EconoPundit wants to know...

If John Kerry has, as he says, spent his whole life fighting against powerful interests like influence peddlers, polluters, HMOs, drug companies, big oil and special interests, why do we still have so many problems?

Link posted by Steve Antler : 8:33 AM

Mutliculturalism vs. Melting pot

Francis Fukuyama in OpinionJournal: But while the French government is publicly supportive of Arab causes, it and other European governments are privately worried about future trends. Sept. 11 revealed that assimilation is working very poorly in much of Europe. Terrorist ringleaders like Mohamed Atta were radicalized not in Saudi Arabia or Afghanistan, but in Western Europe. In a revealing incident that took place shortly after the attack on the World Trade Center, a crowd of mostly second- and third-generation French North Africans booed the Marseillaise during a soccer match between the French and Algerian national teams and chanted Osama bin Laden's name. Third-generation British Muslims have traveled to the West Bank to martyr themselves in suicide operations. The French...have always accepted the principle of assimilation. French citizenship, like ours, is not based on ethnicity but is universal. The republican tradition recognizes only the rights of individuals, not groups, and its commitment to laicite or secularism remains strong. French schoolteachers in particular are heirs to an anticlerical tradition stemming from the French Revolution, and have looked askance at expressions of religiosity in public schools. The new French policy on headscarves should thus be seen as a type of forced assimilation. Previously it had been up to individual schools and teachers whether to ban headscarves or not; the new policy takes this burden off their shoulders by making it a national policy. Whether the ban will work is a delicate tactical issue. It may create a counterproductive backlash, driving observant Muslims out of the public school system and into their own Islamic schools. Yet the ultimate goal of the policy is not to crush religious freedom but to promote assimilation, one that American opponents of multiculturalism should appreciate. ...Americans, looking at Europe, should be glad that they have made their country an assimilation powerhouse. But as the authors of a new volume on assimilation edited by Tamar Jacoby indicate, this is not something that we can take for granted. During the big immigration wave of the late 19th and early 20th centuries, the largely Protestant native-born elites deliberately sought to use the public school system to assimilate the newcomers from southern and eastern Europe to their cultural values. The 1960s and '70s gave rise to multiculturalism, affirmative action and bilingualism, which sought to reverse course on assimilation. The '90s saw a backlash against this kind of divisive identity politics with the passage of Proposition 227 in California, which wiped out public school bilingual programs at a stroke. This was our version of the headscarf ban, one that worked well because it was supported by a great many Hispanic parents themselves who felt their children were being held back in a Spanish language ghetto. It is in this context that we should evaluate President Bush's recent proposal to grant illegal aliens work permits. Many Americans dislike the policy because it rewards breaking the law. This is all true; we should indeed use our newly invigorated controls over foreign nationals to channel future immigrants into strictly legal channels. But since we are not about to expel the nearly seven million people potentially eligible for this program, we need to consider what policies would lead to their most rapid integration into mainstream American society. For the vast majority of illegal aliens, the law they broke on entering the country is likely to be the only important one they will ever violate, and the sooner they can normalize their status, the faster their children are likely to participate fully in American life.

Link posted by Steve Antler : 8:09 AM

But I don't think there is one...

If there were a housing bubble stuff like this might be happening now: But investors lost no time shifting gears after Wednesday's Fed meeting and they are likely to keep adjusting positions, strategists said. The most interest-rate driven stocks, like housing companies, were getting dumped, while the heavy industry sector held up.

Link posted by Steve Antler : 8:02 AM

Policy trade off...

Here's an interesting incursion of monetary policy into the territory usually identified as "political economy." Which do you prefer -- relatively ineffective monetary policy with openly stated goals (e.g. controlling inflation) or effective monetary policy with non-transparent, unannounced goals? The latter might seem preferable, until it is pointed out its lack of transparency undermines democracy and democratic values. Maybe the former, even though less effective as economic policy, is to be preferred because it reinforces the democratic system as a whole? (I think we need a new EconoPundit theorem about where the Enron concerns really stop.)

Link posted by Steve Antler : 7:57 AM

Friday, January 30, 2004

You heard me right: $3

From Andrew Higgins in Today's WSJ (can't guarantee the link -- article emailed to me from a friend's paid edition): Logitech's Suzhou parts warehouse is a microcosm of the global economy, and helps explain why China reinforces America's role as ringmaster. Piled to the ceiling on blue metal shelves are boxes marked with the logos of foreign companies, from big U.S. multinationals to a small Belgian billiard company that makes trackballs. One of Logitech's big sellers is a wireless mouse called Wanda, which sells to American consumers for around $40. Of this, Logitech takes about $8, while distributors and retailers take $15. A further $14 goes to suppliers that provide Wanda's parts: A Motorola Inc. plant in Malaysia makes the mouse's chips, and America's Agilent Technologies Inc. supplies the optical sensor. Even the solder comes from a U.S. company, Cookson Electronics, which has a factory in China's Yunnan province next to Vietnam. Marketing is led from Fremont, Calif., where a staff of 450 earns far more than 4,000 Chinese employed in Suzhou. China's take from each mouse comes to a meager $3, which covers wages, power, transport and other overhead costs. (Just by the way, I purchased a hard copy of WSJ to get this article two hours before a friend mailed it to me.)

Link posted by Steve Antler : 12:52 PM

Care and Feeding of a Macroeconomic Model (installment #2)

Now comes a visit to the Hall of Exogenous Variables. I picture it as a cold, drafty place with about 130 cubbies. In each is a slow-moving, dour little creature which looks a bit like the little centipede-endogenous variables, but with a serious, even boring sort of face which looks a little (I'm sorry I can't help this) like John Kerry. These guys' values are fixed and given by things like consumers' preferences or the laws passed by Congress. Each three months, when new quarterly data comes in, each one of these gets a new segment attached to its dour little body. So rougnly 330 model-determined (endogenous) and societally-determined (exogenous) variables have now been updated. In the next step, all these data go thru their paces and perform for us! TO BE CONTINUED -- SCROLL UP TO FIND MORE

Link posted by Steve Antler : 11:32 AM

Hamilton's "Report on Manufactures" Revisited

Pat Buchannan on Chris Matthews' Hardball last night: ...there's one way to do it. And, look, how did Alexander Hamilton turn a completely rural country utterly dependent on everything from Europe into the greatest industrial power the world had ever seen in 100 years? You have got to raise the price of cheap-made products abroad, cut your prices at home. You do it with something called a tariff. You mention the word tariff and everybody in this city runs. It is only a matter of time before the entire Democratic Party starts sounding like this.

Link posted by Steve Antler : 11:11 AM

Now it gets close and personal...

My factory's heating bills went through the roof when all this was going on. Now I'm about as mad as heck about Enron as is Paul Krugman -- madder, in fact. (Heck, they paid him, but it cost me!) But as you feel (hopefully massive amounts of) empathy for me, the poor small manufacturer, ask yourself this question -- are we reading this owing to failure or proper working of regulation?

Link posted by Steve Antler : 9:07 AM

Thursday, January 29, 2004

Spoofing+Phishing=Disaster?

Charlie Martin sends more on our Monday discovery of the www.FDIC.gov scam web site. InfoWorld says the Internet Explorer hole that made the scam possible is bad news indeed: A security hole in Microsoft Corp.'s Internet Explorer could prove devastating. Following the exposure of a vulnerability in Windows XP earlier this week, http-equiv of Malware has revealed that Explorer 6 users (and possibly users of earlier versions) could be fooled into downloading what look like safe files but are in fact whatever the author wishes them to be -- including executables. It is therefore only a matter of imagination in getting people to freely download what could be an extremely dangerous worm -- like, for instance, the Doom worm currently wreaking havoc across the globe. However what is more worrying is that this hole could easily be combined with another Explorer spoofing problem discovered in December. The previous spoofing problem allowed Explorer users to think they were visiting one site when in fact they were visiting somewhere entirely different. The implications are not only troublesome, but Microsoft's failure to include a fix for the problem in its January patches has led many to believe it cannot be prevented. If the same is true for this spoofing issue, then it will only be a matter of time before someone who thinks they are visiting one website and downloading one file will in fact be visiting somewhere entirely different and downloading whatever that site's owner decides. More here. This doesn't look good.

Link posted by Steve Antler : 2:10 PM

Lots of this going around I guess...

This email just came through from "VISA SERVICE" -- Dear Sir/Madam, We were informed that your credit card is used by another person or stolen. It could happen if you have been shopping on-line, and someone got your "Billing information" including your credit card number. To avoid and prevent any further fraud and billing mistakes and to refund your credit card, it is strongly recommended to proceed filling in the secure form on our site and applying for our Zero Liability program. Program is free and it will help us to confirm the fact of fraud and investigate this accident as soon as possible. Sincerely yours, Visa Support Assistant, Alwin Desagun. I kinda think this isn't kosher because the grammar isn't quite right and VISA doesn't operate like this so I deleted it rather than clicking the "continue" button. Maybe I was wrong? Nah...

Link posted by Steve Antler : 1:54 PM

Care and Feeding of a Macroeconomic Model (installment #1)

As this is written on January 29, 2004, Ray Fair and whatever help he's able to find are busy updating his US and MC model databases. You might imagine the data as a collection of little zoo creatures, each happily living in its own cozy cage. What do they look like? Each endogenous variable is like a cute little centpedes with roughly two hundred segments -- four for each year going all the way back to the 1950's. So as Ray or his research assistant visits each cage, the centipede eagerly rears up on its legs and just spits off the top segment -- which, to tell the truth, had a suspiciously different color and shape than all the other segments anyway. As the old segment is discarded, a handsome new, perfectly-colored and shaped segment is quickly screwed on to replace it. Okay, what's going on here? "Hypothetical" data that was forecasted or estimated last quarter is now being replaced by the new quarterly data that's come in since the model was last run. There are roughly 200 variables that require this sort of tending. And while the model's "constraints" and "definitions" do some of this work automatically -- imagine some of the little critters tending to each other under programmed instruction -- the basic principle remains: to carry out a "quarterly run" of a big econometric model, the first step is to update the data. TO BE CONTINUED -- SCROLL UP TO FIND MORE

Link posted by Steve Antler : 1:33 PM

The Oil Bribe List -- From Memri.Org

As you read the following, please remember at the world price of, say, $27/bbl, each 1 million barrels is worth, uh, about $27 million? Is that right? Anyway, this is "a partial list and description of individuals and organizations that MEMRI has been able to identify": Canada: Arthur Millholland, president and CEO of the Calgary-based Oilexco company, received 1 million barrels of oil. United States: Samir Vincent received 10.5 million barrels. In 2000, Vincent, an Iraqi-born American citizen who has lived in the U.S. since 1958, organized a delegation of Iraqi religious leaders to visit the U.S. and meet with former president Jimmy Carter. Shaker Al-Khafaji, the pro-Saddam chairman of the 17th conference of Iraqi expatriates, received 1 million barrels. Great Britain: George Galloway received 1 million barrels. Fawwaz Zreiqat received 1 million barrels. Zreiqat also appears in the Jordanian section as having received 6 million barrels. The Mujahideen Khalq(3) in Britain received 1 million barrels. France: The French-Arab Friendship Association received 15.1 million barrels. Former French Interior Minister Charles Pasqua received 12 million barrels.(4) Patrick Maugein of the Trafigura company received 25 million barrels. Michel Grimard, founder of the French-Iraqi Export Club, received 17.1 million barrels. Switzerland: Glenco Re, the largest commodity trader in Switzerland, received 12 million barrels. Taurus, which has been associated with Iraq for 20 years and was the first company to renew its business with Iraq after the fall of Saddam, received 1 million barrels. Petrogas, which is listed under three sub-companies - Petrogas Services, Petrogas Distribution, and Petrogas Resources - and is associated with the Russian company Rosneftegazetroy, received 1 million barrels. Alcon, listed in Lichtenstein and associated with larger oil companies, received 1 million barrels. Finar Holdings, which is listed in Lugano, Switzerland, and is under liquidation, received 1 million barrels. Italy: The Italian Petrol Union received 1 million barrels. West Petrol, an Italian company that trades crude oil and oil products, received 1 million barrels. Roberto Formigoni, possibly the president of Lombardia, received 1 million barrels. Salvatore Nicotra, a former NATO pilot who became an oil merchant, received 1 million barrels. Spain: Basem Qaqish, a member of the Spanish Committee for the Defense of the Arab Cause, received 1 million barrels. Ali Ballout, a pro-Saddam Lebanese journalist, received 1 million barrels. Javier Robert received 1 million barrels. Yugoslavia: Four Yugoslav political parties received vouchers: the Yugoslav Left party received 9.5 million barrels. The Socialist Party received 1 million barrels. The Italian Party received 1 million barrels. Another party, whose name in exact transliteration is "kokstuntsha" - possibly Kostunica's party - received 1 million barrels. Other political parties: The Romanian Labor Party received 5.5 million barrels. The Party of the Hungarian Interest received 4.7 million barrels. The Bulgarian Socialist Party received 12 million barrels. The Slovakian Communist Party received 1 million barrels. Austria: The Arab-Austrian Society received 1 million barrels. Brazil: The 8th of October Movement, a Brazilian Communist group, received 4.5 million barrels. Fuwad Sirhan received 10 million barrels. Egypt: Khaled Gamal Abd Al-Nasser, son of the late Egyptian president, received 16.6 million barrels. 'Imad Al-Galda, a businessman and a member of the Egyptian parliament from President Mubarak's National Democratic Party, received 14 million barrels. Abd Al-Azim Mannaf,(5) editor of the Sout Al-Arab newspaper, received 6 million barrels. Muhammad Hilmi, editor of the Egyptian paper Sahwat Misr,(6) received an undisclosed number of barrels. The United Arab Company received 6 million barrels. The Nile and Euphrates Company received 3 million barrels. The Al-Multaqa Foundation for Press and Publication received 1 million barrels.(7) Libya: Prime Minister Shukri Ghanem received 1 million barrels. Sub-Saharan Africa: Chad's foreign minister received 1 million barrels.(8) Four South Africans are listed: Tokyo Saxville received 4 million barrels. Montega received 4 million barrels. Both are associated with the African National Party. Palestinians: The Palestinian Liberation Organization (PLO) received 4 million barrels. The PLO Political Bureau received 5 million barrels. Abu Al-Abbas received 11.5 million barrels. Abdallah Al-Horani received 8 million barrels. The PFLP received 5 million barrels. Wafa Tawfiq Al-Sayegh received 4 million barrels. Oman: The Al-Shanfari group received 5 million barrels. Syria: Farras Mustafa Tlass, the son of Syrian Defense Minister Mustafa Tlass, received 6 million barrels. 'Audh Amourah received 18 million barrels. Ghassan Zakariya received 6 million barrels. Anwar Al-Aqqad received 2 million barrels. Hamida Na'Na', the owner of the Al-Wafaq Al-Arabi periodical, received 1 million barrels. Lebanon: The son of Lebanese President Emil Lahoud received 4.5 million barrels. Former MP Najjah Wakim received 3 million barrels. Nasserist Party head Osama M'arouf received 3 million barrels. National Arabic Club Chairman Faisal Darnika received 3 million barrels. Jordan: Former Islamist MP and head of the Engineers Union Leith Shbeilat(9) received 15.5 million barrels. Former MP and Jordanian Writers Union head Fakhri Qi'war received 6 million barrels.(10) Former Jordanian chief of staff Mashhour Haditha received 1 million barrels. Former MP Toujan Al-Faisal received 3 million barrels.(11) The Jordanian Ministry of Energy received 5 million barrels. Muhammad Saleh Al-Horani, the Amman Stock Exchange head and former Minister of Supplies, received 4 million barrels. Lawyer Wamidth Hussein Al-Majali received 6 million barrels.(12) Qatar: Qatari Horseracing Association Chairman Hamad bin Ali Aal Thani received 14 million barrels. Gulf Petroleum received 2 million barrels. The Indian Congress Party received 1 million barrels. Indonesia: Indonesian President Megawati received 1 million barrels as "the daughter of President Sukarno," and 1 million barrels as Megawati. Myanmar: Myanmar's Forestry Minister received 1 million barrels. Ukraine: The Social Democratic Party received 1 million barrels. The Communist Party received 6 million barrels. The Socialist Party received 1 million barrels. The FTD oil company received 1 million barrels, as did other Ukrainian companies. Belarus: The Liberal Party received 1 million barrels. The Communist Party received 1 ton [sic] of oil. The director of the Belarussian president's office received 1 million barrels. Russia: The Russian state itself received 1,366,000,000 barrels. The list also included the following: Companies belonging to the Liberal Democratic Party received 79.8 million barrels - the list notes the name of party president Vladimir Zhirinovsky. The Russian Communist Party received 1 million barrels. The Lukoil company received 63 million barrels. The Russneft company received 35.5 million barrels. Vladimir Putin's Peace and Unity Party received 34 million barrels - the list notes the name of party chairwoman Saji Umalatova. The Gazprom company received 26 million barrels. The Soyuzneftgaz company received 25.5 million barrels - the list notes the name Shafrannik. The Moscow Oil Company received 25.1 million barrels. The Onako company received 22.2 million barrels. The Sidanco company received 21.2 million barrels. The Russian Association for Solidarity with Iraq received 12.5 million barrels. The Ural Invest company received 8.5 million barrels. Russneft Gazexport received 12.5 million barrels. The Transneft company received 9 million barrels. The Sibneft company received 8.1 million barrels. The Stroyneftgaz company received 6 million barrels. The Russian Committee for Solidarity with the People of Iraq received 6.5 million barrels - the list notes the name of committee chairman Rudasev. The Russian Orthodox Church received 5 million barrels. The Moscow Science Academy received 3.5 million barrels. The Chechnya Administration received 2 million barrels. The National Democratic Party received 2 million barrels. The Nordwest group received 2 million barrels. The Yukos company received 2 million barrels. One Russian company which phonetically reads as Zarabsneft received 174.5 million barrels. Vouchers were also granted to the Russian foreign ministry, one under the name of Al-Fayko for 1 million barrels, and one to Yetumin for 30.1 million barrels. The Mashinoimport Company received 1 million barrels. The Slavneft Company received 1 million barrels. The Caspian Invest Company (Kalika) received 1 million barrels. The Tatneft Tatarstan company received 1 million barrels. The Surgutneft company received 1 million barrels. Siberia's oil and gas company received 1 million barrels. In addition, the son of the former Russian Ambassador to Iraq received 19.7 million barrels. Nikolay Ryjkov, a former prime minister of the USSR, received 13 million barrels. The Russian President's office director received 5 million barrels. Oil vouchers were also distributed to companies and individuals from the Sudan, Yemen, Cyprus, Turkey, Vietnam, Bangladesh, Malaysia, Pakistan, the UAE, Morocco, Algeria, Tunisia, Panama, Thailand, Chad, China, Nigeria, Kenya, Ireland, Bahrain, and the Philippines. Two Saudi companies were also listed. UPDATE: Nope, actually that's not right. On the numbers, mechanics, and basic order of magnitude, we're set straight by reader Tim Worstall: I think there has been a misunderstanding about the oil bribes. The list may well be true but the point is that those named ( and I write recalling some of the allegations made against George Galloway soon after the fall of Baghdad ) did not receive a million barrels of oil or whatever. They received a voucher. And the voucher was not for free oil, but for slightly discounted oil. You might have to search back in the www.guardian.co.uk or www.telegraph.co.uk to get the actual numbers, but my feeble memory recalls 25 cents a barrel or something. Yes, bribes, and I can believe (although of course do not state that they did ) the names of those who received them. But, for example, no one, not even Saddam, is going to give Gorgeous George $ 27 million. $ 250,000 maybe. If they were actually giving away this much oil, rather than allowing a small kickback on it, then Saddam would have been getting no money for either the oil for medicines program, nor any from smuggling to pay for the rest of the dictatorship. UPDATE II: More at ABC News.

Link posted by Steve Antler : 6:47 AM

Wednesday, January 28, 2004

Looking good...

Check out Fairmodel's new front page.

Link posted by Steve Antler : 9:36 AM

New housing sales flat...

Reuters is reporting this like the Fall of Rome. Here's the report itself (it seems to indicate a very wide margin of error for this result). Okay, let's be honest. If there were a housing bubble and it were to burst, this could be the first indicator. Or it could be a slowdown in a non-bubble situation. Or it could be measurement error. Or it could be the start of a stable leveling-off. Face it, markets do lots of things besides rise or fail.

Link posted by Steve Antler : 9:34 AM

Heck, I know EconoPundit don't count for a hill of beans...

All the Email for this site comes and goes from an internet .edu location, and I know on the grand scheme of things my experience is miniscule. Still, judging from my inbox it looks like the internet's just come through a genuine dark night of the soul -- choked, possibly to the stopping point, with infected mail.

Link posted by Steve Antler : 5:54 AM

Tuesday, January 27, 2004

JEC Report on New Jobless Claims

The JEC has just issued a short interpretive report on new jobless claims, along with this 4-week moving average plot of claims: We repeat, yet again, this advances the case for "jobless recovery as urban legend" only for those predisposed to so believe. Three months ago Krugman argued new jobless claims data proved the unemployment numbers incorrect; he now, no doubt, has alternate data proving these current new jobless claims are wrong. I repeat: don't argue numbers with those to whom numbers don't matter. UPDATE: Barry L. Ritholtz objects: ...I have a bone to pick...You use "new unemployment claims" and the "employment level" interchangeably. One measures a limited pool of eligibility for unemployment insurance, and the other is the percentage of potential workers with full time jobs. These are two different measures entirely -- so much so that back in 1999 Grennspan actually created the Augmented UnEmployment Rate, so as to get a better fix on labor conditions. Just as the Household and Establishment surveys masure 2 different things (and often diverge), so to do these different reports measure very different statisitics! EconoPundit Responds: Of course you are correct. Who could say otherwise? But please, put yourself in my shoes for a moment. If I explain these things endlessly readers will start imagining me as a fat pedantic bore and stop visiting EconoPundit, leaving me to go back to whatever it was I used to do before I started blogging, upsetting my wife, and causing my daughter to fear I might be coming seriously unhinged.

Link posted by Steve Antler : 1:14 PM

Department of Recent Correspondence

Dear Sir, First, let me thank you for your excellent site. I check it daily - and have learned quite a lot. I have sent many of my friends here, and appreciate your efforts. I have a number of left-leaning friends who constantly parrot the "2.5 million lost jobs" meme that we hear so much about in the media (e.g. today's NYTimes Op-ed by Herbert, "Nearly 2.5 million jobs have been lost since Mr. Bush became president, and the most recent employment statistics have made a mockery of the claim that tax cuts for the rich would be the engine of job growth for the middle and working classes. " ) I point out the falling unemployment statistics, and the growth in the household survey jobs number, and the fact that more people are employed than ever before in US history, but they just don't get it. So my question is, is there any truth to this number? Is it the number of payroll jobs that have "been lost" or have gone over to the self-employed non-payroll side? Can you give to me a way to dispell this oft-repeated claim, for once and for all? Thanks again, Sincerely - John Landshof, Baltimore MD Dear Mr. Landshof, Thanks for the kind words. With most of my friends and family proudly call themeselves liberals and vehemently denounce the Bush administration. When they just want to vent and call people bad names I let them go ahead and get it out of their system. This is, after all, the friendly thing to do. However, if they put economy numbers in front of me, somethink else is called for. I simply ask if they'd change their mind if the numbers were wrong. When the answer is "no" (as is virtually always the case) I politely insist we ignore the numbers and talk about something else. If it makes no difference to my friend whether the numbers are true or false. why should we waste our breath even talking about them? Thomas Sowell argues American Liberalism has become so self-contained it is impervious to fact. All new evidence, he says, is either re-interpreted by it to reinforce preconceived thinking, or where that's not possible, discarded. Thus record-breaking cold spells come to be taken as evidence for global warming rather than its opposite ("Seasons are becoming more variable!"). Thus program failures -- the war on poverty, education, you name it -- are taken not as signals the programs should be changed or discarded, but as indicators more funding is needed. All I can advise is hold on. Data so far are mixed, and there is indeed a possibility the jobs recovery will be weaker than one might hope. I suspect, however, that just as the GDP data finally turned around, so the lagging jobs data will follow. But for the time being, don't even discuss data unless your friends agree the numbers actually make a difference. UPDATE: Another correspondent strongly objects: As far as your description of liberal friends and family, are you sure they are truly liberal? I've met many people who claim to be liberal, but they are anything but that. They are dogmatic, and the dogmatists occupy both sides of the political divide. Your commentary supports my observation, in that you say that some of your "liberal" friends would ignore data if it didn't support their beliefs. Those people are not liberal.

Link posted by Steve Antler : 10:25 AM

Is Andrew Sullivan part of a (new) vast right wing conspiracy?

In the past I have (respectfully) urged Andrew Sullivan to get just a little more economic education before he so-adamantly issues automatic condemnations of the Bush administration's spending habits. But now I learn from Paul Krugman Sullivan is a dupe. Bush administration runaway spending is, says Krugman, a new "urban legend" manufactured by right wing think tanks: According to cleverly misleading reports from the Heritage Foundation and other like-minded sources, the deficit is growing because Mr. Bush isn't sufficiently conservative: he's allowing runaway growth in domestic spending. This myth is intended to divert attention from the real culprit: sharply reduced tax collections, mainly from corporations and the wealthy. So crafty, those right wing think tanks, no? I can say no more, except that you should read Don "EconoGonzo" Luskin for detailed analysis and great links showing distribution aspects of the Bush tax cut. UPDATE: I guess Paul's column was written just before he had a chance to see the latest CBO Study. What astoundingly bad luck this guy has.

Link posted by Steve Antler : 9:38 AM

Monday, January 26, 2004

CBO: budget balances itself by 2014...

Here's the new CBO study. Its most striking prediction is this plot of actual and forecast annual federal deficits: What this says, basically, is put away the sackcloth and ashes -- economic growth will restore balance to the federal budget within a decade. Now the assumptions behind this prediction are unrealistic, so these results as non-credible as the many doomsday projections of budget disaster in ten, twenty, or thirty years. None of this is a problem, however. You simply can't run a long term model like this without making assumptions that someone, somewhere will call "unrealistic." Remember EconoPundit's theorem #14q: one economist's reasonable assertion is another's unrealistic assumption. All these qualifications notwithstanding something remarkable needs to be said: as this is being written, nobody but Fox News is reporting the story. UPDATE: The CBO study includes a useful summary of CBO's prediction track record. (Nice to see someone other than Ray Fair being frank about how well or poorly their model has done in the past.) Also, it discusses and nicely illustrates how statistical certainty fades as a model bravely plots what it thinks will happen in ten, twenty, or thirty years. As I think we've said elsewhere in this blog, any thirty year budgetary projection is basically an informed guess. UPDATE II: Speaking of Ray Fair, the Yale model should be undergoing reestimation right about now. We can, hopefully, expect a new forecast memo by Monday. Last time Ray was ever-so-slightly more optimistic about the deficit than CBO. One can only wonder whether this time Fairmodel has major surprises in store for us. UPDATE III: A reader objects: Be careful about the CBO forecast regarding a vanishing deficit. The treasury secretary noted this forecast when it was released as a sign of improving public finances. This is, as I think you were alluding to, a trap for conservattices. Of course assumptions matter, but the most important element is that the CBO forecast sunsets the Bush tax cuts. Thus this forecast is based on decent sized tax increases in 2009. There are also plenty of extenders in the tax code that either expired this year of the coming years. These too contribute to revenue gains. EconoPundit Responds: To be sure, demanding notice of the exactly balanced budget after 2009 with no qualifications is intellectually dishonest. I plead guilty to trying to get readers' attention. But c'mon, don't you agree the deficit improvement prior to 2009 is exciting? The basic supply side case is simple: tax cuts=growth=higher tax revenue. Any improvement in the deficit position prior to the 2009 tax increase -- no matter how small -- lends major support to the supply side position at the same time as it undercuts modern Rubinomics.

Link posted by Steve Antler : 9:22 PM

Impact of undocumented immigration on the US unemployment rate

Drudge now cites a National Population Council (Conapo) report as stating: The number of Mexicans illegally entering the United States...every year has grown to more than 1 million. Of that number, only about a third achieve their goal of staying in the United States to work. EconoPundit's very rough back-of-the-envelope-calculation finds this causes the US official unemployment rate to be overstated by about a half a percentage point. If we're now officially at 5.6%, the unemployment rate in the strictly domestic labor market of legal and documented residents is more acurately stated at about 5.1%, in other words.

Link posted by Steve Antler : 1:29 PM

In case you didn't know...

An organization calling itself Vietnam Veterans Against the War still exists. Is John Kerry a member? If so, why? If not, why not? More info available here. UPDATE: And even more here.

Link posted by Steve Antler : 12:41 PM

Text of FDIC Scam Email Contains Virus?

I innocently tried to forward the text of the fraudlent FDIC email and got this response: The body of this message has been replaced as it contains the Exploit-URLSpoof.gen virus. We all know about not opening attachments from strangers, right, but now text messages themselves can transmit viruses? What's going on? UPDATE: Charlie Martin (who is on the case) reassures us plain text can't contain a virus, and sends these links for more info: http://www.securityfocus.com/bid/2737/info/ http://www.kb.cert.org/vuls/id/988768 UPDATE II: Here's part of the text of the fraudulent message, diligently typed in by myself from the printed text (to avoid even the slightest hint of virus transmission): In cooperation with the Deaprtment of Homeland Security, Federal, State and Local Governments your account has been denied insurance from the Federal Deposit Insurance Corporation due to suspected violations of the Patriot Act. While we have only a limited amount of evidence gathered on your account at this time it is enough to suspect that currency violations may have occurred in your account and due to this activity we have withdrawn Federal Deposit Insurance on your account until we verify that your account has not been used in a violation of the Patriot Act. As a result Department of Homeland Security Director Tom Ridge has advised the Federal Deposit Insurance Corporation to suspend all deposit insurance on your account until such time as we can verify your identity and your account information. Please verify through our IDVerify below...Failure to [do so] will cause all insurance for your account to be terminated and all records of your account history will be sent to the Federal Bureaqu of Investigation in Washington D.C. for analyisis and verification. Failure to provide proper identity may also result in a visit from Local, State or Federal Government or Homeland Security Officials. Thank you for your time and consideration in this matter. Donald E. Powell Chairman Emeritus FDIC John D. Hawke, Jr. Comptroller of the Currency Micahel E. Bartell Chief Information Officer This is substantially the entire fraudulent message without the link to the fake fdic.gov site. We omitted the fake link to keep EconoPundit part of the solution, of course, rather than part of the problem.

Link posted by Steve Antler : 10:37 AM

On Kerry

Andrew says: He droned monotonously on, that stooped back and drooping face looming toward whichever poor schmuck he was condescending to at the moment. I know this much: he's a shameless panderer to the paleos on the stump. I also know his voting record is all over the map, and that his policy zig-zaggery is a legend. He has, in other words, all the liberal baggage with none of the liberal fire. There's a reason his campaign didn't catch alight for a year! And Glenn sends us back in time to this location.

Link posted by Steve Antler : 8:49 AM

FDIC Web Site Hacked? Hijacked?

At my business' main office this morning, we found a fraudulent email waiting. Here's not the email itself, but the FDIC description of same: Emails to financial institution customers that fraudulently claim to be from the FDIC attempt to obtain highly sensitive personal information, including bank account information. These emails falsely indicate that FDIC deposit insurance is suspended until the requested customer information is provided. At approximately 12:00 p.m. (EST) on January 23, 2004, FDIC Consumer Call Centers in Kansas City, Missouri, and Washington, D.C., began receiving a large number of complaints by consumers who received an email that has the appearance of being sent from the FDIC. The email informs the recipient that Department of Homeland Security Director Tom Ridge has advised the FDIC to suspend all deposit insurance on the recipient's bank account due to suspected violations of the USA PATRIOT Act. The email further indicates that deposit insurance will be suspended until personal identity, including bank account information, can be verified. This email was not sent by the FDIC and is a fraudulent attempt to obtain personal information from consumers. Financial institutions and consumers should NOT access the link provided within the body of the email and should NOT under any circumstances provide any personal information through this media. (Emphasis added) The most disturbing aspect is the form requesting personal information seems to be clearly part of the www.fdic.gov structure -- not merely an imitation FDIC page (which I suppose everyone knows how to do) but a page with a ".gov" address. Does this mean the FDIC itself has been hacked into or hijacked? A quick call to the FDIC customer service line reassured me this could not possibly be the case, but the FDIC representative couldn't tell me why or how the fraudulent form could have a ".gov" extension that mimicked their own so perfectly. UPDATE: More from John Brophy: The www.fdic.gov scam exploits a bug in IE that allows a fake address to appear in the address bar. It has nothing to do with the actual FDIC site...See this for more on this story.

Link posted by Steve Antler : 8:35 AM

Friday, January 23, 2004

From the Latest Debate

Sharpton's Monetary Policy: JENNINGS: Forgive me, Reverend Sharpton, but the question was actually about the Federal Reserve Board. SHARPTON: I thought you said IMF, I'm sorry. JENNINGS: No, I'm sorry, sir. And what you'd be looking for in a chairman of the Federal Reserve Board. SHARPTON: Oh, in the Federal Reserve Board, I would be looking for someone that would set standards in this country, in terms of our banking, our -- in how government regulates the Federal Reserve as we see it under Greenspan, that we would not be protecting the big businesses; we would not be protecting banking interests in a way that would not, in my judgment, lead toward mass employment, mass development and mass production. I think that -- would I replace Greenspan, probably. Do I have a name? No. HUME: Thank you, Reverend Sharpton. Thanks very much.

Link posted by Steve Antler : 3:00 PM

And the answer is: without genuine, principled leadership, none at all.

USA TODAY thinks the prospects for reforming health care look dim: Tucked...within the...State of the Union address [was a call] for something called "association health plans." These plans allow small businesses to band together into national pools to negotiate discount health insurance rates closer to those available to big corporations. They...would address an important problem: the steep costs small businesses must pay to offer medical coverage. Because they can't spread their risk throughout a large workforce, they pay higher rates for their insurance. Partly as a result of this limitation, only 49% of small employers offer health insurance, compared with 98% of large companies... Yet even this small, common-sense reform has touched off fierce opposition from powerful groups ranging from Blue Cross and Blue Shield to state health commissioners. They claim it would gut state regulations that consumers need without reducing the ranks of the uninsured. The controversy raises a vexing question: If one incremental change can set off so many special-interest battles, what hope is there for the broader health care reform the nation needs to extend coverage to all and stem skyrocketing costs for those who have insurance?

Link posted by Steve Antler : 10:03 AM

Thursday, January 22, 2004

Dems question each others' patriotism?

I can remember the exact time and place (grad student in Connecticut) I first learned about John Kerry and a then-new organization Vietnam Vets Against the War -- so this news kinda frosts my cake: Retired General Wesley Clark yesterday noted he "stayed with the U.S. Army" through the Vietnam War, setting up a contrast with White House foe John Kerry, who left the military and became a war critic. Via Opinionjournal.

Link posted by Steve Antler : 6:19 AM

Wednesday, January 21, 2004

Sell-by dates that are past or fast approaching...

We noticed yesterday it's about time to stop worrying about a jobless recovery. Last night it seemed clear Dubya really doesn't stand for small government. It will soon develop a clearly articulated Middle East policy -- even one able to accept preemptive war when necessary -- won't bring the world price of oil back down to $17/bbl. UPDATE: Many, many more in Easterbrook's The Progress Paradox, How Life Gets Better While People Feel Worse, which I'm now happily reading as time permits. Get a copy, but meanwhile read DuPont's mini-review.

Link posted by Steve Antler : 5:49 AM

Tuesday, January 20, 2004

Dennis Miller on the Dean Iowa Speech

"We used to play name the states in the back seat of my car on my family vacations -- it didn't mean we were ready to be president..." "But that was an insane speech, halfway through it he got so far afield I thought they were gonna have to install an Onstar button in the middle of his forehead..." "I think Howard Dean screwed the pooch last night,..It's over Johnny -- c'mon over to CNBC, I need an Ed McMahon." From CNBC interview, approx. 7:08pm, Jan. 20, 2004

Link posted by Steve Antler : 7:07 PM

Savor it...

Matthew Hoy takes the time to enjoy each grubby little detail of Professor K's latest.

Link posted by Steve Antler : 6:52 PM

McGovern Reforms Revisited

In NRO, Robert Moran predicts (1) rumors of Howard Dean's political demise have been exaggerated and (2) we can expect a painful short term future for the Democratic party: The Democratic party's primary system is not winner-take-all, like the GOP's...John Kerry did not win all of Iowa's convention delegates Monday night. He won approximately 38 percent of its delegates. This means that if we were to see the results in Iowa replicated in each and every upcoming primary contest...there would be no nominee with the delegates to lay claim to the nomination. Democratic presidential wannabes would then begin to wheel and deal and seek support from the roughly 800 Democratic super-delegates and from each other....The story is not that Gephardt was crushed and is shuffling off to the dustbin of history. The story is not that Kerry or Edwards did so well in a caucus that is a poor predictor of future success. The story is that Dean fumbled his chance to run the tables quickly and is now forced to use his money to defeat his opponents in a more protracted fight...Dean and many of the pundits marched off to battle thinking the war would be short. They were...painfully wrong. They're headed for a brutal war of attrition. (Emphasis added)

Link posted by Steve Antler : 1:56 PM

Myth of the Jobless Recovery

A new Global Commentary from David Malpass presents strong evidence we're not too far off track when we advise "non hyperventelare." UPDATE: Bill Hobbs has more. FULL DISCLOSURE: Last recovery, we went through a year of temps in the factory before we settled on permanent new additions. This time? Frankly, I'm still waiting. UPDATE II: More optimistic analysis, this time from the JEC.

Link posted by Steve Antler : 9:02 AM

Cultural Innovation?

Jerusalem Post reports: Rayashi..."was not a cold-blooded terrorist, steeped in faith and madness, who chose out of free will to turn her two young children into orphans -- but instead a woman who was forced to carry out the act." According to military sources, Rayashi paid a cruel price for being involved in an illicit love affair and was forced to sacrifice herself in order to "clear" her name and the honor of her family. Actually, the details in this case don't really matter. Honor crimes are as commonplace in Palestinian society as they are elsewhere in the Middle East. It takes little imagination to see how homicide bombing and honor criminality might merge.

Link posted by Steve Antler : 8:30 AM

"Oh wow"...

Back the sunny sixties I was a big fan of electronic music, especially Steve Reich's tape compositions. My favorite was "Come Out." Aside from being entertaining in a hypnotic kind of way, this piece was a unique audio equivalent of those Escher type optical illusions that look like one thing when you look one way, another when you shift your thinking gears. Anyhow, until you get a copy of Steve Reich's "Come Out," you can listen to this. Via The Corner.

Link posted by Steve Antler : 8:25 AM

More drunken sailor stuff...

Data from today's WSJ: Average annual real increases in domestic discretionary spending Fiscal years========== Increase Lyndon Johnson 1965-69==4.3% Richard Nixon 1970-75 ====6.8% Gerald Ford 1976-77 ======8.0% Jimmy Carter 1978-81 =====2.0% Ronald Reagan 1982-89 === -1.3% George H.W. Bush 1990-93 ==4.0% Bill Clinton 1994-2001======2.5% George W. Bush 2002-04====8.2% Views like mine are definitely in the minority these days. But tell me, with all this loose talk about drunken sailors, isn't there bound to be some sort of discrimination complaint lodged by the AASCAU (Association of American Seamen for Continued Alcohol Use)? UPDATE: Reader Steve Melancon complains: I don't think it's fair to drunken sailors to compare them with government. After all, a drunken sailor is spending his own money, not anyone else's.

Link posted by Steve Antler : 6:42 AM

Monday, January 19, 2004

EconoPundit says...

It is okay to read this story and get a little creeped out. More information will undoubtedly be forthcoming. But for just remember something. It is a statistical certainty that we will, from time to time, observe events which in and of themselves appear very unlikely.

Link posted by Steve Antler : 3:14 PM

Maybe after the election?

Victor Davis Hanson provides a definitive critique of the Bush Immigration Plan.

Link posted by Steve Antler : 11:09 AM

Non Hyperventelare!

A well-informed but too-excitable reader sends these questions: Steve, Where are the jobs? If you look at [Centrist.org's] charts, the household survey paints a completely different picture of the jobs situation. The total number of jobs is up 2 million not down over the last two years...What happened in early 2002? Did the tax cuts go into effect? Why are more people working than show up in the payroll survey? Or is it the other way around? Why are households reporting inflated numbers?...Or is Paul Craig Roberts right? The jobs are gone over the internet to India? EconoPundit responds: The advice I still follow is given by the Yale model and by my own ongoing business experience. (The latter tells me we're in a strong recovery.) Ray Fair's models remains the most detailed, reliable, and accessible forecasting tools every constructed by a US economist. His models, additionally, are the only ones with a complete forecasting record open to public scrutiny. Consider this plot, a simulation of US employment from 1955 to the present. The green line shows actual data, the red line, data simulated by the model itself. The simulation isn't perfect -- they never are. But this is about as good as it gets. This model's most recent employment forecast, as well as all newly-available data, suggest to me we should believe the household survey, and stay confident other data will eventually fall into line. Paul Craig Roberts and others are basically whining -- complaining that all the data don't show what some of the data now show. Additionaly, Roberts (like Krugman) is using the hiatus to promote an agenda -- a wacky, Ricardo-revisionist anti-trade argument that deserves little attention. UPDATE: I want to pass these thoughts, just in from David Malpass, along to you: Data is showing strong, sustainable growth for the U.S. in 2004. We think this has continued positive implications for U.S. profits and equities. Even though expectations were consistently increased in 2003, we don't think they have fully incorporated the strength of the economic outlook. --In both nominal and real terms, U.S. GDP has hit a new record in each quarter of 2002 and 2003, reaching over $11 trillion in current dollars. --On January 15, the Federal Reserve released data showing a record $51.6 trillion of household assets on September 30. --The government's household survey of employment showed a record 136.2 million non-agricultural workers in December, up over 1.5 million in 2003. --Unemployment claims fell to a 347,500 four-week average through January 10, a level consistent with fast job growth. This is the same picture shown by the rapid decline in the unemployment rate to 5.7% and the strength in the ISM employment indicators. --For January, the Philadelphia Fed's manufacturing diffusion index showed 38.8, the highest since 1993 (0 is neutral). The New York Fed's manufacturing index showed 39.2, up steadily from -20 in April 2003. We think there are several explanations for the current weakness in the establishment survey of employment, the basis for the claim of a "jobless recovery". Employment in this survey fell 74,000 in 2003 at a time of notable strength in almost all other indicators including the 1.5 million increase in the household survey: --The establishment survey is routinely revised upward at turning points in the economy. --Employment in establishments rose to a very high level in the late 1990s, in part at the expense of self-employment. --At its peak in June 2000, establishments were employing 63.3% of the total working-age population. That was way above any previous experience, reflecting Y2K investment, the booms in Nasdaq and IPOs, and likely some measurement error. --In December 1999, household employment, typically 6% above establishment employment, was only 0.6% higher, highlighting the unique 1990s shift toward employment at establishments. By comparison, we now have fewer establishment jobs, but more jobs according to household data. --We think employment in the establishment survey will grow strongly in 2004 as inventories are rebuilt, risk-aversion at big companies finally abates, and the bulge in establishment jobs versus household jobs finishes reverting to normal.

Link posted by Steve Antler : 10:01 AM

What's more foolish?

NYT agonizes over the newDem rallying cry, "Vote Bush Out of Rove's Office": "Why attack the monkey when you can attack the organ grinder"' said Paul Begala, a former White House adviser to Bill Clinton who said he likes Mr. Rove. "It's a conceit among liberals that actually works to Bush's great advantage. It suggests that Bush is not political and that he simply does what he thinks is right, or what Karl tells him to do." Nonetheless, Mr. Begala said, Democrats are right not to underestimate Mr. Rove. "Karl is the most influential unelected person in America," he said. But, as if to point out just how self-absorbed and irrelevant this is, the same article provides links to short fact sheets about Dean, Clark, Lieberman, even Bush himself. Does anyone who's interested in whether attacking Rove is good tactics needs a crib sheet about the candidates? And of course this is the point. The majority of mainstream Democratic voters can't name any of the candidates running in tonight's caucuses. Isn't it just a teeny bit narcissistic to think they share any of your own obsession with Karl Rove?

Link posted by Steve Antler : 9:21 AM

Blech... Monday.

Here's your economic calendar.

Link posted by Steve Antler : 8:33 AM

Sunday, January 18, 2004

A Belated In Memoriam Punditwatch

Ambush of the week? On Meet the Press Russert asks Gephardt to explain how he could have said this: Trade is part of the answer to terrorism. ...There are 3.5 billion people in the world today who live on less than a dollar a day. Then we wonder why people are deciding to become terrorists. We got all the money, they're going to come get us. Gephardt responds: Look, trade is not the only answer to the problem of poverty but it's one of the building blocks to get the world out of--there are 3.5 billion people in the world who live on less than a dollar a day. That's a problem, and we need to use trade as a way to begin to get these standards up. So Russert was talking to the pro-trade Gephardt, not the anti-trade, pro-international minimum wage guy that Nick Kristof seems to have read about. UPDATE -- Hanner sends us this from the Missouri River: Aaand coming down the home stretch it's Dean and Gephardt, Gephardt and Dean. They were the only ones still airing TV ads today, as far as I know. Dean is still maintaining the button-down Ivy League look and speaking earnestly about taking America away from the corporations and Washington insiders and giving it to the people. Eehhh, what's up Doc? Don't you know how ownership works in the USA? Gephardt still is pandering mightily to the union vote. He says that when he is president he will work for a global minimum wage...I think it is the anti-trade, pro-international minimum wage guy I heard/saw in those TV ads today.

Link posted by Steve Antler : 7:47 PM

Saturday, January 17, 2004

Thus spake she-who-constructs-NYT-myths:

"A race rooted mainly in attacking the president may not take Dean far enough. Voters want someone who's been through the fire. They care about character. They want to know the evolution of the man, even if it's a myth." Maureen Dowd, quoted in Drudge.

Link posted by Steve Antler : 12:52 PM

New view of environmentalism...

A new Bartlett post at Trendmacro has great links, great quotes and an important announcement. Here's a sample: "When I helped create Greenpeace in 1971," reflects Dr. Moore, "I had no idea it would evolve into a band of scientific illiterates who use Gestapo tactics to silence people who wish to express their views in a civilized forum. I had no idea the movement would oppose genetic engineering and other programs that could benefit mankind -- and adopt zero-tolerance policies that so clearly expose its intellectual and moral bankruptcy." My discomfort with Greenpeace goes back farther than Moore's. I sided with the Newfoundland outport communities that depended on the economics of the annual seal harvest. Those impoverished and economically disadvantaged communities are now long gone, but the children of those who lived there still pronounce the word "Greenpeace" with disdain.

Link posted by Steve Antler : 7:40 AM

Latest from our Missouri River Correspondent

Gerald Hanner writes: The angry attack ads seem to be toned down now; I haven't heard any of the Dems running against Bush in the past day or so. Tonight Howard Dean appeared in a blue pin-point button-down shirt, sleeves rolled down and buttoned -- and a tie -- to make his argument for universal health care. He doesn't call it that, this time, but that's what he is describing. The universal health care message is also being offered by Kerry, but it looks like Dean is doing a me-too because Kerry's message of late is that of universal health care. Again, Kerry doesn't come right out and say it, but that's what he's describing. Gephardt is still pandering to the unions. That appears to be his stronghold. The only three to air TV ads are Dean, Kerry, and Gephardt. It seems to have become pro forma for each of the three to finish the ad by stating that he authorized the message. Well, no kidding! All you see for 15 - 30 seconds is Dean/Kerry/Gephardt. Did they believe that people might think the messages they are sending were a diabolical plot by Karl Rove? So, as the Iowa Caucus looms the anger of the front runners seems to have abated, at least for now. Tonight the local news had a few seconds on the subject; it seems that all the anger was putting people off.

Link posted by Steve Antler : 7:19 AM

Friday, January 16, 2004

A new government rationalism?

The Washington Times reports conservative groups have broken with the Republican leadership: National leaders of six conservative organizations yesterday broke with the Republican majorities in the House and Senate, accusing them of spending like "drunken sailors," and had some strong words for President Bush as well. "The Republican Congress is spending at twice the rate as under Bill Clinton, and President Bush has yet to issue a single veto," Paul M. Weyrich, national chairman of Coalitions for America, said at a news briefing with the other five leaders. "I complained about profligate spending during the Clinton years but never thought I'd have to do so with a Republican in the White House and Republicans controlling the Congress." Okay, explain to me why the following simple response is incorrect. If (as I think EconoPundit has argued and shown) there are no serious mid term consequences to this "drunken sailor" spending, why not view it as a rational response to a basic problem of government? We all know capitalist governments, as compared with business firms, have an interent tendency to promise far more than they are able to deliver -- that there's a wedge between government's costs and the benefits the public gets from government programs. Is there a solution? Individual programs can might be written to include market incentives to police the situation, but a simple and more direction solution, seems to me, is to starve all of government, and over time make each program fight to get its funding back. Run up a deficit, expand everything -- the bigger the better! In the future taxes will have to be raised, but under these circumstances each program can be forced to justify its existence and effectiveness anew as compared with other programs. This isn't exactly the same as rationality in the market sense, but it is some kind of approximation of same. Let programs fight for their refunding in the arena of public ideas in the same way candidates fight for office and products fight for the individual consumer's dollar, in other words. Maybe this is too simple, but it sounds pretty wise to me. The optimism generated by this simple vision (call it, maybe, "new government rationalism?") may explain why markets (as opposed to opinion leaders) seem completely unruffled by the growing federal deficit. UPDATE: I'm thinking like this. Yeah: "I think we can reduce the size of Washington," Kerry said Jan. 6, 1996. "Get rid of the Energy Department. Get rid of the Agriculture Department, or at least render it three-quarters the size it is today; there are more agriculture bureaucrats than there are farmers in this country." Well, actually maybe not. What I had in mind was a rational process of cutting back by rebuilding partially. What's being advocated here seems more like government cutbacks by screaming nightime mobs carrying flaming torches. UPDATE II: But seriously folks, not everyone agrees. Here's one response: I think your plan is called "looting the treasury." Our generation will enjoy all the wonders purchased by the irresponsible spending while leaving future generations to pay for it along with the task of dealing with the almost certain fiscal crisis that will result. And another: My view is that your perspective has a basic flaw...that with minor and rare exception, NO governent program has ever been shut down or even seen its funding cut (as opposed to the "cuts" defined as a reduction in the expected growth). So the problem being created is one in which the baseline for government size and tax dollar appetite is reaching extraordinary levels. Even if each program must justify its existence (which it most likely will as there always is an associated constituency), this justification will start at an inflated spending level. In addition, it would seem like the optimum time to starve the government would be when it is running a deficit when each program should justify its continuation. This is how business deals with a revenue slowdown by trimming unnecessary or unproductive efforts. Your premise seems to suggest the inverse. If we cannot or will not do this now, there will never be a time to do so. And one more, to end everything on a positive note (indeed, this correspondent compares humble EconoPundit favorably to Milton Friedman himself!): I am reminded of a quote from Milton Friedman where he suggests that reducing the budget deficit through increased taxes would simply lead to more government spending and not a debt free America. "Raise taxes by enough to eliminate the existing deficit and spending will go up to restore the tolerable deficit. Tax cuts may initially raise the deficit above the politically tolerable deficit, but their longer term effect will be to restrain spending." What you are referring to in your post, however, is increased government spending and not the tax cuts. Many of Bush's critics may claim that the tax cuts are "spending," but I don't subscribe to that point of view. What are the major spending increases for Bush? Off the top of my head, I would say that they are: 1. War in Iraq/Afganistan 2. Defense against terrorism 3. Health Care for the Elderly 4. New direction for NASA - proposed 5. Farm Bill 6. Education Bill Now, 1 and 2 are not long term recurring costs like Social Security, so the increase in spending on them is not something that should really concern us. In fact, it is probably less of a burden on us to use the deficit to pay for them over a long period of time rather than enacting a war time surcharge/tax. Given the political climate over the past few years, I would argue that 3 and 6 were inevitable, regardless of who is president. So that leaves the proposed NASA changes and the Farm Bill to be scrutinized by your theory of new government rationalism. Looking at the NASA proposal, it seems that Bush is leaving the funding of this to future sessions of Congress. This is a perfect example of your new government rationalism; NASA will be required to show positive signs of progression in order to continue receiving funding for this project. The farm bill seems to fall into this line as well. As the deficit groes, future leaders will need to decide whether or not it is wise to continue subsidizing U.S. farmers. UPDATE III: More disagreement: [Can] you run your household bills by maximizing your deficits? If you were married and had a hard time agreeing with your wife on spending priorities, would you just spend wildly on your favorite priorities to force a household fiscal crisis in which you could then justify denying your wife her priorities now and in the future? This is what the Bush team is doing. I think it's ruinous to the public in general because of the interest rate costs and the competition it creates for free capital. But more important it's simply stealing from our children to allow unrestrained spending on current Republican priorities at the expense of all other priorities, including future priorities. Quick response: please, please, please check out my Economic Sermon for your Holiday Weekend before pushing these household-economy analogies!

Link posted by Steve Antler : 8:51 AM

You mean this Global Warming stuff can be...political?

Gore on Global Warming in chilly Manhattan: The biggest laugh came when Gore was talking about the impact of rising sea levels due to ice caps melting from global warming. He pointed out that rising waters would displace millions in Bangladesh, and then said it would also have a serious flooding effect in Florida, the state at the center of the 2000 election controversy...A cheer from the audience inspired laughter, which turned into an uproar when Gore said, "You be careful. I believe I carried Florida." Right. Remember, this stuff is serious.

Link posted by Steve Antler : 8:26 AM

Thursday, January 15, 2004

Yeah...

Jonah: I don't mean to get too worked up. I know people think Ted Kennedy is the 'conscience of his party' (that's the Democratic party; any other party where Ted's involved you're gonna want to bring your snorkel).

Link posted by Steve Antler : 1:13 PM

As we search for root causes...

My continuing interest in the Edsall thesis: The McGovern reforms on delegate selection greatly expanded the number and importance of primaries and "requir[ed] proportional representation of blacks and women, mandat[ed] open-slating processes, and [made] popularly elected delegates subject to a wide range of procedural challenges" ... This effectively ended the party bosses' monopoly on the Presidential nominating process and opened the way for Democrats to nominate candidates like, well, George McGovern... makes me wonder whether Robert Kuttner's prediction, this may be "the first year since 1960 that the Democratic nomination contest goes all the way to the convention... ", based party on this observation: The Democrats no longer use a winner-take-all-system. Thanks to party reforms, votes are allocated proportionally. So, in a nine-person field, a candidate can "win," say, South Carolina with a plurality of 30 percent of the vote -- but only get about 30 percent of that state's delegates. In the old days, the winner would have taken them all. shouldn't give a little credit to Edsall? Is Kuttner referring to the McGovern reforms (in which case the words "no longer" are probably inappropriate), or to changes since then (of which EconoPundit is clearly unaware)?

Link posted by Steve Antler : 8:47 AM

Wednesday, January 14, 2004

Tells it like it is...

Easterbrook: Whatever else you think of the George W. Bush immigration plan, just focus on this: It will make life better for millions of the disadvantaged. How often does any government action achieve this? And shouldn't a better life for the needy be among the first goals of government policy? Surely it should be among the first goals of liberal government policy...Had a Democratic president proposed exactly what George W. Bush has proposed for the treatment of illegal immigrant workers, editorialists might have called it bleeding-heart liberalism...That commentators have focused instead on political vote-totals analysis, and petty sniping at the Bush plan just tells us how removed contemporary media is from the struggles of the average person...

Link posted by Steve Antler : 11:13 AM

War Against the Market Mechanism Continues

Economics 101 tells us smaller firms bid against all other firms for the factors of production they'd like to employ. Wages and benefits may be set by bargaining -- in a political fashion -- at the nosebleed heights of elite unionized corporations or public services, but the small business sector still sets its wages the old fashioned way, according to the simple laws of supply and demand. You want to hire and keep a good worker? You've got to offer wages and benefits no less than he or she could get elsewhere. It is as simple as that. Not so to the proposers of this new tax: The core of the plan is what in Albany has been called play-or-pay, a $3,000 tax on employers for each worker they do not insure, with a smaller levy for small businesses that pay low wages. No state imposes such a tax of any significant size, health care advocates say. Some of the money would be used to increase the number of people in New York's state-subsidized health plans like Medicaid, Family Health Plus and Healthy New York, which together already constitute the most expansive such system in the country. The basic attitude here is simple -- if you can't afford basic health care for your workers, you simply shouldn't be in business. We've heard this before.

Link posted by Steve Antler : 10:31 AM

On success of welfare reform and Sharpton...

Kaus says: To some extent, Clinton's welfare reform--and the (not unrelated!) slow-but-perceptible improvement in inner-city crime and the black family structure have had the perverse effect of freeing Democrats to be paleoliberals on race again. They don't have to talk about welfare and crime--the issues that made previous Brown and Black debates, always embarrassing suck-up sessions, a little tense, since confronting welfare and crime at least meant contemplating what had gone wrong with the decades-long Democratic effort to produce "community development" (not to mention worrying about the reaction of non-liberals and worried suburbanites who might be listening in). Welfare and crime aren't on voters' radar screens anymore, and Democrats can once more go ahead and grovel to the liberal ethnic lobbies without too much complication. But something is missing when you compare this year's humiliating panderfest with previous humiliating panderfests: There's no more talk of sinking vast sums of money into Model Cities and UDAGs and CDBGs and all the other sinkholes and mayoral slush funds of the Democratic antipoverty apparatus. Even relatively non-left Democrats like Carter and Dukakis eagerly embraced such programs, but they don't get defended anymore, even by self-proclaimed let's-go-on-offense types such as Dean. It may be cause, or it may be effect, that Sharpton's limited, legalistic New York City-style issues--"racial profiling, police brutality, racial discrimination in the private sector"--lend themselves easily to headline-grabbing and community organizing but less easily to expensive programmatic solutions. Sharpton's a "race man," but he doesn't seem primarily a big-government "race man." ... (Emphasis added) For at least a year I've argued the proof of welfare reform's success is in its absence as campaign issue.

Link posted by Steve Antler : 6:55 AM

Tuesday, January 13, 2004

Do Voters Support the Bush Tax Cut?

Nothing but the presidential election will really answer this question. In the meantime, Bartlett subjects the question to reasoned logic: Leaving aside the details of the Bush tax cuts, which did in fact benefit the middle class substantially, there are still two good reasons why a voter might support tax cuts (and oppose tax increases) even if they would have no change in their tax liability either way. First, one can believe that tax cuts (increases) will increase (reduce) economic growth and job creation. This will benefit even those who pay no taxes at all. Second, one can view tax cuts as a restraint on the growth of government. In other words, tax policy is a very accurate measure of a party's political and economic philosophy. Grover Norquist calls this a party's brand identity and must be protected for the same reason corporations protect their brands. That is why it often makes sense to propose tax cuts even when it may not necessarily make economic sense to do so, just as companies sometimes put their best-sellers on sale. It reminds voters and consumers about the brand and helps protect against competitors. I have found indirect but overwhelming evidence of public support for the tax cuts. The evidence is right before us and we have missed it because it is disguised as a negative economic statistic. Evidence of voter support for the Bush tax cuts can be found in the unemployment rate. We'll explain, but first a bit of background. From its murky beginnings last June, the weblog has been obsessed with employment and the unemployment rate. One of our first posts described the sinking sense of nausea one can experience when trying to explain how changes in the size of the labor force can influence the unemployment rate. Some loyal Econopunditistas have taken up the challenge of this issue, attempting to address the issue in their own terms. More recently, in a bored sort of way we've briefly mentioned the ten-thousandth rediscovery of the discouraged worker effect, without tracking the many and even many more discussions of Paul Krugman's rediscovery of same. Every day there's a negative story on the "jobless recovery." Postive ones like this -- ones which look below the simplest numbers -- are few and far between Now ask yourself as you look over these stories: what's at stake here? How many jobs make the difference between a negative story and a positive one? Between a story and no story at all? The numerical answer is from about 50,000 up-or-down on a monthly basis, or, alternately, about 3 million when viewed annually -- the number of jobs supposedly "lost" by the Bush administration. We have persuasive quantitative evidence from 500,000 to one million US residents have been sufficiently affected by the Bush tax cuts to significantly change their behavior -- in a positive direction and in a manner strongly suggesting support for the tax cuts. These people are either employed or looking for work whereas, in the absence of the tax cut, they would not be part of the labor force. The evidence was obtained very simply: by running Yale University's FAIRMODEL under the counterfactual assumption of no tax cut, and comparing the results with the same model's conclusions given the presence of the tax cut. The model shows a growing "extra" component of the labor force -- by now a number approaching one million -- responding to all the supply-side incentives offered by higher take home pay. Some may object or even sneer, claiming the tax cut impact on take home pay must be too small to make a difference. We can think of three responses. (1) The reliability of FAIRMODEL is a matter of public record. (2) One's own intuitive response to a change in incentives is a poor indicator of how other people may respond. (3) Finally, the numbers say exactly what the numbers say. Soon EconoPundit will post a tutorial on how to run FAIRMODEL so you can verify these results for yourself. Meanwhile, keep thinking positively. An "extra" one million employed or seeking work is only a negative if you think the economy's in the business of producing not goods, but "bads."

Link posted by Steve Antler : 10:54 AM

Interesting contrast...

Bruce Bartlett, who has gone on record with this criticism of the administration: this is the most centralized administration since Nixon's. Cabinet secretaries and cabinet departments seem to have less influence on policy than at any time in recent memory. All key decisions appear to have been made in the White House and the only job of cabinet secretaries is to sell the policy, get votes in Congress, and raise money for the president's reelection. never the less finds no support for the critique in Paul O'Neill's recent outbursts. Contrast this with Andrew Sullivan -- equally committed but with fewer sources close to the administration -- who manages to squeeze out a little support from what O'Neill says. (Keep your eye on Bartlett. He may have more to say on O'Neill some time soon.) UPDATE: Now available, Bartlett on the alleged Bush quote, "Haven't we already given money to rich people? This second tax cut's gonna do it again…. Why are we doing it again?": Although the [Ron Suskind book] cites a transcript of this meeting provided by Mr. O'Neill, participants in the meeting tell me that no such statements were ever made. Former Council of Economic Advisers Chairman R. Glenn Hubbard states flatly, "The president NEVER made any of the distributional comments referred to in the interview." Cesar Conda, Vice President Dick Cheney's domestic policy adviser, also told me that the president never said anything about giving money to rich people. Referring to his own notes of the meeting, Conda said that the discussion was about extending depreciation rules that were due to expire, not about reducing income tax rates.

Link posted by Steve Antler : 10:23 AM

New Clinton health care proposal...

This reads more like press release than genuine news story: Clinton, D-N.Y., fought unsuccessfully a decade ago to expand affordable health care. The initiative died after industry interests and many members of Congress resisted to what they called a confusing bureaucracy. Missing is any indication of the abrasiveness and elitism (e.g. "I can't be responsible for every undercapitalized small business in America") that turned off a critical mass of much needed support.

Link posted by Steve Antler : 10:03 AM

There but for...

On my first visit to Cape Spear Newfoundland (many years ago) I climbed down onto the wet rocks to explore all the exciting nooks and crannies. Another visitor -- from a nearby town -- advised me to get the heck up off the rocks and away from anything that looked wet. So I did -- and ten minutes later a wave the size of the apartment building I now live in crashed into the acre of rocks and cliffs surrounding my little exploration area. Ocean, their tides, currents, and waves, are no joke. My sympathy goes out to the families affected by this tragedy.

Link posted by Steve Antler : 9:49 AM

Monday, January 12, 2004

Who had what when -- and why?

NYT is selling this as "Tape Shows General Clark Linking Iraq and Al Qaeda" but seems to ignore a really weird gaffe: "Certainly there's a connection between Iraq and Al Qaeda," [Clark] said in 2002. "It doesn't surprise me at all that they would be talking to Al Qaeda, that there would be some Al Qaeda there or that Saddam Hussein might even be, you know, discussing gee, I wonder since I don't have any scuds and since the Americans are coming at me, I wonder if I could take advantage of Al Qaeda? How would I do it? Is it worth the risk? What could they do for me?"(Emphasis added) Did Clark really believe Saddam Hussein would be the one to buy scud missiles from stateless, back-to-the-land Al Qaeda rather than the other way around? Well before these 2002 statements it was widely known (well, on the web at least) Al Qaeda's best and brightest couldn't distinguish internet "how-to-build-an-atom-bomb" parodies from genuine instructions. These brave fighters left behind a number of Afghan hospital opportunities to collect radioactive dirty bomb material because, apparently, their Koran studies hadn't prepared them for little things like finding the Department of Radiology in any modern hospital. The list goes on and on. The best they can do is hire folks for the internet. Even their home video is amateurish. Clark thought Saddam Hussein might have purchased scuds from Al Qaeda? I guess we shouldn't be surprised -- this is, after all, the same guy who thinks the Saudi army has elite special forces who can help us find Bin Laden if only we ask nice. UPDATE: Whoa, there, EconoPundit! This reader's suggests we may be taking things a little too literally: I took Clark's comments to be that, because Saddam didn't have Scuds, he was looking for a substitute delivery system (i.e. Al Qaeda terrorism), not that Al Qaeda could provide him with Scuds. Okay, maybe we'll try sticking closer to economics for the next 12 hours. UPDATE II: QandO has more.

Link posted by Steve Antler : 2:01 PM

AndrewAnalysis...

It truly is back to 1988 -- as farce. But unlike 1988, the Democratic nominee will not be able to shun Sharpton. The Dems are now dependent on massive black support just to be competitive in many states -- which gives Sharpton more leverage than even Jesse Jackson once had. One thing we have learned from this campaign is that the Clinton policy make-over of the Democrats now has only one standard-bearer: his wife. For the rest, it's that '70s Show, with post-industrial populism thrown in.

Link posted by Steve Antler : 8:55 AM

French Political Reform...

Glenn Reynolds has links to a new interview with Sabine Herold and other pertinent material. There's even a great snapshot in color.

Link posted by Steve Antler : 8:38 AM

Sunday, January 11, 2004

Draw your own analogies...

Why is it so very important for Brad DeLong and his followers to believe their opponents are morons? Why is their first instinct in disagreement to question your intelligence? They're so big on planning, do they perhaps have some sort of long-term secret solution for dealing with the less-intelligent portion of the population? Doesn't DeLong -- who bans those who disagree from posting comments on his otherwise-pure web site -- seem like, well, a thug? UPDATE: A good friend whose opinion I respect writes: Steven, You slam DeLong for banning certain commenters, but you don't have a commenting feature! You can get one [easily in many different ways]. [And be sure to check] out my blog at its new non-Blogger incarnation, www.billhobbs.com. Bill Hobbs

Link posted by Steve Antler : 7:07 AM

Supply Side Impact on Job Market

Here's a preview of what we'll be arguing tomorrow. In effect, the tax cut has created its own apparent unemployment problem by raising real wages. The impact on the main labor force (males 25-54) is relatively small, but for all others the tax cut effectively raises the value of take home pay enough to bring more workers into the labor force seeking jobs. By now the effect approaches one million. That's right. About one-third of the media-celebrated three-million job deficit was created by the tax cut itself. Go figure.

Link posted by Steve Antler : 6:54 AM

Talk about "living in the past"...

So I look at all these patched-together images of Mars and see how the sky colors just don't quite match at the seams and I think to myself "Yeah, just like Cinerama..."

Link posted by Steve Antler : 6:34 AM

Saturday, January 10, 2004

Okay, this means they did do planning for postwar Iraq, right?

"There are memos," Suskind tells Stahl, "One of them marked 'secret' says 'Plan for Post-Saddam Iraq.'" UPDATE IN MEMORIAM PUNDITWATCH: Britt Hume makes this same point on Fox News Sunday. UPDATE II: Hanner comments: Apparently, Paul O'Neil is either way out of the loop or completely cynical in his claim that Bush was planning war on Iraq from the start of his administration. Having spent twenty-five years in the US Air Force, and having spent part of that time in the area of war plans, I know that there are contingency plans of one sort or another for just about any potential hot spot on the planet. Those plans typically lay in a vault for many years, are updated when appropriate, and are never used. They exist at all because it is prudent to consider in advance what you might do in the event you are faced with a need for action some day.

Link posted by Steve Antler : 1:04 PM

On this we've been lately brooding...

This paper, if you haven't seen it, is a classic. Basic bibliography and background on Supply Side Economics by someone who knows the stuff better than nearly anyone. I have been a supply-side agnostic for a long time, largely because of the the so-called "transmission mechanism" issue. Shortly I'll have surprising and disturbing things to report in this area -- and as Yoda might say, bit less of an agnostic I am starting to be, hmmmm.

Link posted by Steve Antler : 10:50 AM

Report from the Academy

Put "PhD" after your name and you can publish anything in the Chicago Tribune, no matter how false. Consider this: There have always been two Americas. Both begin with the understanding that America is a land of immigrants. One America has embraced the notion of welcoming newcomers from different parts of the world, although depending on the era, even this more welcoming perspective may not have been open to people from certain parts of the world or of different persuasions. This America has understood that Americans are not necessarily of the same background or tongue. The other America largely has remained mired in a Euro-centric (originally Western Euro-centric) vision of America that idealizes the true American as white, Anglo-Saxon, English-speaking and Christian. For the most part, this America has opposed more immigration, especially immigration from regions of the world that are not white nor supportive of our brand of democracy. This is the America perpetuated in the Bush plan. These things are, of course, relative. Is the US really Eurocentric? With whom are we competing? No nation in Europe or Asia or (for that matter) Latin America can claim to have ever welcomed and assimilated so many as did the United States. How about our closest competitor, Canada? Visit any city in Canada and, in the privacy of your hotel room, open the local telephone directory to any of the pages showing names starting with "Mc" or "Mac" or for that matter, any other name betraying Scottish or British descent. Whoa! Prepare to start giggling nervously. Is someone playing a trick on you? This is Monty Python territory! You won't believe how page, after page, after dozens of pages, the telephone directory reads as if everyone in the Department of Manpower and Immigration snaps angrily every other sentence, "If it's not Scottish, it's crap!" In modern times -- since the 1970's -- Canada compensated with better (some might say politically correct) immigration policies, but this can't change the basic evidence anyone can find in the phone book. Historically, Eurocentrism (specifically British-centrism) has been a Canadian, not an American policy. So our closest competitor kinda fails the test, which leaves us to conclude we're competing with an imaginary academic ideal rather than something in the real world. Maybe the US hasn't been as welcoming as the professor-editorialist might have wished, but in this area it still remains the standard by which all other nations are to be judged.

Link posted by Steve Antler : 9:12 AM

What's the expression -- it "has legs?"

In a few arbitrary, abstract minutes of web browsing this (via Luskin's letters page) is what I encounter: The problem is, the exact same argument was energetically explained to me across the table at a dinner party last night. This means, I think, the argument is really moving quickly through certain circles. Just in case you want to know, when asked what I thought I responded that there are all sorts of viscious circles in economics -- and lots of virtious ones and other feedback mechanisms as well.

Link posted by Steve Antler : 8:14 AM

Friday, January 09, 2004

Scary note on which to end your week...

Are Rubin, Krugman, and individuals in the IMF, NYT, CBO, GAO, co-ordinating efforts to bring down Bush -- perhaps with George Soros -- who at the stroke of a pen can cause credence-lending-to-critics disruptions of stock and currency markets? Bruce Bartlett doesn't think so. But still... UPDATE: If this gets to you and you start to worry, say three times, with conviction, the following magic incantation: "markets work, and for every artificially-created bargain there's an eager buyer somewhere."

Link posted by Steve Antler : 2:28 PM

Isn't he the guy who started EconoPundit?

Bill Hobbs has four economic charts worth looking at.

Link posted by Steve Antler : 12:51 PM

Details, details...

From today's OpinionJournal: Mr. Bush's guest-worker proposal would create a legal means--a renewable three-year work visa--for new immigrants to enter the country and take jobs that Americans don't want. Illegal immigrants already living here would become eligible for guest-worker status after paying a fine. The plan also would allow for circular migration, which means that farm hands could return home to their families after the harvest without worrying about another life-risking trek back to the U.S. Immigrant workers would enjoy the protection of our labor laws and be able to quit or switch jobs without fear of deportation. To all this add the following: no longer will de facto guest workers be recorded, by Census, BLS, and others, as if analytically/economically identical to native-born citizens or formally-legal immigrants. And as this happens the entire indictment -- Dickensian poverty, intergenerational stagnation, and intolerable disparities between super rich and super poor -- will shatter and come crashing down on The Nation magazine, Paul Krugman, and lots of startled others.

Link posted by Steve Antler : 11:48 AM

Open Invitation

I have had exactly one encounter with Brad DeLong. While the encounter was less-than-pleasant, I have no reason to believe he's banned me from posting comments in fashion similar to this -- the third such case I've heard of: Some posters [in Brad's Comments section] provided terrific insights into federal labor statistics. I thought we were having a high level debate, without insults or rancor. I tried posting a comment tonight at DeLong's site and found a message, 'You are not allowed to post comments.' Of course, it's his site and he has the right to ban anyone for any reason. So I'll put out this open invitation: forward any appropriate comments to me and I'll post them for you.

Link posted by Steve Antler : 10:14 AM

Something in the template, I think...

QandO knows two things I don't. First, how to give readers the option of opening links in separate windows. Second, that Paul Krugman once said this: Ken Lay, Gary Winnick, Chuck Watson, Dennis Kozlowski -- all will be consoled in their early retirement by nine-figure nest eggs. Unless you go to jail -- and does anyone think any of our modern malefactors of great wealth will actually do time?

Link posted by Steve Antler : 8:38 AM

Thursday, January 08, 2004

Move over, global warming!

There's a new threat to the world economy: the US budget deficit. I suppose there's been a bit of progress made here. Six months ago any downward movement of the dollar was reported as if market failure had taken place. Now, it is regularly acknowledged it is disorderly rather than simple downward movements that are to be feared. I still maintain what EconoPundit said on this matter last June, when the blog was first starting up. While we're still waiting for Boskin to redo his disastrous 401k work, this material -- directly quoted from June's post -- still stands up, I think: Here's a quiclk-and-dirty comparison I happened to have on my desk -- old, but I doubt the numbers have changed much. Combined with the Boskin antibonds, this may explain why the dollar just won't fall as quickly as predicted by Krugman and other doomsayers. ------------------------------------------------------------------------------------------ GOVERNMENT DEBT AND PENSION LIABILITIES AS PERCENT OF GDP (1990) ===net conventional debt=======net pension liabilities CANADA===52================121 GERMANY==22================157 ITALY====100================259 UK=======27================156 US=======35=================90 ----------------------------------------------------------------------------------------------- Source: Essays on Pension Reform, Max Alier PhD Thesis, University of California LA, 1997; quoted in R.E.A. Farmer, Macroeconomics, South-Western, 2002, p. 162. All this pertains to the pretentions of the Europhiles, especially the Social Democratic left wing of the Democratic Party, who expect a Euro-Japanese flight from the dollar. Fact 1: as a percent of GDP the upcoming US liabilities are comparatively modest. Fact 2: while we await word from anyone with more info or data, I think it is safe to assume nowhere is there anything like the accumulation of U.S. Boskonian antibonds as an asset to possibly offset these future liabilities. The presence of this asset and the comparatively modest extent of U.S. upcoming obligations may explain the dollar's current durability.

Link posted by Steve Antler : 12:36 PM

Some issues will soon radically change their look...

As usual, Andrew gets it mostly right. What's missing? Just by proposing this new policy the administration facilitates integration of immigration numbers into discussions of US income distribution, income mobility, or health care availability. With one wave of the policy-proposal wand, Bush has made it possible, even perhaps respectable, to distinguish the economic lot of native-born and documented-immigrant-Americans from that of the undocumented visitors. By radically altering the breakdown of certain numbers, this will change the basic look of many issues. UPDATE: Mark Krikorian, who certainly has his own viewpoint on these matters, makes the essentially sound point here that a liberal undocumented immigration policy has the same impact as a low "setting" of the minimum wage: ...it's the second part of the response to a tighter labor market that people just don't get. By holding down natural wage growth in labor-intensive industries, immigration serves as a subsidy for low-wage, low-productivity ways of doing business, retarding technological progress and productivity growth. Even though I'm in favor of the new policy as a short term stopgap measure, this last paragraph and its implications can't be ignored. UPDATE: Chuck, from Blog.simmins.org, sends us this: I'm all in favor of enforcing the immigration laws. But no one has demonstrated a practical method of removing the current group of illegals. I say "Fait accompli!" Find a way to legalize them, get them all into the legal economy. Can't agree, Chuck. One practical method of (your words) "removing the current group of illegals" is to make it illegal to employ them exept under new regulations. Heartless? Yes. But not from the viewpoint of new applicants seeking entry under the new regulations. Features of the new regs you ought to support wholeheartedly are (a) guest workers can go back and forth across the border without having to re-apply or illegally sneak in, and (b) savings accounts giving them back their payroll tax deductions when they leave. I like these, but mostly I'm enthusiastic because I think the new proposals will raise the quality of discourse generally.

Link posted by Steve Antler : 10:55 AM

Carnegie Endowment for International Peace

The Carnegie Endowment for International Peace describes itself as: a private, nonprofit organization dedicated to advancing cooperation between nations and promoting active international engagement by the United States. Founded in 1910, its work is nonpartisan and dedicated to achieving practical results. But isn't this organization's new 111 page report about as partisan as anything can get? Go here for background and more. UPDATE: Someone who should know says it isn't so.

Link posted by Steve Antler : 10:37 AM

News from our Missouri River Correspondent

Gerald Hanner writes: Perched, as I am, on the west bank of the Missouri River, just across from Council Bluffs, Iowa, I have seen some of the nuttiest political ads from Dem hopefuls that I have ever seen in this political season. There is much Bush hatred in the messages; the two most commonly using that ploy are Kerry and Gephardt. Gephardt has taken the Kerry tactic of announcing that he has approved the ads and that, like Kerry, he is out to thwart George Bush and . Kerry's latest ads claim that in his first 100 days he will introduce legislation that "will put your health care before the profits of pharmaceutical companies and health insurers." I wonder if he's given any thought as to where the money for health care comes from (premium payers, really) and how closely profitability is linked to things being produced. For his part, Gephardt's current mantra is that he's out to stop George Bush and corporate agri-business. It's amusing that, just like in Nebraska, there is this penchant for clinging to the days when familiar farms feed not only large families, but the whole country. Both Iowa and Nebraska have fiddled with their state constitutions to bar corporations from owning and operating farmland. The one thing it does for sure is to prevent the would-be family farmer who has the skill, resources and vision to get bigger from doing so. I'm wondering why these knuckle-heads don't just come out and say that they thing the state should own and operate everything.

Link posted by Steve Antler : 8:17 AM

Wednesday, January 07, 2004

This surprises someone?

The craziness of victimology political rhetoric and the pre-Bush tax code can reclassify two single "just-above-working-poor" individuals as rich, or perhaps close to it, if only they get married. So how anyone can be surprised at the following, among Zogby's latest findings, is beyond me: Among other survey findings, married voters approved of the Bush tax cuts by a margin of more than 2-to-1 -- 51 percent of married voters said the tax cuts were a good idea and 20 percent said they were a bad idea. By comparison, single voters said the tax cuts were bad by a 34 percent to 25 percent margin.

Link posted by Steve Antler : 11:14 AM

Die Gedanken sind frei II

Glenn Reynolds flirts with simple-minded class warfare: Soros, the 38th richest man in the world, has famously promised to put his immense wealth behind defeating President Bush. Whether this will work is unclear...but there's no question that Soros has resources, and political clout, that make him a political force to be reckoned with in a way that your garden-variety millionaire, or multimillionaire, isn't...Of course, campaign finance reform might conceivably land Soros in jail, but the point still holds: if the super-rich become rich enough, they'll become laws unto themselves. And if that happens, it doesn't matter that the rest of us are getting richer, too... But he pulls out of this analytical dive at the last second and saves the analysis by remembering that little thing called "democracy": The twenty-first century, I think, will belong to those who can persuade others to voluntarily give of their time and energy in support of their goals. And genuine enthusiasm is hard to buy. To the extent that the super-rich become rich enough to be alienated from the rest of us, they're likely to become less persuasive...Am I sure of this? No. And if Bush is defeated, I'll take it as proof that rich people have too much influence on the political process -- and I'll argue for a 100% income tax on currency traders worth more than a billion dollars… (Emphasis added) I'm continually surprosed at the inverse relationship between "degrees to the left" and "apparent degree of faith in democracy." Anyway, congratulations for saving the essay, Glenn!

Link posted by Steve Antler : 10:47 AM

We're referring to the principle, not the weblog...

As markets continue their relentless march toward hegemonic world domination, assymetric information strikes again: China indicated it is ready to put up to 100 billion dollars into its ailing banking sector in an effort to clear a massive overhang of bad debt at the major banks, which will also be allowed to seek foreign investment...The government will transform some of the state banks into public shareholding companies, paving the way for the introduction of outside investors, Liu Mingkang, chairman of the China Banking Regulatory Commission (CBRC), told Wednesday's edition of the China Daily...The report follows an announcement by the State Council Tuesday that it had injected 45 billion dollars from the foreign reserves into the Bank of China and the China Construction Bank to bolster their balance sheets...The bailout is only the first step in a government strategy that could see it pour as much as 100 billion dollars into the banking system as part of efforts to make banks solvent in preparation for a stockmarket listing, the Financial Times reported, quoting unnamed government officials.

Link posted by Steve Antler : 10:08 AM

Monday, January 05, 2004

This just in...

From the always-engaging but sometimes unreliable source of used Israeli raw intelligence known as Debkafile: A Yemeni group, Ansar al-Haq (supporters of justice) claims that it shot down the Egyptian charter airliner bound for Paris that crashed into the Red Sea on Saturday minutes after take off from Sharm el-Sheikh, killing all 148 (most French) people on board. Egyptians say cause was mechanical fault. Yemeni group claims it was protesting French law regulating Muslim dress. UPDATE: More here.

Link posted by Steve Antler : 11:27 AM

In case you missed it elsewhere...

With Instapundit linking to it this is redundant. Still, check out Carnival of the Capitalists.

Link posted by Steve Antler : 11:10 AM

Sunday, January 04, 2004

There but for...

Once in Newfoundland, while foolishly showing off my cold-water swimming skills, I found myself trapped in a similar situation. I was very lucky to get back to shore.

Link posted by Steve Antler : 9:44 PM

And what about that guy in Evil Dead I?

Professor "K" has come in #17 in John Hawkins' The 2nd Annual Twenty Most Annoying Liberals In The United States awards: Paul Krugman is the Noam Chomsky of economics. Like Chomsky, Krugman uses his credibility in another field to give people the impression that he's a competent political commentator. However, his political screeds in the New York Times usually come off as slightly unhinged and gloomy, sort of like the deadite who was stuck in the basement in "Evil Dead 2". This year, Krugman predicted SARS might very well derail the economic recovery, bemoaned the conservative bias of the mainstream press from the staunchly liberal and incredibly influential New York Times, bizarrely claimed that Donald Luskin was stalking him, and went so far as to blame the Bush administration for Malaysian moonbat Mahathir Mohamad's anti-semitic remarks about Jews ruling the world. All of this from perhaps the most highly regarded & influential left-wing columnist on the planet. My non-conservative buddies (and I have lots) defend Paul like a darling kitty. I just don't get it, but this is definitely a phenomenon.

Link posted by Steve Antler : 2:27 PM

Did Elmer Gantry have a secret mistress?

This just in from Newsweek: One interesting topic: his sale of shares in five Vermont banks after he became governor. He told NEWSWEEK he had sold them in 1991 as soon as he realized that briefings from a state banking official contained inside information. Dean told NEWSWEEK that he could have profited more handsomely had he been able to hold on to the shares, but campaign officials say that so far they can't locate records to document precisely when the sale was made. Dean also may have some more explaining to do about his relationship with a drug company called Astra, which by 1997 was in a limited partnership with another big drug firm, Merck. In 1998, two things were happening in Montpelier: Dean was running for re-election, and drug companies, including Merck, were lobbying against the imposition of price controls on drugs in the state. Over the years Dean, who at the time opposed the price-control plan, had taken campaign contributions from the drug industry, including $3,000 from Merck. (Dean later turned tougher on the industry.)...In May 1998, NEWSWEEK has learned, Dean earned $4,000 for a speech at a conference sponsored by Astra -- a firm that, as it happened, was in the midst of defending itself (unsuccessfully) against a major sexual-harassment suit involving 80 female former employees. Dean was scheduled to give another speech to another Astra meeting five months later, in October 1998 -- until a reporter got wind of his plan. Asked about it at a press conference, Dean at first defended the idea, but within hours changed his mind, saying he didn't want to give his political enemies ammunition. What he didn't disclose at the press conference -- and, indeed, never mentioned later -- was that he had already been paid for the earlier speech to the same controversial company. Tax returns made public by the campaign last year show an additional payment, of $5,000, for a speech in 1999. Dean aides said the payment came from Astra, but were unable late last weekend to provide an immediate explanation for the speech or the fee. Well, who knows? Maybe this just proves he's human, after all -- which of course isn't big news. UPDATE: Via Instapundit, more potential dirt. UPDATE II: Now, nearly a week later, the news reaches the west coast. Unclear if this is new or recycled.

Link posted by Steve Antler : 9:03 AM

Die Gedanken sind frei...

Jim Pinkerton relates this revered German folk song to EconoPundit's theorem #14xr, which is "No Monopoly Lasts Forever."

Link posted by Steve Antler : 7:39 AM

An economist who is not Paul Krugman tells a lie...

Alan Greenspan's self-serving selective memory of events is critiqued by Don Luskin, who uses a graph to illustrate his point. (I want everyone to now admit I am not the only one who posts those pesky, annoying, confusing, hard-to-read graphs.)

Link posted by Steve Antler : 7:23 AM

Saturday, January 03, 2004

Eight reasons why it may have been terrorism...

Debkafile -- an always-engaging but sometimes unreliable source of used Israeli raw intelligence -- asks these questions about the crash of a chartered Egyptian airplane in the Red Sea on Saturday, January 3: 1. Was it a coincidence that the disaster occurred amid the heightened aviation alert that led to the cancellation of seven US-bound flights in the week from Christmas to January 2? 2. Updated intelligence reports have revealed one or more trained al Qaeda pilots penetrating international airlines in the Middle East or Europe and standing by for a chance -- or an order -- to hijack a passenger airliner. 3. Suggestively, the Egyptian plane vanished abruptly from radar screens before the air crew had a chance to send out a distress call or any other signal. It looked very much as though the craft had plummeted into the sea too suddenly for any warnings; it may even have exploded in midair before dropping into the water. In that case, the cause of the explosion would have to be investigated. An eyewitness said people heard a very loud noise at the time of the crash. 4. The stricken aircraft plunged down very close to the Sinai coast opposite the shore of Saudi Arabia. Yet, several hours after the disaster, no survivors had surfaced -- as normally happens when a complete craft plunges into deep water - and no large wing sections or pieces of fuselage, as would normally have been expected -- only small pieces of wreckage and tens of body parts. Floating bits of debris and personal possessions were clearly visible from Naama Bay half a mile from the rescue area. 5. The Egyptian assertion of a mechanical fault does not quite accord with the initial response from French transport minister Dominique Busserau who said: "The plane had a problem after take-off and then tried to turn and it was at that minute that it apparently crashed." However, Egyptian aviation sources say the plane was maintained regularly in Norway and there was no sign of any mechanical fault before its last flight. 6. Another odd feature of the episode is the unusual lack of response from the Saudi, Israeli, Jordanian air forces and the American warships cruising in the Tiran Straits and the Red Sea. In an exceptionally tense time, when all military electronic instruments in the region, including those of the Egyptian air force, are most certainly at peak vigilance for al Qaeda-piloted intruders, the plunging Egyptian airliner must have appeared on all their radar screens from the moment of its take-off. Because of its situation close to Jordan and Israel and opposite the big northern Saudi air base at Tubuk on the Jordanian frontier, Sharm el-Sheik is one of the most sensitive corners in the world. Why has no word come in from anyone around it? 7. The Sharm el-Sheikh air disaster recalls the last Egyptian air disaster in 1999 when EgyptAir's 990 Boeing 767 crashed opposite the American coast of Massachusetts shortly after takeoff, killing all 217 aboard. At the time, the Egyptian authorities attributed the disaster to unusual atmospheric conditions on the East Coast, a claim never confirmed by US authorities. In a subsequent federal probe, US aviation authorities established that the co-pilot, Jamil Batouty, who was not supposed to be on duty at the time, took over the controls and put the plane into a sharp nosedive shouting Allah is Great! in Arabic. DEBKAfile's counter-terror sources reported then that a large group of Egyptian air force officers were aboard, flying home from counter-terror combat and fighter jets courses in the United States. Our sources learned that Batouty has been assigned by his known Egyptian Jihad Islami connections in Los Angels and Cairo to carry out a kamikaze mission to destroy this group. 8. British prime minister Tony Blair was vacationing at the Sharm el-Sheikh resort with his wife and four children. The day of the crash was supposed to be the last day of his end-of-year holiday. From the moment the disaster was reported, no word was released about their whereabouts. If the Air Flash charter tragedy was indeed staged by al Qaeda to coincide with the Blair family's presence at the Sinai resort, it would be further evidence of the terrorist group's audacity and intelligence prowess. So where was Tony Blair when the crash occurred? Can this have been an abortive attempt to kill Blair by crashing the jet into his vacation resort? UPDATE: My neighbor Paul Stinchfield helps us with background by sending links to The Crash of EgyptAir 990, by William Langewiesche in Atlantic Magazine, and an interview with William Langewiesche in same.

Link posted by Steve Antler : 4:05 PM

Nor do I play one on TV...

I'm no lawyer, but it seems to me there's something new going on here. I always thought reporters' right to protect sources had the same legal force as stuff like tenure and academic freedom -- specific professional rights/obligations protected more by custom and practice than written law. Now, it seems the administration is applying non-disclosure agreement law to journalists and their sources. Is this kosher? A clever infringement of law on custom? UPDATE: I guess we're not exactly caught up on this issue. Instapundit talks about it here.

Link posted by Steve Antler : 9:20 AM

Friday, January 02, 2004

On the Howard Dean tax proposals...

Stephen Moore says: Under current law, a married couple with one child and a $40,000-a-year income pays income taxes of $1,503. Under the Dean tax, that family would pay $2,935--or just about double. For a family with two kids and an income of $80,000 a year, the extra Dean tax costs $1,780 a year. What Mr. Dean has never had to answer to in the Democratic primary, perhaps because the other candidates are too embarrassed to ask, is how a presidential contender whose campaign is dedicated to relieving the economic squeeze on working class families, believes that socking these folks with a $1,400- to $1,800-a-year tax hike will make their financial situation less stressful...Mr. Dean responds...by countering...his plan will help restore prosperity and produce higher incomes and more jobs. But how exactly? His tax plan would be the equivalent of hitting small businessmen, who create about 70% of the jobs, over the head with a two-by-four. The highest tax rate under the Dean plan rises from 35% to 39.6%. Add on top of this perhaps the most insidious feature of the Dean tax. For the first time ever, he would eliminate the cap on payroll taxes. Henceforth, all income of more than $87,000 a year would pay a 15% payroll tax. This means the Dean tax plan raises the small-business tax rate from 38% to 55%. If you are a self-employed worker with an income of $125,000 a year, which in high-cost-of-living states like California and New York is hardly rich, Howard Dean wants to raise your taxes more than $8,000. That will create jobs? Yes, but are those so called "payroll taxes" really taxes or fees? This is no small problem. FULL DISCLOSURE: Our analysis of the Dean tax proposals appeared here, but not everyone liked what we had to say, and some even called Glenn Reynolds a bad name for linking to us.

Link posted by Steve Antler : 11:11 AM

Thursday, January 01, 2004

Reuters: steak prices moving downward...

The market mechanism in action: Prices for cattle traded at the Chicago Mercantile Exchange have tumbled more than 19 percent since the U.S. Agriculture Department announced last week that a Holstein cow infected with mad cow disease was found in Washington state...The drop in wholesale prices will eventually trickle down to consumers at the retail level, said Philip Paarlberg, agricultural economist and professor at Purdue University. "As a result of the ban on exports, we've lost 10 percent of our market," he said. "It's going to drive down prices." Econo-Heh.

Link posted by Steve Antler : 7:28 AM

An American New Year's Story

When it first rained in January of the new year 2000, my workers found there was a new and bad leak in the factory roof. Rain was just slurping in from one point near the south wall. So we had the roof guys in. They inspected, and found bullet holes. Yes, that's right. There were bullet holes in my factory roof.

Link posted by Steve Antler : 5:04 AM

 
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