Journamalism Watch: Robert Kuttner Unfairly Trashes Robert Rubin

A friend once told me oh, four years ago, that we would be able to tell when the Democrats are on the upswing: it will be when Robert Kuttner decides that trashing other Democrats--not arguing about the future of a party, not arguing about a good society, not debating honorable adversaries, not thinking about policies, not discussing issues, but simply trashing other Democrats--is his Job #1.

Well, it must be that time.

Robert Kuttner trashes Robert Rubin.

It is the shoddiest thing I have seen The American Prospect publish--it is even shoddier than Robert Samuelson's 2004 right-wing trashing of Robert Rubin in the New Republic and that is saying something.

Consider:

American Prospect Online - Friendly Takeover: The '90s saw declining inflation, looser money, and rising productivity growth, for reasons unrelated to Clinton's slaying of the deficit. The economy's previous investment in computers was belatedly raising productivity growth rates. With higher productivity growth, the Fed didn't have to "take away the punch bowl," as former Chairman William McChesney Martin famously put it, for fear of letting growth trigger price pressures. Greenspan let the recovery rip because he saw few signs of inflation, not because of reduced deficits...

Curious how Bob Kuttner knows more than I do, or indeed than Alan Greenspan does, about why Alan Greenspan believed (correctly) in the 1990s that he could keep interest rates low without generating higher inflation. Greenspan says that he kept interest rates low because (a) the deficit was smaller, (b) because higher investment made possible by lower deficits was increasing the rate of growth of potential GDP, and (c) because the computer revolution provided a further big boost to the growth of potential GDP. I think Greenspan's right about the (multiple) reasons he bet that he could keep interest rates low without triggering higher inflation. Kuttner thinks different.

It gets worse. Kuttner writes:

A man of nimble intellect, self-effacing charm, and professed concern for America's downtrodden, Rubin functions as what once would have been called a power broker. But that label doesn't attach to Rubin, because he is so seemingly public-minded, so socially liberal, and so genuinely nice...

"'Seemingly' public minded"? "'Professed' concern for America's downtrodden"? Bob Kuttner doesn't dare say that Bob Rubin's real aim is to shape America's public policy to make himself richer--it's false, and it would lose Kuttner too much credibility. But Kuttner does want his readers to think that Rubin is a devious, self-interested plutocrats--hence the insinuations.

It gets even worse. Kuttner writes:

Rubin's dubious counsel included making the North American Free Trade Agreement (NAFTA) a priority over health reform (Hillary Clinton's objections notwithstanding), and pushing the budget all the way to surplus, protected from a Republican treasury raid only by a fictitious Social Security "lockbox." He did support expansion of the earned income tax credit and minor social-spending increases, but fiscal discipline was paramount. These views are not just those of a centrist policy kibitzer; they are exactly what you would expect of a leading banker...

Bob (Kuttner, that is): "Leading bankers" are not typically for higher taxes, more progressive taxes, social-spending increases of any kind, and especially not of expanding social-welfare spending on the poor--which is what the EITC is. You expect a leading banker to be in favor of fiscal discipline, yes; but also for lower taxes, flatter and less progressive taxes, reduced social spending in general, and reduced welfare spending in particular.

And it gets even worse. Kuttner simply lies about the Brookings Institution's Hamilton Project:

The Hamilton Project, founded by Rubin and based at the Brookings Institution, promotes free capital movements, fiscal balance, and small gestures toward greater equality...

And it gets even worse still:

Rubin tends to get a free pass on actions that, in lesser men, would be seen as plain conflicts of interest.... Goldman Sachs, which Rubin left to join Clinton, was a prime underwriter of Mexican bonds.... After NAFTA created a gold rush of foreign money into Mexico, enriching Goldman Sachs and its clients and triggering an unsustainable speculative boom followed by a crash, Rubin promoted the bailout of Mexico that made foreign bondholders whole...

Notice that Kuttner does not quite say that Rubin sponsored making holders of Mexican bonds whole at the expense of American taxpayers--even though that's what "bailout" means, somebody other than the original debtor paying off a debt. Kuttner implies that Rubin sponsored making holders of Mexican bonds whole at the expense of American taxpayers, but he doesn't quite say so.

And the reason that he doesn't quite say so? Because it isn't true, and because Kuttner knows that it isn't true--U.S. taxpayers benefitted handsomely (indeed, some quite senior IMF officials in the late 1990s thought much too handsomely, they told me: they believed Rubin had used America's bargaining power inappropriately in setting the terms of the completely-repaid loans (not the "bailout") it made to Mexico in 1995) both as creditors and as workers whose jobs were not lost from the macroeconomic distress that would have followed a complete crash of the Mexican economy.

But Kuttner wants readers of the American Prospect to think that Bob Rubin enriched Goldman Sachs at the expense of the American taxpayer.

I could go on: I've only covered about a quarter of Kuttner's article. But what's the point? It's not as though Kuttner is making an argument that Rubin was wrong in thinking that Eisenhower-Republican-light policies were America's best option in the 1990s. You can make that argument (and I believe some of it, and I make some of it at times), but that's not what Kuttner is doing.

Kuttner, you see, is not in the information business. He is in the character assassination business.

Comments

[Peter Eggenberger]

It was a pleasure to read your views on Kuttner's article. But I think you should generalize your reflections-- most of the articles in the American Prospect are equally awful. I write as a subscriber who won't renew. (And the founders of the magazine included Kenneth Arrow, Arthur Schlesinger, John Kenneth Galbraith and James Tobin!)

[dr chadblog]

Brad, leaving aside whether or not Kuttner is unfairly attacking Rubin (not so interesting), what is your response to the GENERAL CRITIQUE of the "Rubin wing" of the Democratic party? I mean, its pretty clear there are two rival camps WRT Democratic economic policies: the one you belong to along with Rubin, which is generally for trade deals like NAFTA, and emphasizes low deficits, and generally can be described as "neoliberal". The other camp is Kuttner's, along with the trade unions, economic nationalists and fair-traders, which basically oppposes NAFTA-style trade deals and beleives fiscal policy should go harder on social spending. The "Rubin-DeLong" camp seems to be pretty okay to large corporations, but honestly you guys seem more like natural Republicans to me when compared to the views of most Democrats.

Why is it that the most protectionist and currency-managed economies (ex: the Asian tigers + China) outgrow the economies that take the "neoliberal" approach (ex: the Latin American economies before the current left turn)?

[prostratedragon]

I just googled "Mexican bailout" to check out my hazy recollection that the term was a political buzz term that persisted despite being untrue as Brad noted. Sure enough, I came up with a couple of pages of screeds, overwhelmingly from the right, before finding an article that attempted a straightforward descrption of the peso crisis and its significance. Sadly, that article was written not by one of our august pundits, but by a recent Bachelor degree recipient (at Utah's Hinckley Journal, http://tinyurl.com/2ktagv), who in using the term "bailout" made it clear that it was a rhetorical smear of the day.

Like our host, I'm far from in universal agreement with R. Rubin's approach and sense of national priorities, but the last decade or so has also made me suspicious of the eternally recurring canard, especially when it comes from those who plainly ought to have a correct set of facts available to them.

[anne]

Brad DeLong:

"A friend once told me oh, four years ago, that we would be able to tell when the Democrats are on the upswing: it will be when Robert Kuttner decides that trashing other Democrats--not arguing about the future of a party, not arguing about a good society, not debating honorable adversaries, not thinking about policies, not discussing issues, but simply trashing other Democrats--is his Job #1.

"Well, it must be that time."

Agreed completely, and I sorely needed the lesson.

[anne]

http://economistsview.typepad.com/economistsview/2007/03/should_democrat.html

Robert Kuttner as absurdist:

"One candidate who might well reject Rubinomics is John Edwards, who is unlikely to raise large sums on Wall Street. And even Edwards is talking more about our duty to the poor, and less about the need to reregulate capitalism. However, should the populist Edwards be nominated, he will need a calming figure to reassure Wall Street that he is not an economic madman. Someone like Bob Rubin."

[christofay]

oh, lord, to leave aside Kuttner for a minute, Tom Friedman starts the attempt to rehabilitate his rep, "One day Iraq, our post-9/11 trauma and the divisiveness of the Bush years will all be behind us — and America will need, and want, to get its groove back." Friedman is staking out the Green as his turf after attempting to democratize the M. E. from the barrel of a gun.

[david]

How would you describe the Hamilton project? I don't see the lie there, but there's no particular reason I would.

Unfair charge on the bailout: as I read Kuttner, he's saying that there's a potential for double-dealing in making foreign bondholders whole. It's Faux's point. It's not crazy to think that Rubin's professional life may have colored his judgment -- fine you disagree, but it's the sort of thing that it's normal to speculate about when somebody's a treasury secretary.

On the whole the article is negative, a bit unfair but not nearly as nasty as you make out.

"Professed" isn't so bad. But "seemingly" is pretty rotten and shouldn't be there.

[Ponzi Q. Globalization]

"Why is it that the most protectionist and currency-managed economies (ex: the Asian tigers + China) outgrow the economies that take the "neoliberal" approach (ex: the Latin American economies before the current left turn)?"

drchadblog,

You are correct that the neoliberal way has proven to be a clustereff for Latin America. Furthermore, I believe, it will be shown to be a clustereff for the U.S.

But you must understand that the results are not what's important. What's important is that both we and Latin America (formerly) are not in a state of econosin. What's important is that we are following the Econodoctrine. This is not like other doctrines, by the way. It's scientific! In an Economics sort of way.

That this Econodoctrine happens to bolster the positions of the rich and powerful is, I'm sure, just a side effect. There are no influences going on that modify the Econodoctrine to favor one group over another. Human power relationships do not effect it. The Econodoctrine is pure and untouched by human hands. It is simply the immutable One True Way.

Anyway, here's my favorite Rubin quote...

"Just to go back to the labor thing for a moment. I tend to think that what I said before is kind of what the system should look like. But I still think it's a very complicated question whether you put labor conditions in an agreement. I would not hold back from going ahead on a trade agreement because another country refused to accept labor standards. If we were going to have a bilateral agreement with India and they refused labor standards, I still very much want to do the agreement."

From: http://www.thenation.com/doc/20060731/greiderweb

Read the whole interview and decide for yourself if this super rich banker cares about the downtrodden in America. The impression I got was that Rubin *does* care. He cares as long as he and his ilk will not have their revenue lessened one iota.

I'm not bashing him for this. Lord knows I would probably do the same thing if I was in his position. And I'd bet you and most others here would too.

But let's not get stupid and pretend Rubin is some sort of spiritual being who is not influenced by his own position at the pinnacle of finance and the views of the people he does business with.

[John Emerson]

I really think that the neoliberals are going to have to look at themselves someday. Brad shows occasional signs of wavering, but then he swings back. Globalization was a nice try at best.

[save_the-rustbelt]

If I may speak on behalf of blue collar America, GO KUTTNER GO!!!!

Rubin is for Wall Street, Wall Street, and Wall Street - just like Paulson.

[ken melvin]

Try try we must but doctrinaire we can not be.

[Cranky Observer]

I would be curious to see what the results would be if Ponzi Q's 5:01 AM post were assigned to one of Brad's 300-level Econ classes for analysis.

Cranky

PS Ponzi: affect vs. effect.

[Dean Baker]

My God, Kuttner called Rubin a "power broker,"
I can see why Brad is upset.

I really don't see too much more than semantics in Brad's outrage. I know that the Hamilton Project wouldn't use the adjective "small" to describe their efforts to promote equality, but is the rest of Kuttner's description inaccurate?

As far as describing the loans to Mexico as a "bailout," I don't really see an issue. The U.S. government made loans at a below market rate. The loans were paid back so they ended up not costing taxpayers money, but we didn't know that at the time they were issued. The government also made money on its loans to Chrysler in 1980, but wasn't that a bailout?

We all understand risk, and when the government makes a loan that the private sector is unwilling to undertake, it can be, and has consistently been,described as a "bailout." This is not Kuttner's invention nor is it a slur.

[anne]

Brad DeLong is right, entirely right. During the Mexican crisis, the problem was not in the least making mythical Goldman Scahs bond holders and such whole, the problem was assisting Mexico through the crisis and preventing or limiting a dramatic recession in Mexico. Actually, Mexican debt had been bought for years at ridiculous prices by Fidelity and passed along to hundreds of thousands of mutual fund holders who were indeed harmed by the debt crisis at Fidelity had been warned would happen almost a year before the crisis. Robert Rubin responded to Mexican needs wonderfully for Mexico and indirectly for us.

[Robert]

You are much much too kind to Kuttner.

They in insinuated hypothesis that Rubin acts to maximize Rubin's wealth is, I think, the most refuted hypothesis in the social sciences. Believing such a thing is much much crazier than believing in the efficient markets hypothesis. Kuttner, of course, is dishonest not crazy or stupid.

It may be true that *bankers* want fiscal discipline. However it is not at all in the interest of retired former bankers. Bankers loan long term and borrow short term and are hammered by high interest rates.

In contrast, when he worked in DC, Rubin had immense wealth (tied up in bonds for concerns about appearances of conflicts of interest reasons) and (relatively) tiny income. His economic interests were two. He would benefit from high real interest rates and low taxes on the very rich. In Washington Rubin dedicated his efforts reducing real interest rate by reducing the deficit/increasing the surplus (otherwise what is the point ?) by increasing taxes on the super rich.

Kuttner suggests that Rubin had a personal interest in helping Goldman Sachs after he joined the Clinton administration (think Chekey and deferred payments from Halliburton).

Experiment in information retrieval number MCCXXXLLCVIII gets me here
http://tinyurl.com/create.php
in less than a minute. To join the Clinton administration, Rubin converted his share of Goldman Sachs to bonds just before GS went public. Thus from the day he started in DC he could gain or lose nothing (more) by affecting GS profits. Given the deal with his partners, this operation must have cost him hundreds of millions as he should have know.

Given the effect of his actions in DC on Rubin's wealth, one must conclude that he is either very honest or very stupid. The fact that, despite his apparent near indifference to the issue, Rubin is super rich suggests that he is not stupid. I am forced to conclude that he is a very honest banker/policy maker.

I mean there has to be at least one.

(I'm not saying he's the only one. I wish a quick recovery on another one who was recently victim of a hit and run driver. )

[anne]

Beyond having an animus for Robert Rubin that is unwarranted, Robert Kuttner simply cannot be bothered to tell an accurate story and therein is a deeper problem. Rubin was a profoundly successful Secretary of Treasury, the effects of whose policies were continually and progressively positive through the 1990s. As for the Hamiltonians, I find them another matter entirely for I find them merely a veneer, a pretense, for a self-serving candidate for whom I have lost almost all respect (who could she be).

[CalDem]

I don't like the Rubin worshipping. Rubin demonstrated exceptional political cowardice by not expressing his private concern over the direction of Hillary health care reform and therefore played a part in the disastrous 94 elections. I think everybody who was in the Clinton Administration knows this.

[anne]

Agreed; I have been and am critical of Robert Rubin on unwillingness to analyze health care policy proposals and more so on silence about the tragedy of Iraq.

[save_the-rustbelt]

Didn't Goldman Sachs "lose" millions of e-mails just a few days before Elliot Spitzer asked for them?

Please correct me if my memory is hazy.

Apparently GS is a good place to be a power broker.

[Cranky Observer]

> Kuttner suggests that Rubin had a personal
> interest in helping Goldman Sachs after
> he joined the Clinton administration
> (think Chekey and deferred payments from
> Halliburton).
>
> Experiment in information retrieval number
> MCCXXXLLCVIII gets me here [tiny url omitted
> in less than a minute. To join the Clinton
> administration, Rubin converted his share
> of Goldman Sachs to bonds just before GS
> went public. Thus from the day he started
> in DC he could gain or lose nothing (more)
> by affecting GS profits. Given the deal
> with his partners, this operation must
> have cost him hundreds of millions as he
> should have know.

I am no fan of Rubin, but I agree with you that a man his age was probably not directly motivated by increasing his personal fortune at that point.

Surely you know however that at that level the game is not played for dollar-markers, nor for adding to one's own stock of markers. The question is, was the game being played to further the long-term interests of a specific _class_ within US society? Even if along the way some bitter medicine was required for that class? I don't think anyone at the senior level on Wall Street would be very upset with a Gilded Age-type social structure with 3% upper crust controlling 95% of the wealth, 80% stuck forever in lower-lower-middle-class drudgery and fear, and the remaining mix of very poor and illegal immigrants keeping the pressure on the toilers. Was Rubin working to stop or further that goal?

Look at Cheney: he no longer holds defense industry stock (to his knowledge) and he will almost certainly die of heart failure within a few years. Yet he works his butt off to further the interests of the authoritarian war-tech class.

Cranky

[D-Slam]

"PQG: But you must understand that the results are not what's important. What's important is that both we and Latin America (formerly) are not in a state of econosin. What's important is that we are following the Econodoctrine."

Ponzi, when I reached this point in your post I knew you were the author.

[Ponzi Q. Globalization]

"I would be curious to see what the results would be if Ponzi Q's 5:01 AM post were assigned to one of Brad's 300-level Econ classes for analysis."

The class would rip it apart for it's lack of mathematical rigor and poor grammar. I plan to make good use of differential operators, generating functions, ANOVA, stochastic processes, and the theory of semigroups in my next rant. So bone up ASAP.

Who likes being told that the esoteric doctrines one works so hard to learn, while useful, does not really provide The Keys that unlock the door and reveal The One True Way. It's nice to think that, after all the hard work, ones knowledge is so deep and abilities are so great that one can point the world towards utopia. It's hard to find out that the knowledge is quite limited and restricted and that it's over-estimation can lead to unforseen and tragic outcomes. It's hard to find out that much of it is simply an ideology one has unconsciously absorbed full of unstated assumptions and simplifications, moral positions, and class favoritism.

"My God, Kuttner called Rubin a 'power broker,' I can see why Brad is upset."

Dr. Baker, do not attack Saint Rubin or his doctrine of the benefits of poor working conditions for laborers. His acolytes are many and they are quick to anger.

[Colin Danby]

It's a mistake to go after Rubin personally. But just to argue two narrower points on policy:

(1) Isn't Dean Baker right? At the very least U.S. taxpayers assumed a large risk for a while. Do we just need a larger menu of terms?

(2) You can make a case that the Clinton administration bears some joint responsibility with the Salinas team for encouraging large flows into short-term Mexican gov't bonds in 1991-94. If the question is only what was the right policy after the currency peg broke in December 1994 you get one kind of discussion. But if the relevant unit for analysis is the full boom-to-bust cycle you get another and possibly more illuminating discussion, which raises the possibility that Mexicans paid a high price for the full cycle. And of course if you pull back further to multiple cycles, both in Mexico and elsewhere, you get another kind of discussion.

[anne]

Ah; the fundamental problem in Mexico has for generations been an autocracy that really does practice trickle-down economic policy rather than opt for education, hard infrastructure development, agricultural subsidies, and technology development in exchange for trade. An over-valued currency had mostly to do with speculation in Mexican assets which has come in Mexican presidential cycle 6 year waves, and in the early 1990s was spurred by Fidelity mutual funds. Fidelity alone owned more than half the international debt of Mexico by 1994; yes, more than half. Mexico has needed to use China for a development model, but that has not happened.

[anne]

Colin, you are clever.

The cycles of funds flowing to Latin America, however, and Mexico, Brazil and Argentina in particular, extend through the 1980s. Sometimes banks, sometimes international brokerages, sometimes mutual funds would play the game. The game would go; there is lots of low priced debt that can be bought in Latin America and the debt will be variously guaranteed by this government or that so buy and get stock-like returns from bonds with half the risk of stock. Duh.

[anne]

The game would go on, with lots of money being made in absurdly risky bonds that appeared to be risk-free. But, to keep the bonds appreciating in value the home economy would in the beginning need to have lots of bond buyers buying from abroad and eventually have to limit growth enough to limit inflation to continue to hold bond values. There would be an economic slowing or worse and devaluation. Nice game, but....

[richard locicero]

I'm not going to get into the discussion of Robert Rubin's sins and/or successes but when people start pulling this "Would it pass 'Ec 300'" nonsense, I'm reminded of what Lord Keynes said about people in authority listening to the pronouncements of some madmen and calling that sound economics.

I know of no academic discliple more in thrall to unproved theory than economics and that includes the structuralists and Derridians over at MLA. In fact it seems to be a mark of pride to never let real world experience get in the way of a good theory - I doubt if Theologians are that dogmatic.

No wonder Chemists and Physicists sneer whenever they are told of the winners of this year's "Nobel" in economics is. In their fields you don't award it to guys who believe in the Steady State one year and the Big Bang the next. There's this thing called the "Scientific Method" you see - maybe some of you heard of it.

[anne]

Remember by 1994, Fidelity owned half the international debt of Mexico. Fidelity funds were amazing investors who had no idea why (talent, of course, talent). Then came the Mexican devaluation which Fidelity had been warned about even in a New York Times column 8 months before the devaluation. Well, there would always be Argentina to come.

The problem was always that debt was not contributing nearly enough or much at all to significant development in Latin America.

[Cranky Observer]

> when people start pulling this
> "Would it pass 'Ec 300'" nonsense,

For my part, that was an honest question: I would be curious to know what they would produce. I don't think the answer is necessarily a given.

Cranky

[CalDem]

the Chemists can go back to their labs and leave the real world to people who make an effort to understand complex systems rather than those who sneer and then hide under their lab coats. Only someone completely and willfully ignorant of the developments in Economics over the past 30 years would ignore all the statistical work that goes into the discussion of which theories make sense. you can't get the answers to big economic questions in a lab so lab science standards don't apply. And don't get me started on how badly lab scientists do with statistics when they step one foot outside of controlled experiments.

"The essence of tyranny is the denial of complexity" and that is what lab scientists do when they willfully misunderstand social sciences.

[Ponzi Q. Globalization]

"the Chemists can go back to their labs and leave the real world to people who make an effort to understand complex systems rather than those who sneer and then hide under their lab coats."

For the most part, chemists and other simple-minded lab rats know the limitations of their discipline. Many economists do not. And, what's worse, many economists *do* understand the limitations and still push policy as if these limits didn't exist so they can suck up to wealthy and powerful interests.

[Robert]

Dear Ponzi

You make Kuttner look reasonable and dishoner the name of Charles Ponzi

"Read the whole interview and decide for yourself if this super rich banker cares about the downtrodden in America. The impression I got was that Rubin *does* care. He cares as long as he and his ilk will not have their revenue lessened one iota."

Your claim is technically slanderous. It is demonstrably false and you made it with reckless disregard for the truth. You are clearly web literate, yet you couldn't spare one minute (literally) to google.

Rubin is a leading capitalist, but it is not true that all capitalists care only about the interest of their class as a rather dim follower of Marx might imagine (ever heard of Friedrich Engels ?).

Such utter contempt for mere facts casts doubt on the sincerity of your critique of economists for indifference to reality. Your critique is certainly valid, but it's like the snow calling the sand white.

CalDem you are too kind to economists (such as myself). Empirical research is part of the game and many economists are very good at testing hypotheses not to mention summarizing data and such. However, the refutation of economic hypotheses has a very limited (to zero depending on how close one is to a great lake) effect on their influence on the profession.

The standard response of economists is that all models are false by definition (it is assumed that all theories are models and false by definition which would come as a bit of a surprise to a natural scientist) that the hypothesis is false but it may be a good first order approximation to reality. Therefore it is a good first order approximation to reality and we should speak to non economists as if we know it is true.

Consider Paul Krugman who dedicated much of his career to proving that protectionism is not necessarily harmful to the protecting country, much of the rest to telling people that protectionism is as stupid as blood letting and astrology and the rest to bashing Bush (third times a charm).

To whom do I owe this insight into Krugman as a other than totally frank economist ?

Better not say.

[Ponzi Q. Globalization]

"You make Kuttner look reasonable and dishoner the name of Charles Ponzi"

This is quite funny!

"Your claim is technically slanderous."

Sue me. Or maybe just call me Ponzi Q. Coulter.

"Rubin is a leading capitalist, but it is not true that all capitalists care only about the interest of their class as a rather dim follower of Marx might imagine (ever heard of Friedrich Engels ?)."

What about the dimness of assuming they don't care at all? Or care more about others than the people they know and love and those they live and do business with on a daily basis? And 'yes' to the Engels question. Does this make Roger Altman, Karl Marx? He's rich too you know.

"Such utter contempt for mere facts casts doubt on the sincerity of your critique of economists for indifference to reality. Your critique is certainly valid, but it's like the snow calling the sand white."

An area of agreement. Well, the last portion.

"Consider Paul Krugman who dedicated much of his career to proving that protectionism is not necessarily harmful to the protecting country, much of the rest to telling people that protectionism is as stupid as blood letting and astrology and the rest to bashing Bush (third times a charm)."

Beautiful. Hell, I'm in love.

[Matt]

I need a better opening but this will do.

Speaking through the blog to the mathematical economists, I wish they would understand the concept of spectral invariance as it applies to the economy.

The theory suggests that any of the norms we use to understand the economy should all predict the same spectral shape, all have a kernel matrix, similiar functions for the matrix polynomial, similiar argebras describing the X axis, and the normative eigen value curve is derived from the diagonal of the characteristic matrix.

If we could get through this theory then our understanding of the economy would be much clearer, the equations would be much simpler.

The theory predicts that all representations of the economy are defined by complex eigen values in whatever spectral transformation we use. All these economic descriptions have a phase delay which is represented in the semantics of accounting as a time shift in assets vs liabilities.

The theory allows us to use the fourier transform to derive the two sided interest yield curve, it explains the motions of the economy over its cycles.

[DILBERT DOGBERT]

My goodness! So many people with strong convictions that they know what goes one inside the head of one man. There is many a day that I don't know what is really going on in my skull.

[Dean Baker]

If we get beyond the histrionics about what was in Alan Greenspan's head when he decided to let the unemployment rate fall below the widely accepted estimates of NAIRU, there is a very interesting question on which Brad's inside knowledge may be helpful.

When Greenspan proposed lowering interest rates in the summer of 1995, he faced strong (shrill?) opposition from Janet Yellen and Lawrence Meyer, the two most prominent economists on the Fed at the time, both Clinton appointees. This raises an obvious question -- didn't Clinton (Rubin?) grill his Fed appointees on their views of the NAIRU? (This is entirely proper. The law says that the Fed should target 4.0 percent unemployment. It was only necessary to ask if they intended to respect the law.)

If not, this was a very serious oversight in my book. Whoever played a role in selecting the Fed governors deserves some real punishment.

[Well, that was, in part, me. As a Treasury staffer assembling a short list of candidates, I remember writing memos that a good Fed Governor would be somebody who (a) understood the importance of not spooking financial markets and maintaining the Fed's expensively-bought credibility as an inflation fighter, (b) understood the important social benefits produced by labor-force upgrading in a high pressure economy, and (c) could go toe-to-toe with the model-builders and forecasters on the Fed staff. Meyer and Yellen seemed to me (and to all my various bosses, whose judgment was what really counted) to fit the bill. I was as surprised as anybody when they emerged as somewhat more inflation-hawkish than Greenspan in 1996-1997. (Indeed, I have some although not ironclad reason to think that they were surprised.)]

We were lucky that Greenspan was able to carry the day with the open market committee and eventually pushed the unemployment rate down to 4.0 percent, two full percentage points below the standard estimate of NAIRU in 1994. (The stock bubble is another matter.)

[lerxst]

As a graduate student I once had the misfortune of dealing with Mr Kuttner about an article I was writing with a former CEA chairperson ... he seemed annoyed that as the editor he should even have to speak to the junior co-author ... we never ended up submitting the article. His arrogance and elitist attitude has since colored my perceptions of him.

[Robert]

Ezra Klein chimes in at tapped
http://www.prospect.org/weblog/2007/04/post_3455.html#016279

he writes "It was Rubin, after all, who convinced the nascent Clinton administration to do NAFTA before health reform -- which I judge a critical mistake."

I find this claim very unconvincing. WJ Clinton declared that a plan would be announced on May 30 1993. This does not seem to be consistent with Klein's claim.

I have links to google searches and such at my blog here http://tinyurl.com/create.php.
Sorry to link to myself but it would be paint to transfer them here.

Rubin was a very enthusiastic supporter of raising the top marginal tax rate. Bankers may like balanced budgets, but they do not like to pay higher taxes. I think the claim that Rubin's policy recommendations make sense for someone from his background is inconsistent with the facts. There are other reasons to oppose protectionism and Robert Reich's vague expensive proposals.

Matt you are talking down to your readers. Everyone here knows that "complex eigenvalues " and "the business cycle" are synonyms.

[DRR]

It was definitely a knee-capping article, that much was established when it was first published. But of all the cheap-shots, baseless accusations & slimy insinuations within it, the one that really offends was toward the end, wherein Kuttner proclaims that that Bob Rubin is "hedging his bets" (pun!) so to speak, due to the fact that so many people who once worked with, for, met or ate dinner once with the man now populate a variety of different Presidential Campaigns, as if they all were agents of infiltration, operating at his behest.

Of course, a wider debate within the Democratic party about what course we should pursue going forward (one closely associated with Bob Rubin's philosophy or some alternative approach) should be taking place. But this slimy character assassination should be called on what it is. I think Brad Setser is one of if not thee most talented, honest economists operating today, one not prone to subscribe to many tenets of the Bob Rubin worldview and he says Rubin is a mensch. I have no idea why Robert Kuttner felt the need falsely smear Rubin & employ a few right-wing talking points in the process but he must have had his reasons.

[Ponzi Q. Globalization]

"Rubin was a very enthusiastic supporter of raising the top marginal tax rate. Bankers may like balanced budgets, but they do not like to pay higher taxes. I think the claim that Rubin's policy recommendations make sense for someone from his background is inconsistent with the facts. There are other reasons to oppose protectionism and Robert Reich's vague expensive proposals."

Most people tend to be attracted to ideologies that bolster their position and their view of themselves. Is this controversial?

Robert Rubin is an international banker who proposes policies that give international bankers more say in what gets done in this world. This is a fact.

[And Robert Rubin is a very rich person who proposes tax policies that give very rich people less say in what gets done in this world. This is also a fact.]

Why all this dualism? Robert Rubin proposes tax increases on his class. Great. He is not a monster. Robert Rubin proposes policies that destroy the bargaining position of American labor. Not so great. He is not an angel.

Brad, Robert, and others don't think that Rubin's position as a top financier color his views. They think Rubin is generating ideas in some abstract heaven of human caring uninfluenced by his Wall Street position and the people he does business with. I find this hard to believe.

I think it's more sensible to believe that Rubin is a decent man who occupies a certain position in this world. This position constrains his thinking and influences his view of what's good and bad.

If the head of a union is protectionist, you claim he's looking out for his buddies. If a top international banker is all for neoliberal free-trade, he's doing it in the best interests of humanity. This is a sad joke.

[baileyman]

Curious Kuttner echoed my own judgment of Mr. Rubin. I don't listen to what they say. I just watch what they do. What he does seems pretty darn clear.

[Ponzi Q. Globalization]

"[And Robert Rubin is a very rich person who proposes tax policies that give very rich people less say in what gets done in this world. This is also a fact.]"

This is correct, of course. In fact, I mention it in the very next paragraph.

One of my points was that he's not some sort of demon seeking to eff up humanity. He's human like the rest of us. Only much richer. Well, I should say 'probably much richer' because I don't know the financial situations of our host and other readers.

Here's a question. When taken as a whole, do the policies that Robert Rubin pushes increase or decrease the power of finanical institutions such as Goldman-Sachs and Citigroup? Another related question is: Do the policies that come from his 'economic and social philosophy' increase or decrease the power of such institutions?

Who are the people who gain power through the increase in such institutional power? Are they dishwashers? Truck drivers? Or are they people like Rubin himself and those he deals with on a daily basis?

I have my preconceptions. Enlighten me.

[Ponzi Q. Globalization]

"The entire economics profession is a gigantic fraud, a pseudoscience on par with phrenology or astrology. Economists are nothing but soothsayers who grow fat telling rich people what they want to hear. The sooner the American people catch on to the scam and de-fund every single school of economics in every college in the country, the better off we'll be."

This post demonstrates the truism that, in any subject, there's always someone more radical then oneself!