Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Saturday, September 09, 2006

The Education of William Greider (Why Oh Why Can't We Have a Better Press Corps?)

In the Nation, William Greider defends David Stockman against the civil securities fraud charges that the Securities and Exchange Commission is thinking he might be guilty of:

Greider starts:

Hold the Schadenfreude: People ask me how I feel about Stockman's new troubles because we were friends in those olden days and I collaborated with him in a truth-telling exercise that deeply shocked official Washington at the time.... Stockman in Washington days was a true believer, brainy and tenacious, in the mysterious arts of federal budget making, and he did indeed assert his faith in public long after the adverse realities were persuading him that Reagan's agenda of tax cutting and doubling defense spending wasn't going to balance the federal budget. His greatest sin, however, was telling the truth, albeit belatedly...

But there was no truth-telling exercise to collaborate in. Republican Vice President George H.W. Bush knew that Reagan's fiscal policies didn't add up: he and his people coined the phrase "voodoo economics." Republican Senate Majority Leader Howard Baker knew that Reagan's plan made no sense: he called it a "riverboat gamble," meaning an imprudent and unwise throw of the dice. Those working for Reagan in 1981 fell into four groups:

  1. The innumerate and gullible--most of them willfully so--who did not look into assurances that the Reagan administration's plan would balance the budget.
  2. True believers in broadening the base, lowering the rates, and balancing the budget who looked on in horror and who hoped to fix things later.
  3. Those who didn't care that the Reagan administration's budget policies were bad for the country in the long-run if they were advantageous in the short run.
  4. Those who knew that the tax cuts and defense spending increases would unbalance the budget, and thought that the deficits created would put irresistible pressure on congress to do what it would never do otherwise--shrink a social insurance state. This was Stockman's group.

Only the first group within the Reagan administration, bamboozled led by the other three--and only those outside the Reagan administration who were bamboozled by it and its "he said-she said" enablers in the press--actually believed in cutting taxes and balancing the budget.

Greider continues:

The Reagan cabinet officer (practically a kid in those days) shared his true opinions privately with me--an assistant managing editor at the much-loathed Washington Post--and I disclosed the bracing realities in the Atlantic Monthly...

But there were no "bracing realities" to be disclosed.

All this--that things didn't add up, and that there were these four feuding groups within the Reagan administration--was common knowledge to budget experts, economists, and journalists.

What Greider got from his breakfasts with Stockman was some juicy quotes that he used in his Atlantic Monthly article and in a very good little book he wrote--The Education of David Stockman and Other Americans. What Stockman and company got out of Stockman's breakfasts was Greider's promotion within the Post of the "he said-she said" coverage that pretended to take the Reaganites' claims to be able to cut taxes and balance the budget seriously.

In short, Greider didn't do his job at the Post: he approved a great many stories about the Reagan budget that he knew, from his contemporaneous conversations with Stockman, were false. Greider then used what he had learned to make a personal splash in the Atlantic that told me, at least, little other than that Stockman personally was in Reagan group 4. And Greider sells this shabby story as a "truth-telling exercise."

Why is Greider misrepresenting his role of 25 years ago? Because he wants to defend David Stockman:

I don't know the facts of Stockman's present travail, but I have a hunch he is guilty mainly of excessive optimism, not fraud. When asked, I express sincere sympathy for his plight. Indeed, his dilemma reminds me of playwright Clare Booth Luce's wicked aphorism: "No good deed goes unpunished."... Whether he misjudged the situation or misrepresented it to investors, I do not know. I do feel sure he was a victim too, perhaps of own Midwestern optimism and self-confidence. Let's not hang the man for trying to do the right thing.

Greider has a lot of cheek. Greider committed a fraud on his employer--the Washington Post--in 1981. Stockman committed a fraud on his boss, Ronald Reagan, in 1981--for Reagan was in group 1, and accepted Stockman's assurances that the numbers would add up. And Stockman committed a fraud on the non-budget expert public--a fraud that Greider tiptoes around, saying only that Stockman did "indeed assert his faith in public long after the adverse realities were persuading him that Reagan's agenda of tax cutting and doubling defense spending wasn't going to balance the federal budget."

But there is a difference between Washington and Wall Street. When Stockman in Washington lies to everybody except his Washington Post managing editor confidant, and that confidant lies to his reporters about the budget--that is "an exercise in truth-telling." When Stockman on Wall Street lies to investors about the finances of Collins & Aikman--that is a potential fraud, and the SEC investigates whether civil fraud charges are warranted.


First Draft - I Love The Eighties: I think I'm having a flashback.

To old hands in Washington, David A. Stockman will always be the long-haired numbers cruncher who led the cheers for Reaganomics but nearly lost his job for privately denigrating the administration's budget at the same time he sold it to the public.

Stockman's trip "to the woodshed" with President Ronald Reagan and his denouncement of the "rosy scenario" of White House fiscal policy helped coin political phrases that linger in the capital's lexicon more than two decades after he left government.

Now the man who put one over on Congress could face far more severe consequences for possibly misleading Wall Street.

Lawyers at the Securities and Exchange Commission recently notified Stockman that he could face civil charges related to upbeat statements he made to investors two months before an auto parts company he ran sought bankruptcy protection last year, according to sources familiar with the issues who spoke on condition of anonymity because the investigation continues.

Securities regulators are examining the role Stockman and other former executives played in alleged financial irregularities at Collins & Aikman Corp., with an eye on whether Stockman may have lied to investors by telling them the company's finances were being "managed quite effectively" when he was aware of mounting problems. Federal prosecutors have also subpoenaed financial records from the company...

Jason Furman on the American Standard of Living

Jason Furman on American earnings and inequality:

American Prospect Online - ViewWeb: Walk and Chew Gum at the Same Time. by Jason Furman: Damn Matthew Yglesias. Somehow he hacked into my computer and stole my argument on the Rose-Mishel debate -- before I had even written it. Damn he's good. As Matt points out, the debate over what has occurred in the last 30 years is largely irrelevant to the policy prescriptions and political strategies we adopt to ensure that America becomes an even better place over the next thirty years.

But the facts are not entirely irrelevant.... I would much rather we all... spend our time figuring out what to do about rising inequality. But... Rose is right, people are substantially better off than they were 30 years ago.... [T]oday's workers are earning more than their counterparts did 30 years ago.

Ignore the statistics for a second and use your common sense. Remember when even upper-middle class families worried about staying on a long distance call for too long? When flying was an expensive luxury? When only a minority of the population had central air conditioning, dishwashers, and color televisions? When no one had DVD players, iPods, or digital cameras? And when most Americans owned a car that broke down frequently, guzzled fuel, spewed foul smelling pollution, and didn't have any of the now virtually standard items like air conditioning or tape/CD players?...

A long life -- it's four years longer today than it was in 1975. A college education -- 38 percent of young adults are enrolled today, compared to 26 percent back in 1975. A home -- also more common today than in 1975....

Some of the wage statistics that Mishel tosses around suffer from a number of limitations, virtually all of which bias the picture in the same way. The biggest one is that wages... are reported after the cost of increasingly generous and technologically advanced health insurance is factored out.... Health isn't the only problem with the wage data; other benefits have grown as well -- in addition to the fact that the wage comparisons rest on a measure of inflation that is almost universally believed to be biased and ignore the influx of immigrants who weren't in the data back in the 1970s.

But if you are capable of walking and chewing gum at the same time, then read Mishel to learn about the large rise in inequality and the large disconnect between productivity growth and compensation for the typical worker.... [O]ur economic system does a decent job of delivering strong productivity growth... even when inequality widens, the majority of Americans are still doing better.... But I also want more Americans to share in those gains, and thus support investments in education, progressive savings incentives, and more generous tax credits to make work pay -- especially for childless workers who have been left behind by our increasingly child-centric tax system....

[I]f we're not happy with the way our society distributes the gains from our economy -- and I personally wouldn't be happy with the state of things even if someone [were to] convince me that inequality was actually decreasing -- then the final part of a solution is a more progressive fiscal system....

A good politician -- think Bill Clinton -- can talk optimistically about America's successes but also constructively about overcoming our probelems and challenges. Surely even us lesser mortals can aspire to do the same.

Brigadier General Mark Scheid Is Really Shrill

Wow. Brigadier General Mark Scheid is really shrill.

Kevin Drum has the goods:

The Washington Monthly: "HE WOULD FIRE THE NEXT PERSON THAT SAID THAT".... Today, via Orin Kerr, comes a remarkable interview with Brigadier General Mark Scheid, chief of the Logistics War Plans Division after 9/11, and one of the people with primary responsibility for war planning. Shortly after the invasion of Afghanistan, he says, Donald Rumsfeld told his team to start planning for war in Iraq, but not to bother planning for a long stay:

"The secretary of defense continued to push on us... that everything we write in our plan has to be the idea that we are going to go in, we're going to take out the regime, and then we're going to leave," Scheid said. "We won't stay."

Scheid said the planners continued to try "to write what was called Phase 4," or the piece of the plan that included post-invasion operations like occupation.

Even if the troops didn't stay, "at least we have to plan for it," Scheid said.

"I remember the secretary of defense saying that he would fire the next person that said that," Scheid said. "We would not do planning for Phase 4 operations, which would require all those additional troops that people talk about today.

"He said we will not do that because the American public will not back us if they think we are going over there for a long war."

...."In his own mind he thought we could go in and fight and take out the regime and come out. But a lot of us planners were having a real hard time with it because we were also thinking we can't do this. Once you tear up a country you have to stay and rebuild it. It was very challenging."

Impeach George W. Bush. Impeach him now.

Based in Reality?

Ezra Klein writes:

TAPPED: FINALLY. It looks like someone tipped off The Washington Post to the existence of a major primary in Rhode Island, as they sent Ruth Marcus to cover hyperconservative Stephen Laffey's attempt to dethrone Lincoln Chafee. Most polls show him within spitting distance of succeeding -- a far more significant act than anything Ned Lamont pulled off, as a Laffey victory will almost certainly flip the seat to the Democrats. But the Laffey campaign isn't fueled by blogs, and Markos Moulitsas has nothing to do with it, so Chafee's looming defeat has attracted nearly no media attention. That's a shame because the fall of the most prominent Rockefeller Republican would be significant, and the victory of the Laffey campaign, which relies on a "Time to Change Washington" slogan, would be further evidence of the vibrant anti-incumbent sentiment rippling through the electorate. And that doesn't even get into the potential importance of Laffey's populist message -- he claims Teddy Roosevelt as his personal hero, favors permitting Medicare to bargain with drug companies, and mentions eliminating corporate welfare every time he talks about government waste. In many ways, Laffey's potential victory is more portentous than Lamont's was, both for the Republican Party and this election. It's nice to see the press finally noticing it.

Ezra doesn't say that page A-15 is the op-ed page, not a news page. There is a difference. Len Downie's news shop--the shop that focused so much attention on Lamont-Lieberman--continues to downplay Laffey-Chaffee. It is a more important story than Lieberman-Lamont. This is about the ongoing destruction of the reality-based wing of the Republican Party: Laffey gives his allegiance to the real loonies. As Marcus says, Rhode Island is potentially far more momentous than Connecticut

Yet Ruth Marcus takes some steps to keep the focus away from the differences between Lieberman-Lamont and Chaffee-Laffey. Lamont is not to the left of Lieberman--Lamont is a Greenwich good-government type and Lieberman is an interest-group liberal. Laffey is far to the right of Chaffee.

Lamont's principal beef with Lieberman is not ideological. Lamont's principal beef with Lieberman is that Lieberman is not reality-based--that his views on what is going on with Iraq come from the Gamma Quadrant, that his eagerness to support Bill Frist's long-distance diagnosis that Terry Schiavo's brain was intact and potentially functional was both cruel and stupid, that he casually presumes that the voters back home will never notice that the really key votes in the Senate are the votes to close debate.

By contrast, Laffey's key beef with Chaffee is ideological: that Chaffee is too pragmatic. Laffey's beef with Chaffee appears to be that Chaffee is reality-based--as Marcus implies but does not say, when she writes that dealing with the deficit "isn't nearly as simple--or as painless--as Laffey asserts.

Lieberman Redux in Rhode Island?: Lieberman Redux in Rhode Island?By Ruth MarcusWednesday, September 6, 2006; A15WARWICK, R.I. -- Cranston Mayor Stephen Laffey doesn't run for office, he bounds -- up steps, across lawns, in his quest to unseat Rhode Island's incumbent senator, Lincoln Chafee, in next Tuesday's primary."If one of the other candidates knocks on your door, vote for that guy, but they won't," the 44-year-old Laffey assures voters. He's accompanied by his wife, four of his five children and a posse of high school friends, all decked out in trademark Laffey yellow and blue, right down to the double stroller for the youngest Laffeys and his wife's custom-made "Laffey 2006" Converses. (The candidate, who has a Harvard MBA and isn't shy about mentioning it, read a study finding this the optimal color scheme for communicating.)

"This will probably be the first time in 40 years we haven't voted for a man named Chafee, but we've just about had it," Richard Carr, a 62-year-old construction company manager, tells Laffey, referring not just to the current senator but to his late father, John, who was a senator and governor.After Laffey sprints on, Carr explains his distaste for the younger Chafee: "He is a Republican and he doesn't vote for the president," he says, referring to the senator's 2004 presidential write-in vote for George H.W. Bush.

Is Steve Laffey to Linc Chafee as Ned Lamont was to Joe Lieberman?

Once again an incumbent senator who often breaks with his own party -- this time a Republican -- could find himself toppled. Once again, the opponent is an energetic businessman-turned-politico, milking discontent among the base and disgust with Washington. Once again, outside groups -- in Connecticut the liberal blogs, here the anti-tax Club for Growth -- are stoking voter anger.

It was inevitable, then, that Laffey-Chafee would be cast as the GOP replay of the Connecticut Democratic primary. Yet the analogy goes only so far. The Rhode Island race is more complex, certainly odder and potentially far more momentous.

For angry Democratic voters, a Lamont vote was all but risk-free. Rhode Island is Connecticut with consequences: A Laffey nomination in this heavily Democratic state could imperil GOP control of the Senate. A general election race between the Democratic nominee, former attorney general Sheldon Whitehouse, and a bruised Chafee promises to be close. But nearly the only one who thinks Laffey would beat Whitehouse is Laffey. "I'll crush him," he asserts.

That's doubtful, but Laffey has a serious shot at ousting Chafee. Precisely how serious is unknowable, because the population of Rhode Island Republicans is so minuscule (just 10 percent of registered voters) and so much could turn on the wild card of independent voters.

Greeting voters outside the Warwick Stop & Shop, Chafee himself doesn't sound terribly confident. "What I've been surprised at is having a parade of Republican luminaries come in to help me -- highlighted by the first lady -- that didn't have a really strong move from the conservative base in my favor," Chafee says. "Even after that, still the Laffey people were Laffey people."

Hence the spectacle of the Washington Republican establishment rushing to the defense of a man who voted against all the Bush tax cuts, the war in Iraq, the Medicare prescription drug plan and Justice Samuel Alito, and who favors gay marriage and abortion rights and opposes the death penalty for Osama bin Laden.The Republican Senate campaign committee has plowed hundreds of thousands of dollars into the race, savaging Laffey with ads as brutal as those deployed against any Democrat. One particularly ugly anti-immigrant spot attacks Laffey's acceptance of Mexican matricula cards as identification. (No matter that Laffey opposes the Senate immigration bill -- which Chafee backed -- as too permissive.)

If Connecticut was about unhappiness with Iraq and President Bush, the issues here are more nebulous. The candidates are vying to outdistance each other from Bush, and while Chafee opposed the war and Laffey supports it, Iraq hasn't been a focus.Instead the race has been partly about personality ("If you looked up demagogue in the dictionary there would be a picture of Steve Laffey," Chafee says), partly about a generalized sense of dissatisfaction with what Laffey terms "big-spending Washington insiders."

Laffey temporarily raised taxes to help rescue Cranston from bankruptcy. "Well, duh, what was the choice?" he says. But he rules out the possibility of any national-level "well, duh" moment. "The corporate welfare gets you $150 billion and [freezing] the nonmilitary discretionary spending gets you $63 billion," he says, throwing in $27 billion more from cutting earmarks. "I just gave you $250 billion and I haven't blinked my eye. So that's where the waste is right there." The solution isn't nearly as simple -- or as painless -- as Laffey asserts.

Still, Laffey, a toolmaker's son who was the first in his family to go to college, is no cookie-cutter conservative. He says his role model in the Senate would be Bobby Kennedy, and he describes himself as a populist reformer, "more of a Teddy Roosevelt kind of Republican." A Senator Laffey would push the federal government to negotiate prices with big drug companies and promote tax breaks to encourage a solar panel on every roof. "By the way, that doesn't sound like a conservative Republican, does it," Laffey asks, part of the running self-commentary he provides.

Whitehouse, for his part, plans to run a similar campaign against either man -- arguing that either would provide a vote, quite possibly the critical one, to empower a Republican majority. Still, he says with the grin of a man who sees a long-shot Senate seat within reach, "I can't wait to find out which."

Commitments: Wednesday Oct 18: Macro/Growth/International Reading Group

Commitments: Wednesday Oct 18: Macro/Growth/International Reading Group: I'm now signed up to present, in Evans 597 at noon:

Esther Duflo, Abhijit V. Banerjee and Kaivan Munshi (2002), "The (Mis)allocation of Capital".

Hoisted from Comments: David Brooks's Innumeracy

John Schmitt writes:

Brad DeLong's Semi-Daily Journal: Fire David Brooks. Fire David Brooks Today (Why Oh Why Can't We Have a Better Press Corps?): I was also curious about Brooks's claim that: "The typical male worker with some college but no degree has seen his income rise from $34,000 in 2000 to about $40,000 today." These numbers probably give most readers the impression that the real annual earnings of the typical man with some college but no degree rose about 18 percent between 2000 and 2005.

A quick check at the Census web page shows median annual earnings for men 25 and over with "some college no degree" to be $35,463 in 2000, rising to $39,150 in 2005. But, both figures are in nominal terms.

Adjusting the Census numbers above for inflation suggests that the earnings of the typical man with some college but no degree actually fell about 3 percent over the same period.

Does anyone have any idea about the source for the David Brooks number? Or any thoughts on why there is such a discrepancy between his numbers and those at the Census Bureau?

If Brooks got this was as wrong as he appears to have gotten it, he should have to run a correction in his column.

My sources:

Mickey Kaus Is Right!

Mickey Kaus's claims that high numbers for "Brokeback Mountain" in Plano, TX did not tell us that Texans in general were broadminded because Plano was an oasis of liberal yuppiedom find strong support from... Wal-Mart! - To Boost Sales, Wal-Mart Drops One-Size-Fits-All Approach: Thinking Local To Boost Sales, Wal-Mart Drops One-Size-Fits-All Approach World's Largest Retailer Will Target Six Groups in U.S.; Changing Product Mix Guns Out, Home-Fitness In. By ANN ZIMMERMAN. September 7, 2006; Page A1: To appeal to affluent shoppers in Plano, Texas, Wal-Mart staffed the new store there with consumer-electronics specialists called "know-it-alls." And it geared the sporting-goods section toward children, on the theory that well-heeled adults tend to buy their tennis and golf gear at country clubs, not discount stores....

Enter Mr. Castro-Wright. The 51-year-old native of Ecuador had conducted a test run of his localization theories during his stint running Wal-Mart's Mexican division from 2000 to 2005, first as chief operating officer, then as chief executive. Wal-Mart's Mexican stores had six different formats before he arrived. Mr. Castro-Wright refined their merchandise mix to better target different income levels.... While the Mexican localization was based purely on shoppers' incomes, Mr. Castro-Wright concluded the U.S. was a more complex market and segmentation would involve ethnicity and lifestyle as well....

The Plano store has about 3,000 different items -- or about 3% of the total -- targeting the well-heeled. It has twice the number of organic products and a wine section with 1,000 bottles, at prices ranging from $4 to $500. Wal-Mart removed the gun department and expanded the home-fitness equipment area. "I normally do not shop at Wal-Mart, but I really like this store, because it is much nicer than the typical Wal-Mart," said Charlotte Ackley, an employee-benefits specialist, on a recent visit to the Plano store. "It is clean, has a good selection of wines, and the service is fast"...

Yes, in Plano, TX, it is a selling point that the local Wal-Mart has "a good selection of wines."

Game to Mickey Kaus!

Now--for the set--does Mickey Kaus read past the jump in the Wall Street Journal news pages? Does he read Wall Street Journal stories about retail at all--even if they are on page A1? Does he read page A1 at all?

How long will it take Mickey Kaus to discover this strong support for his Plano hypothesis? And how will he discover it?

Place your bets ladies and gentlemen...

Kevin Drum Corrects Fareed Zakaria

Kevin writes:

The Washington Monthly: DRAINING THE SWAMP.... Fareed Zakaria almost gets it right here:

Washington has a long habit of painting its enemies 10 feet tall -- and crazy. During the cold war, many hawks argued that the Soviet Union could not be deterred because the Kremlin was evil and irrational. The great debate in the 1970s was between the CIA's wimpy estimate of Soviet military power and the neoconservatives' more nightmarish scenario. The reality turned out to be that even the CIA's lowest estimates of Soviet power were a gross exaggeration. During the 1990s, influential commentators and politicians -- most prominently the Cox Commission -- doubled the estimates of China's military spending, using largely bogus calculations. And then there was the case of Saddam Hussein's capabilities. Saddam, we were assured in 2003, had nuclear weapons -- and because he was a madman, he would use them.

It is not quite right to say that "Washington" has a habit of doing this. Zakaria should instead say that "hysterical Republican hawks" have a habit of doing this.

Accuracy is important in these matters. For the record, then: "Team B" was a creation of George H.W. Bush and included such members as Richard Pipes, Paul Wolfowitz, and Edward Teller. The Cox Commission was the brainchild of congressman Christopher Cox (R%u2013Calif.). And Saddam's nuclear bombs were the fantasy product of Dick Cheney, Donald Rumsfeld, George Bush, et. al.

This quibble aside, the column is very good. The fever swamp hysteria floating around right-wing circles has become increasingly desperate in recent weeks, and Zakaria does a good job of showing it up for the infantile yowling that it is. Democrats who want to be taken seriously on foreign policy could do worse than have it stapled to their foreheads.

More Lies From the Bush...

Impeach George W. Bush. Impeach him now.

Spencer Ackerman writes:

The Plank: WHO APPROVED BUSH'S SPEECH?: So it's not just me who sees the lies in Bush's defense of torture yesterday. My colleague Andrew Sullivan does as well, and so does ex-Justice Department official Marty Lederman (via Laura Rozen). That raises the question: Who vetted Bush's speech?

"Everybody," says a National Security Council spokesperson. "It was vetted, vetted and more vetted at every level of government." Well, like who in particular? Steve Hadley? John Negroponte? Condoleezza Rice? "Negroponte ... I imagine the Secretary of State, but I'm not sure. The primary vetters were [in the intelligence community], of course, the [Director of National Intelligence, John Negroponte], Hayden. But this was vetted, vetted and vetted."

I'm told I'll have more reaction from the White House later, including (allegedly) an official statement, so I'll post that as soon as I have it....

BUSH LIES ABOUT RAMZI BIN AL SHIBH, ABU ZUBAYDAH AND TORTURE: Not that it should surprise anyone anymore, but yesterday's stomach-churning Bush speech defending torture contains this little number:

We knew that Zubaydah had more information that could save innocent lives, but he stopped talking. As his questioning proceeded, it became clear that he had received training on how to resist interrogation. And so the CIA used an alternative set of procedures. These procedures were designed to be safe, to comply with our laws, our Constitution, and our treaty obligations. The Department of Justice reviewed the authorized methods extensively and determined them to be lawful. I cannot describe the specific methods used--I think you understand why--if I did, it would help the terrorists learn how to resist questioning, and to keep information from us that we need to prevent new attacks on our country. But I can say the procedures were tough, and they were safe, and lawful, and necessary.

Zubaydah was questioned using these procedures, and soon he began to provide information on key al Qaeda operatives, including information that helped us find and capture more of those responsible for the attacks on September the 11th. For example, Zubaydah identified one of KSM's accomplices in the 9/11 attacks--a terrorist named Ramzi bin al Shibh. The information Zubaydah provided helped lead to the capture of bin al Shibh. And together these two terrorists provided information that helped in the planning and execution of the operation that captured Khalid Sheikh Mohammed.

First, according to Ron Suskind, Abu Zubaydah didn't clam up because he was "trained to resist interrogation," but because he has the mental capacity of a retarded child. Second, the idea that Abu Zubaydah's interrogation tipped off the U.S. to the existence of Ramzi bin Al Shibh is just an outright lie. A Nexis search for "Ramzi Binalshibh" between September 11, 2001 and March 1, 2002--the U.S. captured Abu Zubaydah in March 2002--turns up 26 hits for The Washington Post alone. Everyone involved in counterterrorism knew who bin Al Shibh was. Now-retired FBI Al Qaeda hunter Dennis Lormel told Congress who Ramzi bin Al Shibh was in February 2002. Abu Zubaydah getting waterboarded and spouting bin Al Shibh's name did not tell us anything we did not already know.

Of course, most Americans don't have access to Nexis. And most Americans don't remember--and can't be expected to remember--newspaper coverage of Al Qaeda for a seven-month stretch between the attacks and Abu Zubaydah's capture. Bush is exploiting that ignorance to tell the American people an outright lie in order to convince them that we need to torture people. As Bush once said in another context, if this is not evil, then evil has no meaning.

Why Oh Why Can't We Have a Better Press Corps?

While we are at it, consider that Slate does--presumably--pay its Lexis-Nexis bill, yet Slate's John Dickerson writes:

Bush tries once more to sell his security policies. By John Dickerson - Slate Magazine: I thought the details Bush offered today sounded fairly persuasive...

Memo to Jacob Weisberg: Slate will die unless you employ people who will use Google and Lexis-Nexis--not people who won't.

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

Glenn Greenwald has the normal criticisms of the Washington Post's Jonathan Weisman:

Unclaimed Territory - by Glenn Greenwald: This week's FISA debate -- 2 falsehoods that cannot be responsibly reported: If Jonathan Weisman and the Post like warrantless eavesdropping, they can say so. But there is no excuse for depicting the NSA program as some sort of widely popular program which has the backing of "a majority of Americans" and is opposed only by the Democrats' "liberal base." That is not reporting. That is factually false political propaganda straight from the mouth of Karl Rove and Ken Melhman. The opposite is true -- at best, polls show that Americans are evenly divided, but most polls have shown since the beginning of the NSA scandal that most Americans want aggressive eavesdropping on Al Qaeda but oppose warrantless eavesdropping. Whatever can be done to drum this simple, clear fact into the heads of journalists who write or speak about this story should be done.

Reputation as an objective news source? Stick a fork in it: it's done.

Air Cover on Veblen Effects from Daniel Davies and Lizard Breath

I wrote some things that I thought had been obvious and uncontrovertible since pointed out by Thorstein Veblen:

Brad DeLong's Semi-Daily Journal: Making 'em Feel Small...: I wrote that one reason that America's rich today live the expensive and ostentatious lifestyles they do (rather than spending much more money on charity, or philanthropy) is that it is a way of making other people feel small and unhappy:

Brad DeLong's Semi-Daily Journal: Lyndon Johnson, Yes. William Jennings Bryan, No.: I'm enough of a touchy-feely sociology-lover to believe that a good chunk of the utility the rich derive from their conspicuous consumption is transferred to them from the poor...

And promptly found myself in need of aircover. Now additional aircover arrives:

From Daniel Davies, who writes:

D-squared Digest -- FOR bigger pies and shorter hours and AGAINST more or less everything else: Thursday, September 07, 2006: No Riff-Raff

Entering into the Brad DeLong Eat The Rich Controversy, I offer this observation:

If it is not the case "that the rich are spiteful--that they enjoy the envy of the poor", then why is the word "exclusive" so popular in the marketing material for hotels, nightclubs, holiday resorts and residential property developments.

"Exclusive" is probably these days an advertising man's synonym for "nice", but it also has a clear and specific literal meaning. It means that the hotel, nightclub, resort etc is providing a bundled service; partly, the provision of a normal hotel or nightclub, and partly the service of excluding a segment of the population from that service. One pays extra to go to a health club whose swimming pool is not polluted by the greasy, hairy polloi.

The reason that this service is valuable is that those who consume it get utility from a) dividing society into two groups, rich and poor, b) creating institutions which physically and socially segregate these two groups and c) them being in the "rich" group.

Nobody would apply for membership of Bouji's or the Bucks if it was just a matter of waiting your turn and paying your fee. This would completely defeat the point of the exercise and destroy the value proposition. The point is that in order to attract a better class of customer, you have to keep the riff-raff out. Basil Fawlty understood this; why doesn't the blogosphere?

And from Lizard Breath, who writes:

I'm not DeLong (and am also not, insofar as I understand what I'm talking about, a utilitarian), but given that he probably doesn't hang around here hitting refresh as often as I do, let me give it a stab, or at least see if I can try once again to clearly convey what I thought was wrong with the critiques of DeLong's post.

While I'm not a strict utilitarian, I think that part of what policy makers should be doing is trying to increase total utility, within the bounds of practicality and justice. DeLong's original post asserted that the rich derive some utility from the fact of inequality -- you could argue with that as a fact claim, but I don't think it's unlikely. And then, by advocating a reduction in inequality that tangibly benefits poorer people, he implicitly suggested that the type of utility that the rich derive from the fact of inequality is not utility that he thinks should be valued from a policy point of view.

That all seems entirely unobjectionable to me.

It is peculiar. I was sitting there, having nice utilitarian-technocratic thoughts about American economic policy, writing things like "I'm enough of a believer in CPI bias to want to say 'real compensation for male nonsupervisory workers has stagnated since 1973'--I think it has grown, but only very slowly, and much less rapidly than productivity. On the other hand, I'm enough of a touchy-feely sociology-lover to believe that a good chunk of the utility the rich derive from their conspicuous consumption is transferred to them from the poor: the happiness America's working poor and middle class derive from the compensation distribution--given their compensation, the compensation of the rich, and the lifestyles of the rich and famous--seems to me to be certainly less than that of their counterparts back in 1973."

And Greg Mankiw decides that he wants to change things from a utilitarian-technocratic discussion about social welfare among various states of affairs to a discourse about the moral flaws of the poor: "I am uncomfortable making envy a basis for public policy."

To which I respond by focusing on the moral flaws of the rich: "It's not the hard work and entrepreneurship [of the rich] that is to be discouraged. Make inventions, build enterprises, donate money for hospitals and libraries--that is all extremely meritorious and praiseworthy. It's the conspicuous consumption that is the problem. Surely spite is at least as offensive an other-regarding preference as envy, isn't it?"

And then all of a sudden we are accused of wanting to throw acid in Cindy Crawford's face.

It's been a long, strange trip.

Alicia Munnell and Company Find Defined-Benefit Pensions Outperforming 4

401(k)s are not the greatest idea in the world:

Angry Bear: Investment Returns: Defined Benefit vs. 401(k) Plans: The always excellent Alicia Munnell and her co-authors Mauricio Soto, Jerilyn Libby, and John Prinzivalli have just released an interesting analysis:

The bottom line is that over the period 1988-2004 defined benefit plans outperformed 401(k) plans by one percentage point. This outcome occurred despite the fact that 401(k) plans held a higher portion of their assets in equities during the bull market of the 1990s. Part of the explanation may rest with higher fees, which are deducted before returns are reported to participants. But the one percentage point shortfall understates the investment problem in 401(k) plans, since an aggregate number does not reflect the fact that more than half of participants in 401(k) plans do not follow the prudent investment strategy of diversifying their holdings. Finally, the available data suggest that IRAs produce even lower returns than 401(k) plans, which, if true, implies trouble ahead given the massive amount of money that is being rolled over into these accounts.

Alicia Munnell and Company Find Defined-Benefit Pensions Outperforming 401(k)s

401(k)s are not the greatest idea in the world:

Angry Bear: Investment Returns: Defined Benefit vs. 401(k) Plans: The always excellent Alicia Munnell and her co-authors Mauricio Soto, Jerilyn Libby, and John Prinzivalli have just released an interesting analysis:

The bottom line is that over the period 1988-2004 defined benefit plans outperformed 401(k) plans by one percentage point. This outcome occurred despite the fact that 401(k) plans held a higher portion of their assets in equities during the bull market of the 1990s. Part of the explanation may rest with higher fees, which are deducted before returns are reported to participants. But the one percentage point shortfall understates the investment problem in 401(k) plans, since an aggregate number does not reflect the fact that more than half of participants in 401(k) plans do not follow the prudent investment strategy of diversifying their holdings. Finally, the available data suggest that IRAs produce even lower returns than 401(k) plans, which, if true, implies trouble ahead given the massive amount of money that is being rolled over into these accounts.

Michael Froomkin Thinks ABC/Disney Does the Impossible

Michael Froomkin says that ABC/Disney looks like it is about to do something I would have thought impossible in the United States of America: about to libel public figures: ABC's '9/11' Libel By Fiction Exposure: ABC's '9/11' Libel By Fiction Exposure

In all the ink, real and virtual, that's being spilled over ABC's fictionalization of the run-up to the 9/11 attacks, it seems to me that one aspect of ABC/Disney's position has been missed: if the public descriptions of the show are accurate, then the people who made it and those who plan to show it have some serious libel exposure.

To recap, just in case you are reading this blog from Pluto, ABC hired a bunch of right-wing hardcases who got the Republican chair of the 9/11 Commission to lend them his good name. Purporting to dramatize the findings of the 9/11 commission they instead produced the sort of mockumentary that Rush Limbaugh would love, and in fact does love.

The show includes scenes that are flat-out inventions designed to show that the Clinton administration refused clear shots at bin Laden (in fact, no such event took place) and was generally to blame for the 9/11 attacks. Missing from the show are key moments such as Bush ignoring written warnings that al Quaeda was planning to attack. Equally absent is the famous 'My Pet Goat' moment. And so on.

Publicity for the show has been a bit odd: ABC sent pre-release tapes to Limbaugh and to conservative bloggers, but not liberal ones. It also refused requests by Clinton and others in his administration for an advance look -- shocking disrespect for a former President.

The blogs are hard at work on this one. But nowhere have I seen mention of the libel claim that I think is looming.

Generally in the United States you can't libel a public figure. Plus, libel claims based on fiction are obviously much harder than claims based on assertions in supposed non-fiction. But neither of these bars is insurmountable. And on the facts as reported, they could be surmounted surprisingly easily.

As one New York court put it not so long ago, a claim of "libel by fiction" requires that "the description of the fictional character must be so closely akin to the real person claiming to be defamed that a reader of the book, knowing the real person, would have no difficulty linking the two." The novel Primary Colors didn't meet that test as it didn't use real names, nor were the physical description of any character like the plaintiff in that case. But the 9/11 show differs from Primary Colors in a very basic way: It uses actors portraying real people with their actual names involved in activities that are a blend of real things they did and of the partisan imagination. I suspect it wouldn't be hard to get a court to see the difference from Primary Colors-like facts. Furthermore, even if ABC were to run a big disclaimer with the episode, that wouldn't necessarily suffice.

It's even harder to make out a case of libel when the victim is a public figure. Basically, to win you have to show that the author of the libelous work demonstrated a "reckless disregard for the truth." Given the public nature of the warnings that various scenes are false, if in fact they are false then I think this part of the case should be pretty easy.

If I were at ABC or Disney I'd be having a serious talk with my lawyers right about now.

Department of "Huh?"

Greg Mankiw, seeking to score rhetorical points off of Paul Krugman, writes:

Greg Mankiw's Blog: A Kept Promise: In 2000, candidate George W. Bush said: "On principle no one in America should have to pay more than a third of their income to the federal government." Today, in Paul Krugman's NY Times column, I learn: "the effective federal tax rate on the richest 0.01 percent has fallen from about 60 percent in 1980 to about 34 percent today."

Because this is the group with the highest average tax rate, I guess we should conclude that President Bush kept his promise.



No. No! No!! No!!! No!!!!

In no meaningful sense has George W. Bush reduced the tax burden. In no meaningful sense has he kept any promise. George W. Bush has kept his promise to cut taxes in the same way that a spouse who decides to "save money" by making only the minimum required payment on the VISA bill has kept a promise to reduce household spending.

As Milton Friedman puts it, to spend is to tax. Bush's spending increases--defense, Iraq, the Republican porkfest, the Medicare drug benefit--are still there, just as things you have charged to your VISA don't go away if you make only the minimum monthly payment.

What George W. Bush has done has been to shift taxes from the present to the future--and also made future taxes uncertain, random, and thus extra-costly from a standard public finance view.

The reality-based right-wing public-finance economists right now are not complimenting George W. Bush for keeping his promises to cut taxes. No, no, no, no, no.

The reality-based right-wing public-finance economists are saying something very different than "President Bush kept his promise to cut taxes."

Here's Andrew Samwick:

Vox Baby: First Things First: I don't disagree with Calculated Risk... [who] writes: "Everyone should agree that the most immediate fiscal problem is the structural General Fund deficit. Excluding future health care costs, the structural deficit is around 4% to 4.5% of GDP. This serious problem has been caused almost exclusively by Bush's policies. And imagine if the economy slows next year, as many people expect, adding a cyclical deficit on top of the huge Bush structural deficit."... As I have discussed... the appropriate target for the General Fund deficit is for it to average to zero over a business cycle. A corollary to that is that the General Fund should be in surplus during the non-recessionary parts of that business cycle...

Here's Tyler Cowen: - Are Tax Reforms Sensible, Or Just a Cut for the Rich?: Commentators frequently refer to the Bush "tax cuts," but this is a misnomer. Government spending has risen sharply, including at the domestic level, so our taxes are going up in the future, especially once you consider the implicit liabilities from Social Security and Medicare. Bush has given us a "tax shift," combined with a long-run net tax increase; read Alex Tabarrok here. We simply haven't yet been told which taxes are going up and when...

Here's Alex Tabarrok:

What Tax Cut?: Newsroom: The Independent Institute: I favor a much smaller government but I do not favor the Bush tax cut. Or, to be more precise, I would support a tax cut if one had been proposed. But so far President Bush has neither proposed nor implemented a tax cut--only a tax shift. To grasp the difference between a tax cut and a tax shift, we must first understand that what ultimately drives taxes is spending. If spending increases, as it has under the current administration, then sooner or later taxes must increase (or inflation, a type of tax, will go up). Milton Friedman, the libertarian-leaning Nobel prize-winning economist, has long reminded us to be suspicious of any tax cut not matched by a spending cut. If spending isn't cut, then less taxes today means more taxes tomorrow. Thus, the Bush tax cut plan is really a plan for future tax increases...

Here's Bill Niskanen:

Bill Niskanen: For nearly 30 years, many Republicans have asserted that the best way to control federal spending is to “Starve the Beast” by reducing federal tax revenue.... There are at least three problems with this perspective:

  1. It is most implausible that reducing the tax burden of government spending on current voters would reduce the level of government spending that Congress would approve. In private markets, there is a consistent negative relation between the price of a good or service and the amount demanded.
  2. The “Starve the Beast” assertion is inconsistent with the facts, at least since 1980...
  3. An increased belief in the “Starve the Beast” assertion has substantially reduced the traditional Republican concern for fiscal responsibility – leading to a pattern of tax cuts, increased spending, and increased deficits. This pattern has been strongest during the current Bush administration...

All impeccably right wing. All reality-based. All well worth listening to. None would say that President Bush has "kept his promise" in any meaningful sense.

The Stupidity! It Burns!! It Burns!!!

Andrew Sullivan writes:

Andrew Sullivan | The Daily Dish: I fear Maliki's government is powerless against the Shiite militias that have increasingly infiltrated it.

Maliki's government is the Shiite militias. The Shiite militias are Maliki's government. There is no "infiltration."

Friday, September 08, 2006

Larry Katz Weighs in on What Should Be Done About Inequality

Ezra Klein:

TAPPED: LAWRENCE KATZ SPEAKS. One last thing on yesterday's David Brooks column. My friend Reihan Salam wondered why I was so dismissive of the piece, and he was right to. In short, I've done a lot of reading into the economic literature on inequality and never, ever come across what Brooks was saying. Moreover, I'd read a fair amount of Lawrence Katz's work on inequality and it also failed to support Brooks' thesis. Something seemed wildly awry.

So I employed the top secret journalistic technique of picking up the damn phone (or PUDP, in TAP office parlance), and gave Katz a call. His answers confirmed my suspicions. Before he even talked about the column, he e-mailed to say that "I obviously don't have anything to do with the 'spin' [Brooks] gives the material and certainly nothing to do with the numbers he cites in the first half of his column." And when I got him on the phone, he repudiated nearly every aspect of the piece. "There are," he said, "clear market forces that have to do with the demand for talented individuals, but the current period is not that different from the past for that type of thing. In the past, however, we've done a very good job expanding access to education to keep up with growth, providing bargaining power to those left behind, and using government policy to help them. What's changed in the last twenty years is that we've eroded those ameliorating institutions."

In other words, Brooks used Katz as a good example of "the second and much more persuasive school of thought on inequality" that rejects the decline in unions, increases in CEO pay, loss of wages, and all the other standard critiques of the left. The only problem? Katz is not that sort of economist. He mentioned the importance of unions four or five times during our ten minute talk, and kept returning to the idea that the demand for new skills is nothing new and nothing specific to America -- what's different is its translation into rampant inequality. He is also a former Clinton administration economist, and so the distortion of his views gave a bipartisan imprimatur to Brooks' remarks, allowing Brooks to place a wedge between the good "Clinton" Democrats and the bad, populist liberals.

I can't speak of intentions; I don't know if Brooks misunderstood Katz -- who, like me, he spoke to -- or distorted him, or just wrote unclearly. But the opinions in that column are not those of Katz. Even the part Brooks directly attributes -- the primacy of "skills," or so-called skills-based technial change -- is misleading. As Katz told me (and as others, like Emmanuel Saez, have pointed out), "Those market forces aren't new, and other countries have had them without the inequality we've had." In other words, France has computers and customer service too, and they've not seen the startling increase in inequality that we have.

So what does Katz think we should do? "Talented Americans aren't going to stop working if their tax rate is 42 percent," he told me. "So I would scale back cuts at the top end and use the revenue to expand the EITC to increase its generosity and its reach -- it should be doing more for young singles. We should clearly have a National Labor Relations Board that's more open-minded, so it's easier to unionize...And over the long run we need to do things to provide health care to a larger group, offer training and wage insurance to people who lose jobs, and create greater educational opportunities [throughout society]." So there you have it, Lawrence Katz wants unions, health care, more expansive wage subsidies, and a more progressive tax code. The question, I guess, is whether Brooks really does agree with him.

We Interrupt This Weblog for a "Devil Wears Prada" Moment...

Did anybody else get a fifty-page Loro Piana collection fall-winter catalog book in their newspaper this morning? (It came in either the FT or the NYTimes, we are not sure which.) How large a chunk out of their advertising budget did this take?

And Eric Alterman Gets Medieval on Brad DeLong...

Eric writes:

Altercation: Notso Slacker Friday - Altercation - Come on People Now, Smile on Your Fellow Technocrat Everybody Get Together and Make Policy Right Now. Brad DeLong Makes a Mistake here when he writes,

While I am profoundly, profoundly disappointed and disgusted by the surrender of the reality-based wing of the Republican policy community to the gang of Republican political spivs who currently hold the levers of power, I do think that there is hope that they will come to their senses and that building pragmatic technocratic policy coalitions from the center outward will be possible and is our best chance.

He is not factually mistaken, of course. But he is mistaken in the sense that he is deluding himself and therefore misdirecting his efforts. When I was a freshman in college, I took Philosophy 101, and learned, via David Hume I believe, that philosophically speaking, just because the sun had risen in the east and set in the west every day since time began-—as far as anyone knows-—that was no reason to conclude it would necessarily do so tomorrow. I thought this brilliant at the time, but today I think it’s bullshit. So is DeLong’s “best chance.”

There’s absolutely nothing in Republican Party politics driving its members toward the goal of “building pragmatic technocratic policy coalitions” and lots of money, power, rewards and institutional arrangements doing just the opposite. (See Off Center: The Republican Revolution and the Erosion of American Democracy by Jacob S. Hacker and Paul Pierson, here, and Building Red America: The New Conservative Coalition and the Drive For Permanent Power by Thomas Byrne Edsall, here, if you doubt this.)

DeLong’s hope, while noble in principle, is emasculating in practice. And it’s one of many reasons why liberals continue get their asses handed to them, again, and again and again. This is war, and the other side needs to be soundly defeated—drowned in a bathtub, to borrow a felicitous phrase--before the sources of DeLong’s “disappointment and disgust” can be addressed as anything more than a dangerous delusion.

I really do need to take Paul Pierson out to lunch...

Ask the Readers: Why do you do dumb things?


Ask the Readers: Why do you do dumb things? - Lifehacker: Former Apple evangelist and Silicon Valley bigwig Guy Kawasaki discusses how his Macbook's hard drive went kaput and why he, as an intelligent guy, had not backed up his important data.

Excuse me while I go back up all three of my hard disks.

A Request for Help...

Well, I guess I can put this out...

It's not a done deal yet, but I might be on the committee to search for a successor to Orville Schell as Dean of Berkeley's Graduate School of Journalism.

In which case, I would need a lot of help answering the following questions:

  1. What is the future of journalism over the next two generations?
  2. What would a good Berkeley Graduate School of Journalism look like over the next generation?
  3. What skills and capabilities would a dean need to have to move GSJ in that direction over the next decade?
  4. What people have those skills and capabilities?
  5. Which of the people with those skills and capabilities could we attract to Berkeley?

Hard questions, all.

Eric Alterman Watches Jonathan Weisman

You know, it is really impossible to believe that Washington Post print editors believe that their own website is a threat to their reputation as objective news reporters. Impossible:

Altercation: Tricks of the trade - Altercation - One of the many, many problems with journalists’ attack on bloggers for lacking professional ethics is not only that many journalists lack any professional ethics—see under “television news, cable, entire,”—but that even when journalists at the top of their profession do their job entirely professionally, their practices often lead us no closer to the truth, and often mislead us away. For instance:

The old “There Are Only Two Options, Here, Mine and Some Idiot’s” dodge:

In a Washington Post chat, an emailer asked reporter, Jonathan Weisman, “Dick Cheney said he was stuck with the grave decision of whether to shoot down the flight that crashed in Pennsylvania or not. The recently released NORAD tapes confirm that the government first knew of the flight one minute before it went down. Is Cheney lying, again, or was he thinking very fast that day, with his drama unfolding within 60 seconds? I've yet to read anywhere that Cheney has been queried about his story. THANKS.

Weisman replied: If I can get him on the phone, I will query him. Cheney's statements present a quandary for us reporters. Sometimes we write them up and are accused of being White House stenographers and stooges for repeating them. Then if we don't write them up, we are accused of being complicit for covering them up. So, all you folks on the left, what'll it be? Complicity or stenography?” Here.

The contempt dripping from Weisman’s typist is evident but his logic is not. Why would it be impossible for Weisman, even without getting Cheney on the phone, and ha ha, what a riot, asking a politician an impolite question—publish what Cheney actually said alongside the evidence that the man is not telling the truth? That would not be “complicity.” That would not be “stenography.” (And by the way sir, in the case of this administration, “complicity” and “stenography” are synonymous.) It would be solid, sensible journalism. Has the Washington Post fallen so far from the ideal of actually trying to tell the public the truth when officials want it hidden that their reporters are actually unfamiliar with the practice?...

Yes, Eric, they have fallen so far.

As I have said before, my first encounter with Jonathan Weisman came when he got a story wrong and I protested. His response?

[F]or someone who got the longest quote in my [Glenn] Hubbard profile, you mercilessly slammed me really good..."

I should, Weisman thinks, be grateful because he gave me "the longest quote" in his article. And--in Weisman's view--what sources really want is not that the story be right but that they be quoted at length in the Washington Post. "Telling the public the truth" doesn't enter the picture at all.

Eric Alterman Watches Jonathan Rauch Jump the Shark

Too bad. I thought Rauch used to be an honest and interesting guy. But I won't think so if he keeps going down this road:

Altercation: Tricks of the trade - Altercation - One of the many, many problems with journalists’ attack on bloggers for lacking professional ethics is not only that many journalists lack any professional ethics—see under “television news, cable, entire,”—but that even when journalists at the top of their profession do their job entirely professionally, their practices often lead us no closer to the truth, and often mislead us away. For instance:

The Phony Comparison With Someone or Something Insane to Make the Otherwise Outrageous Appear Sensible:

In The New York Times Book Review, Jonathan Rauch writhes:

This “party of death” — “those who think that the inviolability of human life is an outdated or oppressive concept” — is not perfectly congruent with the Democratic Party, but in Ponnuru’s words, it has made the Democrats a “wholly owned subsidiary.” That distinction may seem less meaningful to many readers than it does to Ponnuru, who has been accused by his critics of political partisanship, and whose title and subtitle do their commercialistic best to give that impression. He is, however, the soul of fair-mindedness compared with many of his fellow pundits. (For instance, the conservative writer Ann Coulter, in her new book, “Godless: The Church of Liberalism,” distinguishes Republicans from Democrats this way: “We’re the Blacks-Aren’t-Property/Don’t-Kill-Babies Party. They’re the Hookup party.” Now that’s partisanship.)...

Now you see the service that Coulter provides to conservatives and that network brass provide to them by giving her a platform. It’s impossible to be considered beyond the bounds of sensible discourse when your only standard is a screaming, hysterical dishonest lunatic, but that here, is what appears to be Rauch’s only allowable standard.

Why Oh Why Can't We Have a Better Press Corps? (Fire Tom Friedman Now Edition)

Brendan Nyhan has shrill contempt and scorn for Tom Friedman:

The Horse's Mouth: On the other hand, Tom Friedman, who was never a prose stylist, seems on the verge of mental collapse midway through today's column (before calling for yet another attempt to make peace in Iraq).... Just so we're clear: He's not truly baffled -- he's "truly, truly" baffled. $50 per year is a bargain for this kind of analysis!

Here is Friedman:

The Central Truth - New York Times: We are stalled in Iraq... because of how the Bush team, the center of U.S. policy, approached Iraq from the start. While it told the public -- correctly, in my view -- that building one example of a tolerant, pluralistic, democratizing society in the heart of the Arab-Muslim world was really important in the broader war of ideas against violent radical Islam, the administration acted as though this would be easy and sacrifice-free.

Bush-Cheney-Rumsfeld told us we are in the fight of our lives against a new Islamic fascism, and let's have an unprecedented wartime tax cut and shrink our armed forces. They told us we are in the fight of our lives against a new Islamic fascism, but let's send just enough troops to topple Saddam -- and never control Iraq's borders, its ammo dumps or its looters. They told us we are in the fight of our lives against a new Islamic fascism, but rather than bring Democrats and Republicans together in a national unity war coalition, let's use the war as a wedge issue to embarrass Democrats, frighten voters and win elections. They told us we are in the fight of our lives against a new Islamic fascism %u2014 which is financed by our own oil purchases -- but let's not do one serious thing about ending our oil addiction....

[I]t is the "moral confusion" at the heart of the Bush policy -- a confusion between its important ends and insufficient means -- that has hobbled us from the start. It truly, truly baffles me why a president who bet so much of his legacy on this project never gave it his best shot and tolerated so much incompetence. He summoned us to D-Day and gave us the moral equivalent of the invasion of Panama.

Tom Friedman is "truly, truly baffled." He could be unbaffled if he learned how to use the internet. He would find that his question was answered three and a half years ago, by Daniel Davies, here:

D-squared Digest -- FOR bigger pies and shorter hours and AGAINST more or less everything else: And another hit and run:

I find myself with a few spare minutes and make the mistake of reading Thomas Friedman again. His conclusion after a long, dull and witless ramble about the introduction of "democracy" to Iraq... reads "If [it is] done right, the Middle East will never be the same. If done wrong, the world will never be the same".

There's not much you can say to that except "shut up you silly man".

But it does inspire in me the desire for a competition; can anyone, particularly the rather more Bush-friendly recent arrivals to the board, give me one single example of something with the following three characteristics:

  1. It is a policy initiative of the current Bush administration
  2. It was significant enough in scale that I'd have heard of it (at a pinch, that I should have heard of it)
  3. It wasn't in some important way completely f----- up during the execution.

...I literally can't think what possible evidence Friedman might be going on in his tacit assumption that the introduction of democracy to Iraq (if it is attempted at all) will be executed well rather than badly. Worst piece of counterfactual speculation by Friedman since the day he pondered the question "If I grew a moustache well, I would look distinguished and stylish; if I grew one badly, I'd look like a pillock."

I think that it is time for an op-ed accountability moment here. Fire people--like Tom Friedman--who have said witless and stupid things and now profess to be "truly, truly baffled" at the witless stupidity of the Bush administration. Friedman of all people should find witless stupidity easy to understand.

Replace people who have shown themselves to be witless and stupid by people smart enough to have pointed out their witlessness and stupidity in advance.

I hereby call upon Gail Collins to replace Tom Friedman with Daniel Davies.

Thursday, September 07, 2006

Anybody Else in Berkeley Economics Interested?

A graduate student emails:

Dear Prof. DeLong,

This is a little late, but I was wondering if I could do the Indian economic history course with you this fall that we had briefly discussed last semester. I hope it isn't too late to do this, as I really am interested, but I got in to Berkeley a little late and it has taken me some time to get my bearings, especially since i am teaching for the first time this semsester.

Certainly it's possible. But I want to see if anybody else in the Berkeley grad student population is interested before I email back.

Any takers?

Greg Mankiw Endorses Tyler Cowen on the Yuan

The highly intelligent Greg Mankiw lines up on the side of the highly intelligent Tyler Cowen and Larry Lindsey on what the U.S.'s China policy should be:

Greg Mankiw's Blog: Cowen on the Yuan: In today's NY Times, economist Tyler Cowen argues:

The United States should not be spending its international political capital on yuan revaluation.

I agree. Larry Lindsey put the economic logic well in a Wall Street Journal column last April:

America, however, benefits from this arrangement. The Chinese clearly undervalue their exchange rate. This means American consumers are able to buy goods at an artificially low price, making them winners. In order to maintain this arrangement, the People's Bank of China must buy excess dollars, and has accumulated nearly $1 trillion of reserves. Since it has no domestic use for them, it turns around and lends them back to America in our Treasury, corporate and housing loan markets. This means that both Treasury borrowing costs and mortgage interest rates are lower than they otherwise would be. American homeowners and taxpayers are winners as a result.

There are losers, of course, most notably American producers of goods that are now made in China. Yet the losses to these producers are outweighed by the benefits from Chinese subsidies of our imports of consumer goods and the reductions in our borrowing costs from generous Chinese lending. Though correct, in politics these gains are now beside the point.

Once again, I agree.

Everything that Larry Lindsey says is correct. But I cannot join Greg in Tyler's conclusion because of worries about how the situation will be unwound. At some point China's State Council will tell the People's Bank of China to stop buying dollar-denominated securities. What happens then? Bad things. And if I listen to my inner Friedrich Hayek about how the cost of unwinding a fundamental resource-allocation and investment disequilibrium rises more than one-for-one with the magnitude times the duration of the disequilibrium, I can get very worried indeed. Dollar crashes, financial crises, large-scale housing defaults, deep recessions, panics, revulsions, discredits--and at the very least the movement of 8 million workers in the U.S. out of construction, consumer services, and supporting occupations and into export and import-competing manufacturing, and the movement of 40 million workers in Asia out of export manufacturing and supporting occupations and into... what?

We should be moving toward Andrew Samwick's policy of a cyclically-appropriate on-budget government surplus in order to put downward pressure on domestic absorption, and we should be strongly advising the Chinese and others to shift from export-led growth and allowing their real exchange rates to adjust, in order to reduce the risks of a really unpleasant episode.

We aren't.

Only if I could throttle and silence my inner Friedrich Hayek could I line up with Tyler and Greg on this one. And I can't.

I should surf on over to Brad Setser's website and see what he has to say...

Fire David Brooks. Fire David Brooks Today (Why Oh Why Can't We Have a Better Press Corps?)

The New York Times wouldn't hire an op-ed writer who was this illiterate. Why does it employ David Brooks, who appears to be innumerate?

Jared Bernstein reports. You decide:

By Jared Bernstein
: His oped in the NYT this A.M. ($$) is way too dismissive of a number of factors that inequality analysts widely agree play a role in the long-term problem of unequal economic outcomes.

As is too often the case, journalists who can't find a factor that explains 51% of the phenomenon in question dismiss everything. Brooks argues that declining unionization is not a "driving force" because it only explains 10-20 percent of the rise in inequality. But that's as big as any other force that economists have measured. Roughly speaking, the decline in the real value of the minimum wage explains about that much (more for female wage inequality). And globalization is generally cited as accounting for around this share of the increase as well....

Does Brooks or anyone else seriously believe that the increase in trade, investment flows and multinational corporate activity has had no impact on inequality? Does he believe that large and sustained trade deficits have nothing to do with the loss of manufacturing jobs and the fall in the relative wages of non-college educated workers?

At this point, I'm not aware of any serious analysis of inequality that is anywhere near this dismissive of these impacts. Granted, they are discussed in terms of transitional costs, but they are widely recognized as part of the problem. Fed Chairman Bernanke, for example, worries about these issues.

Offshoring in Brooks's piece is another mythic force.... But... Brooks ought to be aware that the literature on the impact of offshoring has appropriately shifted its focus from job loss to wage loss. You don't have to lose your job to be affected by competition from the fact of millions of skilled workers coming online in the global economy. Alan Blinder famously makes this case in a recent Foreign Affairs piece ($$).

Next, Brooks claims that workers are just as secure as they were in decades past and that social mobility is unchanged. But even he would agree that there's more inequality now than there used to be, and unless mobility has increased, we are much further from each other across the economic spectrum, and no more likely to span the increased distances. We need more social mobility to offset rising inequality, and we haven't gotten it....

Brooks is also in denial about "factor shares." Again, no serious analyst questions whether profit rates or shares are uncharacteristically high right now though again, many argue this is soon to be corrected. Brooks notes that the compensation share of GDP is relatively unchanged (the wage share of national income is near historic lows), but this includes CEO pay, bonuses, stock options, and so on. Again, inequality analysts recognize that big, inequality-inducing shifts have occurred within the compensation share of national income.

Finally, those who want to dismiss the impact of everything except skills have to explain what happened in the 1990s. Measures of inequality--especially those that emphasize the gap between the middle and bottom--compressed over those years. The 20th percentile real wage rose in step with productivity, and poverty fell sharply, especially among the least advantaged. That hadn't happened since the latter 1970s and it hasn't happened since. Did skills temporarily rain down on people's heads, 1995-2000, and then disappear?

Obviously, other forces are at play.... To dismiss everything except skills is to misdiagnose the problem, inevitably leading to insufficient solutions.

If the New York Times editorial page operation wants to survive, it needs to establish one benchmark principle: people aren't allowed to write about things they don't understand.

Wednesday, September 06, 2006

Impeach George W. Bush

As best as I can see, the balance of the probabilities is that George W. Bush spent this morning lying his head off. Is there any reason to believe him, rather than to believe Ron Suskind's sources?

George W. Bush today:

President Discusses Creation of Military Commissions to Try Suspected Terrorists: Home > News & Policies: Within months of September the 11th, 2001, we captured a man known as Abu Zubaydah. We believe that Zubaydah was a senior terrorist leader and a trusted associate of Osama bin Laden. Our intelligence community believes he had run a terrorist camp in Afghanistan where some of the 9/11 hijackers trained, and that he helped smuggle al Qaeda leaders out of Afghanistan after coalition forces arrived to liberate that country. Zubaydah was severely wounded during the firefight that brought him into custody -- and he survived only because of the medical care arranged by the CIA.

After he recovered, Zubaydah was defiant and evasive. He declared his hatred of America. During questioning, he at first disclosed what he thought was nominal information -- and then stopped all cooperation. Well, in fact, the "nominal" information he gave us turned out to be quite important. For example, Zubaydah disclosed Khalid Sheikh Mohammed -- or KSM -- was the mastermind behind the 9/11 attacks, and used the alias "Muktar." This was a vital piece of the puzzle that helped our intelligence community pursue KSM. Abu Zubaydah also provided information that helped stop a terrorist attack being planned for inside the United States -- an attack about which we had no previous information. Zubaydah told us that al Qaeda operatives were planning to launch an attack in the U.S., and provided physical descriptions of the operatives and information on their general location. Based on the information he provided, the operatives were detained -- one while traveling to the United States.

We knew that Zubaydah had more information that could save innocent lives, but he stopped talking. As his questioning proceeded, it became clear that he had received training on how to resist interrogation. And so the CIA used an alternative set of procedures. These procedures were designed to be safe, to comply with our laws, our Constitution, and our treaty obligations. The Department of Justice reviewed the authorized methods extensively and determined them to be lawful. I cannot describe the specific methods used -- I think you understand why -- if I did, it would help the terrorists learn how to resist questioning, and to keep information from us that we need to prevent new attacks on our country. But I can say the procedures were tough, and they were safe, and lawful, and necessary.

Zubaydah was questioned using these procedures, and soon he began to provide information on key al Qaeda operatives...

Me, quoting Barton Gellman, quoting Ron Suskind, last June:

Brad DeLong's Semi-Daily Journal: Ron Suskind's New Book: Ron Suskind has a new book. Barton Gellman reviews it:

Ron Suskind's gripping narrative of what the White House has celebrated as one of the war's major victories: the capture of Abu Zubaydah.... Described as al-Qaeda's chief of operations... shipped to a secret prison abroad. Suskind shatters the official story line here. Abu Zubaydah, his captors discovered, turned out to be mentally ill... nothing like the pivotal figure they supposed him to be... appeared to know nothing about terrorist operations; rather, he was al-Qaeda's go-to guy for minor logistics -- travel for wives and children and the like.

That judgment was "echoed at the top of CIA and was, of course, briefed to the President and Vice President," Suskind writes. And yet somehow, in a speech delivered two weeks later, President Bush portrayed Abu Zubaydah as "one of the top operatives plotting and planning death and destruction on the United States." And over the months to come, under White House and Justice Department direction, the CIA would make him its first test subject for harsh interrogation techniques.

How could this have happened? Why are we learning about it only now? Those questions form the spine of Suskind's impressively reported book....

[T]he intelligence and counterterrorism professionals whose point of view dominates this book... came to believe, Suskind reports, that "their jobs were not to help shape policy, but to affirm it." (Some of them nicknamed Cheney "Edgar," as in Edgar Bergen -- casting the president as the ventriloquist's dummy.)...

[T]he unbalanced Abu Zubaydah. "I said he was important," Bush reportedly told Tenet at one of their daily meetings. "You're not going to let me lose face on this, are you?" "No sir, Mr. President," Tenet replied. Bush "was fixated on how to get Zubaydah to tell us the truth," Suskind writes, and he asked one briefer, "Do some of these harsh methods really work?" Interrogators did their best to find out, Suskind reports. They strapped Abu Zubaydah to a water-board, which reproduces the agony of drowning. They threatened him with certain death. They withheld medication. They bombarded him with deafening noise and harsh lights, depriving him of sleep. Under that duress, he began to speak of plots of every variety -- against shopping malls, banks, supermarkets, water systems, nuclear plants, apartment buildings, the Brooklyn Bridge, the Statue of Liberty. With each new tale, "thousands of uniformed men and women raced in a panic to each... target." And so, Suskind writes, "the United States would torture a mentally disturbed man and then leap, screaming, at every word he uttered."

Two points in Barton Gellman's review cannot be allowed to pass without comment. The first is his description of how Abu Zubaydah was treated:

...water-board[ing], which reproduces the agony of drowning.... threatened... with certain death... withheld medication... bombarded him with deafening noise and harsh lights, depriving him of sleep... he began to speak of plots of every variety -- against shopping malls, banks, supermarkets, water systems, nuclear plants, apartment buildings, the Brooklyn Bridge, the Statue of Liberty...

Yet Gellman cannot write the word "torture." The most he can bring himself to write is "harsh interrogation methods."

The second is Barton Gellman's question:

How could this have happened? Why are we learning about it only now?

I know that I am not learning about "this"--if the "this" is the Bush administration's inept, cruel, and immoral botching of the War on Terror--now, and I don't think Barton Gellman is learning about it now. He may be pretending to be learning about it now. But the big picture has been clear for years.

Impeach George W. Bush. Impeach him now.

Good Books I Have Read: Donald Sassoon "One Hundred Years of Socialism: The West European Left in the Twentieth Century"

Various students are reading:

Donald Sassoon (1997), One Hundred Years of Socialism: The West European Left in the Twentieth Century: (New York: New Press: 1565843738).

Should be called "One Hundred Years of Social Democracy," but nevertheless a very good book.

On TV...

On Bloomberg TV Today

Bloomberg TV: Programming Schedule: 9/6/2006 2:00 PM ET Bloomberg On the Economy Weekdays, Tom Keene interviews leading economists, politicians and strategists. Longer interviews that go beyond the headlines to provide a depth of economic analysis found nowhere else in the media. Podcast ready, these interviews address the economic news of the moment — and provide context and perspective that is a must-listen in a hurried world. Tom Keene and top economists. It's Bloomberg on the Economy.

A Republican Leak...

Joe Gandelman:

The Moderate Voice - Guess Where Joe Lieberman Got Some Of His Primary Funding?: In terms of imagery as an independent candidate, Joe Lieberman is now in big trouble due to this:

The White House funneled millions of dollars through major Republican Party contributors to Sen. Joseph Lieberman's primary campaign in a failed effort to ensure the support of the former Democrat for the Bush administration.

A senior GOP source said the money was part of Deputy White House Chief of Staff Karl Rove's strategy to maintain a Republican majority in the Senate in November. The source said Mr. Rove, together with Republican National Committee Chairman Ken Mehlman, directed leading pro-Bush contributors to donate millions of dollars to Mr. Lieberman's campaign for re-election in Connecticut in an attempt that he would be a "Republican-leaning" senator.

"Joe [Lieberman] took the money but said he would not play ball," the source said. "That doesn't mean that this was a wasted investment."

The last statement reeks of a CYA statement that a source gives a journalist to short-circuit and protect someone who is being mentioned in a quote that could spark an outcry against the person being mentioned (yours truly knows this because as a full-time journalist he was faced with lots of statement such as this on sensitive stories).

But Lieberman probably did indeed say that and believes it: just because he took the money doesn't mean he has been bought by people with an agenda at odds with what has been his party for many years.

A clever leak by the Republican political machine: lower Lieberman's chances of winning in November, but these revelations greatly raise the chances that Lieberman will convert to the Republican Party if he does win.

Tuesday, September 05, 2006

Dog Whistle Politics and the McWhorter Fallacy

Pithlord watches ex-Berkeley professor John McWhorter commit the shameful act of laying down covering fire for Republican Senator from Virginia George "Let's give a welcome to macaque, here--welcome to America and the real world of Virginia" Allen. He focuses on the fact that McWhorter's argument is self-denying--that it is valid only if it is invalid; and that if it is valid, then it is invalid.

Pithlord writes:

Pith and Substance: The McWhorter Fallacy: Those who pay attention to the scandals of the American political blogosphere doubtless know that George Allen -- a more-than-expectedly unappealing potential Republican nominee for President in 2008 -- called one of his opponents' staffers a "maccaca" and bid him "Welcome to America." The staffer in question is of South Asian descent and the hivemind quickly discovered that "maccaca" was a slur used by French colonists against North Africans. Allen's mother was a French colonist in Algeria, and it seems plausible (particulalry in light of the absence of competing explanations) that he consciously or sub-consciously had this meaning in his head.

The Allen campaign can't admit any of this, of course, because it would suggest that Senator Allen is part French.

All of that is by way of background for those of readers and spambots who do not obssessively follow American politics.

The point I wanted to make came from John McWhorter's defence of Allen, related by publius here:

Imagine for a moment that Allen actually knew that a "macaque" is a kind of monkey, or that in French the term is sometimes used as an insult for North Africans (Allen denied having known about either). Who, then, believes that Allen would use the slur against an opposition campaigner aiming a camera straight at him?

The logic, as I understand it is as follows:

  • If P said X, then P would be criticized for violating some public norm.
  • P therefore could not have said X since it would result in public criticism, which would reduce P's electability.
  • Therefore, public criticism [of P] is unjustified.

The second premise depends on the idea that politicians, even in moments of stress, always act rationally. It also assumes that everything blameworthy will, in fact, be blamed. Since these are unsuound assumptions, the argument is a stupid one. This could actually be used as a warning about rational choice models, or just about the fact that in the public discourse today, someone will defend anything.

But more interesting is that the argument undermines itself to the extent that it is believed.

McWhorter's Fallacy logically compels the conclusion that no politicians will ever say antyhing blameworthy. If people accept McWhorter's Fallacy, then, of course, they won't criticize politicians for what they say. But if that is true, then rational politicians, fearing no criticism and seeking the psychic satsifaction of insulting people will start saying blameworthy things again.

In other words, racial slurs by politicians become frequency-dependent strategies. If they are uncommon enough, they will not be criticized (on the assumption that their use is too irrational to occur). But then they will become a cheap way of letting loose. But if too many politicians start employing this method of stress relief, the McWhorter reasoning loses its hold and politicians start being criticized for being boors and bigots again.

It would then follow that there is a slur E[volutionary ]S[table ]S[trategy].

Anyone thinking of modelling this should give me credit. I realize it might be a bit embarrassing to suggest your idea came from an anonymous fellow on the Internet named "Pithlord", so I suggest P. Lord of the Institute for Pith and Substance. You're welcome.

John McWhorter is Senior Fellow at the Manhattan Institute and until 2003 was Associate Professor of Linguistics at UC Berkeley. He is the author of Winning the Race: Beyond the Crisis in Black America and The Power of Babel: A Natural History of Language.

Which Budget Deficit to Target?

Andrew Samwick on fiscal policy. He writes:

Vox Baby: Which Budget Deficit to Target?: A comment on a recent post asks:

Do you think we should use the on-budget deficit to measure our nation's short-term fiscal health? I thought most people looked at the unified deficit, measuring how much the US government has to borrow from the markets.

Calculated Risk's graph seems to show the increase in "national debt", rather than in "debt held by the public." But the "national debt" includes accruals to the Social Security and Medicare trust funds, which are merely intergovernmental accounting transfers. Do you subscribe to this as an appropriate metric?

I'm being deliberate in endorsing the on-budget deficit for the "must average to zero" standard and national debt (as opposed to that held by the public) for the "no Debt/GDP trend" standard. The key adjustment to the off-budget deficit is demographic, not cyclical. We are in a period when Social Security surpluses are being run in the anticipation of deficits as the Baby Boom retires.

Suppose, counterfactually, that the present value of those off-budget surpluses and deficits is zero. If we are targeting the unified deficit, then the current off-budget surpluses enable larger on-budget deficits in the near term. That wouldn't be too problematic if I thought that the looming off-budget deficits would cause the government to run comparably smaller on-budget deficits in those years. (An analogous argument holds if we use debt held by the public rather than national debt when assessing the trend in Debt/GDP.)

I don't think that will happen. We cannot get the on-budget account out of deficit, much less into surplus. The government is not releasing (or even making) budgets with a long enough time horizon to capture the demographic impact on the General Fund. Government officials are not targeting the unified deficit because they deliberately intend to have that future path of on-budget surpluses. They are targeting it because it postpones tough fiscal decisions of cutting spending or raising taxes to someone else's watch. That postponement needs to stop.

If we continue to amble along on our current path, then I expect that in 10 - 15 years, politicians will opportunistically switch to targeting the on-budget deficit when the off-budget account turns from surplus to deficit. And given that expectation, I want them targeting the on-budget account today, as a means of imposing some fiscal discipline.

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

The Washington Post's Jonathan Weisman drives Dean Baker into shrill unholy madness:

Beat the Press: Medicare Drugs and What Politicians "Think": There should be a simple rule written in huge neon signs in every newsroom: "You don't know what politicians 'think.'"

The reason is simple. Politicians do not generally say what they think. They say what will advance their political careers. This is their job. (That is a bi-partisan comment.) If a reporter believes that she knows what a politician actually thinks then she is probably too close to this person to be able to cover them objectively. Reporters best serve the public by reporting what politicians say, and leave it to their readers to determine what the politicians might actually believe (if anything).

For this reason, it was very annoying to read a book review in the Washington Post that tells us that Bill Thomas, the chairman of the House Ways and Means Committee, prohibited Medicare from offering its own drug plan that would negotiate directly with the drug industry because he "thought pitting private insurance companies against one another would inject competition into the drug market for seniors and keep the price of drugs down, without the heavy hand of government."

While Mr. Thomas said this, do we really know that this is what he thought, as opposed to... that he thought the insurance and pharmaceutical industries are a great source of Republican campaign funds? Sorry, I am not prepared to accept the reporter's personal assurance on Mr. Thomas's thoughts, and the Washington Post would do best to keep them out of the paper, except on the editorial pages.

(One reason that I question the reporter's assessment is that if Mr. Thomas really had such confidence in private insurers, he could have allowed Medicare to offer a plan competing with them. If the private insurers were actually more efficient, then the public would vote with their feet and sign up with the private plans. However, Mr. Thomas was unwilling to let the private sector demonstrate its superiority in the free market.)

Let Us All Praise Ben Bernanke!

In email, Jared Bernstein says that we should all praise Ben Bernanke--while we still feel like doing so:

Feelin’ the Love: You got to give it up to Ben Bernanke. Here are four reasons why:

  1. He strives for clarity: he eschews Greenspan-speak and seems to really value transparency. By signaling markets what the Fed is thinking about, this avoids unnecessary surprises.
  2. He paused. Even though inflation was outside his comfort zone, he and the Open Market Committee recently paused after 17 straight rate hikes, recognizing a) the lags in terms of interest rate hikes on real activity, and b) the danger from over-tightening.
  3. He said this the other day: “I try not to forget what underlies all those data: millions of Americans working hard, trying to better themselves economically, struggling to manage their family finances, and worrying about the price of gas and college tuition.”
  4. He has a pretty reasonable and balanced view re the minimum wage, rare for someone in his position. He recently commented: "a modest increase in the minimum wage would likely have only a small effect on labor costs for the economy as a whole and therefore a small effect on overall inflation… Economists disagree about whether increases in the minimum wage are well-targeted toward lower-income people and whether increases in the minimum wage reduce employment of low-wage workers.”

Not a ringing endorsement, but he sounds pretty open-mined about it.

He’s probably got some tough sledding ahead, what with the housing bust, external imbalances, and geo-political mishigos (and its impact on energy prices, a very tough itch for the Fed Reserve to scratch). So I thought I’d send him some love while I was feeling it.