Sunday, November 30, 2003
|
An Economic Sermon for your Holiday Weekend |
All you debt hawks out there -- I want you to think about a few things.
There are a series of classic paradoxes, traditionally used to impress on students the basic macroeconomic fact the whole is not always a mere sum of its parts.
The more aggregative your outlook the more debt appears to self-cancel, for example. My owing money to a loan shark is a source of concern. My owing money to my father is of somewhat less concern, since the assets/liabilities remain within the family. Even if dad charges me an exorbitant interest rate -- well heck, he will only use the money to buy nice things for mom, right?
You can extend this argument to a nation's public debt. From this viewpoint, the federal debt is innocuous, merely what we all "owe ourselves."
What about externally-held public debt -- those foreigners who buy our treasuries? Traditionally external debt is looked on with xenophobic suspicion -- we worry about "leakages" of expenditure going abroad not matched by "injections" of income generated internally. It we who spend but the foreigners who benefit, we worry.
The more globalization increases international trade, the less are these suspicous worries warranted. Sure, we may owe money to foreigners, but these foreigners are also our customers. We get much of our money back in the form of orders for our own country's output.
The less didactic your outlook, the more debt resembles a convention, a mere way of describing details of ownership rather than an active force. Not only xenophobia but also America's Puritan heritage sometimes points thoughts about public debt in the wrong direction.
Traditional Puritan thinking associates indebtedness with indolence and profligacy, suggesting conclusions like "less aggregate debt is always superior to more." This conclusion is not always true.
Please picture for a moment an economy with many modern factories, abundant natural resources, and a vibrant work force. It is these that all determine how wealthy the economy will be. This economy's debt structure -- including whether there's "lots" or "little" private or public indebtedness -- merely describes "who owns what" and "who must behave how." It has nothing to do with the workers, machines, and resources which actually produce all the GDP.
From this viewpoint, then, fretting about alternate structures of private/public debt is like worrying about what color the machines are painted. What does it matter who owns a machine, or whether it serves as collateral in some debt arrangement? Its productive capabilities are all about the metal it is made of, not about how it is described in some contract.
Inappropriate didacticism gives rise to the most commonplace argument against high levels of federal indebtedness -- the notion we somehow pass a debt "burden" to our children by increasing the federal debt.
The temptation for jokes here is simply too great. Here's one: "I asked my daughter about the federal debt. She said it was okay, she'd take care of it somehow!"
Here's another: "But seriously folks. I did ask her. Heck -- she said she'd just pass it on to her daughter!"
As it turns out the last joke is no a joke at all. Any level of federal debt gets passed on from one generation to the next. No generation has to pay off all the federal debt. The idea it does is just plain silly.
What we and our children must face with higher levels of federal debt, however, is higher levels of interest payment on the federal debt. Through the first half of the 1990s, for example about 18% all federal receipts had to be devoted to interest paynments on the public debt. The 90s boom reduced this number to roughly 10%, but with the increasing federal deficit a reasonable forecast suggests an increasing level of 17% by 2007.
In the language of modern political economy, these interest payments are an entitlement. To the extent our debt is held externally (by foreigners) as well as internally, it is not only a domestic but also an international entitlement.
But entitlements can be the subject of a future sermon -- that's enough for today. Get out and enjoy the rest of the holiday weekend -- and for now at least, stop worrying so much!
UPDATE: Someone, somewhere just asked: what about the fabled Krugman Krash? Won't the dollar start falling if the federal debt keeps rising? There are plenty of answers, but the most persuasive is simply that there are impossibly wealthy individuals devoted to ending the Bush administration who would, if it were at all possible, buy a Krugman Krash through what is often perjoratively referred to as international currency manipulation. Thus far they've been unable to purchase it.
UPDATE II: John McCain on this morning's Fox News Sunday: "...we are laying a burden of debt on future generations of Americans...Any economist will tell you you cannot have this level of debt, of increasing deficits, without eventually it affecting interest rates and inflation. It's common sense..." We will conduct yet another numberical test of this "common sense" within the next few days. |
| Link posted by Steve Antler : 9:11 AM |
Saturday, November 29, 2003
|
Actually, they planned lots of stuff... |
| Maybe if the American Left hadn't yelled "its all about OIL!" so many times the administration would have felt less constrained to address this problem. |
| Link posted by Steve Antler : 1:05 PM |
|
Three million? Two? Heck, who's counting? |
From Monday's Washington Post we have a description of Moveon.org's new economic ad campaign, and today's WSJ Opinionjournal links to this from The Hill:
Sen. Jon Corzine (D-N.J) and the MoveOn Voter Fund were supposed to hold a news conference at the National Press Club last Friday to introduce MoveOn's new TV spot on the Bush administration's economic program. But, at the last minute, the event was canceled.
"There were legal problems I'm not supposed to talk about," said someone connected with MoveOn. The group's Voter Fund is one of the so-called 527 political action committees currently under investigation by the House Administration Committee.
"There was a scheduling conflict," said Kawana Lloyd, a spokeswoman for MoveOn.
"What press conference?" said Corzine, hustling to the Senate floor. "I didn't know there was one."
Can the "legal" and/or any of the other problems have anything to do with these words from the ad:
"George Bush is going to be the first president since Herbert Hoover to lead an economy that loses jobs, over 2 million so far. Didn't George Bush say his tax cuts would create jobs?"
and the high probablility these words are -- as predicted -- now demonstrably false? |
| Link posted by Steve Antler : 10:34 AM |
Friday, November 28, 2003
|
The Paradox of Globalizing Productivity |
James G. Lakely keeps us up to date on the right wing spending hawks:
Chris Edwards, director of fiscal policy at the libertarian Cato Institute, said the Bush record on spending has been a major disappointment.
"My impression of Bush is that I've never seen him give a speech in which he says government is too big and we need to cut costs," Mr. Edwards said, pointing out that President Reagan vetoed 23 bills in his first three years in office, while Mr. Bush has yet to unsheathe his veto pen.
Accepting additional spending is the price Mr. Bush pays for getting his agenda through Congress, Mr. Edwards said.
EconoPundit, out on a limb alone as usual, has started to worry "EconoEquivalence" could be a greater threat than the deficit itself.
I'm working on a slightly less-technical version of Monday's post, as well as additional work to address those (e.g. Andrew Sullivan) who think spending cuts might produce something different.
Preview: as far as I can tell so far, the message is the same both ways. (We may wind up calling this message something like "the paradox of globalizing productivity.") Reduce the deficit, it seems, and the economy generates fewer jobs and a significantly lower aggregate income, but with no apparent countervailing benefits in the form of lower prices, lower interest rates, or faster growth.
UPDATE: Then again there's Krugmanic stuff like this, not well-captured in any single-country model. |
| Link posted by Steve Antler : 1:46 PM |
|
A "Gathering Storm"? |
There is supposedly an upcoming new scandal over "Prince of Darkness" Richard Perle:
Though he was forced to give up the board's chairmanship when some of his private defense-contracting clients were revealed, Perle maintains a unique position as a shadowy Beltway operator who blurs the line between private business and foreign policy. He's been making lots of noise -- and news -- lately, and his critics are asking questions about his intentions.
But to find out more you must pay Salon, or register (and sit thru a "brief" commercial) for a trial run. I refuse to do either. Instead, I've decided to borrow and post this story's very Satanic-looking photo of Pearle suggesting his teeth are either dirty or filed down to Draculaic-Satanic-points.
Wouldn't you agree he just looks repulsive here? Poised, perhaps, to toss back a nice glass of some kid's blood? |
| Link posted by Steve Antler : 12:55 PM |
|
New-taxes-are-needed-maybe-alert... |
| If you're bored this weekend, and you suspect prescription drug benefits will yield high windfall profits to the pharmaceutical industry, and you think maybe some new taxes could capture these, you can find lots of arguments and data in this report. |
| Link posted by Steve Antler : 10:57 AM |
|
Who knows... |
When was the last Presidential visit to a war zone? Am I forgetting something? Isn't it true neither Johnson, Kennedy, nor Nixon visited Vietnam?
I was too young to understand these things, but I remember Ike basically won the 1952 election by saying "I will go to Korea." It was a stunning thing for him to say, not just because he was a general running for office, but because American Presidents just don't go to war zones!
I think everyone's still too stunned to realize how new this is.
UPDATE: Okay, so I'm wrong. These things happen. Probably will happen again someday. Just got this from Patrick Taylor:
Sorry Econopundit, but It's happened a couple of times ... and in recent memory too.
Bill Clinton visited troops in Kosovo for Thanksgiving in 1999 a bit over five months after the end of major combat operations.
and
Bill Clinton visited front-line troops in Bosnia in 1996.
Thanks Patrick. (Jeeez, I just hate it when I'm wrong! Darn!)
UPDATE II: And more historical facts surface to prove me totally wrong! Lyndon Johnson visited Vietnam in 1987. Clinton to the S. Korean DMZ in 1998. George H. Bush to Somalia in 1993.
UPDATE III: I mean Johnson visited in 67, not 87. (Thanks to Steve M. for pointing this out and reminding me of that awful year!)
|
| Link posted by Steve Antler : 8:38 AM |
|
Political Analysis from the New York Times |
Commenting on the Bush Thanksgiving visit to Iraq, an unnamed senior adviser to a top Democratic presidential candidate said: "Those guys can do some pretty smart stuff sometimes."
UPDATE: In the same article, Wesley Clark's communications director comments on Democratic candidates' upcoming strategy:
"They made their bed with that 'Mission Accomplished' trip, and that's going to be around for a long time," he said. "That's not the last ad you will see with that. I will guarantee you that whoever the nominee is will have that image up."
If he's correct, doesn't this provide perfect cover for Bush Iraq visit campaign footage? If your opponent deems it fair to use troop visit footage (the carrier landing) in a negative ad, can you be faulted for using similar footage (Iraq visit) in a positive one?
UPDATE II: As well, check out America's leading ethicist, Andrew Sullivan, on the Bush visit. He brings the "French Resistance" into the discussion and explains why the expression belongs in quotes.
I mention this because by coincidence at our Thanksgiving table last night (no, Andrew wasn't there) we had a somewhat rambling discussion on whether the various WW II resistance movements' effectiveness varied in direct proportion to the participation of sociopaths -- those who, in peacetime, would have either been or belonged in prison. (It was argued the Danish resistance was highly effective compared with the French owing to the relatively large criminal element involved in the latter.)
Anyway, others know lots more about this, but I report the conversation because we know in Iraq the prisons were emptied of 200,000 sociopaths just before liberation, and it is interesting to speculate: were all the genuinely political prisoners killed, but the sociopaths reserved in the slight eventuallity they'd be needed for this purpose? |
| Link posted by Steve Antler : 7:04 AM |
Wednesday, November 26, 2003
|
A Thanksgiving Story |
There I am in line at Costco. Wall-to-wall crowding. Pre-holiday craziness.
Behind me, a suburban guy with ten tons of stuff in his cart. Ahead at the checkout a tall, thin, earnest guy in jeans conferring with nuns, pushing a flatbed cart with a week's worth of giant cans, bulk stuff, institutional-looking food.
The African American checkout lady just bubbles with energy. She pushes stuff through, smiles, chats, swipes that Costco card out of your hand with all the elegance of a veteran Las Vegas dealer.
And then, just as she takes my card, I see it buried in the suburban guy's cart -- a gigantic utility sack of Pig Ears. Yeah, a plastic sack of Pig Ears!
So I have to ask if they're really pig ears. Maybe this is a funny name for something else? A new kind of snack?
"No, they're really pig's ears" he laughs, and he pulls the sack out showing me about two hundred dried reddish ears taken off a herd of pigs somewhere.
This absolutely tickles the checkout lady -- and the tall guy with his nuns, organizing their institutional food, are also starting to laugh.
"Are you surprised I'd buy pig ears?" he asks.
"No way," I answer, trying to sound experienced in these things. "People eat all sorts of stuff -- like, uh, chitlins you know?"
"Hey -- " and the checkout lady imperiously pulls herself together in loud angry indignation -- "I eat chitlins!"
And it hits me -- we're improvising a parody! This is all a holiday pantomime, a very American pre-Thanksgiving comedy making fun of those awful things other folks eat and too-serious jerks who'll claim any clumsy gaffe is a racist slur.
Pig ears? It turns out they're dried things for dogs to chew on -- not meant for humans at all.
Chitlins (of course) are great -- heck, every so often you even get a piece of corn!
So happy Thanksgiving everyone -- and tell me, don't you just love this country? |
| Link posted by Steve Antler : 5:40 PM |
|
A valuable contribution... |
MEMRI has numerous extracts from an English-language anti-American, anti-Western official Saudi website:
The website contains information that is anti-Western in general and anti-American in particular. In one instance for example, [it] states, "Today's false idols, which dominate over the entire world, are Democracy, Capitalism, Socialism and Communism. Islam instead calls for a Khilafa (Caliphate) based on consultation, and a just economic system based on Zakat and a prohibition of usury."
It is hard to look over this material without coming to the following conclusions: (1) As described by the website, Islam's purpose is to take over the world, and (2) a religious war exists between Islam and the West.
FULL DISCLOSURE: In my youthful Marxist days for a time I followed the newfangled fashion of radical resource economists and actually studied what was then called "Islamic Economics." These words capture the essence of the experience: "Oy vey!" |
| Link posted by Steve Antler : 9:22 AM |
|
Can a deeper recession be a better recession? |
It is unclear whether "more unemployment, shorter recession" is better or worse than "less unemployment, longer recession." Tradeoffs are involved in this puzzle.
Economists love to badger students with tradeoffs. This is one of their favorites.
Paul Krugman's Tuesday column altered a George Bush quote to suggest the President referred not to this tradeoff, but to mysterious advice of an unknown advisor arguing against the American public's well-being.
How can Krugman have done this? Last night I produced evidence Paul "borrowed" the argument, without attribution, from a blogger who (a) does not understand the depth/breadth tradeoff and therefore (b) misinterpreted the Bush quote so as to (c) produce the argument Krugman reported in his column.
Let's now give Paul Krugman the benefit of the doubt. Let's assume he found the altered quote somewhere and just ran with it. Does the (spurious) Bush quote, as it stands, really suggest the President invented and then demonized a crazy economic advisor who hates the American public?
The answer is "no" for anyone with an undergraduate knowledge of American macroeconomic thought. Whether you call them Hayek enthusiasts, new-classical economists, or real-business cycle theorists, there are many American economists who think Keynesian fiscal and monetary remedies do more harm than good.
I am not one of them, nor do I play one on TV. But I teach both my undergraduates and graduates about them, because everyone else does.
Any "B-or-better" undergraduate will tell you some American economists say recessions should be left alone, that they're good for us, because they (1) weed out non-competitive and inefficient firms, (2) reallocate resources from less- to more-productive uses, (c) lower our prices (making exports more competitive) and (d) lower our interest rates (increasing economic growth and future prosperity).
All this benefit, however, takes place at a cost -- the cost of higher unemployment for some period of time -- the cost of a recession. Real business cycle theory suggests the long-term benefits of leaving a recession alone may outweigh the short-term costs of unemployment.*
On the face of it, as Krugman presents the quote, Bush was simply rejecting the advice of some hard-line, right-wing real business cycle theorist advocating the recession just be allowed to play itself out. If Bush demonized anyone, it was an economist somewhat to the right of mainstream.
Explaining it this way makes Bush look kind of warm and fuzzy, however. Better, thinks Krugman, to present the view that none but the demonic economist would ever suggest recessions should be allowed to play themselves out! Yes! That makes Bush look bad! Really bad!
We conclude either Krugman has for three decades been a sleepwalker, unaware of minority opinion in his profession, or he uses his position at the New York Times to misrepresent this profession to the educated public. His agenda, I guess, is politics, not economic education. But I'm not the first one to notice this.
-------------------------------------
* I'm ignoring the distribution question here. Clearly, the benefits can be captured by people other than the ones who pay the costs. Also there's the temporal matter -- we pay costs now, and get benefits later. There are ways of handling both these questions. Trust me. |
| Link posted by Steve Antler : 7:28 AM |
Tuesday, November 25, 2003
|
Krugman Cribs and Dowdifies |
Today, Paul Krugman says President Bush said this:
here's President Bush on critics of his economic policies: "Some say, well, maybe the recession should have been deeper. It bothers me when people say that." Because he used the word "some," he didn't literally lie -- no doubt a careful search will find someone, somewhere, who says the recession should have been deeper. But he clearly intended to suggest that those who disagree with his policies don't care about helping the economy.
In his July 30, 2003 press conference President Bush said this:
The '01 tax cuts affected the recession this way, it was a shallow recession. That's positive, because I care about people being able to find a job. Someone said, well, maybe the recession should have been deeper in order for the rebound to be quicker. My attitude is, a deeper recession means more people would have been hurt. And I view the actions we've taken as a jobs program, job creation program.
And in an August 3 post, Self Made Pundit said this:
In Bush's fantasy world, he deserves credit -- not blame -- for the dismal state of the economy because he rejected nonexistent advice to let the economy get worse. When asked by a reporter at his press conference on Wednesday whether he should be rethinking his economic approach given the dismal results of this policies, Bush visited his fantasy world:
The '01 tax cuts affected the recession this way, it was a shallow recession. That's positive, because I care about people being able to find a job. Someone said, well, maybe the recession should have been deeper in order for the rebound to be quicker. My attitude is, a deeper recession means more people would have been hurt. And I view the actions we've taken as a jobs program, job creation program.
Bush, of course, never identified this phantom adviser that suggested the recession should have been deeper. Bush did, however, refer to this phantom adviser again on Friday in defending his administration economic record to reporters:
"Economic historians would say that the recession of 2001 was one of the more shallow recessions. Some would probably say, well, maybe you shouldn't have acted and let the recession go deeper, which would have made -- may have made -- for a more speedy recovery," Bush told reporters after meeting with his Cabinet.
Once again, Bush did not identify this phantom adviser with the Machiavellian bent who urged him to let the economy get worse so he could claim credit for a more impressive recovery. Perhaps Bush, like William Safire, is being haunted by the specter of an advice-dispensing Richard Nixon. Or perhaps Bush is reticent to identify this little Machiavelli because he is really a miniature Bush with horns who whispers into his ear when Karl Rove is otherwise occupied.
When reporters pressed White House Spokesman Scott McClellan as to whether Bush's pixie of economic doom actually exists, McClellan instinctively began to cover for Bush, but then in mid-sentence apparently realized he lacked Ari Fleischer's flair for obfuscation and gave up:
As to whether any particular individuals had actually urged Bush to deliberately let economic conditions worsen, McClellan said: "This goes back to conversations that people have said publicly and that -- I don't know the specific person, though. I couldn't tell you."
It is highly unlikely that Bush's phantom adviser exists. Bush himself seems unsure whether his demonic adviser is more than a figment of his imagination, wavering from Wednesday's claim that "someone said" such advice to Fridays's (sic) suggestion that "some would probably" offer such advice.
The strongest evidence that Bush's phantom adviser is just a figment of his imagination is the sheer stupidity of the advice. Other than Bush, it is unlikely that there is anyone in the White House ignorant enough to believe that the best way to ensure a speedy recovery is to make sure that a recession is as severe as possible. The deepest economic downturn in American history was the Great Depression. And we all remember how speedy that recovery was...
Okay, let's review. Paul Krugman appears to have (a) truncated and changed the meaning of the Bush quote, (b) cribbed his argument from an unattributed source who (c) lacks economic credibility.
On point (c): is it actually "sheer stupidity" to wonder whether a shorter, deeper recession might actually be preferable to a longer, more-shallow one?
Of course not. The welfare tradeoff between deepness and length of a recession is discussed all the time. Krugman is not only cribbing -- he's cribbing from somone who doesn't understand economics.
UPDATE: There's also this quote from Bush's September 1, 2003 Ohio Labor Day Speech:
They tell me it was a shallow recession. It was a shallow recession because of the tax relief. Some say, well, maybe the recession should have been deeper. That bothers me when people say that. You see, a deeper recession would have meant more families would have been out of work. I'm interested in solving problems quickly. I want more people working.
Given the earlier quote one could reasonably understand this as refering to the more unemployment/quicker recovery-less unemployment/slower recovery tradeoff -- but the point gets muddled and the poor guy claims the best of both, silently knowing he's bungled things.
Does this bungling prove "Bush is an idiot"? Well maybe, but Bush seems to understand the "wideness/deepness" tradeoff exists, whereas smug, articulate Self-Made Pundit doesn't have a clue. |
| Link posted by Steve Antler : 5:40 PM |
Monday, November 24, 2003
|
Sullivan, Klein, and EconoEquiv |
This little bit of econo-equivalence (i.e. the economic analogue of "moral equivalence") from Andrew Sullivan:
The GOP has now no credibility as a party of fiscal discipline or small government. It's just another tool of special interests - as beholden to them as the Dems are to theirs.
and his link to Joe Klein's essay of similar convictions, are good starting points for a report on our tax-cut-repeal project.
Newcomers to EconoPundit (EcoNewbies?) should know we're referring to no less than a full implementation of Howard Dean's cornerstone economic policy using the Yale econometric simulation model. What levels of income, output, employment, interest rates, economic growth, prices, and -- apparently most important to Andrew Sullivan -- the deficit, would we have experienced had the Bush Tax cut not gone into effect?
First let's look at exactly what we're doing. We're causing the computer to simulate the economy up through fourth quarter 2007 using best current data under the two alternate personal income tax assumptions illustrated here:
The red line, showing the Dean Plan, freezes the personal income tax rate to a historically reasonable level just fractionally below the pre-second-round tax cut. The green line shows actual and forecast levels given current legislation.
So what would have been the economic outcome? First, we'd have seen a slightly milder recession but a dramatically slower recovery. On an average annual basis, with no tax cut the unemployment rate runs about a tenth of a percent less through 2003, but about a half percent higher for the rest of the forecast period.
Realized levels of real GDP would have been substantially reduced in the absence of the tax cut.
Interest rates would be higher:
And the deficit, though effectively cut in half, would still be substantial and growing in the absence of the tax cut:
It is this last point speaks most strongly to the naivete of EconoEquiv. First, even a rescinding of the tax cut is insufficient to restore the lost surplus of the 1990's boom. Andrew Sullivan says things like the following:
[The GOP's] pork barrel excesses may now be worse than the Dems, and the president seems completely unable or unwilling to restrain them. I know I'm a broken record on this but we truly need some kind of third force again in American politics - fiscally conservative, socially inclusive, and vigilant against terror. Last week has shown us why.
without understanding how genuinely ineffective fiscal conservativism can be. The Fairmodel simulation shows a tax-induced $300B reduction of the deficit "costs" an average annual real income loss of about $125B during the forecast period -- roughly the equivalent of 2 million lost jobs, over and above all the losses recorded in manufacturing. I doubt Sullivan would agree this is "worth" a lower deficit number.
Most important is the simple issue of war, however. If you genuinely believe you are at war there is little difference between a $500 and $250B deficit. The "extra burden" to future generations generated by this higher deficit is nothing compared with the sacrifice of lives.
UPDATE: By documenting specific "pork numbers" (our expression, not his) Bruce Bartlett adds a great deal to the discussion. Yet I think it's important to remember the whole "porkiness" of pork vanishes after first-round spending. By objective standards everyone would agree that, say, a quarter million dollars homeland security spent upgrading some local Hooter's restaurant is corrupt. But all the profits, rents, and salaries generated by this spending are spent and taxed exactly like all other dollars in the economy. You ignore this principle at your own peril. Remember the Democrats' "luxury tax" on furs, jewelry, and yachts? About 25,000 suddenly-jobless workers wound up wondering what they'd done wrong -- and changed their voting patterns accordingly.
UPDATE II: Even more pertinent is this from Bruce:
If the tax cuts were in fact the primary factor in the rise of deficits, then one would expect U.S. fiscal policy to be moving in a direction opposite to that of other countries that have not cut taxes. In fact, as a new study by the Federal Reserve Bank of St. Louis notes, the fiscal stance of all major countries pretty much moves in tandem. Deficits fell sharply in the late 1990s in all major countries, with many moving into surplus. Since 2000, surpluses have vanished everywhere except Canada, and deficits equivalent to those here (as a share of GDP) have emerged everywhere.
UPDATE III: For anyone with the EconoEndurance to have actually read all the way to this point, here's a little inside information. My next step is to reverse the problem -- to "allow" the tax cut but generate the same deficit reduction with reductions in federal spending instead. (The model lets you do thought-experiments like this.) This procedure gives us one way to understand whether we can "afford" both the tax cut and the war at the same time. |
| Link posted by Steve Antler : 6:50 AM |
|
Today is Monday, remember? |
| Here's your economic calendar. Tomorrow promises to be an interesting data-announcement-day, no? |
| Link posted by Steve Antler : 6:44 AM |
Saturday, November 22, 2003
|
Those strange connections we make... |
An article, which appeared a few weeks after 9/11, keeps popping into my memory as I unsuccessfully avoid the wall-to-wall Michael Jackson coverage. Here are the last paragraphs:
Getting straight to the point, the interviewer asked, "Do people in Paradise have sexual relations?" "This issue is known only to Allah," said Tantawi. "It is enough that we know that Paradise offers [everything] to satisfy the soul and gladden the eye..."
In a review of the Egyptian press in the London daily Al-Quds Al-Arabi, the veteran Egyptian journalist Hasanain Kurum explained that Sheikh Tantawi knowingly gave a vague answer to the question, so as to avoid a scandal like the one created a few years previously by the late author and journalist Muhammad Galal Al-Kushk. Al-Kushk wrote, "The men in Paradise have sexual relations not only with the women [who come from this world] and with 'the black-eyed,' but also with the serving boys." According to Kurum, Al-Kushk also stated, "In Paradise, a believer's penis is eternally erect." |
| Link posted by Steve Antler : 10:57 AM |
Friday, November 21, 2003
|
Yet another voice joins the chorus: the "worst administration since Herbert Hoover!" |
Is it Daschle on deregulation? No! Is it Krugman on jobs? No!
It's BARTLETT on TRADE!
AAARRGGHHH!!!!!!
UPDATE: And for more on Bush/Hoover check out Rich Lowry. (Regarding the jobs issue, he clearly doesn't read EconoPundit.) |
| Link posted by Steve Antler : 8:57 AM |
Thursday, November 20, 2003
|
Where have we been? What have we been doing? |
Loyal EconoPundit readers will have noticed a recent dropoff in blogging. Here's the explanation.
First, I've been dealing with my factory's busiest weeks of the year. Lots of orders, everyone should have my problems.
Second (and more interesting I trust) I've been spending most breaks in the econometric wilderness figuring exactly how to simulate Howard Dean's fondest wish -- a complete rescinding of the Bush tax cut.
Here's the project as it stands so far. The Yale model includes two exogenous variables measuring federal personal income taxes and their progressivity. (Anyone who wants to look them up: they're TAUG and D1G.) A plot of D1G seems to show distinct downward moves reflecting the Kennedy and Reagan tax cuts, and a current massive plunge (probably made more dramatic because we're measuring in current, not constant dollars) reflecting the first round, current, and upcoming stages of the Bush tax cut.
A first and relatively simple approximation of life without the Bush tax cut would be to choose some average value for D1G (e.g. .07) for all years after 2002. A second and somewhat more complicated method would be to adjust D1G downward and TAUG upward (presumably to introduce more progressivity).
So that's it. We're going to try the simple stuff first, fool around with the more-complicated stuff, and report the results. So -- more to follow soon! (At this point I repeat my November 5th invitation to collaborate on this project.)
|
| Link posted by Steve Antler : 3:42 PM |
Wednesday, November 19, 2003
|
The "least European U.S. president since Andrew Jackson..." |
New York Post Online Edition: postopinion: "On one level, the European left's protests against all things American are understandable. We won, they lost. All their cherished rhetoric led only to the Gulag in the East and to bankrupt welfare states in the West. Now, the East, where terror reigned, aligns with America, further angering the West Europeans who lived on credit for the past 50 years, loafing in the shade of America's might.
President Bush is an especially appealing target for their scorn, since he's the least European U.S. president since Andrew Jackson. Bush speaks awkwardly, but acts powerfully. The European ideal is a politician who speaks beautifully and does nothing. " |
| Link posted by Steve Antler : 8:44 AM |
|
What was he thinking? |
From The Corner on National Review Online, this is so odd and inappropriate we have to ask whether Pinter was actually referencing good old fashioned blood libel:
Dear President Bush,
I'm sure you'll be having a nice little tea party with your fellow war criminal, Tony Blair. Please wash the cucumber sandwiches down with a glass of blood, with my compliments.
Harold Pinter
I repeat: what was he thinking? |
| Link posted by Steve Antler : 7:32 AM |
|
Non Hyperventelatare |
All of this is exactly what the markets are supposed to be doing:
The dollar fell to a record low against the euro on Tuesday as data showing sharply weaker capital flows prompted new fears over the funding of the US current account deficit.
Treasury figures showed net capital inflows into the US fell from about $50bn (E42bn) in August to $4.2bn in September, the lowest since the near-collapse and bail-out of the Long Term Capital Management hedge fund rattled markets in 1998.
The euro rose two cents to $1.1953 against the dollar, beating its previous lifetime high of $1.1933, set in May.
The data raised fears that the US may have difficulties funding its current account deficit, which ran at about $46bn a month in the first half of the year.
"The September data is the strongest evidence to date that the record US current account deficit has become too large to finance through the net foreign investment into US securities, and is thus contributing to the long-term decline in the US dollar," said Michael Woolfolk, senior currency strategist at the Bank of New York.
Fears of a trade war involving the US also put the dollar under pressure after the US Commerce Department said it was planning quota restrictions on Chinese clothing imports (see article this page). The news follows a dispute with Europe and Japan over steel tariffs that could escalate into a bigger trade war. |
| Link posted by Steve Antler : 7:18 AM |
Tuesday, November 18, 2003
|
Paradox... |
In Massachusetts, says Andrew Sullivan, "gay people have become equal citizens under the law..."
I think that judges who, on the strength of their legal expertise, feel qualified to re-order society are just as bad as economics bloggers who feel qualified to comment on the judiciary just because they know how to plot a few graphs and structure an econometric model.
Accordingly, this post will self-destruct in 90 seconds. Watch out. |
| Link posted by Steve Antler : 10:09 AM |
Monday, November 17, 2003
|
More Lost Paradise of the Good Jobs |
Check out Pat's Wall Street Journal vs. America:
The mega-issues on which the Bushes abandoned conservatism for the Hong Kong values of the Wall Street Journal are free-trade globalism, open-borders immigration, and Wilsonian interventionism.
(You just have to admire the way this new "Hong Kong values" expression allows him to vent his anti-Jewish feelings in an apparently acceptable way. How ironic -- we once called Chinese the "Jews of the Orient," no?)
Back to the main point -- this is all just waiting to be picked up as the new ideology of the Left, in EconoPundit's opinion at least. See McGurn on the topic as well. |
| Link posted by Steve Antler : 2:48 PM |
Saturday, November 15, 2003
|
Acts of political contrition... |
Glenn Reynolds now realizes he should be watching Chris Matthews' Hardball. The show, virulently anti-war in the past, is now really something, with daily reports from Iraq so pro-occupation and critical of the ABC/CBS/NBC/Al-Jazeera axis it makes Chris look like James Thurber's bear who let it alone -- you know, the one who fell flat on his face rather than leaning over too far backward?
 |
| Link posted by Steve Antler : 8:46 AM |
|
Question appears settled? |
| Found this on The Corner this morning, Drudge just found it as well, but his link is overloaded. |
| Link posted by Steve Antler : 8:39 AM |
|
From the desk of the hegemonistic right-wing ideologue... |
Nice pair of contrasting essays in The Nation. Sarah Anderson & John Cavanagh look forward to upcoming Nov. 17 FTAA talks, even though "Miami would not have been the activists' choice of meeting place [because it] lacks proximity to concentrations of the manufacturing-sector trade unionists who have been the backbone of the US anti-free trade movement." (Yes, once they're allowed to join us on the barricades who knows what will happen!) Doug Henwood, in contrast, effectively deconstructs anti-globalizationism and in traditional ("autonomist?") Marxist fashion calls, somewhat mysteriously, for an international labor takover of the anti-globo movement:
In our normal work lives, we're all linked--often invisibly-- with a vast network of people, from across the office or factory to the other side of the world. Standard globalization narratives, mainstream or critical, often efface this fact, seeing capital, rather than the billions who produce the goods and services that the world lives on, as the dominant creative force. That cooperative labor deserves to be acknowledged in itself, as the creative force that it is, but also as a source of great potential power. Empire uses a lyric from Ani DiFranco as one of its epigraphs: "Every tool is a weapon if you hold it right." They could have also used a line from Patti Smith: "We created it. Let's take it over."
What am I missing here? Wouldn't the implementation of, say, an international minimum wage involve so much hegemonistic central planning and regulation that the present situation would by contrast look like pure international democratic laissez-faire? |
| Link posted by Steve Antler : 6:58 AM |
|
Meet me at intermission to discuss economics, music, or life... |
| Blogging will be light thru Monday because I'm going to Philadelphia to hear the Berlioz Requiem. |
| Link posted by Steve Antler : 5:45 AM |
Friday, November 14, 2003
|
Me? Jealous? No Way! |
Via Insults Unpunished: The Economist celebrates but also partially destroys Paul Krugman.
UPDATE: Robert Musil has more on this, and he isn't jealous either.
UPDATE II: Check Musil for more links and updates. Look -- I'm not jealous, and Musil isn't jealous either. Neither of us is jealous of Krugman! (However, I sometimes feel a little pang of jealousy when I see this.)
UPDATE III: Look -- I am not jealous of Paul Krugman! And I've checked this out! Bruce isn't jealous. Don and Robert aren't either. So figure it out -- that leaves just one person who could possibly be jealous of Paul Krugman... |
| Link posted by Steve Antler : 11:19 AM |
|
Lost Paradise of the Good Jobs |
Reader JH in Palatine IL sends us to a Paul Craig Roberts Commentary articulating a virulent economic ideology adoptable by the Democratic Party's left wing (once "tax cuts for the rich" inevitably runs its course, as it must). What's waiting here is a lethal mix of Krugman economic half-truths, Buchannanite nativism, Gore populism, and (of course) traditional Democratic victimology:
It is possible that the loss of American jobs in tradable goods and services, combined with the importation of massive numbers of poor people, will leave the U.S. without the means to purchase its energy needs in world markets. When the dollar's value is undermined by budget and trade deficits, energy prices for Americans will explode.
A country that substitutes foreign labor for its own domestic labor via outsourcing, offshore production and Internet hiring, a country that transfers its wealth to foreigners to pay for imports, a country that fills up with welfare-dependent multitudes while it squanders $200 billion in Iraq, is a country headed for Third World status.
Some industry experts argue that the U.S. has lost so much of its core industrial capability that advanced manufacturing skills are disappearing in the U.S. The U.S. lacks mass production ability in critical areas of high-tech manufacturing.
The U.S. assembles parts made elsewhere. Knowledge- and capital-demanding activities, such as charge-coupled devices, industrial robotics, numerically controlled machine tools, laser diodes and carbon fibers, are passing out of U.S. hands.
A service economy has less to export than a manufacturing economy. What will the U.S. sell abroad to pay for its energy and manufacturing imports?
Read the whole thing and you'll understand why I say, "where to begin?"
There are important factual errors. Here are two for starters, and there may be more.
First, we export services as well as goods. During the 90's boom services outpaced goods exports during many periods.
Second, there's nothing new about the disappearance of manufacturing jobs. They've been vanishing from the US economy since 1948. Check out any recent Economic Report of the President. You'll see about 35% of all US jobs in manufacturing in 1948, less than half that currently.
The half- or semi-truths are probably more important. Are we really exporting jobs, or does advancing technology cause manufacturing jobs disappear on a worldwide basis? While illegal immigration distorts the US labor market, it also holds down the US cost of living. Even Victor Davis Hanson (Mexifornia) concedes the cost/benefit calculus needs to be carried out, so it is unclear whether we're net losers or gainers on this score.
But most grave among the half-truths is the following misunderstanding, which we can only assume has been encouraged by numerous Krugman editorials:
We currently pay for our imports by giving up ownership of our companies, real estate and corporate and government bonds. Once the U.S. has spent its wealth, we will have no way to pay for the energy and manufactured goods on which we have become import-dependent.
Hiding in this explanation of the current and capital accounts is the foolish notion our "wealth" is fixed -- something we can and will "run out of." In reality, we're augmenting this wealth continuously. There's no reason to believe it will ever "run out."
The most important of the half truths, though, is their subtext, the "Lost Paradise of the Goods Jobs" myth. Catering to victimology, feeding on the foolish idea economic structural change can and should be zero-cost to all, and tweaking nostalgic longings for the simplicity of the 1950's, this myth patiently waits its turn. Wrapped in the right set of economic half-truths, it is powerful enough bring us back to a new protectionism-generated Great Depression.
UPDATE: Reader SP from Darien IL sends an email entitled "What A Yutz":
"-- we will have no way to pay for the energy and manufactured goods on which we have become import-dependent. --"
Well, we could drill in ANWR and off our coasts for starters. Wouldn't that make us less import-dependent? And create jobs, union goodpaying jobs. And steel jobs to make the pipelines.
What a yutz.
I really appreciate your blog. I'm learning a lot.
What a relief. At first I thought I was the yutz. |
| Link posted by Steve Antler : 8:46 AM |
|
Children of the (dead) rich and famous... |
Lots of discussion and good links on the economics of inheritance:
Interestingly, studies don't show that large inheritances reduce the work ethic to the extent one would imagine. Children of the wealthy mostly work and lead productive lives, perhaps out of a sense of noblesse oblige or because our jobs define us to a greater extent than our wealth today. Even Paris Hilton has a television show forthcoming on Fox. Studies of lottery winners have shown that the bulk of them continue working even when they don't have to for economic reasons.
Too little attention seems paid here to the linkup between intergenerational wealth and intergenerational knowledge transmission. In the days of the family business or family farm, even though the heir would sometimes go away to college, the "wealth" passed from one generation to the next was not only dollars but knowledge of how the dollars were generated.
Arguably, the inheritance laws of the New Deal killed this means of transmitting knowledge. This might explain why the economic niche once filled by the American small family businesses is now filled by those uniform, same-from-one-strip-mall-to-the-next franchise operations.
UPDATE: Bruce Bartlett sends this addendum:
Don't know if you saw the cover story in Business Week recently, which showed that S&P 500 companies with a large measure of family control tended to outperform the index. Your point may be one reason. Having a longer time horizon would be another. I touched on it in this paper [which] you may not have seen.
|
| Link posted by Steve Antler : 7:33 AM |
|
The audience participaton is the best part... |
Charles Krauthammer reviews the new Russel Crowe seagoing naval epic Master and Commander:
Even better is the fact that the hero in his little British frigate is up against a larger, more powerful French warship. That allows U.S. audiences the particular satisfaction of seeing Anglo-Saxon cannonballs puncturing the Tricolor. My favorite part was Aubrey rallying the troops with a Henry V, St. Crispin's Day speech featuring: "Do you want your children growing up and singing the Marseillaise?" It was met by a chorus of deafening "No's." Maybe they should have put that in the trailer too. |
| Link posted by Steve Antler : 5:43 AM |
|
Nor do I play one on TV... |
I'm not a specialist in the economics of health care. I will therefore avoid comment on Krugman's current editorial other than to mention the following two points on which I can claim some expertise:
(1) The Kaiser Family Foundation may have done lots of good work, but they are hardly an objective source for evaluating the likely effects of alternate health care policies. Here's an example of the bias that runs thru their work:
millions of Americans lack health insurance, either because their employer does not offer it or they cannot afford to pay for it.
That's it, the explanation has two parts, no more. No worker or in the United States, according to the Kaiser Family Foundation, ever (wisely or not) voluntarily declined health insurance.
(2) You don't practice "bait and switch" with a "Trojan horse." This is the dumbest mixed metaphor I've seen all month.
UPDATE: Oh yes, and there's the old "mine doesn't smell" trick:
You might say it's a good idea to face up to Medicare's problems early. But the legislation would allow only two responses: either an increase in the payroll tax (a regressive tax that bears more heavily on middle-class families than on the wealthy) or benefit cuts. Other possibilities, like increases in other taxes or other spending cuts, would be ruled out. In short, this is an attempt to pre-empt discussion of how we want to deal with Medicare's future and impose a solution reflecting a particular ideology. (Emphasis added)
What are those "other possibilities" being "ruled out" by those bad right-wing ideologue Republicans? Could he be referring to the completely ideology-free all purpose Democratic solution known as "raising taxes on the rich?"
One of the minor things we remember Joan Robinson for is her likening ideology to bad breath. Your colleagues notice it immediately -- but you simply can't smell it. |
| Link posted by Steve Antler : 5:31 AM |
Thursday, November 13, 2003
|
Latest News from MEMRI |
From Al-Qal'a, an Islamist Internet forum...interview with a person who introduced himself as Abu Salma Al-Hijazi, one of the Al-Qa'ida commanders closest to Osama bin Laden...The interview was conducted in Iraq, south of Faluja. The article notes that Al-Hijazi was surrounded by five masked men carrying missiles as well as personal weapons:
In regard to rumors about a large-scale attack against the U.S. during the month of Ramadan, Al-Hijazi said that "a huge and very courageous strike" will take place and that the number of infidels expected to be killed in this attack, according to primary estimates, exceeds 100,000. He added that he "anticipates, but will not swear, that the attack will happen during Ramadan."
UPDATE: Now Drudge picks it up and links to this story. (But remember EconoPundit found it first.)
UPDATE II: For Arabic readers, here's the original document. |
| Link posted by Steve Antler : 1:54 PM |
Wednesday, November 12, 2003
|
Outrageous! |
"The fact that they committed these heinous acts in Islam's holy month...should leave no one in any doubt that these people are followers of the devil not of God or any religion." (Emphasis added)
I demand that this religious fanatic be forced to resign! Wait, what's that you say? It's not a US General talking? It's an Arab Physician in Saudi Arabia? Okay, sorry.
|
| Link posted by Steve Antler : 3:10 PM |
|
The Seductive Lure of Transnational Progressivism |
I woke up this morning wondering whether in this new age of transnational progressivism there's really room left for anything so old-fashioned as an excusionary "Egyptian" state. Haven't we really moved beyond the narrow, backward, nationalism that generates this sort of thing? I mean really, why should we be asked to accept such a thing as an "Egyptian" state?
My wife gently suggested I get myself some coffee to clear my head. There's no such thing as a nation without something or other to make it unique. If it's not an "Egyptian" state, she said, then it will be a Catholic one like the Vatican, or even, yes, a Jewish one like Israel.
The coffee helped. I started to see what she was talking about. Also, reading this Clifford D. May article in National Review Online cleared a few things up:
The U.S. has supported one principle -- not blindly but with clear vision: The right of Israel to exist. This is not a right uniquely granted to Israel. All other states in the world enjoy it and the U.S. has gone to war to defend this principle, most recently to guarantee Kuwait the right to exist after Saddam Hussein attempted to wipe it off the map. America has resorted to force of arms to protect the existence of other communities -- mostly Muslim communities, as it happens -- in such places as Bosnia, Kosovo, and Kurdistan.
American leaders of both parties for half a century have agreed that Israel's right to exist is not a negotiating position, is not an issue to be haggled over at anything misleading called a "peace conference." |
| Link posted by Steve Antler : 11:52 AM |
|
Steel? |
Here's Robert Samuelson, and the IIE document he cites.
[T]he widespread impression that steelmaking in America is vanishing is both true and untrue. It's true (as nightly news shows constantly remind us) that many Midwestern steel communities have suffered grievously from the shutdowns of vast mills...But it's untrue that the United States is leaving the steel business. In 1970 American mills shipped 91 million tons of steel, and imports supplied 14 percent of U.S. demand. Since 1996 U.S. mills have shipped an average of 103 million tons annually and imports have averaged 21 percent of demand. Bigger, more labor-intensive mills have gradually closed, to be replaced by smaller, more efficient mini-mills.
[Also], Bush's tariffs have "worked" in that the industry has improved its competitiveness. The president urged the industry to "restructure" -- to consolidate, shut expensive plants and lower costs -- and this has occurred. Plants of bankrupt steel companies have been purchased at low prices by healthier firms, including the new International Steel Group (ISG)... As steelmaking grows more capital-intensive...America's steel prospects improve. Higher U.S. labor costs are partly offset by the transportation costs of foreign steel. The U.S. industry says it needs 18 more months of tariff protection to complete "restructuring." But if the United States flouts the WTO, it can't expect other countries to respond to American complaints that they're flouting WTO rules. A president who believes his own rhetoric about the recovery and healthy world trade won't pick a fight over steel. |
| Link posted by Steve Antler : 9:22 AM |
|
Spending |
From the OMB Budget of the United States Government, FY 2004, MSR, Spending:
Total outlays for 2003 are now estimated to be $2,212 billion, $71 billion above the February Budget estimate. The increase is the result of enactment of legislation, including the Emergency Wartime Supplemental Act and final 2003 appropriations, offset in part by revisions in estimating assumptions.
Summaries and additional spin in Washington Post. When you read the latter, please don't wet your pants by confusing "discretionary spending" with total outlays.
For a bracing contrast to my laid-back attitude, see what Bruce Bartlett has to say:
This can't go on and eventually will result in a voter backlash that will force Republicans into adopting some sort of deficit reduction package...If President Bush wishes to avoid being backed into a corner, he must drop the prescription drug plan, veto spending bills, and start rebuilding his credibility as a fiscal conservative. Otherwise, he could find himself blindsided by Howard Dean on this issue. |
| Link posted by Steve Antler : 8:10 AM |
|
"I shouldn't have said that " |
Today you must check out Don "EconoGonzo" Luskin's Conspiracy to Keep You Poor and Stupid:
No, I didn't say that. But it doesn't matter. In any case, the, the point is, I mean, I'm not allowed. I mean, I couldn't have said that because...I'm not allowed.
 |
| Link posted by Steve Antler : 7:35 AM |
Tuesday, November 11, 2003
|
Cronyism in Iraq -- More Evidence (Not) |
Time incredibly spins these as "cronyism":
"The [non-US, Iraqi] mobile contracts were all politically divided," says an Iraqi emigre who returned as a consultant for a telecom firm. "It's the same as Saddam's time. It's about who you know."
So you just have to ask why did this person emmigrated during Saddam's time and return only now? Can it be he's no longer worried about, oh, maybe someone cutting off his tongue?
The story continues:
Now another deal is coming under scrutiny. A senior Pentagon official told Time that the U.S. is reviewing its decision to grant the mobile license for Baghdad and central Iraq to a consortium led by Egyptian telecom giant Orascom because of its ties to Nadhmi Auchi, an Iraqi-born billionaire who built his fortune partly through arms deals with the Iraqi regime in the 1980s... A senior U.S. official says Orascom's ties to Auchi are being investigated. As a result, no mobile licenses have yet been issued.
Is the "cronyism" the Orascom deal itself, or that it was caught and aborted? I suppose I'm missing something.
Wait -- here's a clue! The article starts with these words: "Some locals may be reaping benefits from U.S. connections." (Emphasis added) Yes, that's it. The corruption spreads from Halliburton to the local Iraqis. Any benefit to anyone is corrupt because (presumably) the market system itself is so corrupt. Okay, I've got it now. |
| Link posted by Steve Antler : 10:39 AM |
|
A Neocon Historical Vision |
The American Left split in the late 1970's. Partly it was influenced by European trends, and partly it was simply bought off by petrodollars.
In one direction, the quieter of the two, those loyal to the Marxist historical vision sputteringly withdrew to offices and private lives. In the other direction -- in classrooms and New York's Salons of the Monthly Review, a new kind of American Leftism took shape, one which celebrated Third World Liberation as a substitute for modernization.
The Marxist historical model, based on the Communist Manifesto's shaping of history as Ancient to Medieval to Capitalist to Communist was discarded by this Newest Left as having missed the modern imperialism that centered OPEC's political imagination. Just as a few years earlier the Black Panthers had been romanticized as the vanguard of the coming revolution, so now the third world dictator moved into that exalted role. Palestinian-weaved scarves became the new fashion of this newest, ahistorical American Left, even as Islamic Economics came to rival Marxism as the trendiest area of study.
Many (well, at least a few) modern American intellectuals' thinking traces back to the less-loud, non-Monthly Review, more-historical side of this late 70's split. It is the romance of the Marxist Historical Model which explains why they resonate so strongly to the ideal of Democratic Iraq.
The basic European/American history of the Communist Manifesto rephrased a basic conceit of Western Civilization, namely, history as moral progress. Marx's version was among the few that truly defined what we now call "modernity." For Marx we know we've made progress not because we are more "Christian" or "more organized" or even more literate, but rather because owing to science, machines, and historic redefinitions of property rights, we are more wealthy. Far from being hateful to Marx, the bourgeoise was (in its appropriate era) the embodiment of progress itself.
Iraq's appeal is its modernity. It is already halfway there. Educated, industrialized, even (in a kinky way) politically sophisticated, Iraq seems ripe for the picking for anyone caught up in the romance of Marxist historical processes.
So postmodernism,we think, has it all wrong. History is not written by the victors, but intellectual history is written by the intellectual victors. Brendan Miniter in the WSJ gives us today's evidence the Neocon/Marxist vision may prove correct in Iraq. As a hopeful ideologue I'm happy for today's bit of evidence, which suggests we are winning. Good intelligence is leading to to specific arrests of specific individuals responsible for specific attacks on US troops and Iraqi civilians:
Coalition forces are routinely catching the men who are planning and carrying out attacks on soldiers and civilian infrastructure:
#&149; The 101st Airborne nabbed seven individuals suspected of perpetrating attacks on American troops on Nov. 7 by conducting a series of nighttime cordon and "knocks" (entering homes). The suspects also allegedly harbored weapons caches.
#&149; The 82nd Airborne detained five anticoalition fighters--one a former Republican Guard lieutenant colonel--on Nov. 6. The five men are regime loyalists and were sought out by U.S. forces because they're believed to have planned and carried out attacks.
#&149; On Nov. 6 coalition forces were monitoring the site of a seized weapons cache when they spotted two men looking for the rocket-propelled grenade launcher and other munitions. When the men spotted the soldiers, they ran. They were ordered to halt, but one--who was carrying an AK-47--opened fire instead. The soldiers shot back, killing him and catching three others.
#&149; The 12th Infantry Regiment was attacked with 10 rockets on Nov. 7. Soldiers spotted where the rockets were coming from and returned fire. A patrol simultaneously closed in on the enemy's position. The attackers attempted to flee as the soldiers approached, but all three were shot down and killed as they ran.
#&149; The 82nd Airborne carried out the first phase of Operation All American Tiger on Nov. 6, detaining three members of an anticoalition cell in Husaybah and several others. The men caught are suspected not only of carrying out attacks but also of providing safe houses, weapons, transportation and funding to militants.
#&149; On Nov. 7 one division carried out 168 patrols--eight of them jointly with Iraqi border guards and policemen--as well as two raids and three cordon searches. The operations yielded 39 detainees, including several individuals known to be involved in attacks on coalition forces.
#&149; A man believed to be a former bodyguard of Saddam Hussein was captured in an early-morning raid on Nov. 8 south of Kirkuk. Coalition forces went after him after learning of his possible involvement in attacks.
#&149; On Nov. 7, acting on the tip from a local sheik, members of the 504th Parachute Infantry Regiment seized a large weapons cache 20 miles northeast of Fallujah. The following day they returned to the same site and found another large stockpile of weaponry, including 194 152mm artillery shells, 84 antitank missiles, 45 high-explosive and fragmentation rockets, 34 155mm artillery shells, four 57mm rounds, five 115mm rounds and one 125mm antitank round as well as thousands of rounds of small arms ammunition.
The death of an American soldier is front page news, while the death of his attacker is buried deep inside the paper, if reported at all... |
| Link posted by Steve Antler : 6:49 AM |
Monday, November 10, 2003
|
Which is the target and which the staging area? |
I remember a prewar estimate of $17/bbl as the politically necessary price to maintain the Saudi royal family. (Anything less doesn't cover all ongoing costs of purchased loyalty.) Total Saudi oil revenue depends not simply on price per barrel, but also on volume shipped.
World markets now fear al Qaeda is using Iraq as training for and perhaps staging of for major assaults on Saudi oil facilities:
Suspected al Qaeda suicide bombers, trying to destabilize the pro-Western ruling Saudi royal family, killed at least 17 people in the Saudi capital Riyadh on Sunday, underscoring worries about possible attacks against oil production or export facilities.
"The psychological impact of these terrorist attacks is that what began in Iraq is now happening in Saudi Arabia, and who knows where it will happen next? In the UAE, Kuwait?" said Katsunori Watanabe, director of research at Japan's Nihon Unicom Corp.
"So far they have only been able to target very soft targets but in terms of nightmare scenarios for the oil market it couldn't get any worse than an attack on Saudi oil facilities," said a London oil dealer.
|
| Link posted by Steve Antler : 11:27 AM |
|
The Sunday NYT Editorial |
Here's an excerpt and a link to the editorial that has lots of econobloggers talking:
The Bank of England last week became the first major central bank in three years to raise interest rates, and Mr. Greenspan will have to do the same soon, unless he wants to begin flirting with inflation. You can expect the Fed to prepare markets for the turnabout when it next considers rates in December, and then to take action in the spring. Mr. Greenspan cannot allow the political calendar to make him trigger-shy...There is always a concern that a rise in interest rates will derail a recovery, or spook the stock market. But in this case, if a modest increase from such extraordinarily low rates is done carefully and deftly explained, Americans will understand that it is a vote of confidence in this recovery.
Here's Fairmodel's most recent inflation forecast:
In case there are any reliability questions, here's a short extract from a memo discussing the issue:
The mean absolute error for the inflation forecasts is only 0.59 percentage points, and the largest error in absolute value for any of the forecasts is only 1.8 percentage points. The inflation forecasts are thus overall quite good. Between forecasts 39 and 66 (January 31, 1993, through November 5, 1999) the error was never larger than .6 percentage points in absolute value. For forecasts [between January 2000 and October 2002] the model overpredicted inflation [from .9 to 1.6] percentage points...
In English: this is about as good as it gets.
Inflation, then, will peak at about 3% in the last quarter of 2004, and will moderately decline to 2.6% by the end of 2007.
Interest rate predictions are similarly moderate:
An awesome technical aspect of Fairmodel is its "interest rate reaction function," basically a small, reasonable simulation of Alan Greenspan himself. Those wishing to test their own, more-brilliant policies can put this interest rate reaction function on "hold," plug in their own policies, and find out how much damage they've done.
The forecasting record of the interest rate reaction function seems excellent, however, so we're going to leave it alone for now. In and of itself, this portion of Ray Fair's model is the best response to the NYT editorial. It seems to be saying "don't worry -- the grownups are looking after things."
UPDATE: We've already linked to Bartlett on this. Also see Luskin and Musil. |
| Link posted by Steve Antler : 7:51 AM |
Sunday, November 09, 2003
|
A new slogan... |
Kaus; Robert Reich; Drezner; Wall Street Journal; these are some of the blogger and non-blogger names linking to a new story that is either a laughable economic urban legend, or most important of the year.
Employment in manufacturing, goes the story, is falling worldwide. Manufacturing jobs are not disappearing "here" only to re-appear "elsewhere." Rather, they are vanishing everywhere.
Lags in technology transfer and simple "stage" theories of economic development make it easy to imagine models explaining the phenomenon. We can visualize a kind of neo-Arthur Lewis "early third-world industrializing process" which first gets out of the pre-industrial stage by taking maximum advantage of international wage differentials and then, only second, improves productivity by adopting the always rapidly-improving first-world information technology. This process would have a first, or "job transfer" stage in which the US and Europe apparently lose manufacturing jobs to worldwide newly-industrialized trade-oriented economies. But in its second or "technology transfer" stage, the newly-industrialized economies would appear to lose manufacturing jobs faster than their counterparts in the older-industrialized world the more their initial industrialization ignored techology and based itself on wage differentials alone.
So, all this "oh-I'm-so-smart-I-invented-a-model!" theorizing aside, is it true? Are manufacturing jobs disappearing everywhere? The reason I worry this is merely an urban legend is everyone -- from this Robert Reich NPR commentary, to this WSJ article -- cites a report or studies (e.g. from Glenn Hubbard) that can't be found (or that can't be found on the internet at least). This, via Drezner, is the closest I can come to the original document, purportedly an author's summary.
The political implications of this story can't be ignored. "Manufacturing job loss" is all that remains of the Democratic worst-economy-since-Herbert-Hoover image. If credible statistics show global manufacturing job loss, the new slogan will be: -- "It's not the economy, stupid!"
UPDATE: Bruce Bartlett thinks the search for a new slogan has ended. The New York Times, he suggests, has issued new marching orders:
It's extremely rare for the New York Times to editorialize about the Fed, and rarer still for it to devote the lead editorial position in its heavily-read Sunday edition to this topic. So the Times is clearly sending an important message. That message, I believe, is to the Democratic Party and it is that inflation and rising interest rates need to replace jobs and growth as its principal attack on Republicans. The forthcoming memoir by former Clinton Treasury Secretary Bob Rubin will be heavily hyped to reinforce this agenda change, necessitated by excellent recent data on growth and jobs...The goal is to prepare the ground for Democrats to adopt a Ross Perot-like obsession with fiscal responsibility that could undercut President Bush's support among swing voters. It will also serve to soften the left-wing image of Howard Dean, the likely Democratic presidential nominee, by giving him a conservative issue to run on.
|
| Link posted by Steve Antler : 8:46 AM |
Saturday, November 08, 2003
|
Obscene calculation... |
Reuters reports the Coalition Provisional Authority (CPA) has a "mass grave action plan," whose director has done some comparative arithmetic: in Bosnia, after eight years there have been recovered 8,000 bodes out of a total of 30,000 missing and assumed murdered; in Iraq, since May over 2,000 bodies have been recovered from mass graves. These figures, as well as reports of 260 mass graves and 40 so far confirmed, allow a conservative estimate of 300,000 for all those murdered by the Baath regime since 1983.
UPDATE: Sebastien at SadlyNo sends us to previous accounts of the 300,000 number, using the expression "cynical exploitation." What did I miss? Is somebody selling T-shirts or something? |
| Link posted by Steve Antler : 11:36 AM |
|
An Agenda for the NeoEcons |
The stronger the recovery, the more important it is for neoconservative economists ("NeoEcons" -- unless, of course, the term has already been invented elsewhere for other purposes) to formulate an agenda. Here are a few ideas, in no particular order.
--- There's the matter of definition. What is a NeoEcon? How does it differ from a monetarist, Keynesian, new-business cyclist, or supply-sider? (Kaus and others not initiated in the secret rites of economists think anything unequal to but not on the left of Greenspan is a supply-sider; they're not correct, are they?)
-- Also, we have to consider a certain amount of re-living the past. True, you can't, go back in time, but you can sure as heck simulate the process. Someone has to run a simulation of the US economy in an alternate universe without the Bush tax cut. In that alternate universe, I presume, we're still in the recession. For how long? How many jobs have been lost since the start of the recession? How does it compare to Herbert Hoover's economy (or at least to th | |