity of these charges, but ""improperly manipulated all of the accurate data... to achieve whatever results he wanted to show to outsiders" is a very good description of Stockman's practice as head of OMB--and of the practice of his successors Mitch Daniels and Josh Bolten.

Posted by DeLong at 08:09 PM | Comments (0) | TrackBack

Greg Ip Reads the Mind of the Fed

He writes:

WSJ.com - Fed Sees Bond Market Hampering Its Steps to Keep Inflation in Check: By GREG IP: WASHINGTON -- As the Federal Reserve prepares to raise short-term interest rates again next week, officials there increasingly believe the bond market, which sets long-term rates, is diluting their efforts to tighten credit and contain inflation. The result: The longer the bond market keeps long-term rates unusually low, the further the Fed is likely to raise the short-term rates.... This dynamic marks a striking break from the past when the Fed typically saw sharply higher bond yields as a reason to lift short-term rates further and low yields as a reason to worry about the economy.

Fed officials say future rate moves mostly depend on what data indicate about growth and inflation. With inflation low but the economy steadily using up unused capacity, officials plan to keep raising short-term rates to... a level... between 3% and 5% that neither stimulates nor restrains economic growth.... Some policy makers worry that bond yields are being kept in check by overly complacent investor sentiment which could rapidly dissipate, pushing up mortgage rates and shaking the housing market.... The Fed is expected to raise the short-term rate to 3.5% on Tuesday. Since June of last year, the Fed has raised the Fed funds rate target from a 46-year low of 1% to 3.25%.

Yet, over the same period, the yield on the benchmark 10-year Treasury bond has declined. It fell from 4.7% to below 4% a month ago, although its has bounced back up to 4.3%.... If "special factors," such as increased investor confidence that inflation will remain low, or purchases of bonds by foreign central banks, are the reason for low bond yields, "the federal-funds rate probably needs to be somewhat higher than would otherwise be appropriate," Ms. Yellen said. But if the market is anticipating hard economic times, "a somewhat easier policy may be appropriate," she said. In the past month, other key Fed policy makers have come to view special factors as the likelier explanation for low long-term rates than [beliefs in future] economic weakness.... Mr. Greenspan last month strongly suggested that he thought investors may be complacent. "Risk takers have been encouraged by a perceived increase in economic stability to reach out to more distant time horizons," he said. "Long periods of relative stability often engender unrealistic expectations of its permanence and, at times, may lead to financial excess and economic stress."...

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

More "Guns, Germs, and Steel" Weirdness...

A correspondent sends me to another academic's take on Jared Diamond. Here's David H. Holberg, Chair, Department of Anthropology, Cornell University:

The Einaudi Center - Guns, Germs, and Steel: All of you who were involved in an initial way in thinking about the Diamond book might be interested to know that Yali, whose question Diamond claims prompted his book, is the subject of a relatively long study in 1964 by the anthropologist Peter Lawrence. (Diamond met Yali in 1972). I thank Jane Fajans (who works in New Guinea) for alerting me to what is an extraordinary account giving much greater depth to Yali and the question he asked. A good portion of Lawrence's book entitled Road Belong Cargo is devoted to Yali's role in millenarian movements and other political activities. Lawrence's account (as does other expert testimony) contradicts several of Diamond's representations about Yali. From what I have read so far, I would conclude that Diamond's representations are fundamentally misrepresentations which, unconsciously perhaps, disguise a racist and ethnocentric position...

It's beginning to look as if people like Ozma's calling Guns, Germs, and Steel "quasi-racist" and Tak's saying that it "perpetuates racism" may simply be aping their elders. It appears to be a thing their sub-group does in order to close the circle of discourse against outsiders--just as economists close the discourse to outsiders by saying "they don't have a mathematical model" and historians close to discourse to outsiders by saying "they don't have any new primary-source evidence." If so, Ozma's and Tak's claims that Diamond is "quasi-racist," or "perpetuates racism" should not be understood as empirical claims about the world but merely as markers of their own commitment to a group that seeks to close the discourse to outsiders.

Holberg continues:

...Moreover, [Diamond's] patronizing objectification of Yali...

Here's Diamond's description of his meeting with Yali, in full:

... a remarkable local politician named Yali.... We walked together for an hour, talking during the whole time. Yali radiated charisma and energy. His eyes flashed in a mesmerizing way. He talked confidently about himself, but he also asked lots of probing questions and listened intently. Our conversation began with a subject then on every New Guinean's mind--the rpaid pace of political developments. Papua New Guinea, a Yali's nation is now called, was at that time still administered by Australia as a mandate of the United Nations, but independence was in the air. Yali explained to me his role in getting local people to prepare for self government.

After a while, Yali turned the conversation and began to quiz me. He had never been outside New Guinea and had not been educated beyond high school, but his curiousity was insatiable. First, he wanted to know about my work on New Guinea birds (including how much I got paid for it). I explained to him how different groups of birds had colonized New Guinea over the course of millions of years. He then asked how the ancestors of his own people had reached New Guinea over the last tens of thousands of years, and how white Europeans had colonized New Guinea within the last 200 years.

The conversation remained friendly, even though the tension between the two societies that Yali and I represented was familiar to both of us. Two centuries ago, all New Guineans were still "living in the Stone Age." That is, they still used stone tools similar to those superseded in Europe by metal tools thousand of years ago, and they dwealt in villages not organized under any centralized political authority. Whites had arrived, imposed centralized government, and brought material goods whose value New Guineans instantly recognized, ranging from steel axes, matches, and medicines to clothing, soft drinks, and umbrellas. In New Guinea all these goods were referred to collectively as "cargo."

May of the white colonists openly despised New Guineans as "primitive." Even the least able of New Guinea's white "masters," as they were still called in 1972, enjoyed a far higher standard of living than New Guineans, higher even than charismatic politicians like Yali. Yet Yali had quizzed lots of whites as he was quizzing me, and I had quizzed lots of New Guineans. He and I knew perfectly well that New Guineans were on the average at least as smart as Europeans. All these things must have been on Yali's mind when, with yet another penetrating glance of his flashing eyes, he asked me, "Why is it that you white people developed so much cargo and brought it to New Guinea, but we black people had little cargo of our own?"

It was a simple question that went to the heart of life as Yali experienced it. Yes, there still is a huge difference between the lifestyle of the average New Guinean and that of the average European or American. Comparable differences separate the lifestyles of other peoples of the world as well...

Patronizing? Objectification? I do not think those words mean what Holberg thinks they mean.

Holberg continues:

...for rhetorical purposes exposes in a clear way the conceptual deficiencies of his key arguments in the book. I will almost certainly use passages of Lawrence's book as the basis of freshman writing assignments in reference to Guns, Germs, and Steel.

Lawrence's long biography of Yali indicates that Diamond is wrong on the facts. Diamond writes, "He had never been out of New Guinea and had not been educated beyond high school, but his curiosity was insatiable." Yali had in fact been in close contact with Europeans since an early age and joined the New Guinea Police Force as a young man. He got swept up into World War II activities and after excellent service was promoted to sergeant and joined the Australian army. In 1943 he received an initial six months of training in Australia. Later in 1943, he returned to Australia: "There he was promoted to the rank of Sergeant-Major, higher than which no native could rise in the Australian army." In 1944, after a series of war time incidents in New Guinea (including a trip on a U.S. submarine), he returned to Australia for six months more training in Brisbane.

I will not try to repeat many of the fascinating details of Yali's subsequent career as both a leader of millenarian movements and regional politics other than to emphasize that the question Diamond uses as a device to frame his account was one New Guineans had struggled with since the early days of contact.

Immediately after the war, Yali was the leader of a very prominent cargo movement (movement to acquire European goods). Lawrence divides the movement into five separate phases. The fifth led to the jailing of Yali and others in 1950 for five years. In the fifth phase, Yali directed a movement to return to native ritual practice. To give you a sense of the cultural politics of the scene I will quote a brief passage from Lawrence about this fifth phase:

"Thus almost overnight the pagan revival became the Fifth Cargo Belief. Although he had described his doctrine in full to Yali and his close associates, Gurek ['theologian' of the movement] gave only the barest outline to the people at the assembly at Sor, telling them simply that it was now known that the New Guinea deities as a whole were their true cargo source [not Christianity]. Yali's new policy was fully justified: the natives must abandon Christianity and go back to their own religion so that the goods they wanted would come. Gurek gave them the following instructions: Traditional rituals for agriculture, important artefacts, pig husbandry, and hunting, and the old taboos associated with them, were to be reintroduced; the Kabu Ceremony was to be performed in full, especially the secret parts of it reserved for adult males; and the Letub table ritual was to be instituted. Small tables were to be set up in private houses and near deity sanctuaries. They were to be covered with cotton cloth and decorated with bottles of flowers. Offerings of the spirits of the dead, who were to be invoked to send cargo. The invocations and offerings would ensure that the deities handed over presents to the ancestors who, pleased by the ritual (especially the Kabu Ceremony), would deliver them to their descendants. At such times, the natives would be told by the spirits during dreams where the goods had been leftCin deity sanctuaries or other parts of the bush. The cargo would include rifles, ammunition, and other military equipment.

"Gurek made other claims on this occasion. Apart from cargo in its usual sense, the deities would send also European domesticated animals, especially horses and cows. Additional 'laws' were laid down: Yali was henceforth to be addressed as King; and the days of the week were to be renamed. Gurek said that as Yali had been born on a Thursday, it was to be renamed Sunday and observed as the official day of rest from now on.....

"Once Gurek had laid the foundation of the doctrine of the Fifth Cargo Belief and the cult associated with it, Yali made a few minor additions of his own by attempting to draw parallels between the new ritual and what he had seen of European life. Gurek said that Mass was a hoax, and that the Kabu Ceremony and the table ritual were the true 'road of Cargo'. Yali corroborated this by saying that while he had been in Australia he had never once seen Mass celebrated, but he had often observed Europeans dancing and setting out vases of flowers in their house, restaurants, and other buildings. The dancing was obviously the equivalent of the ola of the Kabu Ceremony, in which men and women participated together outside the cult house. Again, floral decorations were the European version of the table ritual and, like the Kabu Ceremony itself, were means of honouring the ancestors. Although these ideas added little to the new cult, they were important in that they confirmed Yali's previous conclusions that the European and native religious systems were roughly similar in structure and function."

Diamond missed a lot when he was in New Guinea just as he misses a lot in his panoptic view of human history....

This is fascinating. It makes out Yali the ex-Australian army NCO and Cargo Cult leader to be much more and much less sophisticated than the charismatic politician Diamond describes. More sophisticated: rather than never leaving New Guinea, he spent a year in Australia and voyaged on a submarine. More sophisticated: he leaves Diamond with the impression that he is genuinely searching for answers, rather than cross-checking and seeking confirmation for conclusions he already holds. Less sophisticated: Yali has failed to recognize the distinction between natural technology and supernatural gifts of the gods, and has led many of his followers astray as well.

But how does this the fact that Yali is different from the man whom Diamond thinks it is "expose in a clear way the conceptual deficiencies of [Diamond's] key arguments in" Guns, Germs, and Steel? It is a mystery:

Holberg gives a clue:

...Most fundamentally, [Diamond] did not hear Yali's question and his book is no answer. Rather it perpetuates the colonial relation which Yali through oppositional politics attempted to transform. Yali, in a very fundamental sense, was concerned about what in our terms would be called inequality, justice, fairness, and morality...

Now it becomes clear. Holberg wishes that Yali had asked Diamond one of:

Instead of:

At least one of Holberg's beefs, it seems, is not with Diamond but with Yali: Yali is not following the script that Holberg wants him to follow.

And Holberg concludes:

Diamond provides no solace. On the contrary, his deterministic (and simplistic) argument has the opposite effect. Diamond tells us things are the way they are because that is the way that they have to be. Yali was not asking about the origins of unequal relations; he was asking about their perpetuation. In a word, Diamond denies Yali an equal humanity because he makes no attempt to understand Yali in his own terms. This failure is compounded in a more encompassing way in the key arguments of the book because Diamond's argument does not allow humanity in general any sort of culturally-inflected agency in the context of history.

And here we have why, in Holberg's eyes, Diamond is a racist: Diamond (in Guns, Germs, and Steel) focuses not on how human agency is culturally-inflected, but on how it is geographically-inflected and environmentally-inflected. That's materialism. That's reductionism. That's determinism. That's not racism.

P.S.: Road Belong Cargo is a very good book.


UPDATE: And still more weirdness:

Henry Farrell criticizes another Savage Mind, Tak Watanabe, accusing Jared Diamond of "perpetuating racism":

Frog in a Well - The Japan History Group Blog: There are also frightening parallels in the history of Japanese fascism to the kind of environmental determinism used by Diamond.... Diamond... shares with Watsuji a basic methodology of relying on environmental factors as a way to typologize groups of people according to 'race.' The danger here lies... in the biologism of his methodological assumption.... [H]e perpetuates racism by associating a group of people with specific traits...

Ralph Luker jumps in to defend Tak:

History News Network: Henry, It appears to me that... you all are talking past each other.... Isn't it possible that, read in a Japanese context, [Jared] Diamond's argument plays into a Japanese tradition of racialism or racism that isn't otherwise inherent in Diamond's argument in non-Japanese contexts? As Japan specialists, Tak and Jonathan have some obligation to make that point and make it reasonably forcefully, if we fail to understand it. I don't see them as attempting to shut down debate, but as arguing that we -- you and I -- simply don't know enough about the Japanese context to appreciate that fact. I don't have any problem with acknowledging that I don't know nearly enough about Japan to argue with them.

No. It is not possible. The Jared Diamond essay under discussion ends:

The Japanese Roots: WE HAVE SEEN THAT THE COMBINED EVIDENCE OF ARCHEOLOGY, physical anthropology, and genetics supports the transparent interpretation... [that] the Ainu are descended from Japan's original inhabitants and the Japanese are descended from more recent arrivals [from Korea about 2400 years ago]. But that view leaves the problem of language unexplained. If the Japanese really are recent arrivals from Korea, you might expect the Japanese and Korean languages to be very similar....

[M]odern Korean may be a poor model for the ancient Yayoi language of Korean immigrants in 400 B.C.... Modern Korean is derived from the language of the kingdom of Silla... but Silla was not the kingdom that had close contact with Japan in the preceding centuries. Early Korean chronicles tell us that the different kingdoms had different languages... the few preserved words of one of those kingdoms, Koguryo, are much more similar to the corresponding Old Japanese words than are the corresponding modem Korean words.... The Korean language that reached Japan in 400 B.C., and that evolved into modem Japanese, I suspect, was quite different from the Silla language that evolved into modern Korean. Hence we should not be surprised that modem Japanese and Korean people resemble each other far more in their appearance and genes than in their languages.

History gives the Japanese and the Koreans ample grounds for mutual distrust and contempt, so any conclusion confirming their close relationship is likely to be unpopular among both peoples. Like Arabs and Jews, Koreans and Japanese are joined by blood yet locked in traditional enmity. But enmity is mutually destructive, in East Asia as in the Middle East. As reluctant as Japanese and Koreans are to admit it, they are like twin brothers who shared their formative years. The political future of East Asia depends in large part on their success in rediscovering those ancient bonds between them.

Trust me, to say that modern non-Ainu Japanese have the bulk of their ancestors not among the Jomon potters but among the rice-growing Koreans who migrated to Japan 2500 years ago, and have Koreans as their closest cousins--that does not "play into a Japanese tradition of racialism or racism."

Posted by DeLong at 08:06 PM | Comments (0) | TrackBack

Why Are So Few Scientists Republicans?

A question that answers itself:

Marginal Utility: We'll Do It For You In Six Minutes: Via Pandagon and Pharyngula, Fearless Leader steps into the evolution "debate":

WASHINGTON - President Bush waded into the debate over evolution and "intelligent design" Monday, saying schools should teach both theories on the creation and complexity of life. In a wide-ranging question-and-answer session with a small group of reporters, Bush essentially endorsed efforts by Christian conservatives to give intelligent design equal standing with the theory of evolution in the nation's schools...

I believe I can now safely say without fear of contradiction that any scientist or academic (outside of fundamentalist seminaries, of course) who is a Republican is in serious need of help: professional help.

Posted by DeLong at 08:04 PM | Comments (0) | TrackBack

Social Security Solvency

Andrew Samwick writes

Vox Baby: It's Been Mostly Dead All Day: The Administration should have backed away from a plan that would introduce personal accounts without specifically restoring solvency. From the outset (e.g. the President's 2001 Commission) personal accounts have been the sugar to make the medicine go down. The medicine is restoring solvency. And we particularly applaud Ben Bernanke for making it clear that taking the medicine is something to insist on. If that sucked the life out of the House measure, so be it. Nothing prevents them from starting over and making improvements...

Posted by DeLong at 08:02 PM | Comments (0) | TrackBack

Machine Politics

Paul Krugman writes:

Triumph of the Machine - New York Times: [T]he administration is crowing about its success in passing the long-stalled energy bill, the highway bill and Cafta, the free-trade agreement with Central America. So is the Bush agenda stalled, or is it progressing?

The answer is that the administration is getting nowhere on its grand policy agenda. But it never took policy, as opposed to politics, very seriously.... One of President Bush's great political talents is his ability to convince people who do care passionately about policy that he is one of them. Foreign-policy neoconservatives believe he shares their vision of a world transformed by American power. Economic conservatives believe he shares their dedication to dismantling the welfare state. But a serious effort... would require sacrifices Mr. Bush hasn't been willing to make.... His administration sought global dominance on the cheap, with an undermanned, underplanned invasion of Iraq that has, indeed, transformed the balance of power in the Middle East - in favor of Iran....

[T]alk of an "ownership society" appealed to conservatives who dreamed of rolling back the New Deal. But Mr. Bush has expanded... middle-class entitlements.... Social Security privatization was... an attempt to achieve radical goals on the cheap... a phaseout of traditional Social Security benefits in return for the magic of investing....

So what about those legislative successes?... Let's start with the energy bill... an exercise in corporate welfare, full of subsidies and targeted tax breaks.... [T]he pork-stuffed highway bill.... Cafta... promising to limit imports of clothing from China; over all, the effect may well be to reduce, not increase, international trade. But pharmaceutical companies got measures that protect and extend their monopoly rights in Central America.

These bills don't have anything to do with... trying to achieve actual policy goals like energy independence or expanded trade. They're just... favors granted in return for favors received.... [T]he administration does a bad job at governing in part because its highest priority is always to reward its friends. Most notably, the Iraq venture would have had a better chance of succeeding if cronyism and corruption hadn't undermined reconstruction...

Posted by DeLong at 07:58 PM | Comments (0) | TrackBack

When Dinner Attacks!

Some people have more interesting restaurant experiences than I do.

Posted by DeLong at 07:47 PM | Comments (0) | TrackBack

Hiroshima

Kevin Drum actually finds something well worth reading in the Weekly Standard:

Why Truman Dropped the Bomb: Sixty years after Hiroshima, we now have the secret intercepts that shaped his decision: ...The critics [of Truman's decision to use the atomic bomb] share three fundamental premises. The first is that Japan's situation in 1945 was catastrophically hopeless. The second is that Japan's leaders recognized that fact and were seeking to surrender in the summer of 1945. The third is that thanks to decoded Japanese diplomatic messages, American leaders knew that Japan was about to surrender when they unleashed needless nuclear devastation. The critics divide over what prompted the decision to drop the bombs in spite of the impending surrender, with the most provocative arguments focusing on Washington's desire to intimidate the Kremlin.... These rival narratives clashed in a major battle over the exhibition of the Enola Gay.... Since then, however, a sheaf of new archival discoveries and publications has expanded our understanding of the events of August 1945....

By far the most important single body of this new evidence consists of secret radio intelligence material.... In the aftermath of [the] disastrous surprise attack [on Pearl Harbor], Secretary of War Henry Stimson recognized that the fruits of radio intelligence were not being properly exploited. He set Alfred McCormack, a top-drawer lawyer with experience in handling complex cases, to the task of formulating a way to manage the distribution of information from Ultra. The system McCormack devised called for funneling all radio intelligence to a handful of extremely bright individuals who would evaluate the flood of messages, correlate them with all other sources, and then write daily summaries for policymakers.... Every day, analysts prepared three mimeographed newsletters. Official couriers toting locked pouches delivered one copy of each summary to a tiny list of authorized recipients around the Washington area. (They also retrieved the previous day's distribution, which was then destroyed except for a file copy.)... What is almost as interesting is the list of those not entitled to these top-level summaries: the vice president, any cabinet official outside the select few in the War, Navy, and State Departments, anyone in the Office of Strategic Services or the Federal Bureau of Investigation, or anyone in the Manhattan Project building the atomic bomb, from Major General Leslie Groves on down....

The "Magic" Far East Summary presented information on Japan's military, naval, and air situation.... [A] page in the critics' canon emphasized a squad of Japanese diplomats in Europe, from Sweden to the Vatican, who attempted to become peace entrepreneurs.... As the editors of the "Magic" Diplomatic Summary correctly made clear to American policymakers during the war, however, not a single one of these men (save one we will address shortly) possessed actual authority to act for the Japanese government.

An inner cabinet in Tokyo... comprised just six men: Prime Minister Kantaro Suzuki, Foreign Minister Shigenori Togo, Army Minister Korechika Anami, Navy Minister Mitsumasa Yonai, and the chiefs of staff of the Imperial Army (General Yoshijiro Umezu) and Imperial Navy (Admiral Soemu Toyoda). In complete secrecy, the Big Six agreed on an approach to the Soviet Union in June 1945... to enlist the Soviets as mediators to negotiate an end to the war satisfactory to the Big Six.... Indeed, Togo added: "Please bear particularly in mind, however, that we are not seeking the Russians' mediation for anything like an unconditional surrender."

This last comment triggered a fateful exchange. Critics have pointed out correctly that both Under Secretary of State Joseph Grew (the former U.S. ambassador to Japan and the leading expert on that nation within the government) and Secretary of War Henry Stimson advised Truman that a guarantee that the Imperial Institution would not be eliminated could prove essential to obtaining Japan's surrender. The critics further have argued that if only the United States had made such a guarantee, Japan would have surrendered. But... Sato promptly wired back a cable that the editors of the "Magic" Diplomatic Summary made clear to American policymakers "advocate[s] unconditional surrender provided the Imperial House is preserved." Togo's reply, quoted in the "Magic" Diplomatic Summary of July 22, 1945, was adamant: American policymakers could read for themselves Togo's rejection of Sato's proposal--with not even a hint that a guarantee of the Imperial House would be a step in the right direction....

[T]he release of the complete (unredacted) "Magic" Far East Summary... revealed that the diplomatic messages amounted to a mere trickle by comparison with the torrent of military intercepts. The intercepts of Japanese Imperial Army and Navy messages disclosed without exception that Japan's armed forces were determined to fight a final Armageddon battle in the homeland against an Allied invasion... founded on the premise that American morale was brittle and could be shattered by heavy losses in the initial invasion. American politicians would then gladly negotiate an end to the war....

The commander in chief of the U.S. fleet, Admiral Ernest King, informed his colleagues on the Joint Chiefs of Staff in April 1945 that he did not agree that Japan should be invaded. He concurred only that the Joint Chiefs must issue an invasion order immediately to create that option for the fall. But King predicted that the Joint Chiefs would revisit the issue of whether an invasion was wise in August or September. Meanwhile, two months of horrendous fighting ashore on Okinawa under skies filled with kamikazes convinced the commander in chief of the Pacific Fleet, Admiral Chester Nimitz, that he should withdraw his prior support for at least the invasion of Kyushu. Nimitz informed King of this change in his views in strict confidence....

[I]t is now clear that the long-held belief that Operation Olympic loomed as a certainty is mistaken.... With the Navy's withdrawal of support, the terrible casualties in Okinawa, and the appalling radio-intelligence picture of the Japanese buildup on Kyushu, Olympic was not going forward as planned and authorized... not because it was deemed unnecessary, but because it had become unthinkable. It is hard to imagine anyone who could have been president at the time (a spectrum that includes FDR, Henry Wallace, William O. Douglas, Harry Truman, and Thomas Dewey) failing to authorize use of the atomic bombs in this circumstance....

This brings us to another aspect of history that now very belatedly has entered the controversy. Several American historians led by Robert Newman have insisted vigorously that any assessment of the end of the Pacific war must include the horrifying consequences of each continued day of the war for the Asian populations trapped within Japan's conquests. Newman calculates that between a quarter million and 400,000 Asians, overwhelmingly noncombatants, were dying each month the war continued. Newman et al. challenge whether an assessment of Truman's decision can highlight only the deaths of noncombatant civilians in the aggressor nation while ignoring much larger death tolls among noncombatant civilians in the victim nations.

There are a good many more points that now extend our understanding beyond the debates of 1995. But it is clear that all three of the critics' central premises are wrong. The Japanese [ruling elite] did not see their situation as catastrophically hopeless. They were not seeking to surrender, but pursuing a negotiated end to the war that preserved the old order.... The displacement of the so-called traditionalist view within important segments of American opinion took several decades to accomplish. It will take a similar span of time to displace the critical orthodoxy that arose in the 1960s and prevailed roughly through the 1980s, and replace it with a richer appreciation for the realities of 1945. But the clock is ticking.

Richard B. Frank, a historian of World War II, is the author of Downfall: The End of the Imperial Japanese Empire.

Posted by DeLong at 07:45 PM | Comments (0) | TrackBack

Chris Lydon's Radio Open Source

Chris Lydon's Radio Open Source had a show on the housing bubble: http://www.radioopensource.org/2005/07/27/the-beginning-of-the-end-of-the-bubble/. Here's one thing I said:

People have started viewing their houses as gigantic ATMs. Take out a home equity loan, which the banks are eager to offer you, %u2026and all of a sudden you have an extra $70k to play with. You can put on an addition, you can go through the roof, you can take several trips to Hawaii, and still have large amounts of money left over.

I shamelessly stole this line from Doug Henwood of Left Business Observer: http://www.leftbusinessobserver.com/--another man who really ought to have a weblog.

Posted by DeLong at 07:21 PM | Comments (0) | TrackBack

Wal-Mart's CEO Needs a Bathroom

Daniel Gross writes:

CEO Self-Pity Watch: There's nothing so unseemly as a highly compensated CEO feeling sorry for himself. The following gem was buried in Ann Zimmerman's excellent Wall Street Journal profile of Wal-Mart CEO Lee Scott on July 26.

And despite a concerted effort to soften his rougher edges, Mr. Scott can still be impatient with criticism. During the meeting in Los Angeles with business and civic leaders, he was asked about Wal-Mart's reputation for squeezing suppliers.

"I don't feel sorry for our suppliers," he shot back. "I flew here today on a Lear 31 [jet] that had to make fuel stops. Our suppliers fly directly into Bentonville on their G5 [jets]. They're not stopping on the way. And they have got a bathroom."...

Perhaps Mr. Scott should join a union? Bathroom breaks--and the availability of clean bathrooms--are things that unions care about when employers do not.

Posted by DeLong at 07:19 PM | Comments (0) | TrackBack

Inventory Decumulation and the Macroeconomic Outlook

Alan Abelson writes:

Barron's Online - Up and Down Wall Street: Among the supporting signs and portents of the benign effects of what is shaping up as a torrid summer were the preliminary estimate of second quarter GDP (a nice 3.4% rise), the solid gain in durable-goods orders, encouraging retail sales, a gush of stellar earnings reports, an uptick in consumer sentiment and, not least, the cheerful chirping pervading the latest Federal Reserve economic report, the Beige Book, as the cognoscenti call it.

We could, without too much strain, point out the soggy underpinnings of some of these seemingly solid numbers. For example, the noteworthy lift in tech orders, we suspect, included a heap of double ordering by buyers spooked by an unexpected and likely temporary blip in business.

Or, as our colleague Randy Forsyth points out, the gleeful assumption by the sunshine crew that the inventory drop in the GDP report augurs big growth in output in the second half is more than slightly misplaced. The reason simply is that a huge chunk of the inventory reduction was the result of auto companies staging fire sales to clear their dealers' lots, an action certain to take a sizable bite out of future sales...

Posted by DeLong at 07:16 PM | Comments (0) | TrackBack

The Venetian Play

Lance Mannion recommends "The Merchant of Venice" with Al Pacino:

Lance Mannion: We watched Merchant of Venice starring Al Pacino as Shylock last night and it was very good.... [T]his is the second production I've seen... both times I liked the story much better as a watched it unfold than I've ever enjoyed it while reading it....

Merchant is no longer an anti-semitic play. There's no getting around the fact that it was once, for almost four hundred years... and it didn't stop being an anti-semitic play until recently.... What has changed is that we do not automatically associate Jewishness with villainy of any sort.... But also we don't automatically identify with "Christian" characters. Just the opposite. We're more inclined to see a character's flaunted Christianity as a sign of his untrustworthiness.... The fact that Antonio is such a devout Christian (and a practicing anti-semite) pushes us away from Antonio and towards Shylock....

Jessica, Shylock's daughter, runs away because she feels her father's house a "hell."... The line is actually a counter to Shylock's refering to his "sober" home. Which is his way of saying that he doesn't allow any fun in his house.... Shylock is called a Jew but I think Shakespeare saw him as just another Puritan, like Angelo in Measure for Measure and Malvolio in Twelfth Night....

Jeremy Irons played Antonio as gay... this gives him much to work with---for one thing, it allows him to give Antonio a lover's vanity---but it also gives the actress playing Portia a lot to play off of too. Lynn Collins... lets Portia see the truth about Antonio and Bassanio's love for each other and shows her to be alternately jealous, afraid that she'll lose Bassanio to Antonio, angry at Bassanio for tricking her into thinking he loves her, and mad and disappointed at herself for not having figured out the truth before she fell for Bassanio....

Portia as written is something of a plaster saint. She is certainly the only wholly good and decent-hearted character in the play. But having to win Bassanio's love away from Antonio and making sure that Antonio knows she's beaten him on that score, Collins' Portia gets to be emotionally maniupulative, not merely mischievous and playful, when she pulls the ring trick on Bassanio. She also gets to be sexy. Deliberately, naughtily, and yet angrily sexy. The last we see of her she is walking off to the bedroom ahead of Bassanio, moving in such a way that she already seems to be shedding clothes, and looking back over her shoulder not just at Bassanio but at Antonio and everybody else left behind in the room to make sure they know what she is about to do....

Finally, Bassanio. It's kind of a given in discussions of Shakespeare's comedies that on the whole his male lovers aren't worthy of his heroines.... But I think Rosalind's Orlando, Viola's Orsino, and Portia's Bassanio all have been getting a bum rap. It's true that none of them speak as well as the women they love. Few characters in all of Shakespeare speak as well as Rosalind... the men come off as nearly invisible and definitely uninteresting on paper. But Shakespeare didn't create them to exist on paper. He created them to appear on a stage.... Bassanio... definitely as played by Joseph Finnes... is still undeniably worthy of Portia...

Posted by DeLong at 07:10 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have Better Think Tanks? (Yet Another AEI Edition)

And, while they're at it, what has AEI produced in the way of macroeconomic analysis that is worthwhile? Can't the funders find something better to do with their money?

Mark Thoma reads Kevin Hassett so that the rest of us don't have to:

Economist's View: Social Security Reform Stopped by Democrats' Radical Economists: Kevin Hassett of Bloomberg says he is frightened with the thought that Democratic economists might be running the country again some day...:

Until two weeks ago, Social Security reform was sort of dead. But now it seems to be all dead. The breakdown occurred when the administration backed away from a proposal making its way through the House of Representatives that would have introduced personal accounts without specifically restoring solvency to the system. Ben Bernanke, chairman of President... Bush's Council of Economic Advisers, publicly signaled the White House's displeasure with such an approach. Asked if restoring solvency was an inviolable condition, Bernanke said, “Yes, I think the president will insist on maintaining the long-term solvency of the Social Security system.” The word from... up on Capitol Hill, is that this signal from the president sucked the remaining life out of the House measure....

Another thing we learn from the demise of Social Security reform is that when it comes to economics, this is now Howard Dean's Democratic party. This completes, really, the economic radicalization of the Democrats, and it is a frightening picture -- frightening if you consider that they might run the country again some day. The fact is that the Social Security reform proposed by the president is quite moderate.... If private accounts were introduced, then you might buy a U.S. Treasury bond and hold it until retirement.... The labels change but the economic difference is not earth shattering.... Instead, we got only obstruction. Perhaps this is because Democratic leaders don't have any novel policy ideas they would like to see implemented. Perhaps it's because the Democratic leadership is currently to the left of the Mongolians on Social Security...

But why on God's green earth should any Democrat endorse Bush's Social Security proposals? They:

Why on God's green earth should any Republican endorse Bush's Social Security proposals?

It's a mystery.

Posted by DeLong at 07:08 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have Better Think Tanks (AEI Defense Policy Is a Real Embarrassment Edition)

The world would be much better off if the American Enterprise Institute's funders would simply pull the plug on defense studies. What do they produce that isn't a pure waste of photons?

Here we have the intelligent Justin Logan critiquing AEI on defense:

JustinLogan.com: How Do We Expect Rising Great Powers to Act?: Dan Blumenthal... at AEI. [He and his coauthors] present a long list of Chinese grievances that should lead us to see a strategic threat from China... such egregious and threatening postures as:

  • China's noncompliance with its pledges to the World Trade Organization;
  • Its failure to use its leverage with North Korea to end Pyongyang's game of nuclear Russian roulette;
  • Its continuing refusal to abide by human rights and refugee conventions it has signed; and
  • Its obstructionist policies on Iran, Sudan, Zimbabwe, and Burma.

They did take the liberty of including issues that actually matter.... But... I'm simply confounded at the utter lack of not just realism but simple reality in this assessment. It's as though they absolutely expect a rising second-tier great power to simply prostrate itself at the feet of American "benevolent hegemony.".... We can argue about what we should do, but by convincing ourselves that China should do nothing in the face of its own growing might and our reluctance to give it an inch of respect is incredibly absurd....

Tom Donnelly rattled on (and on) about grand strategy regarding China, and ended up embracing what sounded a whole like Zalmay Khalilzad's old "congagement" schtick... a program of economic engagement, building up China's political and economic power, but military containment: not letting it close the gap in military capabilities in any significant way. But that's ridiculous: a great power whose economic and political might is growing is necessarily going to seek a larger security role, at the very least in its own region....

As Gene recently noted, "Having recently crapped the bed on the Iraq issue, one would think that Boot, Gaffney, Woolsey, Kristol, et al. would have the decency to maintain a studied silence on national security issues for a time." Maybe that the Axis of Hawkery would clam up for a bit...

And Matthew Yglesias adds:

TAPPED: August 2005 Archives: From where I sit the most frustrating thing is that, as is so often the case, our neocon friends are not being very clear.... China is getting richer and trying to tilt the balance of power in the region more in its favor. So why might China not succeed in accomplishing this? Well, they might just decide not to try.... They also might not succeed because we decide to fight a preventative war with them before they get more powerful. That, it seems to me, would "work," although the costs would be enormous. If that's what this crowd is after, they ought to say so. Last, they might not succeed because their economic growth might come to an end. Again, if the neocons want the United States to embark on an effort to cripple the Chinese economy, they ought to say so....

The reasonable alternative is to conclude that if all goes well -- if we don't fight a destructive war with China, if China's population doesn't remain trapped in dire poverty -- then it will eventually become unsustainable for the United States to be the dominant military force in the immediate vicinity of China. The thing to be afraid of, it seems to me, is not that China will become more powerful (it's bound to happen anyway) but that this more powerful China will have poor relations with the United States. Whether or not that happens is in large part outside our control. But it's certainly within our power not to ensure that it does happen by engaging in a futile arms race or a lunatic effort to keep China poor...

Posted by DeLong at 07:05 PM | Comments (0) | TrackBack

War on the Cheap

Uwe Reinhardt is not at all happy:

Who's Paying for Our Patriotism?: President Bush assures us that the ongoing twin wars in Iraq and Afghanistan are worth the sacrifices they entail. Editorialists around the nation agree and say that a steadfast American public was willing to stay the course. Should anyone be surprised by this national resolve, given that these wars visit no sacrifice of any sort -- neither blood nor angst nor taxes -- on well over 95 percent of the American people?

At most, 500,000 American troops are at risk of being deployed to these war theaters at some time. Assume that for each of them some 20 members of the wider family sweat with fear when they hear that a helicopter crashed in Afghanistan or that X number of soldiers or Marines were killed or seriously wounded in Iraq. It implies that no more than 10 million Americans have any real emotional connection to these wars.

The administration and Congress have gone to extraordinary lengths to insulate voters from the money cost of the wars -- to the point even of excluding outlays for them from the regular budget process. Furthermore, they have financed the wars not with taxes but by borrowing abroad. The strategic shielding of most voters from any emotional or financial sacrifice for these wars cannot but trigger the analogue of what is called "moral hazard"... if all but a handful of Americans are completely insulated against the emotional -- and financial -- cost of war, is it not natural to suspect moral hazard will be at work in that context as well?

A policymaking elite whose families and purses are shielded from the sacrifices war entails may rush into it hastily and ill prepared, as surely was the case of the Iraq war. Moral hazard in this context can explain why a nation that once built a Liberty Ship every two weeks and thousands of newly designed airplanes in the span of a few years now takes years merely to properly arm and armor its troops with conventional equipment. Moral hazard can explain why, in wartime, the TV anchors on the morning and evening shows barely make time to report on the wars, lest the reports displace the silly banter with which they seek to humor their viewers. Do they ever wonder how military families with loved ones in the fray might feel after hearing ever so briefly of mayhem in Iraq or Afghanistan?

Moral hazard also can explain why the general public is so noticeably indifferent to the plight of our troops and their families. To be sure, we paste cheap magnetic ribbons on our cars.... But... we allow families of reservists and National Guard members to slide into deep financial distress as their loved ones stand tall for us on lethal battlefields and the family is deprived of these troops' typically higher civilian salaries. We offer a pittance in disability pay to seriously wounded soldiers who have not served the full 20 years that entitles them to a regular pension. And our legislative representatives make a disgraceful spectacle of themselves bickering over a mere $1 billion or so in added health care spending by the Department of Veterans Affairs -- in a nation with a $13 trillion economy!

Last year kind-hearted folks in New Jersey collected $12,000 at a pancake feed to help stock pantries for financially hard-pressed families of the National Guard. Food pantries for American military families? The state of Illinois now allows taxpayers to donate their tax refunds to such families. For the entire year 2004, slightly more than $400,000 was collected in this way, or 3 cents per capita. It is the equivalent of about 100,000 cups of Starbucks coffee. With a similar program Rhode Island collected about 1 cent per capita. Is this what we mean by "supporting our troops"?

When our son, then a recent Princeton graduate, decided to join the Marine Corps in 2001, I advised him thus: "Do what you must, but be advised that, flourishing rhetoric notwithstanding, this nation will never truly honor your service, and it will condemn you to the bottom of the economic scrap heap should you ever get seriously wounded." The intervening years have not changed my views; they have reaffirmed them.

Unlike the editors of the nation's newspapers, I am not at all impressed by people who resolve to have others stay the course in Iraq and in Afghanistan. At zero sacrifice, who would not have that resolve?

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

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

Why Oh Why Can't We Have a Better Press Corps? (It Looks Like Some Reporters Need to Be Fired Today Edition)

Peter Baker and Charles Babington of the Washington Post:

In complying with White House "ground rules" on ... [Media Matters for America]: Under a purported embargo, which the Post said prevented reporters from revealing the administration's decision until midnight -- "too late" to contact Democrats for a response -- staff writers Peter Baker and Charles Babington quoted anonymous White House officials spinning the decision regarding the documents.... The Post article, headlined "White House to Release Early Roberts Papers," reported that the White House will provide materials from Roberts's time in the White House counsel's office while withholding the Justice Department documents. Noting only that Sen. Joseph Lieberman (D-CT) had earlier "urged the representatives of the White House to be as cooperative as they possibly could" in providing documents, Baker and Babington justified excluding any Democratic response to the decision by noting that Bush administration officials "disclosed the new policy under ground rules requiring anonymity and an embargo until midnight, too late for Democratic reaction."...

And Lauren Whittington of Roll Call:

Suburban Guerrilla: Via Daily Kos, we discover that reporters get"exclusives" from the GOP - if they promise not to call any Democrats for comment:

Turns out Roll Call writer Lauren Whittington got the story from the GOP with the ground rule that she not call anyone else for the story. In a news media that has fallen mightily, this is just one more gross failure of established journalistic process (time for another blogger ethics conference?). Meanwhile, Lauren didn't just report a one-sided story at the demands of her Republican source, but then refused to ask any real questions...

If these stories are true, all three of these should have already been fired.

Posted by DeLong at 06:59 PM | Comments (0) | TrackBack

Why Oh Why Can't We Have a Better Press Corps? (David Ignatius Edition)

The Washington Post does realize that it would be better off publishing white space instead of David Ignatius, doesn't it?

Spencer Ackerman and Jim Henley write about:

Jim Henley: David Ignatius's insouciance on the prospect of civil war in Iraq.... One line in particular rankles:

But Defense Secretary Donald Rumsfeld's trip to Iraq this week carried the implicit message that America's time, money and patience in Iraq are not endless.

The unmitigated gall. It stupefies.

Posted by DeLong at 06:19 PM | Comments (0) | TrackBack

The Future of Iraq

Doug Bandow writes at The Washington Note:

The Washington Note Archives: Recruiting Problems Should Create Cause for Reflection As most everyone knows, the Army and Marine Corps and Army National Guard and Reserves have been running into recruiting problems. The cause isn't difficult to understand. Indeed, you'd have to worry about someone who was enthusiastic about joining the armed services in order to fight in a war that: was based on completely false claims; has been badly bungled by officials who foresaw no opposition and didn't bother to acquire the necessary equipment (such as body armor and armored vehicles); has spawned a "democratic" process in Iraq that risks becoming distinctly illiberal, and has created an active recruiting and training ground for terrorists....

[I]f anything is evident in the aftermath of the administration's WMD intelligence fiasco, it is that the war was not necessary, but a matter of choice pursued for reasons having little to do with any direct threats to America. The fact that those most at risk in fighting -- as opposed to arm-chair warriors sitting around Washington planning -- such a conflict are increasingly saying no should create cause for reflection. There is nothing inevitable about how long America stays, or in what form it remains engaged.

If war enthusiasts (especially those enthusiastic young conservatives about whom I read who are now active on college campuses) can't seem to make it down to the armed services recruiting offices, the administration has yet another reason to accelerate plans to get out. It's one thing to contemplate conscription to preserve the nation from a hegemonic totalitarian menace. It's quite another thing for those who failed to serve yesterday to draft those who don't want to join today to spread "democracy" -- especially if the ultimate result is an authoritarian Iraq leaning toward Axis of Evil member Iran.

And a largely peaceful, somewhat orderly, relatively authoritarian Iraq closely linked to Iran seems to be the best attainable outcome, looking forward. The other possibilities are worse.

Posted by DeLong at 05:51 PM | Comments (0) | TrackBack

Wild(life) Party

There were twelve turkeys outside our windows this morning, two hens guarding ten no-longer-chicks. They scratched, and then moved on down the hill toward the creekbed and the blackberry... patch, we will call it.

It is remarkable how much more medium-sized wildlife we see on a daily basis here in edge suburbia as opposed to, say, up high in Kings Canyon. The reason appears clear: We irrigate. We irrigate up the wazoo. If the deer had species memories of what this area looked like 250 years ago, they would be amazed at the change. We have changed the land to provide much more food sources for opossums, turkeys, raccoons, skunks, deer, and like critters. Roadkill is an incredible bonanza for cathartes aura(1).

By contrast, we do not like their predators: the larger members of felis, canis, and ursus. There has not been a member of ursus americanus(2) up here by Little Grizzly Creek in a century, and the same goes (fortunately) for ursus arctos horribilis(3). Felis concolor(4) is occasionally seen by the mail carrier resting in the blackberry patch (though, somehow, nobody ever sees felis rufus(5)). I don't think this was ever part of the range of canis lupus(6) (although we hear canis latrans(7) once every couple of weeks.


(1) Turkey vulture.
(2) Black bear.
(3) Grizzly bear.
(4) Mountain lion.
(5) Bobcat.
(6) Grey wolf.
(7) Coyote.

Posted by DeLong at 05:51 PM | Comments (0) | TrackBack

Drug-Abuse Information

The Twelve-Year-Old says that "28 Days" is a much better piece of anti-drug abuse information than anything she sees in the schools.

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

Unusual Menu Notation

Le Cheval in downtown Oakland ("The price is great but service is marginal. However the food is just mouth-watering good!") has an unusual statement at the bottom of its menu:

price may be adjusted depending on attitude of customer

Posted by DeLong at 05:36 PM | Comments (0) | TrackBack

Yes, It Grows on Trees

Great days of television:

The Spaghetti Harvest: On April 1, 1957 the British news show, Panorama, broadcast a segment about a bumper spaghetti harvest in southern Switzerland. The success of the crop was attributed to an unusually mild winter. The audience heard Richard Dimbleby, the show's highly respected anchor, discussing the details of the spaghetti crop as they watched a rural Swiss family pulling pasta off spaghetti trees and placing it into baskets.

"The spaghetti harvest here in Switzerland is not, of course, carried out on anything like the tremendous scale of the Italian industry," Dimbleby informed the audience. "Many of you, I'm sure," he continued, "will have seen pictures of the vast spaghetti plantations in the Po valley. For the Swiss, however, it tends to be more of a family affair." The narration then continued in a tone of absolute seriousness: Another reason why this may be a bumper year lies in the virtual disappearance of the spaghetti weevil, the tiny creature whose depradations have caused much concern in the past."...

  • The BBC has the original broadcast of the Panorama documentary available online in realvideo format. The realvideo player must be installed on your computer in order to view the broadcast.

Posted by DeLong at 05:34 PM | Comments (0) | TrackBack

Wages and Salaries as a Share of Net Domestic Product

Since 1970:

These two figures tell different stories. The difference between them is that non-wage non-salary benefits--overwhelmingly health and pension--are included in the second and not in the first.

From the perspective of workers who are not part of the salaried part of the upper middle class--for whom benefits are, we think, a large part of compensation--the first diagram is more relevant. It shows (a) the explosion of the wage-and-salary share during the late 1960s, (b) the rollback during the 1970s and the further downward push of the wage share in the early 1980s, (c) constancy up until the late 1990s, (d) a wage-and-salary share boom during the "new economy" boom, and (e) the collapse of the wage-and-salary share since 2000.

From the perspective of the salaried part of the upper middle class (or of the declining fraction of other workers with ample benefits) the second diagram is more relevant. It shows (a) the explosion in the labor share of income in the late 1960s, (b) continued rise through the 1970s, (c) a rollback during the early 1980s, (d) a decline in the labor share and then a recovery in the Clinton years, and (e) nothing terribly unusual for the state of the business cycle going on since 2000.

I find this frustrating. The national income accounting tells us that what is going on with benefits and their distribution has a profound effect on how we understand the recent economic history of the distribution of income between labor and capital, and I don't think I have a good grasp of what is going on with benefits and their distribution.

Posted by DeLong at 05:31 PM | Comments (0) | TrackBack

An Open Letter to Michael Kinsley

Do you really think that there is nothing that you can find that would be better to see in the LA Times than this line of c---?

David Gelernter: You might argue that dark-skinned people are a special case, given the way the United States has treated them. I agree -- we have treated them so solicitously, and worked so hard to suppress racial prejudice, that dark-skinned people owe their country the benefit of the doubt...

It's not just his own reputation as a writer that he is shredding. It's your reputation as an editor that he's shredding as well

Posted by DeLong at 05:29 PM | Comments (0) | TrackBack

It's a Mad, Mad, Mad, Mad World

Swopa of Needlenose Reports:

Needlenose | We Needle. You Decide: From the Department of Implausible Extremism. The Washington Post reports this evening:

Iraq's transportation minister... has ordered a ban on alcohol sales at Baghdad International Airport, declaring that the facility is "a holy and revered" piece of Iraq.... The alcohol ban heightened fears of some more-secular Iraqis that the Shiite Muslim majority might seek to impose a rigid interpretation of Islamic law in Iraq, traditionally considered to be tolerant in its observance of religious law. The order followed a visit Maliki made this month with other government officials to Iran, which is controlled by fundamentalist Shiite clerics....

"The issue is that the minister landed in the Baghdad airport and saw alcohol being sold there," Maliki's aide, Karim Jabiri, said Friday. "Given that the airport is a holy and revered part of Iraq's land, the minister ordered a ban on selling alcoholic drinks in the airport."

I think I speak for all of us here at Needlenose when I say that "holy and revered" is not a phrase that usually occurs to us when we think of airports. But perhaps the transportation minister's position as a government official has given him a misleading perception of the place.

I'll tell ya what, Mr. Maliki -- let 'em lose your luggage once, and you'll be humming a different tune...

Posted by DeLong at 05:24 PM | Comments (0) | TrackBack