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, October 21, 2006

Back Alleys vs. Main Streets and Iraqi Deaths

Mike Spagat and Neil Johnson hope they have found a significant flaw in the 650,000 number. That would be good news:

The Blog | David Berreby: Did President Bush Actually get Something Right About the Death Toll in Iraq? | The Huffington Post: Johnson and his collaborator Michael Spagat, an economist at the University of London, Royal Holloway, believe they have found just such a fatal flaw -- an error that stems from mistakenly assuming that war deaths work like deaths from illness. It seems all the households surveyed by the Lancet authors were on main roads or at intersections of smaller streets with major arteries. It does not take a detailed knowledge of warfare to imagine how households in those locations would be more likely to report car bombings, market-place explosions, and attacks on vehicles...

And Riverbend--sitting in the middle of the situation--finds the 650,000 number very credible indeed:

Baghdad Burning: For American politicians and military personnel, playing dumb and talking about numbers of bodies in morgues and official statistics, etc, seems to be the latest tactic. But as any Iraqi knows, not every death is being reported. As for getting reliable numbers from the Ministry of Health or any other official Iraqi institution, that's about as probable as getting a coherent, grammatically correct sentence from George Bush--especially after the ministry was banned from giving out correct mortality numbers.

So far, the only Iraqis I know pretending this number is outrageous are either out-of-touch Iraqis abroad who supported the war, or Iraqis inside of the country who are directly benefiting from the occupation ($) and likely living in the Green Zone. The chaos and lack of proper facilities is resulting in people being buried without a trip to the morgue or the hospital. During American military attacks on cities like Samarra and Fallujah, victims were buried in their gardens or in mass graves in football fields. Or has that been forgotten already?

We literally do not know a single Iraqi family that has not seen the violent death of a first or second-degree relative these last three years. Abductions, militias, sectarian violence, revenge killings, assassinations, car-bombs, suicide bombers, American military strikes, Iraqi military raids, death squads, extremists, armed robberies, executions, detentions, secret prisons, torture, mysterious weapons -- with so many different ways to die, is the number so far fetched?

There are Iraqi women who have not shed their black mourning robes since 2003 because each time the end of the proper mourning period comes around, some other relative dies and the countdown begins once again.

Global Imbalances in Historical Perspective

Chris Meissner and Alan Taylor are optimistic:

Losing our Marbles in the New Century? The Great Rebalancing in Historical Perspective: by Christopher M. Meissner and Alan M. Taylor:

Abstract: Great attention is now being paid to global imbalances, the growing U.S. current account deficit financed by growing surpluses in the rest of the world. How can the issue be understood in a more historical perspective? We seek a meaningful comparison between the two eras of globalization: "then" (the period 1870 to 1913) and "now" (the period since the 1970s). We look at the two hegemons in each era: Britain then, and the United States now. And adducing historical data to match what we know from the contemporary record, we proceed in the tradition of New Comparative Economic History to see what lessons the past might have for the present. We consider two of the most controversial and pressing questions in the current debate. First, are current imbalances being sustained, at least in part, by return differentials? And if so, is this reassuring? Second, how will adjustment take place? Will it be a hard or soft landing? Pessimistically, we find no historical evidence that return differentials last forever, even for hegemons. Optimistically, we find that adjustments to imbalances in the past have generally been smooth, even under a regime as hard as the gold standard.

More Lies from Slate

Eric Alterman reads Slate and finds yet more lies:

The Blog | Eric Alterman: 655,000 Dead: Reporting the Reporting | The Huffington Post:[T]he madman, Hitchens, writes in Slate:

The Lancet figures are almost certainly inflated, not least because they were taken from selective war-torn provinces. But there is no reason why they may not come to reflect reality more closely. It is a reminder of the nature of the enemy we face, and not only in Iraq, and a very clear picture of the sort of people who would have a free hand in Iraq if the coalition were to depart.

In fact, the first claim is flat-out false. The study specifically did not pick particularly violent provinces, as Hitchens could have discovered if he looked at the study, not that he gives any impression of having any experience with this type of statistical sampling.

Why oh why can't we have a better press corps?

Felix Salmon on Argentina and Agricultural Commodity Prices

Felix Salmon watches Argentina continue to improve--and trashes U.S. agricultural subsidies:

RGE - Argentina catches another lucky break: Felix Salmon | Oct 20, 2006: How lucky, macroeconomically speaking, has Argentina been over the five years since its diastrous debt default? Every time economists say that things can't get any better and are going to have to start getting worse, more good news comes out. This time, it's global wheat prices, which have soared by some 40% in the past month and which are now at an all-time high. The price of wheat is not going to stay at these levels for long: it's being driven mostly by the drought in Australia, so when that breaks wheat is likely to come back down in price again. But for the time being, this is a great positive shock for Argentina's terms of trade.

Meanwhile, corn has followed wheat up, rising 30% in the past month, although it has been at these prices as recently as 2004. If the wheat price is good news for Argentina, the corn price is bad news for Mexico, where the beleaguered central bank is desperately trying to keep a lid on inflation despite a country where everybody seems to live on tortillas and salsa -- or, to put it in commodity terms, corn and tomatoes, both of which are surging in price.

Of course the best thing that could happen as a result of the increase in corn prices would be a massive reduction or elimination of corn subsidies in the US. They're pretty gruesome even by agricultural-subsidy standards, because they're harmful not only to global trade but to global health as well. The amount of high-fructose corn syrup in junk food is enormous, thanks to its negligible cost, and the 99-cent or even 49-cent hamburger is a function of cheap beef which gets that way because it's fed on corn and not grass. But the elimination of corn subsidies in the US is about as likely as Nestor Kirchner sending troops to Iraq.

Friday, October 20, 2006

"Aftathoughts on NAFTA," October 16, 2006

The audio podcast of my talk at Berkeley's Center for Latin American Studies at lunchtime on Monday October 16.

The event page.

Now let me look for the video...

The Head Rat on the Stump for Don Sherwood (R-Mistress Choker)

Dana Milbank watches the clown show:

During National Character Counts Week, Bush Stumps for Philanderer - By Dana Milbank: Friday, October 20, 2006; A02LA PLUME, Pa., Oct. 19: So it has come to this: Nineteen days before the midterm elections, President Bush flew here to champion the reelection of a congressman who last year settled a $5.5 million lawsuit alleging that he beat his mistress during a five-year affair.

"I'm pleased to be here with Don Sherwood," a smiling president told the congressman's loyal but dispirited supporters at a luncheon fundraiser Thursday. "He has got a record of accomplishment."

Quite a record. While representing the good people of the 10th District, the married congressman shacked up in Washington with a Peruvian immigrant more than three decades his junior. During one assignation in 2004, the woman, who says Sherwood was striking her and trying to strangle her, locked herself in a bathroom and called 911; Sherwood told police he was giving her a back rub.

At a time when Republicans are struggling to motivate religious conservatives to go to the polls next month, it is not clear what benefit the White House found in sending Bush to stump for Sherwood -- smack dab in the middle of what Bush, in an official proclamation, dubbed "National Character Counts Week."

The president encouraged public officials "to observe this week with appropriate ceremonies, activities, and programs" -- but public officials responded with some unusual ceremonies and activities: The House ethics committee is holding hearings on the page sex scandal; the FBI raided buildings as part of a probe involving Rep. Curt Weldon (R-Pa.); and Rep. Bob Ney (R-Ohio), the eighth person convicted in the Abramoff lobbying scandal, is refusing to vacate his seat in Congress.

On the other hand, while other Republicans proclaim their independence from Bush, Sherwood is one of the few still eager to bask in the president's faint glow. (Another was Sen. George Allen of Virginia, who, after a summer of racial and religious gaffes, was happy to welcome Bush in Richmond on Thursday evening.) Bush may be at a lowly 35 percent in the polls here, but Sherwood should be so lucky: Only 1 in 5 residents definitely intends to vote for him next month. By Sherwood standards, Bush is still a rock star.

"My family and I are humbled by having our friends support us, especially when one is the leader of this great country," Sherwood said in introducing Bush.

His wife and adult daughter stood on stage, human shields against scandal. Their discomfort became apparent when Bush, trying to defuse the controversy, praised the letter Carol Sherwood wrote to her husband's constituents this week about the "needlessly cruel" decision by his Democratic opponent to run an ad about the mistress's allegations. "I was deeply moved by her words," he said, while some in the dead-silent audience noticed an agonized look on daughter Maria Sherwood's face.

Bush was careful to avoid the usual lines about family and conservative values; he also skipped the usual first-name-only reference that would indicate that "Don" is a buddy. Onstage, he gave Sherwood the obligatory handshake and photograph but quickly moved to stand with the female Sherwoods...

Let's Mail Journalist Spencer Ackerman Envelopes of Money!

Spencer Ackerman boosts his reputation by quitting the New Republic. Wonkette reports:

Spencer Ackerman Quits 'The New Republic' -- Observers Shocked That He Was Still There - Wonkette: Ace national security journo Spencer Ackerman quit his editing gig at The New Republic this week, announcing it officially with a tiny little note on his brand new, aptly titled blog. Considering that we’d been told it would happen a month ago, the lack of shock echoing throughout the DC mediasphere is hardly surprising. Why’d Spencer leave?

The ostensible reason for my release concerns my relationship with Franklin Foer and the magazine’s other editors. However, the irreconcilable ideological differences between myself and the top editors at the magazine have been clear to me for months now, and clear to them as well.

We were gonna do one of those “Translated: Marty Peretz is f------ nuts” jokes, but he pretty much did just come out and say it, didn’t he.

I have a question: How can I send Spencer Ackerman two years' worth of New Republic subscription fees? It would definitely be worth it. Ackerman is very good.

Why Oh Why Are We Ruled by These Idiots?

Yet another reason that John McCain should not be president. Our four possible options in Iraq that might succeed are (a) draft and train 500,000 Arabic-speaking military police, (b) pay somebody else's price for them to commit 500,000 Arabic-speaking military policy, (c) strike a deal with Iran and Syria, (d) pull out and leave it to the Iraqis. John McCain is for none of the above:

Unfogged: Today's edition of Hating on John McCain is brought to you by Glenn Greenwald:

So, to recap McCain's position: (1) in order to win in Iraq, we need to expand our military by 100,000 more troops; (2) we don't have anywhere near 100,000 troops to send to Iraq, and nobody suggests that we do; (3) a draft is absolutely unnecessary.I don't think McCain even knows what to say about Iraq at this point -- the Straight Talker refuses to admit that it was wrong because he was one of the loudest cheerleaders for it, but there are also plainly no viable options to change what is occurring -- so all he does is babble incoherently about it.

As best I can tell, his position is that we need 100,000 more troops to win, and that young Americans one day are going to realize this and there will be a spontaneous and massive wave of volunteers eager to go to Iraq and fight in combat there because they will realize -- like McCain and the President do -- just how Very Important it is that we win.

So we'll just wait until that happens.

And then those 100,000 troops will charge across Anbar province on their magical armored ponies.

Wednesday, October 18, 2006

Berkeley Macro Seminar: October 19, 2006

Chad Jones (2006), "The Weakest Link Theory of Economic Development":

Per capita income in the richest countries of the world exceeds that in the poorest countries by more than a factor of fifty. What explains these enormous differences? This paper returns to two old ideas in development economics--complementarity and linkages:

  1. Just as a chain is only as strong as its weakest link, problems at any point in a production chain can reduce output substantially if inputs enter production in a complementary fashion.
  2. Linkages between firms through intermediate goods deliver a multiplier similar to the one associated with capital accumulation in the neoclassical growth model. Because the intermediate goods' share of of revenue is about 1/2, this multiplier is substantial.

The paper builds a model with complementary inputs and links across sectors, and shows that it can easily generate fifty-fold aggregate income differences [without leaving visible $1,000 bills on the sidewalk].

Cachaca! And Free Trade. And Intellectual "Property"

It sounds like moonshine rum--ferment for 24 hours and then boil to 80 proof. Drunk at Cafe de la Paz in Berkeley:

Cachaca: TED Case Study #721 - Brian Morgan: Unknown to many outside Brazil, the cultural significance of cachaça, a distilled liquor, ranks among soccer, carnival, and samba. Although non-Brazilian’s compare cachaça to rum, their only similarity is that they both originate from sugarcane. Cachaça first gained popularity among slaves and peasants during Brazil’s colonial period but the spirit has recently become a favorite domestically and internationally regardless of the drinker’s class. Also, Brazilian cachaça exports to Europe and the United States have been aided by the trendy drink caipirinha. The cocktail’s global success has inspired other Caribbean and South American states to produce their own cachaça-like alcohols. Consequently, the Brazilian government has initiated protectionist measures at home and abroad to preserve cachaça’s foreign markets. These developments bring together cachaça’s trade, cultural, and environmental aspects.

No one knows for sure who began cachaça production.... [S]ugarcane had been introduced to Brazil as a cash crop by their colonial motherland Portugal. Slaves... were given leftover cane juice... let it ferment... plantation owners often promised slaves this fermented cane juice once they had completed their work. Eventually, someone realized that by boiling the fermented juice a more potent libation was produced, marking the birth of cachaça. At this point, wealthy Brazilians regarded cachaça as a poor man’s drink and thus preferred European alternatives. However, this did not stop cachaça from becoming an integral part of Brazilian culture. It is estimated Brazilians consume close to 350 million gallons of cachaça per year – about two gallons per person.

There are roughly 30,000 small producers.... Because the distillation process is relatively easy... because sugarcane is so abundant in Brazil, the business can be is open to anyone. Sugarcane is... milled... fermented for about 24 hours... boiled... 80-proof.... Regardless of the variety, cachaça should not be confused with rum, which is distilled from the molasses left over after sugar refinement....

Cachaça’s export capability was uncertain until the caipirinha became a bestseller in bars across Europe, United States, and Japan. The cocktail combines crushed limes, sugar, ice, and cachaça to produce a sweet and zesty flavor packed with alcoholic intensity.... Germany has become the largest consumer of cachaça outside Latin America, constituting about one forth of the foreign market.... The Brazilian government has also helped promote cachaça by providing caipirinhas at social functions.... Ambitious export programs aim to increase cachaça exports to 40 million liters per annum by end of this decade. In addition, Brazilians hope that cachaça and caipirinha will become what tequila and margaritas have become for Mexico: an internationally recognized image associated with the Brazilian lifestyle....

However, since sugarcane is such a homogenous good and since the distillation process does not impose geographic limitations outside the wood used to age cachaça, imitation cachaças have been increasingly manufactured... the imposters could crowd them out of foreign markets... the quality or unique taste of a cachaça is barely noticeable once it is mixed into a sugar-rich caipirinha.

To protect its cachaça industry... President Luis Inacio Lula da Silva... sent the issue to the World Trade Organization in hopes that cachaça will gain protection under the Trade Related Aspects of Intellectual Property Rights agreement (TRIPS). Moreover, Brazil is currently involved in bilateral negotiations with the European Union to ensure that the cachaça name will be used only with Brazilian products within member states.... Under the TRIPS agreement of the WTO, cachaça could potentially gain protection as provided by Article 22 and 23. According to Article 22, “geographical indications are, for the purposes of this Agreement, indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.” In the case of cachaça, Brazil is arguing that the drink is unique to its territory because of the liquor’s history, origin, and its ties to Brazilian culture. If cachaça qualifies for geographic indication, it would also receive the higher level of protection granted by Article 23, which states that signatories of the TRIPS agreement would need to prevent the use of the name cachaça, “even where the true origin of the goods is indicated or the geographical indication is used in translation or accompanied by expressions such as “kind”, “type”, “style”, “imitation” or the like.”...

If cachaça attains protection for geographic indication in both of these negotiations, it would create two additional avenues for dispute settlement. First, Brazil would be able to file complaints through the WTO, which would allow the country to target Caribbean and Central American nations, such as Colombia and Martinique, that illegally produce cachaça. And Second, Brazil could resolve conflicts directly with the EU regarding cachaça....

Brazil has not yet officially disputed any instances where other countries have tried to sell their drinks as cachaça...

One-Click Rules!

We increasingly live in a complicated world in which those things that can be done in one click get done, and those that can't, don't. And those things that are done often acquire increasing salience. Hence the dominance of YouTube:

Gimme my embedded video! - Download Squad: Jordan Running: This has been bugging me for awhile, and I've just got to get it out in the open: If I want to put a cool movie trailer, a funny Comedy Central clip, or a news clip on my web site, why do I have to go to YouTube, where some kid has uploaded it in violation of the owner's copyright, and where as likely as not it'll be yanked a few days later, in order to do it? I'm talking about stuff that's already on the web--Comedy Central puts the best clips from its shows on its own web site, as does NBC for Saturday Night Live, and has all the best movie trailers. But while I can stick a pirated clip from YouTube on my web site with two clicks, there's usually no simple, straightforward way to do the same thing from a legitimate site.

Some companies have shown signs of getting a clue. Google Video... some movies and TV shows--in particular those targeted at the youth market--now have a presence on YouTube... a few big record labels... but the selection remains pretty bare. What troubles me is that there's no discernible disadvantage for companies to put their own TV clips, movie trailers, and music videos online in a YouTube-like way. There can't be a technical barrier--the tiny dev team at put together their impressive embeddable video-sharing feature in a matter of weeks--nor a commercial one--movie trailers are advertisements, as are TV clips.... What's more, if they hosted their own embeddable videos, they could decide what plays before and after them instead of some kid on YouTube deciding for them, and though they'd be crazy to put anything longer than a two seconds before the video, after the video is a great time to advertise, as the Revver folks have discovered.

So, movie studios, TV networks, ad agencies, and record companies, here's my plea: Let me advertise your stuff on my web site. Hire some smart folks to put together a Flash player... give me HTML snippets to copy and paste... and let my visitors see your stuff, and your ads, without the extra clicks and without waiting for your lame Windows Media Player to load.

Giorgios Tyrannos

Thomas DeFrank on the strange secret twilight struggle between the factions of George H.W. Bush and George W. Bush:

New York Daily News - Home - One proud Poppy ... but: W follies mar legacy, ex-Prez's aides gripe BY THOMAS M. DEFRANK: DAILY NEWS WASHINGTON BUREAU CHIEF: The elder Bush voices public support for his son, but many of the former president's closest aides beg to differ.

WASHINGTON - At this month's christening of the nuclear aircraft carrier bearing his name, former President George H.W. Bush delivered a rousing endorsement of his son. "I am very proud of our President," the elder Bush said in rain-swept ceremonies in Newport News, Va. "I support him in every single way with every fiber in my body." Yet many of his closest former aides beg to differ.

Indeed, one of the worst-kept secrets in Bush World is the dismay, in some cases disdain, harbored by many senior aides of the former President toward the administration of his son - 41 and 43.... For five years, the 41s have bit their collective tongues as, they complain, the 43s ignored their counsel. But as the war in Iraq has worsened and public support for the current administration has tanked, loyalists of the elder Bush have found it impossible to suppress their disillusionment - particularly their belief that many of 43's policies are a stick in the eye of his father.

"Forty-three has now repudiated everything 41 stands for, and still he won't say a word," a key member of the elder Bush alumni said. "Personally, I think he's dying inside." To 41 loyalists, the bill of indictment is voluminous.... 43 has betrayed his father's middle-of-the-road philosophy by governing as a divider.... 43 isn't [really] conservative.... "Conservatives want limited government, a balanced Middle East approach, a foreign policy that builds, not destroys, and general, not special, interest," Smith said. "Bush 41 endorsed all of the above. Bush 43 supports none."... 43's... "cowboy diplomacy"... estranged the U.S. from its allies and diminished its authority around the globe.... Iraq... the appointment of 41's close friend and former secretary of state, James Baker, to chart a new Iraq policy as belated vindication. The 41s remain incensed, however, that Brent Scowcroft... has been demonized.... "What Brent said is now the accepted wisdom," a senior 41 hand said, "and everyone believes 41 agrees with him, though he'll never say it."...

[A]ides to the current President reject the criticism as nitpicking from out-of-touch malcontents... charging much of the damaging material in Bob Woodward's new book, "State of Denial," was provided by 41 partisans. "Nobody has a monopoly on wisdom," a 43 staffer said, "especially those whose information may not be as good as when they were in power."...

"We're all on our best behavior," a top 43 official joked. A few moments later, however, one of 41's most prominent counselors couldn't resist. Trading social gossip at a reception, the ex-aide noted that former Secretary of State Colin Powell was in attendance. "He should be here," the adviser noted. "We didn't fire him" - a barbed reference to Powell's departure as 43's top diplomat after four years of bureaucratic fisticuffs with Vice President Cheney and Secretary of Defense Donald Rumsfeld, two frequent targets of the 41s.

"Everyone knew how Rumsfeld acts," another key 41 assistant said. "Everyone knew 43 didn't have an attention span. Everyone knew Condi [Rice] wouldn't be able to stand up to Cheney and Rumsfeld. We told them all of this, and we were told we don't know what we're doing." Another top former 41 loyalist confided that several ex-colleagues remarked on a perceived "stature gap" between father and son as they sat on the dais....

[T]he 41s suggest a singular irony: the unpopularity of the son's administration may be rehabilitating the father's. "By comparison, the old man looks better and better," a senior 41 hand said, with undisguised satisfaction.

The senior 41 hand is wrong: the worse 43 is, the worse 41 looks: 41 gave 43 his rolodex and endorsement, after all.

Economics 210a: Fall 2006: Memo Question for October 25

ECONOMICS 210A: MEMO QUESTION FOR OCTOBER 25 How much of a difference does "good government"--that is, a government that cares about commerce and enforces contracts more-or-less honestly--appear to have made in the centuries before the industrial revolution in Britain?

Tuesday, October 17, 2006

Web 2.0 for Students: Collective Note-Taking Services


10 Reasons Students Need Studicious:

  1. Simple and reliable note-taking.
  2. Share your notes. Find notes.
  3. Connect to Facebook friends.
  4. Automatically link note keywords to Wikipedia and Google.
  5. Never be out of the loop with todos.
  6. Keep your documents organized.
  7. Create readable notes using keyword substitutions.
  8. October 15th: Note commenting.
  9. October 15th: Privacy features.
  10. Coming soon: RSS feeds and an API.

Why Oh Why Are We Ruled by These Liars?

Yes, Republicans lie. All the time:

Talking Points Memo: by Joshua Micah Marshall: October 15, 2006 - October 21, 2006 Archives: The LA Times interviews former White House political director and current GOP national chairman Ken Mehlman on his role in the Abramoff scandal:

"I was a gateway," Mehlman said in an interview. "It was my job to talk to political supporters, to hear their requests, and hand them on to policymakers."

Mehlman said he had known Abramoff since the mid-1990s and would listen to his requests along with those of other influential Republicans.

"I know Jack," Mehlman said. "I certainly recall that if he and others wanted to meet I would have met with them, as I would have met with lots of people."

Contrast that with Mehlman's "Jack who?" defense earlier this year in Vanity Fair: "Abramoff is someone who we don't know a lot about. We know what we read in the paper."

Remember the good old days when someone like Mehlman could get busted for such a baldfaced lie and there would be serious adverse consequences, personally and politically?

-- TPM Reader DK

Fat, Drunk, and Stupid Is No Way to Go Through Life, Son...

But if you are a Republican Congressman or a Republican-appointed bureaucrat, it is.

Billmon watches the clown show:

Whiskey Bar: An Empire of Idiots: Reading this article, all I could think of was Dean Wormer's line from Animal House: "Fat, drunk and stupid is no way to go through life, son." Except I would make it: "fat, stupid and in power."

It's been almost 30 years since the Islamic revolution in Iran, 23 years since the Beruit bombings, 11 years since the Kobhar Towers bombing, three and a half years since the start of the Iraq War. And this is what the FBI's number one point man on national security knows about the difference between Sunni and Shi'a Islam:

A few weeks ago, I took the F.B.I.'s temperature again. At the end of a long interview, I asked Willie Hulon, chief of the bureau's new national security branch, whether he thought that it was important for a man in his position to know the difference between Sunnis and Shiites. "Yes, sure, it's right to know the difference," he said. "It's important to know who your targets are." That was a big advance over 2005. So next I asked him if he could tell me the difference. He was flummoxed. "The basics goes back to their beliefs and who they were following," he said. "And the conflicts between the Sunnis and the Shia and the difference between who they were following." O.K., I asked, trying to help, what about today? Which one is Iran -- Sunni or Shiite? He thought for a second. "Iran and Hezbollah," I prompted. "Which are they?"He took a stab: "Sunni."

Um, I'll take TV sitcoms for $100, Alex.

Hulon is actually one of the smart guys -- he at least knows that there is a difference between Sunni and Shi'a, even if he doesn't know which is which. But when the writer -- the national security reporter for Congressional Quarterly -- took his question up to Capitol Hill, he found out just how deep the well of ignorance runs:

Take Representative Terry Everett, a seven-term Alabama Republican who is vice chairman of the House intelligence subcommittee on technical and tactical intelligence. "Do you know the difference between a Sunni and a Shiite?" I asked him a few weeks ago.Mr. Everett responded with a low chuckle. He thought for a moment: "One's in one location, another's in another location. No, to be honest with you, I don't know. I thought it was differences in their religion, different families or something."

Yeah, it's a family thing -- you know, like the Corleones and the Tattaglias.

Representative Jo Ann Davis, a Virginia Republican who heads a House intelligence subcommittee charged with overseeing the C.I.A.'s performance in recruiting Islamic spies and analyzing information, was similarly dumbfounded when I asked her if she knew the difference between Sunnis and Shiites. "Do I?" she asked me. A look of concentration came over her face. "You know, I should." She took a stab at it: "It's a difference in their fundamental religious beliefs. The Sunni are more radical than the Shia. Or vice versa. But I think it's the Sunnis who're more radical than the Shia."

Now she's gone and hurt Sheikh Nasrallah's feelings.

Let's review. We have: The head of the FBI's national security branchThe Vice Chairman of the House Intelligence subcommittee on technical and tactical intelligence.The Chairwoman of the House Intelligence subcommittee charged with overseeing the C.I.A.'s recruiting efforts in the Islamic world

And they each know less -- probably much less -- about the most critical religious divide in the Middle East (the same one that is currently getting U.S. soldiers killed at the rate of about three a day) than your average commentator at Little Green Footballs....

Would we be better off if we let the FBI and the politicians play cops and robbers and left the running of the empire to a British-style cadre of foreign policy professionals -- the kind of people who not only can tell the difference between Sunni and Shi'a, but could write PhD dissertations about it? Maybe, although the British experience (not to mention that of the old CIA) suggests it's no panacea. The Brits, after all, had T.E. Lawrence and Gertrude Bell, and they still failed in the Middle East -- although not as badly as Don Rumsfeld and Condi Rice.

But we might at least be spared the national embarrassment of having dumb-as-dirt congressmen and women freeze like deer in the headlights when asked even the most fundamental (so to speak) questions about the Middle East and the "war" on terrorism.

A Good Story About the Deficit from the Washington Post

A lousy headline--there is no "debate" over tax cuts' role in lower deficits. And a lousy headline ruins at least two-thirds of the good that a reporter can do. But reporter Lori Montgomery does good: she finds thoughtful people with credible points of view and tells their stories. Belle Sawhill, Robert Carroll, Alan Viard, and Douglas Holtz-Eakin are all good people interested in raising the level of the debate:

Lower Deficit Sparks Debate Over Tax Cuts' Role - By Lori Montgomery: With great fanfare, President Bush last week claimed credit for a striking reversal of fortune: New figures show the federal budget deficit shrinking by 40 percent over the past two years.... Bush hailed the dwindling deficit as a direct result of "pro-growth economic policies," particularly huge tax cuts enacted during his first term. "Tax relief fuels economic growth. And growth -- when the economy grows, more tax revenues come to Washington. And that's what's happened," Bush said.

Economists said Bush was claiming credit where little is due. The economy has grown... but the Bush tax cuts played a small role in that process... and cost the Treasury more in lost taxes than it gained from the resulting economic stimulus. "Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute. "It's logically possible" that a tax cut could spur sufficient economic growth to pay for itself, Viard said. "But there's no evidence that these tax cuts would come anywhere close to that."

Economists at the nonpartisan Congressional Budget Office and in the Treasury Department have reached the same conclusion.... Robert Carroll, deputy assistant Treasury secretary for tax analysis, said neither the president nor anyone else in the administration is claiming that tax cuts alone produced the unexpected surge in revenue. "As a matter of principle, we do not think tax cuts pay for themselves," Carroll said. But, he said, "we do think good tax policy can lead to important economic benefits. . . . The size of the tax base is larger than it would have been without the tax relief."

The subtleties of that argument have been lost on the campaign trail.... [E]ager to talk about something other than the House page scandal and mounting casualties in Iraq... Speaker J. Dennis Hastert (R-Ill.) claimed credit for "driving down the deficit" and accused Democrats of plotting to roll back the tax cuts....

Democrats... pointed to CBO projections that the deficit will rise again next year and balloon in coming decades as 78 million retiring baby boomers make claims on Social Security and Medicare. "The truth is that the administration's fiscal policies have failed," said Sen. Kent Conrad (N.D.), the senior Democrat on the Senate Budget Committee. "They have not benefited most Americans. They have dramatically worsened our long-term budget outlook. And they are putting our fundamental economic security at risk."...

If growth induced by Bush's cuts doesn't explain the surge, where did all those extra tax dollars come from?The short answer is spectacularly high corporate profits and the advancing fortunes of wealthy Americans, economists said.... A robust economy and a strong stock market deserve the bulk of the credit, the economists said, but tax collections are growing far faster than the economy as a whole, so those factors cannot completely explain the Treasury's good fortune.... "The money flowed in in a way that no one expected," said Douglas Holtz-Eakin, a former Bush White House economist who retired last year as CBO director. "Good economic growth is not the surprise. The surprise is that profits as a whole are so much higher."... Holtz-Eakin and other economists said they can only speculate about why that economic growth generated a disproportionate jump in revenue.... "The simplest way to think about it, I think, is we know we have growing income inequality, especially at the top," said Isabel V. Sawhill, a Brookings Institution economist who worked for the Clinton administration. "The very rich are pulling away from the ordinary rich and the middle class. Those very rich people pay higher tax rates. When the distribution of income shifts upward, as it has in recent years, you get a revenue kicker from that."

Why Hasn't Mexico Done Better? Tyler Cowen's View

He writes:

Marginal Revolution: Why hasn't Mexico done better?: After all they have NAFTA and democracy, sort of. Here are the thoughts of Brad DeLong. I don't disagree with Brad's discussion, here are my ideas:

  1. The North of Mexico would have done far better, if not for adjusting to brutal competition from China. They are in fact coping better than most people had expected.
  2. The North has in any case done remarkably well. This implies that the main problems are not of policy per se.
  3. Mexico has had a serious internal "immigration" problem, as it tries to digest massive migration from rural areas into urban areas. Many of these migrants do not have the appropriate cultural capital to support Mexican economic growth. But this problem will ease over time as the country becomes more integrated.
  4. The costs of crime and corruption are significant. These costs skyrocketed as Mexico became a prime route for cocaine transport to the United States. Not everything we have done for (to) Mexico has been positive.
  5. Mexico will undergo a demographic transition. Rising population will soon cease to swallow up so many of the per capita the gains from rising total income.
  6. The available data significantly understate the standard of living gains in rural Mexico. Incomes go underreported, or unreported, and new commodities are being introduced all the time.
  7. Policy matters less than we economists like to think.

Norm Geras: Failure in Iraq

Norm Geras says: mea culpa, mea culpa, mea maxima culpa:

normblog: Failure in Iraq: Too many people have died in Iraq and too many people are dying there - and this is to say nothing of the wider social disaster that has overtaken the country, the numbers of the dead aside.

The above is not intended as a comment on the latest Lancet report.... I'm put off by expressions of scepticism [of the Lancet report] of a form to suggest that while 600,000?+ deaths is not a credible figure there is some lower, though still very high, figure about which supporters of the war could feel relaxed. The situation has passed that point, whatever it might be thought to be. Too many have died and too many are dying.

Saying this, I do not intend, either, to imply that the battle in Iraq is lost, and that all hope of salvaging a half-way decent, or even just not totally disastrous, outcome should be abandoned. I fear this may be so, but am unwilling to give up hope.... I am also not, therefore, signalling agreement with those who say that there is now nothing for it but to pull US and British forces out of Iraq.... Still, there have been too many deaths; there has been too much other suffering. It has lately become clear to me - and this predates publication of the second Lancet report - that, whatever should now happen in Iraq, the war that I've supported has failed according to one benchmark of which I'm in a position to be completely certain.

That is, had I been able to foresee, in January and February 2003, that the war would have the results it has actually had in the numbers of Iraqis killed and the numbers now daily dying, with the country (more than three years down the line) on the very threshold of civil war if not already across that threshold, I would not have felt able to support the war and I would not have supported it.... [T]he war has failed. Had I foreseen a failure of this magnitude, I would have withheld my support. Even then, I would not have been able to bring myself to oppose the war. As I have said two or three times before, nothing on earth could have induced me to march or otherwise campaign for a course of action that would have saved the Baathist regime. But I would have stood aside....

Were we therefore wrong to support the war, those of us who did?.... Only if the disaster was always foreseeable as the most likely outcome would I be convinced of it. I'm aware, of course, that there are opponents of the war who claim it always was foreseeable, but there are other impulses at work there than a detached estimate of probabilities, and amongst these has been a desire not to dwell too closely on how bad things had been in Iraq.... Sometimes there is a justification for opposing tyranny and barbarism whatever the cost.... Even so, I am bound to acknowledge that, though I never expected an easy sequel in Iraq, much less a 'cakewalk', I did not anticipate a failure on this scale, and had I done so, I would have withheld support for the war without giving my voice to the opposition to it.

I would certainly agree that the Bush administration has been a much greater disaster than even I imagined. But what warrant did anybody have in the spring of 2003 for ignoring the fact that the Bush administration had already proven to be a disaster? I return again and again to Daniel Davies's pre-Iraq war question:

D-squared Digest -- FOR bigger pies and shorter hours and AGAINST more or less everything else: 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 (just what the Gulf region needs, more puppet states) 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 fucked up during the execution.

It's just that 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 would genuinely like to understand Norm Geras's thinking: what had the Bush administration done between its inauguration and March 2003 to give him such confidence in its competence?

My Talk at the Center for Latin American Studies on NAFTA

Economic: Brad DeLong's “Afta Thoughts on NAFTA” Monday, Oct. 16, 12 p.m., Women’s Faculty Club

Brad DeLong: “I was a true believer in NAFTA — the North American Free Trade Agreement. Now my faith is not gone, but shaken.” So says Brad DeLong, professor of economics and creator of one of the Web’s most popular blogs on economics ( DeLong, chair of the political economy major, will address the status of North American Free Trade Agreement and other free-trade negotiations in the Americas in a talk for the Center for Latin American Studies.

DeLong is also a research associate at the National Bureau of Economic Research and was deputy assistant secretary of the Treasury for Economic Policy during the Clinton Administration.

Now I have to write up the talk as a whole. Here is a sketch of the argument: Six years ago, I was ready to conclude that the North American Free Trade Agreement (NAFTA) was a major success. The key argument in favor of NAFTA had been that it was the most promising road the United States could take to raise the chances for Mexico to become democratic and prosperous, and that the US had both a strong selfish interest and a strong neighborly duty to try to help Mexico develop.

Since NAFTA, Mexican real GDP has grown at 3.6% per year, and exports have boomed, going from 10% of GDP in 1990 and 17% of GDP in 1999 to 28% of GDP today. Next year, Mexico’s real exports will be five times what they were in 1990.

It is here – in the rapid development of export industries and the dramatic rise in export volumes – that NAFTA made the difference. NAFTA guarantees Mexican producers tariff and quota-free access to the US market, the largest consumer market in the world.

Without this guarantee, fewer would have invested in the capacity to satisfy the US market. Increasing trade between the US and Mexico moves both countries toward a greater degree of specialization and a finer division of labor in important industries like autos, where labor-intensive portions are increasingly accomplished in Mexico, and textiles, where high-tech spinning and weaving is increasingly done in the US, while Mexico carries out lower-tech cutting and sewing.

Such efficiency gains from increasing the extent of the market and promoting specialization should have produced rapid growth in Mexican productivity. Likewise, greater efficiency should have been reinforced by a boom in capital formation, which should have accompanied the guarantee that no future wave of protectionism in the US would shut factories in Mexico.

The key word here is “should.” Today’s 100 million Mexicans have real incomes – at purchasing power parity – of roughly $10,000 per year, a quarter of the current US level. They are investing perhaps a fifth of GDP in gross fixed capital formation – a healthy amount – and have greatly expanded their integration into the world (i.e., the North American) economy since NAFTA.

But the 3.6% rate of growth of GDP, coupled with a 2.5% per year rate of population and increase, means that Mexicans’ mean income is barely 15% above that of the pre-NAFTA days, and that the gap between their mean income and that of the US has widened. Because of rising inequality, the overwhelming majority of Mexicans live no better off than they did 15 years ago. (Indeed, the only part of Mexican development that has been a great success has been the rise in incomes and living standards that comes from increased migration to the US, and increased remittances sent back to Mexico.)

Intellectually, this is a great puzzle: we believe in market forces, and in the benefits of trade, specialization, and the international division of labor. We see the enormous increase in Mexican exports to the US over the past decade. We see great strengths in the Mexican economy – a stable macroeconomic environment, fiscal prudence, low inflation, little country risk, a flexible labor force, a strengthened and solvent banking system, successfully reformed poverty-reduction programs, high earnings from oil, and so on.

Yet successful neo-liberal policies have not delivered the rapid increases in productivity and working-class wages that neo-liberals like me would have confidently predicted had we been told back in 1995 that Mexican exports would multiply five-fold in the next twelve years.

To be sure, economic deficiencies still abound in Mexico. According to the OECD, these include a very low average number of years of schooling, with young workers having almost no more formal education than their older counterparts; little on-the-job training; heavy bureaucratic burdens on firms; corrupt judges and police; high crime rates; and a large, low-productivity informal sector that narrows the tax base and raises tax rates on the rest of the economy. But these deficiencies should not be enough to neutralize Mexico’s powerful geographic advantages and the potent benefits of neo-liberal policies, should they? Apparently they are. The demographic burden of a rapidly growing labor force appears to be greatly increased when that labor force is not very literate, especially when inadequate infrastructure, crime, and official corruption also take their toll.

We neo-liberals point out that NAFTA did not cause poor infrastructure, high crime, and official corruption. We thus implicitly suggest that Mexicans would be far wose off today without NAFTA and its effects weighing in on the positive side of the scale.

That neo-liberal story may be true. But it is an excuse. It may not be true. Having witnessed Mexico’s slow growth over the past 15 years, we can no longer repeat the old mantra that the neo-liberal road of NAFTA and associated reforms is clearly and obviously the right one.

Brad DeLong's Morning Coffee: The Very Long Run

Productivity growth today is a hundred times the proportional rate it was back before 1650. That is perhaps the most astonishing thing about today's economy, when viewed in historical perspective.

Monday, October 16, 2006

Brad DeLong's Morning Coffee: Vote Democratic in 2006!

For the sake of checks and balances and the proper functioning of the Constitution, vote Democratic in 2006:

This applies to everyone: whether fish or fowl, liberal or conservative, left-wing or right-wing, Democrat or Republican, beast of the field or bird of the air.

David Carr on Bob Woodward


A Reporter Who Scoops His Own Paper - New York Times: The actual journalistic accomplishment in State of Denial is less than grand. It took him three books to arrive at a conclusion thousands of basement-bound bloggers suggested years ago: that the Bush administration is composed of people who like war, don't seem to be very good at it and have been known to turn the guns on each other. Such an epiphany doesn't seem to reflect a reporter who had rarefied access....

One of Mr. Woodward’s chief discoveries was that Donald H. Rumsfeld was not the asset that he first described him as. In “Bush at War” in 2002, Mr. Rumsfeld was described as “handsome, intense, well educated with an intellectual bend, witty with an infectious smile.” In “Plan of Attack” in 2004, he was a leader whose “way was clear, and he was precise about it.” In “State of Denial,” he is a turf-obsessed control freak whose “micromanaging was almost comic.”

Given Mr. Woodward’s tendency to fill his books with kitchen-sink detail, he maintained that the seeds of dysfunction were there to see in his previous two books. But Mr. Woodward’s time spent living in the treetops seems to have blinded him to the fact that the forest below was on fire...

The Washington Post Will Lie to You (Why Oh Why Can't We Have a Better Press Corps)

Can we have a warning label saying, "The *Washington Post* will lie to you with no hesitation" included with every copy?

What Jonathan Weisman wrote:

History of Foley Messages' Release Clarified by Players - [T]here are indications that Democrats spent months circulating five less insidious Foley e-mails to news organizations before they were finally published by ABC News late last month, which prompted the leaking of the more salacious instant messages. Harper's Magazine said yesterday that it obtained the five e-mails from a Democratic Party operative, albeit in May, long before the election season...

What Harper's wrote:

Republicans Want to Turn Over a New Page ( Harper's was offered the story almost five months ago and decided, after much debate, not to run it here on Washington Babylon.

In May, a source put me in touch with a Democratic operative who provided me with the now-infamous emails that Foley had sent in 2004 to a sixteen-year-old page. He also provided several emails that the page sent to the office of Congressman Rodney Alexander....

It was a Democrat who brought me the emails, but comments he made and common sense strongly suggest they were originally leaked by a Republican office. And while it's entirely possible that Democratic officials became aware of the accusations against Foley, the source was not working in concert with the national Democratic Party. This person was genuinely disgusted by Foley's behavior, amazed that other publications had declined to publish stories about the emails, and concerned that Foley might still be seeking contact with pages...

Can you get from the Harper's story to Weisman's characterization without knowingly misleading your readers? No.

>[]( What about all those purple fingers? By: John Amato on Sunday, October 15th, 2006 at 12:10 AM - PDT David Brooks has incredible access to the White House so when he said this shocker on "The Chris Matthews Show," I believed him. Bush is thinking about replacing the entire Iraq government. I kid you not. Video-WMP Video-QT Matthews: David, do you believe the President is looking for an out from his doctrinaire policy of staying the course? Brooks: Not really, no I don't. I think they're looking at policy options. One of those options is trying to replace the current government which seems to be doing nothing. The second option is some sort of federation which–Joe Biden has suggested as separating Iraq. A third option and by far the least likely is going in with more troops, So there's all different three options…We have much less control over Iraq than we did two or three years ago… I guess all those elections didn't really matter after all.What about all those purple fingers? By: John Amato on Sunday, October 15th, 2006 at 12:10 AM - PDT David Brooks has incredible access to the White House so when he said this shocker on "The Chris Matthews Show," I believed him. Bush is thinking about replacing the entire Iraq government. I kid you not. Video-WMP Video-QT Matthews: David, do you believe the President is looking for an out from his doctrinaire policy of staying the course? Brooks: Not really, no I don't. I think they're looking at policy options. One of those options is trying to replace the current government which seems to be doing nothing. The second option is some sort of federation which–Joe Biden has suggested as separating Iraq. A third option and by far the least likely is going in with more troops, So there's all different three options…We have much less control over Iraq than we did two or three years ago… I guess all those elections didn't really matter after all.What about all those purple fingers? By: John Amato on Sunday, October 15th, 2006 at 12:10 AM - PDT David Brooks has incredible access to the White House so when he said this shocker on "The Chris Matthews Show," I believed him. Bush is thinking about replacing the entire Iraq government. I kid you not. Video-WMP Video-QT Matthews: David, do you believe the President is looking for an out from his doctrinaire policy of staying the course? Brooks: Not really, no I don't. I think they're looking at policy options. One of those options is trying to replace the current government which seems to be doing nothing. The second option is some sort of federation which–Joe Biden has suggested as separating Iraq. A third option and by far the least likely is going in with more troops, So there's all different three options…We have much less control over Iraq than we did two or three years ago… I guess all those elections didn't really matter after all.

Ian Buruma on Gunter Grass

Ian Buruma on Gunter Grass:

The New Yorker: PRINTABLES: In 1985, Chancellor Helmut Kohl and President Ronald Reagan decided to remember the war and celebrate the postwar alliance of Western democracies, by laying wreaths at the site of the Bergen-Belsen concentration camp and then at a military cemetery in Bitburg. Grass called it an “insult,” a “defilement of history,” because among the thousands of graves were the remains of forty-nine Waffen-S.S. soldiers. Thirty-two of the soldiers were less than twenty-five years old when they died. Grass, as his critics have now had occasion to point out, never even hinted that he could easily have been one of them.

Just as unequivocal was his declaration, in 1989, that Germany should remain divided, the unified state having “laid the foundations for Auschwitz.”

And his criticisms of the United States show precious few shades of gray. The stationing of U.S. Pershing missiles on German soil, in the eighties, was likened to the Nazi plan to exterminate the Jews.

Why was this man, who dissembled for so long about his own past, so eager to expose the shameful secrets of others? Why was he so intent on imposing a collective guilt on his people, as if all Germans had followed Hitler as blindly as he had? And why is there such a discrepancy between the subtlety of his best narrative writing and the fierceness of his public scoldings?...

Grass’s memoir.... His father, a provincial shopkeeper, a good Roman Catholic, a “peace-loving family man... forever bent on harmony,” filled him with loathing. There was nothing grand or exciting about him. He was, as Grass would say, a Spiessbürger, a stuffy petit bourgeois.... This loathing, in Grass’s recollection, was one of the reasons that he yearned to join the Army at the end of the Second World War.... “I was spoiling for a fight with him,” he writes about his father. “I would like to have murdered him with my Hitler Youth dagger.” He was desperate to find escape routes. “All led in one direction. Away from here, to the battle front, one of the many fronts, as soon as possible.”...

[S]uddenly, the draft card arrived, telling him to report to the Waffen-S.S. in Dresden.... Was he shocked by the reputation of the S.S.? Not at all... there was something attractively European about the Waffen-S.S.; its volunteers included Frenchmen, Walloons, Dutchmen, Norwegians, Danes, and even some neutral Swedes, all battling on the Eastern Front to “save the West from the Bolshevist flood.”...

For decades, serious intellectuals and politicians wouldn’t talk about the effects of Allied terror bombing, say, or the expulsions from the German-speaking areas of Silesia and the Sudetenland... confined to the right-wing fringes of German politics. This began to change recently, and Grass followed the trend with his 2002 novel, “Crabwalk,” about the Wilhelm Gustloff, a Nazi cruise ship that was sunk by Soviet torpedoes in 1945, sending almost nine thousand German refugees, many of them children, to the bottom of the frozen sea.

The sinking of the Wilhelm Gustloff is an enormity worth recalling; and yet the tone of Grass’s novel is oddly peevish. The narrator complains that it was “as if there were no room for another maritime disaster, as if only the victims of the Titanic could be remembered, not those of the Gustloff.” He goes on, “The Internet was abuzz with a tearjerker of colossal proportions, the sinking of the Titanic freshly filmed in Hollywood and soon to be marketed as the greatest maritime catastrophe of all times.” Much is made, earlier in the story, of the fact that the Gustloff, when it was still the flagship of Nazi cruises, was classless, an innovation that had wide appeal. The Titanic, we know, was anything but.... [T]here is an element of contempt here—-toward commercial culture and capitalism—-that hints at some of Grass’s earlier attitudes. It explains his hostility to America....

Grass, from a petit-bourgeois background, a convert to democracy, ashamed of his own youthful moral obtuseness, viewed Adenauer’s Germany as an outrageous betrayal.... Even now... [e]very word is filled with rage:

Chancellor Adenauer was like a mask, hiding everything I loathed: the pseudo-Christian hypocrisy, the disgusting, lying professions of innocence, and the ostentatious bourgeois respectability of a criminal gang in disguise.

This is harsh, but in the context of the early postwar decades Grass’s voice was a necessary moral correction to Adenauer’s pragmatism.... His compatriots needed to have their consciences pricked in the nineteen-fifties and sixties.... The problem is that he hasn’t been able to let go. The Nazi ghosts have continued to haunt him, and any kind of hypocrisy, material greed, or use of military force provokes hysterical denunciations.... [Grass] sometimes talks as if the United States were the Third Reich’s successor... there are hints of earlier enthusiasms, of a possibly unconscious nostalgia for more heroic, more mythical, more tragic times...

A Soccer Game Is Not a Tea-Dance

The thirteen-year-old's soccer team won its first game, 1-0. (They had been 0-2-1.) It won on a goal scored by the thirteen-year-old in the first minute of the game.

It was one of those things that sometimes happens at the start of soccer games. One player is moving. The others--it's as if they haven't yet recognized that they're at a soccer game rather than a tea-dance...

Amaranth Letter to Shareholders from

From What happened remains a mystery to me. The factors pointed to by Amaranth seem to me to be inadequate to account for the scale of the losses:

Amaranth Letter to Shareholders - Sept. 29 letter from Amaranth Advisors LLC to its investors.

To Investors in Amaranth's Multi-Strategy Funds:

In light of the events experienced by Amaranth's multi-strategy funds over the last two weeks, we would like to respond to our investors' queries regarding the status of redemptions and the future of Amaranth's business.

Temporary Suspension of Redemptions

As you know, the Amaranth multi-strategy funds have recently received substantial redemption requests. In light of the volume of these requests, as well as informal feedback from a number of investors, Amaranth has determined that it is in the best interests of the funds and their investors to temporarily suspend redemptions for September 30 and October 31, 2006. This temporary suspension of redemptions will enable the Amaranth funds to generate liquidity for investors in an orderly fashion, with the goal of maximizing the proceeds of asset dispositions, while seeking to treat all investors equitably through pro rata distributions.

Under the funds' current circumstances, Amaranth believes that temporarily suspending redemptions and making pro rata distributions is a more appropriate approach to managing investors' desire for liquidity than invoking the Gate. The cash distributions contemplated in connection with suspended redemptions would not, when paid, be subject to the Gate, the 25-month initial lock-up or any redemption fees or charges.

All investors in Amaranth's multi-strategy funds will receive written notice of the suspension under separate cover.

We note that redemptions and capital withdrawals that were validly requested for August 31, 2006 have been timely paid by the funds.

Current Plans

While we continue to evaluate the situation in light of the liquidity of the funds' portfolios and investors' desires, our current intention is to dispose of the remaining positions in the funds' portfolios in an orderly fashion over time, seeking to maximize sales proceeds and to make periodic cash distributions to investors on a pro rata basis, subject to anticipated reserves. During this period, we intend to reduce our operating expenses to the extent that we are reasonably able to do so while also seeking to retain the key staff required to manage the process going forward. We will be contacting you with further details of this process in the near future.

Strategic Partnership Discussions

Amaranth has previously announced that it is pursuing negotiations with other firms regarding potential strategic alliances that would enable the continued operation of the Amaranth platform. We continue to pursue negotiations but have no announcement at this time.

Transfers to Third Parties

Several of you have inquired about Amaranth's policy toward transfers of shares and LLC interests to third parties. As reflected in the funds' governing documents, Amaranth or the Board of Directors of Amaranth International Limited must consent to any transfers. While reserving its rights to consent to transfers in its sole discretion, Amaranth currently intends to provide this consent (and to recommend to the Amaranth International Limited Board that it consent) where the following conditions are met: (1) the transferor timely notifies Amaranth or the Board of the proposed transfer, (2) the transferee satisfies all of the eligibility criteria for investing in the Amaranth funds (these criteria are set forth in the funds' subscription agreements), (3) the transfer would not result in any of the funds becoming "plan assets" under ERISA, (4) the transferee acknowledges that it is making the investment on an "as-is" basis, not relying on any information provided by Amaranth in making its investment decision and (5) the transfer is not made in violation of applicable law -- together with such other requirements as are set forth in Amaranth's form of transfer agreement.

Performance Update

We estimate that, as of Friday, September 29, 2006, the Net Asset Value of the multi-strategy funds had declined approximately 65% to 70% month-to-date and approximately 55% to 60% year-to-date. We are providing a range given the significant number of trades executed during the month and the limited time available to calculate the estimate. We expect that the monthly estimate, which will be calculated in accordance with our normal month-end closing procedures, will be within this range. We will work diligently to provide you with a monthly estimate within as close to our normal timeframe (Wednesday, October 4, 2006) as possible.

Amaranth is committed to acting in the best interests of the funds' investors and to keeping investors informed of decisions made in furtherance of this objective. We sincerely appreciate your patience and understanding during this challenging period.

Nick Maounis

Dysfunctional Behavior

Ah. Here we have some dysfunctional behaviors from Michael Barone and--surprisingly--from Greg Mankiw:

Greg quotes, apparently with approval, Barone's claim thqt "you can buy a little girl's winter quote at Wal-Mart for $10":

Greg Mankiw's Blog: Barone on John Edwards: Michael Barone comments on POTUS wannabe John Edwards and poverty in America:

His stump speech includes a line about a little girl whose parents couldn't afford a winter coat. Give me a break. You can buy a little girl's winter coat at Wal-Mart for $10. That's the price of taking the little girl out to lunch at McDonald's. As Juan Williams points out in his book Enough: The Phony Leaders, Dead-End Movements, and Culture of Failure That Are Undermining Black America--and What We Can Do About It, no one in America is stuck in poverty if he or she does three things: graduates from high school; gets a job, any job; refrains from having children before getting married. Poverty comes not from any structural failure of society but from dysfunctional behaviors. Edwards's poverty shtick is a crock...

But neither Greg nor Barone shops at Wal-Mart often enough to know or surfs on over to the Wal-Mart web site to learn what girls' winter quotes actually cost:

Jackets & Outerwear - Girls - Apparel - Wal-Mart: Girls' Hooded Jacket with Fleece Lining... $31.82. Girls' 4-in-1 System Jacket with Fur-Trim Hood... $34.82. Girls' Sequined Quilted Jacket... $31.82. Girls' Hooded Thick-Lined Jacket... $19.82. Girls' Heavy-Duty Zip-Front Hoodie... $31.82. Girls' Sueded Shearling Jacket... $31.82. Girls' 4-in-1 Embroidered System Jacket... $34.82.

Dysfunctional behavior.

In Michael Barone's view--and could it be in Greg Mankiw's too?--poverty in America is not something to be worried or concerned about because the poor deserve to be poor. The poverty of the poor is a just outcome. Poverty is, Michael Barone says, "not... any structural failure of society." Instead, poverty comes "from dysfunctional behaviors."

The point that it is a structural failure of society if (some) dysfunctional behaviors by parents trap their children in poverty seems to whiz by both Barone and Greg without penetrating.

Fortunately for Michael Barone, society is so structured that his dysfunctional behaviors don't trap him in poverty. The fact that he is ignorant of the prices of winter coats in Wal-Mart yet eager to opine makes him more rather than less valuable to the Republican slime machine, and to U.S. News and World Report.

Fortunately for Greg Mankiw, there is still time for him to reverse his dysfunctional behaviors: to think about whether he really wants to trust Michael Barone's word on anything without verifying it.

Econ 210a: Fall 2006: Trade and Industriousness: Recommended, Highly Optional, Readings

Recommended (but not required: only for those of you with great interest and copious amounts of spare time) readings for October 25:

Economic History Seminar: The Limits of Equality: Lessons from the Israeli Kibbutz

Ran Abramitsky (Stanford), "The Limits of Equality: Lessons from the Israeli Kibbutz."

If one draws a distinction between "social democracy" and "socialism," it is sobering to think that--outside the hereditary monarchies of North Korea and Cuba--the sole institutional remnants of classic European socialism circa 1900 are the Israeli kibbutzes, which still comprise 2.5 percent of Israel's population.

Risk-sharing, monitoring, adverse selection, moral hazard, and ideological commitment.

Hearts and Minds

Hearts and minds. We are not winning the War of the Islamic Reformation in Egypt: Despair and its Aftermath: Shadi Hamid: I just read a fascinating, if despairing account of the tragedy known as modern Egypt in Vanity Fair, a magazine which, despite its glossiness, has some of the best political coverage out there today. If you want to understand why Egypt (and, by extension, the Arab world) is a powder keg, I suggest you give it a read. It is a tragic but familiar story of the humiliation of life under autocracy and how such humiliation can push people over the edge, to say and do dangerous things. The article is a bit long, so here are the most affecting parts:

Where Farouk still nursed a flickering hope for something better, Ashraf, his elder, had given up. If angrier than any other Egyptian I'd met, Ashraf also seemed to personify a facet of the Egyptian personality I'd long sensed lay just beneath the surface: the rage of a people living in a state of near-constant humiliation.

Some of these humiliations come with life under a dictatorship--the corruption, the petty harassments--but others are specific to Egypt. In the land of one of the world's most fabled ancient civilizations, the average Egyptian now struggles to get by on less than $1,000 a year. About the only opportunity for most Egyptians to economically advance is to labor as indentured servants for their far richer Gulf Arab cousins, or to obsequiously cater to the foreigners in their midst...

"Look at me," Ashraf said. "I feel like I'm 70. I feel like I don't have any future. Not even 1 percent of my dreams have come true. If I had a chance to do something, I'd take up a gun. It's the same life for me whether I live or die."

And then this:

[Farouk's] ultimate dream, though, was to win the American-visa lottery. Every year, the U.S. awards some 50,000 work visas around the world, and this was the fourth year in a row that Farouk was applying...

For some minutes, Farouk rhapsodized about what his life would become if he won the lottery, how it would answer all his dreams. "Because I know in America I would be a great success. Everything would be wonderful for me then." After a short time, though, Farouk seemed to reflect on just how improbably small the odds were of this happening, and grew more solemn.

"You remember my friend Ashraf?" he asked. "He didn't tell you this, but last year he got an Iraqi visa. He wanted to join the jihad--as a fighter or as a shaheed [martyr], he didn't care--but so many Egyptian men have gone there that they have closed the land routes. To go to Iraq now, you first have to fly to Syria, and he didn't have the money for that."

It sounded like some bad joke, a guy so down on his luck he couldn't even get himself killed, but then Farouk continued in a soft voice.

"Sometimes I think maybe I should do that. They talk about it a lot in the mosques, about all the young men going there. I think I'm too soft to be a fighter, that it's not in my spirit, but I don't know.... If I could go and kill some Americans before I die, then maybe my life would have had some meaning."

Of course, that we are not winning does not mean that we are losing. It means that we are drawing closer to a world in which the peoples of the Middle East--Egyptians, Iranians, Iraqis, Syrians, Israelis, Palestinians, and others--lose really bigtime.

Hoisted from Comments: The Euromissiles of the 1980s

Ian Whitchurch writes, apropos of the Euromissiles of the 1980s:

Brad DeLong's Semi-Daily Journal: "Looking Tough" Is Not a Plan--Well, Not a Good Plan Anyway: I'm not sure I'd agree with

"The IRBMs did not add to NATO's strategic options: they could do nothing that Trident missiles could not do at least as effectively."

They did present an option that the Soviet SS-20 (etc) did not - the ability to do a non-ballistic and thus low-warning decapitation strike against hardened command targets.

By definition, this would be a first strike.

That was the disparity between Cruise/Pershing and the SS20. The SS20 could not destroy Washington or Cheyenne Mountain etc.

The First Rule of the Bush White House: "Bettern Not to Put This in Writing" Is Best Not Put in Writing

The first rule of the Bush White House: everytime you are tempted to write "Better not to put this stuff in writing," that phrase is the thing it is most important not to put in writing. Capisci?

Of course they don't understand. Here's Kevin Drum:

The Washington Monthly: "BETTER TO NOT PUT THIS STUFF IN WRITING...." The House Government Reform Committee has released a bipartisan report on the Jack Abramoff scandal, including hundreds of emails between Abramoff and various GOP luminaries, including Karl Rove's assistant, Susan Ralston. And why not? Ralston used to work for Abramoff, after all.

You can see 'em all here. Mostly they seem to be obsessed with the giving and getting of skybox tickets to various sporting events, but Abramoff's bilking of Indian tribes and other clients is an ongoing favorite too. I haven't read the whole bunch, but I've reproduced my favorite exchange below. I wonder how many emails to "Susan's mc pager" didn't get into the White House system?

Impeach George W. Bush. Impeach him now.

Two Questions About the History of the Federalist Period

The sixteen-year-old asks two questions:

First, neither wing of the original Federalist Party was "strict constructionist." The Hamilton-Adams wing was aggressively eager to expand the power of the federal government from the get-go. The Madison-Jefferson wing protested severely as long as the levers of power were in the hands of their ex-friends and now adversaries, but once Jefferson was president the Jefferson-Madison wing was happy to run the activist Hamiltonian government, and to do even more: witness the Louisiana Purchase.

Why, then, do those who, like Supreme Court Chief Justice John Roberts, claim to be "strict constructionists" call their organization the "Federalist Society"? Does this make any sense?

Second, what would John Marshall have thought of the Bush-McCain Torture Bill?

I think he has been procrastinating on his homework again, this time by reading Albert Beveridge's Life of John Marshall, given to him by his uncle.

His answer for the second question is that John Marshall would have disapproved: he did, after all, advise John Adams not to sign the Alien and Sedition Acts. And the infinite jurisdiction of the Supreme Court was his bab.

The first question remains a puzzle. The only answer I've been able to come up with is that their understanding and knowledge of history is so poor that they don't have a clue as to what the real Federalists actually thought.

Why Oh Why Can't We Have a Better Press Corps? (Wall Street Journal Edition)


I thought "Washington Wire" was the product of the news side of the WSJ? If it's going to have random intrusions from the Gamma Quadrant that is the editorial side, it's going to be a lot less useful than it might have been.

Washington Wire: Peggy Noonan writes in today's Journal:

Thirty-two years into his career as a writer of books, Bob Woodward has won a reputation as slipshod... slippery... opportunistic... and generally unaware of the implications even of those facts he's offered that have gone unchallenged.... The Bush White House has spent the past five years thinking they could manage him. Talk about a state of denial.

Now he has thwarted me. I bought "State of Denial" thinking I might have a merry time bashing it and a satisfying time defending the innocent injured.

But it is a good book. It may be a great one. It is serious, densely, even exhaustively, reported, and a real contribution to history in that it gives history what it most requires, first-person testimony. (It is well documented, with copious notes.) What is most striking is that Mr. Woodward seems to try very hard to be fair, not in a phony "Armitage, however, denies it" way, but in a way that -- it will seem too much to say this -- reminded me of Jean Renoir: "The real hell of life is that everyone has his reasons."

Yes. It is too much to say that "State of Denial" reminds one of "La Regle de Jeu". And take a look the part of Noonan's first paragraph that whoever edits "Washington Wire" finds it too embarrassing to quote:

Declarations - As a writer [Woodward's] style has been to lard unconnected sentences with extraneous data in order to give his assertions a fact-y weight that suggests truth is being told. And so:

On July 23, 1994, at 4:18 p.m., the meeting over, the president gazed out the double-paned windows of the Oval Office, built in October 1909 by workers uncovered by later minimum wage legislation, and saw the storm moving in. "I think I'll kill my wife," he said, the words echoing in the empty room.

I made that up. It's my homage [to Woodward]...

That's bats--- insane. That is insanity of a kind that shows that the Magic Dolphin Lady is even more unhinged than I would have thought possible.

RilkeBlog: The great slit in Lydia Bennet's skirt

RilkeBlog notes Jane Austen being saucier than generally noted:

RilkeBlog: The great slit in Lydia Bennet's skirt: Jane Austen has a way of kicking the reader in the head at the end of novels. I just reread a few and forgot to duck. In particular, there's Lydia Bennet, the out-of-control vulgar man-chasing girl who precipitates Pride and Prejudice's closing actions, writing to a friend, "...tell Sally to mend a great slit in my worked muslin gown ..."; there's Mary Crawford's "saucy playful smile, seeming to invite in order to subdue me" in Mansfield Park; there's Emma's slip of the tongue on Box Hill.

The first two are surprising because of the intrusion of open sexuality, the third because few people get to say the simple truth in these novels. I was also greatly surprised by Darcy's "I am in no humour at present to give consequence to young ladies who are slighted by other men" - it's just too rude to be consistent with the later part of the novel. Also Mary Crawford's late letters are impossible to imagine being written to Fanny - she's a modern character forced into a 1790s-1800s or whenever it is era, but even so she should be aware enough not to tell the kind of people scandalized by the idea of friends and family performing a play that an act of adultery was stupid or that an older brother's death has the positive benefit of making the younger son wealthy. But she's a wonderful character - I wonder if some later author has freed her from her bonds and seen what she could do.

Wingnuts "R" Them...

Ummm... Ezra:

Ezra Klein: Kashing In: And speaking of the overrepresentation of libertarian econ bloggers, I was interested to see this study (pdf) showing that precious few economists are actually free marketeers. Indeed, only a couple of percent qualify...

Here's the "study": Is There a Free-Market Economist in the House? The Policy Views of American Economic Association Members. By Daniel B. Klein and Charlotta Stern: People often suppose or imply that free-market economists constitute a significant portion of all economists. We surveyed American Economic Association members and asked their views on 18 specific forms of government activism. We find that about 8 percent of AEA members can be considered supporters of free-market principles, and that less than 3 percent may be called strong supporters...

Here are a few choice words from one of the authors of that "study": Antidiscrimination Laws Violate Freedom Maryland used to prohibit whites and blacks from playing tennis together. H.L. Mencken protested:

Is such a prohibition supported by anything to be found in common sense and common decency? My answer is a loud and unequivocal No. A free citizen in a free state, it seems to me, has an inalienable right to play with whomsoever he will, so long as he does not disturb the general peace. If any other citizen, offended by the spectacle, makes a pother, then that other citizen, and not the man exercising his inalienable right, should be put down by the police.

But if freedom means being allowed to play tennis together, it also means being allowed to choose not to play tennis together....

Along with self-ownership, the freedom of contract (or of association) is a cornerstone of freedom or liberty, as understood by the whole classical-liberal tradition....

  1. Vague, complicated govt rules are imposed from the top-down. They lead to uncertainty; people don’t know what’s unlawful. People are confused about appropriate behavior; social norms of esteem and reputation don’t work well when people don’t know what kind of behavior is “bad.”
  2. The enforcement of interventionist rules falls on government.
  3. Specifying an Anti-Discrimination Law. In formulating an anti-discrimination law, a philosopher-statesperson must specify:
    • What categories are protected
    • What constitutes belonging to the protected category
    • In what activities such discrimination will be unlawful
    • How the law will be administered and enforced
    • What kinds of behavior constitute unlawful discrimination....

Civil Rights Act of 1964 reads: Section 703.

It shall be an unlawful employment practice for any employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex or national origin....

Intervention presumes knowability (Hayek). But the relevant social facts are usually not knowable. Who knows what lurks in the hearts of men? Only the Shadow knows!... People become pitted against each other, suspicious....

Sometimes antidiscrimination laws harm their purported beneficiaries.... One never knows whether someone attained a position because he was a member of a protected category. The only way you can know that you can ride without training wheels is to ride without training wheels.... Antidiscrimination laws demean members of the protected categories.... By coercing ordinary citizens, antidiscrimination laws might make the disabled swell with a sense of power, but the law also sends the message that without government privileges they cannot assert their own worth and dignity....

Antidiscrimination laws create backlash. People resent being forced, they develop hatreds. One reason racial and gender issues are so bitter and acrimonious is because force is involved....

The last of these is, I think, the ugliest.

Only Daniel Klein thinks that the class of free-market economists is identical to that of ignorant, vicious wingnuts.

From C.J. Cherryh, "Fires of Azeroth"

Ah. Here it is:

Changeling had killed, had taken lives none of them could count, and more than that--it had taken another friend; that was the weight on her soul now, he thought: that and worry for the morrow....

Morgaine said nothing. Perhaps she took peace of it. She turned back to the view into the dark, where cries drifted up fainter and fainter. Vanye looked in that direction and then back at her, with a sudden chill, for he saw her draw her Honor-blade. But she cut one of the thongs that hung at her belt-ring and gave it to him, sheathing the blade again.

"What am I do to with this?" he asked, thoroughly puzzled.

She shrugged, looking for once unsure of herself. "Thee never told me thoroughly," she said, lapsing into that older, familiar accent, "for what thee was dishonored... why they made thee ilin, that I know; but why did they take thy honor from thee too? I would never," she added, "order thee to answer."

He looked down, clenching the thong taut between his fists, conscious of the hair that whipped around his face and neck. He knew then what she was trying to give him, and he looked up with a sudden sense of release. "It was for cowardice," he said, "because I would not die at my father's wish."

"Cowardice." She gave a breath of a laugh, dismissing such a thought. "Thee?--Braid they hair, Nhi Vanye. Thee's been too long on this road for that."

She spoke very carefully, watching his face: in this grave matter even liyo ought not to intervene. But he looked from her to the dark about them and knew that this was so. With a sudden resolve he set the thong between his teeth and swept back his hair to braid it, but the injured arm would not bear that angle. He could not complete it, and took the thong from his mouth with a sigh of frustration. "Liyo--"

"I might," she said, "if they arm is too sore."

He looked on her, his heart stopped for a moment and then beginning again. No one touched an uyo's hair, save his closest kin... no woman except one in intimate relation with him. "We are not kin," he said.

"No. We are far from kin."

"She knew, then, what she did. For a moment he tried to make some answer, then as it were of no consequence, he turned his back to her and let her strip out his own clumsy braiding. Her fingers were deft and firm, making a new beginning.

"I do not think I can make a proper Nhi braid," she said. "I have done only my own once and long ago, Chya."

"Make it Chya, then; I am not ashamed of that."

She worked, gently, and he bowed his head in silence, feeling what defied speaking. Long-time comrades, she an dhe, at least in distance and time as men measured it; ilin and liyo--he thought that there might be great wrong in what had grown between them; he feared that there was--but conscience in this area grew very faint.

And that Morgaine kri Chya set affection on anything vulnerable to loss--he knew what that asked of her.

Sunday, October 15, 2006

Echoes of Barrington Moore

Michael Munger writes:

Daron Acemoglu and James A. Robinson, Economic Origins of Dictatorship and Democracy. New York: Cambridge University Press, 2005. xv + 416 pp. $35 (cloth), ISBN: 0-521-85526-6.

The key questions posed in this book have to do with the origins and stability of institutions. Specifically, why do some nations introduce democratic institutions and others fail.... The book rests on a seeming paradox: politically powerful groups need some device that will allow them credibly to commit to reducing their own power. The threat of mass revolution cannot be forestalled by the promise of side payments, unless the means by which those side payments are decided and awarded is literally within the power of the masses....

[C]oups against democracies that impose an oligarchy have much the same logic as coups against oligarchies that seek to impose democracy. In both cases, at least with full information, the current regime will nearly always be better off offering concessions and side payments. But the coup may occur anyway, if the existing regime, regardless of its type, fails to devise a credible means of guaranteeing the compensation once the coup threat dissipates. This is a particular problem when the leaders of a potential coup recognize that their ability to make threats is transitory....

[D]emocracies have historically been created by elites when the threat of social unrest and violence cannot be defused in any other way. This condition will only be met when the conditions in which citizens live are so bad, but the set of civic connections and infrastructure for overcoming the collective action problems inherent in organizing revolution are so good, that revolution is imminent. Second, democracies will not be an answer to the threat of revolution, even credibly imminent revolution, when inequality is so high, and/or when the assets of elites are easily nationalized or taxed away, or when elites expect to lose control of the ability to write down basic constitutional rules that constrain the scope of democratic government action.

More simply, then, we expect elites to support democratic transitions when the threat of failing to do so is nearly certain revolution, and when the expected political and economic costs of democracy can be kept within certain bounds....

I expect that the book will be one of the influential pieces of scholarship of the past decade. Its virtue is its flaw: it develops a coherent framework that takes a particular perspective (instantiating the claims of threat and cost outlined above in a model), and derives propositions from those models....

There is one kind of problem the book does not handle very well.... Acemoglu and Robinson are entirely too confident of the ability of political institutions to control the specter of political, and ultimately revolutionary, chaos.... My quibble about social choice stability aside, I would recommend this book to anyone with a serious interest in democratic transitions and economic development. Its historical scope, and the power of the models it develops, set a new standard in political economy.

John McCain Runs for Cover...

Eve Fairbanks writes:

Adding to the wave of desperate post-Foley fundraiser cancellations (Don Sherwood in PA, Shelley Sekula Gibbs in TX, Ron Lewis in KY, Michael Sodrel in Indiana, Joy Padgett in Ohio, and more have canceled with Tom Reynolds and/or Denny Hastert), John McCain reportedly cancels two events to stump for Reynolds in New York.

Money line: "Senator McCain's office cited scheduling conflicts, though his spokesman couldn't say exactly what the events conflicted with, saying, 'We haven't figured that out yet.'"