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August 2005

David Brin Has a Weblog

David Brin's The Transparent Society is an excellent meditation on the dilemmas of the surveillance society. His Startide Rising is the second-best space opera ever written. And his "Thor Meets Captain America" is the best alternate-history story I have ever read.

Contrary Brin: This blog has (as I feared) turned into a major time sink. While I am impressed with the intelligence and cogency of many participants, I have no idea whether there are enough of you to merit such effort, at some cost to writing novels. What HAS been positive is that I've been inspired to dredge up some older projects to put online...

Another Book: Economic Change in China, c. 1800-1950

Another one to add to the pile:

Economic Change in China, c. 1800-1950: Philip Richardson (1999), Economic Change in China, c. 1800-1950 (Cambridge: Cambridge University Press: 0521635713). Reviewed for EH.NET by Debin Ma, Institute of Economic Research, Hitotsubashi University, Tokyo, Japan and Department of Economics, University of Missouri, St. Louis.

Richardson shows there are relatively firm statistics indicating that foreign trade and investment grew enormously in the nineteenth and twentieth centuries. Industrial output, particularly the modern sector, also exhibited an impressive growth record during the twentieth century. But these elements were far from altering the basic structure of the economy dominated by the giant agricultural sector where traditional technology prevailed and estimates of per-capita output growth are dubious due to the lack of consistent aggregate time series data.... "The major long-term influences... were the pressure of population on the land, the intensification of commercialized market mechanisms, contact with the outside world and the role of state. By the middle of the twentieth century those factors had... produce[d]... significant elements of modernization but not... sustained growth....

I believe there is still room for Richardson to push his assessment a little bit.... [M]odern economic growth... had clearly taken root in regions where modern industrial sectors clustered and agriculture was most commercialized.... China was farther along on the path toward modern economic growth in the 1930s or 1950 than in 1890 or 1850.

I do have some reservations about Richardson's assessment of Chinese agricultural conditions in the 1930s.... The relatively reliable data on rice yield per acre in the 1930s shows that the Chinese level was still about 60-70% of the contemporaneous Japanese level... equivalent to... early Meiji Japan... average farm size in China was comparable to... Japan, Taiwan and Korea.... [P]er-capita gross value added of farm output... peak.... The 1930s per-capita level was only surpassed after de-collectivization and the diffusion of the household responsibility system in the 1980s China.

Chinese farmers may have been poor in the 1930s, but they were not much poorer than those in Japan, Taiwan and Korea in their early stages of development. Very likely, they were just as well-off as the Chinese farmers in the late 1970s....

Citation: Debin Ma (2000), "Review of Philip Richardson Economic Change in China, c. 1800-1950" Economic History Services

The Soft Bigotry of Low Expectations at the Department of State

Bradford Plumer writes:

MoJo Blog: Condoleeza Rice: Francophile: Fred Kaplan is trying to figure out what to make of Condoleeza Rice's first term thus far. After rattling off a bunch of her accomplishments--including the resumption of nuclear talks with North Korea (a feat that probably had more to do with South Korea's offer of electricity than American diplomacy) and crafting a "war crimes" resolution against Sudan--he calls her accomplishments "considerable." I'd disagree--in fact, measures like the UN resolution against Sudan, which was then followed by absolutely no international action, may have done more harm than good--but Kaplan's right on when he says: "Yet these feats are only stirring because of who she's working for. They are the sorts of things--conducting diplomacy, entering negotiations, dealing with international organizations--that secretaries of state in most administrations do routinely."

Right on, but more to the point, most of these steps were things that John Kerry was practically pleading with George W. Bush to take all during the 2004 campaign. Now fair enough, the election's over, and it's hard to get upset over the fact that the Bush administration has essentially adopted Kerry's foreign policy, after spending a year telling the electorate how weak-kneed it was, and how unsafe it would make America. I just wish the press would actually make note of this fact, so that, you know, they could call foul the next time a presidential candidate gets depicted as a flower-strewing wimp for pointing out that, hey, maybe doing nothing while Kim Jong Il develops nuclear weapons isn't the best idea after all. But that's probably hoping for too much.

Why Oh Why Are We Ruled by These Liars? (Estate Tax Repeal Con Game Edition)

Edmund Andrews tells his readers what they need to know about the Republican con game that is estate tax repeal:

Death Tax? Double Tax? For Most, It's No Tax - New York Times: WHEN Congress comes back from its summer recess, one of the first things Senate Republicans will try to do, again, is kill the estate tax.... As Michael J. Graetz and Ian Shapiro of Yale recount in "Death by a Thousand Cuts" (Princeton University Press), their entertaining account of the repeal movement, opponents of the estate tax have already achieved a remarkable political feat by building broad public support for abolishing a tax that currently affects only 2 percent of all estates.

But repeal would be costly - more than $70 billion a year... the populist arguments in favor of repeal are misleading. If estate or inheritance taxes were frozen at today's levels, they would have almost no impact on family farmers and most small-business owners.... [M]many of the earnings that are subject to it were never taxed in the first place.... Killing the estate tax is one of President Bush's top priorities, and the House of Representatives has already passed a repeal measure four different times. But Senate Republicans, despite attempts to cut a deal with conservative Democrats before the summer recess, have been stalled on the issue.

Unable to muster the 60 votes they need to overcome a Democratic filibuster, Senate leaders are now vowing to push for full repeal as soon as they come back in September.... "The I.R.S. hits this greatest generation with an unjust double tax, the death tax," the narrator intoned in an ad aimed at North Dakota. Viewers are urged to "tell Kent Conrad," the state's Democratic senator, to "change his vote."...

[T]he battle is over a very large amount of money held by a very small number of families.... The [Estate Tax] limit rose to $1.5 million in 2004... only 13,771 estates - fewer than 1 percent - would have been subject to the tax. All but 740 of them would have had enough in liquid assets to cover estate tax liabilities....

[I]t is misleading for opponents of the estate tax to claim that it is a double tax on earnings that have already been taxed once. In many cases, that's not true. "A lot of assets that passed through very large estates have never been taxed and never will be," said Mr. Graetz of Yale. "It's a very big issue." For thousands of single-digit millionaires, that could be a very good deal indeed...

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

Ah. Max Sawicky's comments on the budget raise a question: are the Washington Post's budget reporters short-sighted, uninformed, and incompetent, or just pretending to be so because not being short-sighted, acting informed, or writing competently gets them hit on the snout with a rolled-up newspaper?

MaxSpeak, You Listen!: NAUGHTY BUDGET BITS: The Washington Post story begins: "The federal budget-deficit picture turned brighter Monday as congressional scorekeepers released new estimates showing the level of red ink for the current fiscal year would drop to $331 billion."...

The purported "brightening" depends on:

  • Discretionary spending falling from 7.8 percent of GDP in 2005 to 6.8 by 2009. This will probably not happen....
  • A built-in revenue increase due to the cessation of the annual short-term fixes for the Alternative Minimum Tax (AMT) that prevent it from growing.
  • A temporary surge in corporate income tax (CIT) revenues, about which more below....

The vaunted improvement in the year-over-year 2005 deficit -- which marks the limit of the Post's fiscal horizon -- comes in large part from a big jump in corporate income tax payments -- about $80 billion. This jump is bigger than the growth in actual corporate profits, so in this sense the vast bulk of the increase cannot be attributed to economic growth. (CBO attributes just $1 billion of the revenue jump to the economy.) Part of the increase is due to the provisions of the 2002 tax cut, which included a depreciation benefit....

Rarely is the question asked, how goes our Republican Era of Hard Work for Limited Government? Discretionary spending for FY2005 is now estimated at $962 billion. In 2001 it was $649 billion, for an average annual rate of growth of 10.3 percent, warming the hearts of communists all over this great land of ours. People said this would happen if you voted for Al Gore, and they were right!... Since January, discretionary legislative action increased total outlays by $34 billion for this fiscal year (ending in September), and by $1.2 Trillion-with-a-T over the next ten years. Most of this is defense spending.

To be sure, some of this spending was for worthy purposes in the national interest. Our personal favorite, previously noted here, is for a museum commemorating the noble Packard automobile.

The cover of the CBO report shows combined spending for Medicaid, Medicare, and Social Security rising from between eight and nine percent of GDP in 2005, to between ten and eleven percent of GDP in 2015. Inside there is a little table showing the 2004 trade deficit at $666 billion.... Whatever happens to the 2005 or 2006 deficit is not even a sideshow. It's a flea circus. The U.S. economy is facing two giant imbalances: the projected gap between tax revenues and Federal spending, and the current, growing gap between what the U.S. buys and what it sells to the rest of the world. The measure of our political system's vacuity, fed by a brainless commercial media, is the inability to put these issues on the table. When forced by a crisis to do so, the remedies will likely by short-sighted, panicked, and stupid...

A Few Words About Shrillblog

A few words about Shrillblog:

The Ancient and Hermetic Order of the Shrill is for all of us who have been driven into shrill unholy madness by the mendacity, stupidity, incompetence, recklessness, and idiocy of the Bush administration and its allies. Recent inductees--voluntary and involuntary--include Ginmar, Dexter Filkins, Michael Moss, Eliot Cohen, Burton Lee, Zbigniew Brzezinski, and Joe Gandelman.

Should you qualify, your personal copy of the Krugmanomicon (along with additional promotional material containing many valuable offers) will soon be on its way. Do not read more than ten pages a day, under pain of falling even further into shrill unholy madness. When you are in your non-human form, or even if you just believe that you are in your non-human form, remember not to devour any endangered amphibians. We had some... problems with the former regional director of the EPA.

Pray vainly to the dead, uncaring stars at least once a month, preferably when the moon is in the second decant.

The Miskatonic University homecoming, pep rally, barbecue (really don't ask), leaf-watching, and eldritch horror viewing will be held on October 33. Driving directions to picturesque Arkham, Massachusetts will follow. Beware Shoggoths on the road near South Campus at moonrise. On no account allow Yog-Sothoth to divert you from the South Gate to the Nadir Gate.

We continue to work on understanding the fell and arcane mysteries. For example: Richard Cheney. Thirty years ago Richard Cheney was the White House Chief of Staff who ran Gerald Ford's tough-but-fair policy process, and was the best friend of Paul O'Neill. Thirteen years ago Richard Cheney was a determined opponent of America's getting sucked into the Iraqi quagmire. Today?... Well, we all know. What has happened? Replaced by a fell servitor beast casting a hypnotic glamour? Controlled by implants from afar implanted by uebermenschen escaped from a Charlie Stross novel? Or was his mind sucked out and replaced by the mere act of reading the dread Book of PNAC?

I Do Give a Fig

The figs are truly wonderful this year.

That is all.

P.S.: In what society did the expression, "I don't give a fig..." evolve. I mean, I do give a fig--especially for figs like these.

La Longue Duree

From the excellent Robert Darnton (1984), "Peasants Tell Tales: The Meaning of Mother Goose," in The Great Cat Massacre and Other Episodes in French Cultural History (New York: Basic Books: 0394729277):

To reconstruct the way peasants saw the world under the Old Regime... one should begin by asking... what experiences they shared in the everyday life of their villages.... [T]hat question can be answered... with qualifications and restricted to a high level of generalization.... The density of monographs can make French social history look like a conspiracy of exceptions trying to disprove rules. Yet... if one stands at a safe enough distance... a general picture begins to emerge....

Despite war, plague, and famine, the social order that existed at village level remained remarkably stable during the early modern period in France. The peasants were relatively free--less so than the yeomen who were turning into landless laborers in England, more so than the serfs who were sinking into a kind of slavery east of the Elbe. But they could not escape from a seigneurial system that dnied them sufficient land to achieve economic independence and that siphoned off whatever surplus they produced. Men labored from dawn to dust, scratching the soil on scattered strips of land with plows like those of the Romans and hacking at their grain with primitive sickles... to leave enough stubble for communal grazing. Women married late... twenty-five to twenty-seven... gave birth to only five or six children, of whom only two or three survived to adulthood. Great masses... lived ina sate of chronic malnutrition... porridge made of bread and water with some occasional home-grown vegetables.... They ate meat only a few times a year, on feat days or after the autumn slaughtering if they did not have enough silage to feed the livestock over the winter. They often failed to get the two pounds of bread (2000 calories) a day they needed to keep up their health... had little protection against... grain shortage and disease. The population fluctuated between fifteen and twenty million, expanding to... forty souls per square kilometer... [and] forty births [per year] per thousand inhabitants... only to be devastated by demographic crises. For four centuries... [until] the 1730s... French society remained trapped in rigid institutions and Malthusian conditions... l'histoire immobile.

That phrase now seems exaggerated, for it hardly does justice to the religious conflict, grain riots, and rebellions... that disrupted the late medieval pattern of village life.... But... the notion... of structural continuity... la longue duree... served as a corrective.... While ministers came and went and battles raged, life in the village continued unperturbed, much as it had always been since times beyond the reach of memory....

Grain yields remained at a ratio of about 5-to-1... in contrast to modern farming, which produces fifteen or even thirty.... Farmers could not raise enough grain to feed large numbers of animals, and they did not have enough livestock to produce the manure to fertilize the fields to increase the yield. This vicious circle kept them enclosed within... triennial or biennial crop rotation... fallow. They could not convert the fallow to... clover... [to] return nitrogen to the soil because they lived too close to penury to risk the experiment... [and] had no notion of nitrogen. Collective methods of cultivation also reduced the margin for experimentation.... [C]ommon gleaning and common grazing... common lands and forests... pasture, firewood, and chestnuts or berries. The only area where they could attempt to get ahead by individual initiative was the... backyard attached to their household plots....

The backyard garden often provided the margin of survival.... [S]eigneurial dues, tithes, grand rents, and taxes.... [T]he wealthier peasants rigged the collection of the main royal tax, the taille, in accordance with an old French principal: soak the poor....

Many of them went under... took to the road for good... milked untended cows, stole laundry... joined and deserted regiment after regiment... smugglers, highwaymen, pickpockets, prostitutes... pesilential poor houses, or else just crawled under a bush or a hay loft and died....

Death came just as inexorably to families that... kept above the property line.... 236 of every thousand babies died before their first birthdays.... 45 percent of Frenchmen born in the eighteenth century died before the end of ten.... Terminated by death... marriages lasted an average of fifteen years.... Stepmothers proliferated everywhere... [not] stepfathers, as the remarriage rate among widows was one in ten....

The peasants of early modern France inhabited a world of stepmothers and orphans, of inexorable, unending toil, and of brutal emotions. The human condition has changed so much since then that we can hardly imagine the way it appeared to people whose lives really were nasty, brutish, and short. That is why we need to reread Mother Goose...

I think that Darnton misses one important point. Life in early modern France, or Germany, or Britain, or the Low Countries, or elsewhere with the western European late marriage pattern according to which women did not get married until their boyfriends acquired cottages of their own which usually meant they were in their mid-twenties (or in places with similar patterns, like the lower Yangtze valley, where men couldn't get married until their older brothers believed that the lineage household could afford another woman), was quite good for a preindustrial agrarian human society. In most times and places marriage came earlier--not five or six but eight births--but more famines, worse nutrition, and thus greater mortality from disease gave the same two to three surviving to adulthood.

Why Oh Why Can't We Have a Better Press Corps? (Michael Barone: Intellectual Garbage Scow Edition)

Mark Thoma does intellectual garbage pickup on the overrated Michael Barone.

He tackle's Barone's claim that "maybe" the fall in social mobility in America is due to the fact that a high IQ genetic elite has risen to the top of the fair meritocracy that is our society. And Mark's head explodes:

Economist's View: Does Michael Barone Believe the Poor Lack the Genetic Intelligence and Drive Needed to Compete in the Emerging U.S. Meritocracy?: Am I reading this column by Michael Barone correctly? Does it blame being poor on lack of intelligence? Do you believe, as he does, that if you are poor it is most likely because your parents were unintelligent?... Read it yourself....

Michael Barone: [P]olls show that Americans think their chances of moving up are better than a generation ago. Statistics tell a different story: There is a higher correlation today between parents' and children's income than in the 1980s, and the income gap between college graduates and non-graduated doubled between 1979 and 1997.

"America," concludes Parker, "is becoming a stratified society based on education: a meritocracy."... [This] is exactly what Richard Herrnstein and Charles Murray predicted for America in their controversial book The Bell Curve, published 11 years ago. Herrnstein and Murray noted that intelligence is both measurable and in some large but unquantifiable part hereditary, an unexceptionable finding for experimental psychologists but maddening to social engineers. As college education becomes open to all with the requisite intelligence, graduates will tend to marry graduates and produce children with similar intelligence, while others will tend to produce children without it.

"Unchecked, these trends," Herrnstein and Murray wrote, "will lead the U.S. toward something resembling a caste society, with the underclass mired ever more firmly at the bottom and the cognitive elite ever more firmly anchored at the top."... Are we there yet?... [M]aybe so.

Yet should we be so gloomy?... Not everyone has an emotional need to be on top: How many people, if they thought seriously about it, would really want the burdens of a CEO, however lavish the pay?... As Murray has written, all you need to do to avoid poverty in this country is to graduate from high school, get and stay married, and take any job. The intelligence needed to get a place in the cognitive elite may become more concentrated in a fair meritocratic society, but the personal behaviors needed to find a valued place in society are available to everyone. Meritocracy may mean less mobility, but that is bearable if, as Brooks says, "America is becoming more virtuous."...

The inheritance of inequality is strikingly large in America today: if the father's lifetime was 100% above the American average for his day, the son's lifetime income will on average be 65% above the American average for his day. That's a lot of inherited inequality. Is this unequal distribution of wealth, income, and status in the United States today the result of the fact that a genetic elite has risen to the top in a "fair" IQ-driven meritocracy?


This high degree of inherited inequality isn't because high IQ genetic eliteness genes are being passed down from fathers to sons. As Samuel Bowles and Herbert Gintis (2002), "The Inheritance of Inequality," report:

The direct effect of IQ on earnings... presented in Bowles, Gintis, and Osborne (2002a)... is 0.15, indicating that a [one] standard deviation change in the cognitive score, holding constant... remaining variables... changes... earnings by about one-seventh of a standard deviation.... An estimate of the causal impact of childhood IQ on years of schooling... is 0.53 (Winship and Korenman 1999). A rough estimate of the direct and indirect effect of IQ on earnings... is then... 0.15+(0.53)(0.22) = 0.266....

h is the heritability of IQ.... The value cannot be higher than 1, and most recent estimates are substantially lower, possibly more like a half or less.... [C]ouples tend to be more similar in IQ than would occur by random mate choice.... [The] genetic correlation of parent and offspring [is] (1 + m)/2....

Using the values estimated above, we see that the contribution of genetic inheritance of IQ to the intergenerational transmission of income is (h2(1+m)/2)(0.266)2 = .035(1 + m)h2. If the heritability of IQ were 0.5 and the degree of assortation, m, were 0.2 (both reasonable, if only ball park estimates) and the genetic inheritance of IQ were the only mechanism accounting for intergenerational income transmission, then the intergenerational correlation [of lifetime income] would be 0.01, or roughly two percent the observed intergenerational correlation [of lifetime income between parents and children].

Two percent is simply not a large number. Factors that currently account for two percent of lifetime earnings inequality are simply not yet a big deal, and cannot be responsible for the fall in social mobility.

If there is ever to be a genetic elite, its members will surely exhibit two behavioral traits: a facility with math, and a near-intinctive tendency to do back-of-the-envelope quantitative checks of assertions. We can conclude only one thing from Barone's column: neither he nor his descendents (unless they get really lucky in their mates) are plausible candidates for membership in any "genetic elite".

It is worth pointing out that neither Richard Herrnstein nor Charles Murray are plausible candidates for membership in any "genetic elite" either. Let me turn the microphone over to impeccably right-wing Jim Heckman, who comments on The Bell Curve:

The Book fails for five main reasons. 1. The central premise of this book is the empirically incorrect claim that a single factor - g or IQ - that explains linear correlations among test scores is primarily responsible for differences in individual performance in society at large.... There is much evidence that more than one factor -- as conventionally measured -- is required to explain conventional correlation matrices among test scores.... They do not emphasize how little of the variation in social outcomes is explained by AFQT or g. There is considerable room for factors other than their measure of ability to explain wages and other social outcomes. 2. In their empirical work, the authors assume that AFQT is a measure of immutable native intelligence. In fact, AFQT is an achievement test that can be manipulated by educational interventions. 3. The authors[']... implicit assumption of an immutable g that is all-powerful in determining social outcomes leads them to disregard a lot of evidence that a variety of relevant labor market and social skills can be improved. 4. The authors present no new evidence on the heritability of IQ or other socially productive characteristics.... [T]hey... [compare] IQ... [to] a crude measure of parental environmental influences. This comparison is misleading. It fails to recognize the crudity of their environmental measures and the environmental component that is built into their measure of IQ, which biases the evidence in favor of their position. Moreover, the comparison as they present it is intrinsically meaningless. 5. Finally, the authors' forecast of social trends is pure speculation... the social policy recommendations have an ad hoc flavor to them.... The appeal to Murray's version of communitarianism as a solution to the emerging problem of inequality among persons is a deus ex machina flight of fancy that is not credibly justified.

And take a look at as well.

Fool Me Once, Shame on You...

Paul Krugman says that the Bush record on Social Security reform carries important lessons. For, in the words of George W. Bush: "Fool me once, shame on you. Fool me... fool me twice... [pause] We can't get fooled again!"

Social Security Lessons - New York Times: I'd like to revisit Social Security for a moment, because it's important to remember what Mr. Bush tried to get away with. Many pundits and editorial boards still give Mr. Bush credit for trying to "reform" Social Security. In fact, Mr. Bush came to bury Social Security.... Over time, the Bush plan would have transformed Social Security from a social insurance program into a mutual fund, with nothing except a name in common with the system F.D.R. created.

In addition to misrepresenting his goals, Mr. Bush repeatedly lied about the current system. Oh, I'm sorry - was that a rude thing to say? Still, the fact is that Mr. Bush repeatedly said things that were demonstrably false and that his staff must have known were false.... [T]he administration politicized the Social Security Administration and used taxpayer money to promote a partisan agenda. Social Security officials participated in what were in effect taxpayer-financed political rallies, from which skeptical members of the public were excluded....

[This] is still going on. Last week Jo Anne Barnhart, the commissioner of Social Security, published an op-ed article claiming that Social Security as we know it was designed for a society in which people didn't live long enough to collect a lot of benefits. "The number of older Americans living now," wrote Ms. Barnhart, "is greater than anyone could have imagined in 1935." Now, it turns out that an article on the Social Security Administration's Web site, "Life Expectancy for Social Security," specifically rejects the idea the Social Security was originally "designed in such a way that few people would collect the benefits," and the related idea that the system faces problems from "a supposed dramatic increase in life expectancy in recent years." And the current number of older Americans as a share of the population is just about what the founders of Social Security expected. The 1934 report... projected that 12.7 percent of Americans would be 65 or older by the year 2000. The actual number was 12.4 percent....

[T]he campaign for privatization provided an object lesson in how the administration sells its policies: by misrepresenting its goals, lying about the facts and abusing its control of government agencies. These were the same tactics used to sell both tax cuts and the Iraq war. And there are two reasons to study that lesson. One is to be prepared.... [T]here's still room for another big domestic initiative, probably tax reform. Forewarned is forearmed: the real goals of reform won't be as advertised, the administration will say things about the current system that aren't true, and the Treasury Department will function in a purely partisan capacity...

The Reality-Based Community

Ah. At least one member of the Bush administration wants to rejoin the reality-based community. Of course, he cannot admit in public that he wants to "shed the unreality" and still keep his job.

Kevin Drum reports:

The Washington Monthly: REALITY vs. UNREALITY.... The Bush administration, then and now:

Summer 2002, a senior Bush official to Ron Suskind: "[Establishment liberals] believe that solutions emerge from your judicious study of discernible reality. That's not the way the world really works anymore. We're an empire now, and when we act, we create our own reality."

Summer 2005, a senior Bush official to Robin Wright and Ellen Knickmeyer: "What we expected to achieve [in Iraq] was never realistic given the timetable or what unfolded on the ground. We are in a process of absorbing the factors of the situation we're in and shedding the unreality that dominated at the beginning."

Kitten Blood

From Lindsay Beyerstein, I learn that:

Majikthise : Puppy blood: Eugene Volokh affirm[s] that the Iraqi insurgency is bad and emphasize[s] that Westerns who make excuses for brutal theocratic thuggery are bad, too. [He a]cknowledge[s], when pressed, that there are very, very few Westerners in this category, but insist[s] that these people are nevertheless bad. Bravo.

Let me say "Bravo" to Eugene as well. That is a brave and true thing for him to be willing to say.

I for one, would like to also denounce adherents of the Republican Party who pretend to "adopt" kittens from animal shelters, and then kill them and dissect their little kittenish bodies with knives. I acknowledge that rather few Republicans are in this category, but I insist that these people are very bad.

Why Oh Why Are We Ruled by These Incompetents? (Support Our Troops Edition)

Fire Donald Rumsfeld. Impeach George W. Bush. Impeach Richard Cheney. Do it now.

U.S. Struggling to Get Soldiers Improved Armor - New York Times: MICHAEL MOSS: [T]he Pentagon is struggling to replace body armor that is failing to protect American troops from the most lethal attacks by insurgents. The ceramic plates in vests worn by most personnel cannot withstand certain munitions the insurgents use. But more than a year after military officials initiated an effort to replace the armor with thicker, more resistant plates, tens of thousands of soldiers are still without the stronger protection because of a string of delays in the Pentagon's procurement system....

"We are working as fast as we can to complete it as soon as we can," Maj. Gen. Jeffrey A. Sorenson, the Army's deputy for acquisition and systems management, said Wednesday in an interview at the Pentagon.... [B]ody armor remains critical to the military's goals in Iraq. Gunfire has killed at least 325 troops, about half the number killed by bombs, according to the Pentagon.... [T]he Pentagon is relying on a cottage industry of small armor makers with limited production capacity. In addition, each company must independently come up with its own design for the plates, which then undergo military testing. Just four vendors have begun making the enhanced armor, according to military and industry officials.... "Nobody is happy we haven't been able to do it faster," Maj. Gen. William D. Catto, head of the Marine Corps Systems Command, said Wednesday in the interview. "If I had the capability, I'd like to see everybody that needs enhanced SAPI to have it and at the rate we have now, we're going to have months before we get the kind of aggregate numbers we want to have," General Catto said, referring to the thicker plates, known as the Enhanced Small Arms Protective Insert. "That's just a fact of life because of the raw materials paucity and the industrial base."...

Body armor arose as an issue in Iraq shortly after the invasion in March 2003, when insurgents began attacking American troops who had been given only vests and not bullet-resistant plates. The Army had planned to give the plates only to frontline soldiers. Officials now concede that they underestimated the insurgency's strength and commitment to fighting a war in which there are no back lines. The ensuing scramble to produce more plates was marred by a series of missteps in which the Pentagon gave one contract to a former Army researcher who had never mass-produced anything. He was allowed to struggle with production for a year before he gave up. An outdated delivery plan slowed the arrival of plates that were made. In all, the war was 10 months old before every soldier in Iraq had plates in late January 2004.

Four months later, the Pentagon quietly issued a solicitation for the enhanced plates that would resist stronger attacks. At the same time, it worked to make improvements to the vests, including adding shoulder and side protection...


Well, after getting the children to think that we might actually know something about movies with "Doctor Strangelove," we then blew our credibility sky-high with "2001: A Space Odyssey."

Will "American Graffiti" restore our credibility, or further damage it?

Mirrors of Wildernesses

Kevin Drum writes:

The Washington Monthly: STATE DEPARTMENT MEMO UPDATE....Walter Pincus is too subtle for me, but I think Armando at Daily Kos may have correctly deconstructed the point of Pincus's story today about who sent Joe Wilson to Niger. Here's the nickel version:

  1. In July 2003, Karl Rove and Scooter Libby told reporters that Wilson's wife, Valerie Plame, had been responsible for sending him on his fact finding trip to Niger the previous year.
  2. However, virtually every source says that's not true. The CIA maintains that senior officials in the counterproliferation division chose Wilson, and that Plame's only role was to write a memo about his credentials that they asked her to write.
  3. In fact, as of July 2003, there was only one source that said the trip was Plame's idea: the State Department's Bureau of Intelligence and Research, which had written a memo in June about the affair.
  4. Therefore, that State Department memo must have been Rove and Libby's source of information about Plame -- and if that's the case, it's bad news for the White House since the memo clearly marked the information about Plame as classified. (Further tidbit: Is it possible that this memo was what Rove was talking about when he told Time's Matt Cooper that "material was going to be declassified in the coming days that would cast doubt on Wilson's mission"?)

Do I believe this theory? Maybe. It certainly sounds plausible. Do I believe this was Pincus's point in writing his article? Possibly. - High Oil Prices Put Pressure On U.S. Trade Balance in June

Yes. The dollar is overvalued: - High Oil Prices Put Pressure on U.S. Trade Balance in June: Soaring prices and high demand for foreign crude oil put renewed pressure on the U.S. trade balance in June, the government reported Friday.... The Commerce Department said the U.S. deficit in international trade of goods and services grew 6.1% to $58.82 billion. Exports were basically unchanged, advancing to $106.83 billion from $106.78 billion in May, and imports rose 2.1% to $165.65 billion, a record high.... The value of crude-oil imports rose to a record $14.58 billion in June as the average price per barrel climbed $1.32 to $44.40. That marked the second highest price ever; the highest was $44.76 in April.... The U.S. paid $19.93 billion for all types of energy-related imports in June.... Deficits with major trading partners also got bigger in June, Commerce said. The U.S. shortfall with China widened to $17.59 billion from May's $15.75 billion. The U.S. trade deficit with Japan grew to $6.95 billion from $6.58 billion in May. The trade gap with the euro area increased to $8.19 billion from $8.12 billion. The deficit with Canada widened to $5.40 billion from $4.75 billion. The U.S. gap with Mexico rose to $4.76 billion from $4.48 billion....

National Review Strikes Again!

Mark Thoma tells us that the know-nothings at National Review are launching hit pieces on Ben Bernanke. Mark attempts the tas of cleaning out the entire stable. I'm just going to deal with the first piece of horsesh-t I come across:

John Tamny on Ben Bernanke and the Federal Reserve on NRO Financial: Bernanke asked how much demand in the latest quarter “appears to have been satisfied out of inventories rather than from new production.” But supply-siders don’t even consider this — they don’t because they know that products are ultimately bought with other products. “Demand” will always exist, as human wants are unlimited. But what Bernanke deems “demand” is in fact producers offering up their surpluses for those of others. In the supply-side model, what Bernanke sees as a fall in aggregate demand is in fact a fall in production — something supply-siders agree results from governmental meddling along the lines of excessive taxation, regulation, and unstable money...

Bernanke's point is that in the second quarter households, the government, and investing businesses bought one-half percent more goods and services than U.S. producers made and U.S. businesses (net) imported. Thus inventories are now below levels that businesses think they need to run their operations efficiently. In the next several quarters, therefore, businesses are going to ramp up production in order to build their inventories back to a comfortable level. This is an important thing to notice. It is not a contentious or a disputed point--except to the likes of John Tamny.

Tamny is enraged that Bernanke is thinking about fluctuations in employment and capacity utilization at all. We, Tamny says, "don't even consider this" because "'[d]emand' will always exist, as human wants are unlimited.... [W]hat Bernanke sees as a fall in aggregate demand is in fact a fall in production..." Let us not comment on the fact that Tamny is too stupid to notice that what Bernanke is talking about is not a fall but a rise in aggregate demand: that's just too embarrassing for words. Let us, instead, comment that Bernanke is talking about a fact about the world--that spending was larger than production in the second quarter. And Tamny's response is that that fact doesn't exist: because "products are ultimately bought with other products," spending cannot be anything other than equal to production. In Tamny's world, theory proves that fluctuations in unemployment and capacity utilization are logically impossible.

Now there was an economic theory that held that fluctuations in unemployment and capacity utilization were logically impossible: that supply was automatically equal to demand. That theory is called "Say's Law," after nineteenth-century French economist Jean-Baptiste Say. That theory wrong: there are fluctuations in unemployment and capacity utilization. And because that theory is wrong, we have the Federal Reserve. One way to think about the Federal Reserve's mission is that it's job is to try to make sure that spending is matched to production--to make Say's Law true in practice, even though it is not true in theory.

Bernanke's attention to the details of aggregate demand is, of course, on of the reasons that he is exceptionally highly qualified to chair the Federal Reserve.

Views on the Greenspan Succession

Tim Annett takes a poll of economists:

Tim Annett: Economists were divided on the question of whom they would prefer succeed Mr. Greenspan, who is expected to retire from the Fed early next year. Ben Bernanke, a former Fed governor and current chairman of President Bush's Council of Economic Advisors, drew the support of 30% of the economists, while Martin Feldstein, president of the National Bureau of Economic Research, and Fed governor Donald Kohn each received the backing of 15% of the group. Former White House economic advisor and Columbia University professor Glenn Hubbard and Clinton administration Treasury Secretary Robert Rubin each were selected by 11% of the group...

Global Excess Liquidity?

I don't understand the argument that even though inflation is not accelerating, the world nevertheless suffers from "global excess liquidity":

Economics focus | A working model | Is the world experiencing excess saving or excess liquidity?: WHEN The Economist's economics editor studied macroeconomics in the 1970s, the basic model for understanding swings in demand was the so-called IS-LM framework, invented by Sir John Hicks in 1937 as an interpretation of Keynes's General Theory. In recent years it has gone out of fashion.... That is a pity, for... the model... casts useful light on why bond yields are so low.

America's Federal Reserve raised short-term interest rates again this week, to 3.5%, its tenth increase since June 2004. Yet over that period, long-term bond yields have fallen.... The most popular explanation is that there is a global glut of savings, which has driven yields down.... An alternative explanation, preferred by some economists, is that bond prices, like other asset prices, have simply been pushed up by excess liquidity....

The IS-LM model helps us to understand these two opposing theories.... The IS (investment/saving) curve represents equilibrium in product markets, showing combinations of output and interest rates at which investment equals saving and hence the demand for goods and services equals supply. The IS curve slopes downwards, because a higher interest rate reduces spending.... The LM (liquidity/money) curve represents equilibrium in the money market, showing combinations of output and interest rates where the demand for holding money, rather than interest-bearing assets, such as bonds, equals the supply of money. This curve slopes upwards, because a rise in income increases the demand for money and so raises the interest rate.... The point at which the two curves intersect is the only combination of output and interest rates (ie, bond yields) where both the goods and financial markets are in balance....

The left-hand chart shows the economy in equilibrium at interest rate r1 and output Y1. If desired saving increases relative to investment (ie, there is excess saving), the IS curve shifts to the left to IS2. Interest rates fall (to r2), and so also will output (to Y2). This does not fit the current facts: last year the world economy grew at its fastest pace for almost three decades, and this year remains well above its long-term average growth rate. The right-hand chart illustrates the alternative theory. A loose global monetary policy shifts the LM curve to the right, to LM2. Bond yields again fall, to r3, but this time output increases. In contrast to a shift in the IS curve, the economy has instead moved along the IS curve: lower interest rates stimulate global output and hence investment. This seems to fit the facts much more comfortably....

From my point of view, the Economist's story is incomplete. As the Economist admits, the "two theories are not mutually exclusive." What happened was not a rise in savings, but a fall in investment as first the collapse of the dot-com bubble and then 9/11 increased uncertainty and diminished businesses' willingness to undertake risky investments. That shifted the IS curve to the left. In response, the Federal Reserve (and other central banks) shifted to easy money--shifted the LM curve out--like so:

Are interest rates now "too low"? The usual answer is that interest rates are too low when inflation is accelerating. As long as inflation is stable, that means that the supply of goods and services is roughly equal to the demand for goods and services (if demand were outrunning supply, inflation would be accelerating). Inflation is roughly stable. So what's the worry?

The Economist thinks there is a worry:

[C]entral banks have created too much liquidity. Despite rising short-term interest rates in America, monetary policy is still unusually expansionary. Average short-term rates in America, Europe and Japan have remained below nominal GDP growth for the longest period since the 1970s. In addition, America's loose policy has been amplified by the build-up in foreign-exchange reserves and domestic liquidity in countries that have tied their currencies to the dollar, notably China and the rest of Asia. As a result, over the past couple of years, global liquidity has expanded at its fastest pace for three decades. If you flood the world with money, it has to go somewhere, and some of it has gone into bonds, resulting in lower yields. Or, more strictly, bond prices have been bid up until yields are so low that people are happy to hold the increased supply of money...

But if it's not producing accelerating inflation, and if higher interest rates would produce higher unemployment, what's the problem?

Where I see the potential problem is that the dollar is overvalued and may--any moment--fall by 40% or more, should international currency speculators decide that the dollar's run is over and should central banks decide that keeping the value of the dollar high is now too expensive. The United States currently imports 16% of GDP. A 40% price rise in 16% of GDP is a one-shot 6 percentage point increase in the price level. The Federal Reserve is not going to let the inflation rate jump far above 3% per year: it will respond to a falling value of the dollar and the resulting accelerating inflation by raising interest rates far and fast. Thus should a sudden 40% (or more) fall in the dollar take place, a big recession follows.

The way to try to head off this potential problem is to try to make sure that the decline in the dollar takes place slowly and gradually. Slowly shrink the federal government budget deficit--even move the government budget into surplus. Take other steps to shrink gross domestic purchases relative to gross domestic product. Allow other currencies to slowly appreciate relative to the dollar so that the supply shock delivered by dollar decline is spread out and small in any one time period.

But raising interest rates is not a way to head off this potential problem. A balanced increase in interest rates would not affect the dollar, and leave the dollar overvaluation problem as serious as ever. An increase in U.S. interest rates would make dollar-denominated assets more attractive, and increase the magnitude of the dollar valuation problem. An increase in U.S. interest rates would raise U.S. unemployment. And to what gain?


The Washington Post's Sam Coates snarks out:

The Art of Telling Parties Apart: We have, it appears, a new way of distinguishing Republicans from Democrats, at least in the federal city. It emerged last week... from Tim Goeglein, White House deputy director of public liaison.... Not one [Democratic] parent, [Goeglein] said, gave an answer that would be more typical of Republicans. "Our party, in the way it is constituted, we think of medicine, we think of law, we think of business. We don't think, gee, I hope my son grows up to be a great playwright or painter or poet," he explained.

Whether a future government employee, a bureaucrat, would win the approval of a GOP parent, he did not say.

For Goeglein himself is neither a doctor, nor a lawyer, nor an entrepreneur. He has, since graduating from Indiana University, been a congressional flack, a campaign worker, and a bureaucrat--none of them things any Republican parent would approve of.

What Republican lawyer, doctor, or entrepreneur does Coates turn to next for comment? To none, of course: he turns to Republican litterateur Mark Helprin, who has a child "at Harvard studying classics -- 'not exactly law or medicine' -- while the other," a future bureaucrat, "is studying public health at Johns Hopkins."

And then Helprin says that if you are concerned mainly with the humanities "you don't have time to study how the world works. And if you have no understanding of economics, strategy, history and politics, then naturally you would be a liberal."

Helprin--of course--doesn't explain his own politics, for he has no understanding of economics, strategy, history, or politics, and yet is a conservative.

Sam Coates gets a +7 on the snarkiness meter.

Berkeley Economics Fall 2005 Scheduling Anomalies

Basically, we need to have the flexibility of a quarter system. So we are slowly creeping in that direction:

Scheduling Anomalies:

ECON 204 meets Monday-Friday August 8-26 with lectures from 1-4:00 in 250 GSPP. Sections will be announced in the first lecture.

ECON 210A begins October 19 and meets Wednesdays from 12:00-2:00 in 608-7 Evans Hall. Students do not officially enroll in this course until Spring 2006.

ECON 295 begins October 17 and meets Mondays from 12:00-2:00 in 608-7 Evans Hall.

Unstructured Procrastination

I usually am quite good at structured procrastination--working not on the thing that is most immediate and imminent on my calendar, but on the priority #3 or #4 that is actually more important in the long run and that excites me at the moment. But today this system has broken down. I have done something nobody should ever do: I have spent an hour thinking about Louis Althusser.

It's all Michael Berube's fault, but its worth it, for (highlighted below) he has the best paragraph on Louis Althusser ever written. The rest is (or ought to be) silence:

Michael Berube: ...the otherwise incomprehensible question of why anyone would think it necessary to devise a “structuralist Marxism.” Structuralism is so antipathetic to all questions of hermeneutics and historicity that one might imagine the desire for a structuralist Marxism to be something like a hankering for really spicy ice cream. And yet, in the work of Louis Althusser, spicy ice cream is exactly what we have. I don’t like it myself. But because it’s an important byway in the history of ice cream—-er, I mean the history of Marxist theory—-I still find it necessary to tell students about it, partly in order to warn them that it will very likely leave a bad taste in their mouths.... [L]et’s not jump ahead just yet; let’s work to get that bad taste in our mouths first....

[A]s Tony Judt pointed out in a devastating review of Althusser’s career (in the March 7, 1994 issue of The New Republic), Althusserian Marxism was, for a brief period, a lingua franca spoken widely on the Continent:

When I arrived in Paris as a graduate student in the late ‘60s, I was skeptically curious to see and to hear Louis Althusser. In charge of the teaching of philosophy at the Ecole Normale Superieure, the French elite academy for future teachers and leaders, Althusser was touted by everyone I met as a man of extraordinary gifts, who was transforming our understanding of Marx and reshaping revolutionary theory. His name, his ideas, his books were everywhere....

In the past, I’ve directed my students to Judt’s review as well as to various accounts (including Althusser’s) of Althusser’s late “confessions”—-that he was poorly read in Marx, that he suffered from lifelong mental illness, that his so-called “symptomatic” readings in Marxism were little more than an elaborate way of making shit up. I’ve done this... [in part] to complicate the view of Althusser one gets in the Norton, where the headnote tells us that “Althusser’s major concepts—-‘ideological state apparatuses,’ ‘interpellation,’ ‘imaginary relations,’ and ‘overdetermination’—-permeate the discourse of contemporary literary and cultural theory, and his theory of ideology has influenced virtually all subsequent serious work on the topic”.... [Presume] Althusser was speaking the truth about his lack of familiarity with the Marxist canon, and that his mental illness played a large role in his life and work. (Hardcore Althusserians have tried to set aside his “confessions” precisely by appealing to his history of mental illness, but this merely produces a Marxist-theory version of the Cretan liar’s paradox: of course you can’t believe a madman who tells you he’s mad.)...

Let nobody mistake me: I do not have a single good word to say for Louis Althusser. But at least one of Karl Marx's own Marxisms was a "structuralist Marxism" from the very beginning. Let's let German Charlie from Trier speak for himself:

To prevent possible misunderstanding, a word: I paint the capitalist and the landlord in no sense with rosy colors. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.

What Marx is saying here is that capitalists and landlords act as they do in large part because the process by which they have been raised, educated, and socialized makes it almost impossible for them to think that they should act otherwise. And, to the extent that they do wonder whether they should act otherwise, they cannot do so--not without losing their fortunes, their businesses, and their jobs, and being replaced by those who do act in a manner consistent with maintaining their economic roles. The immorality of capitalism, for Marx, lies not in the evil acts of individuals (who for the most part think that they are dealing "fairly"--buying and selling at market prices) but in the workings of the system in which they are embedded. In short:

Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like an Alp on the brains of the living.

That's "structuralism." (Now that's not all of Marx, and things like the Eighteenth Brumaire (1) are most interesting where they deviate from and build on the technology-economics-class interests-class politics structuralism that is at the bottom of the mature Marx's analysis. But that structuralism of the "base" does exist, and the more subtle analysis of the "superstructure" is built on top of and conditioned by it in a perturbation-theory way.)

I think that the attraction of Althusser lay in a very different core: Althusser's Marxism was attractive not because it was "structuralist" but because it was, as E.P. Thompson put it, "idealist."

Let me explain.

In the 1930s the Great Depression made it very easy to be a Communist: no matter what the criticism, you could answer it with, "Oh yeah? And you'd rather have the system that gave us the Great Depression." In the 1940s the extraordinary suffering of Russia during World War II and the great victories won by the Red Army made it easy to be a Communist: no matter what the criticism, you could answer it with, "Oh yeah? Without the factories of Magnitogorsk that Stalin built, Hitler would still be in Paris." (And it is certainly true that the world owes an enormous debt to the soldiers of the Red Army and the workers of Magnitogorsk that it has never honored.)

By the 1960s, it was much harder to be a Communist. The workers' uprisings were all east of the Iron Curtain--Hungary 1956, East Germany 1953. The living standard gap between the democratic industrial west and the dictatorial centrally-planned east was growing. Khrushchev was saying that Stalin was not as bad as right-wing propaganda had imagined: he was worse. Mao had starved tens of millions of people to death, did not fear nuclear war, and was launching the Cultural Revolution. And relations between the Soviet Union and China were very bad: Khrushchev and Brezhnev had more fear of (and had more reason to have fear of) Mao's atomic bombs than Johnson or Nixon did. The Marxist-Leninist theory of historical development had gone off the rails. Where was the increasing immiserization of the working class? Where was the increasingly violent struggle between imperialists for colonies whose markets they could dominate? Where was the increasing domestic political repression as working-class parties gained grass-roots strength? Where were the increasingly-violent political crises?

The easiest way, in the 1960s, to deal with all these criticisms that the Marxian framework did not explain what was going on in world politics and economics was to throw out the belief that Marxism was a set of ideas to help one understand the world, and to replace it with the belief that Marxism was the study of certain texts--that it was a logical and philosophical mistake to even ask the question of whether Marx's ideal types were a close match to actual historical developments. That's the key thing that Althusser did: he gave his students and acolytes an excuse to ignore the real economics and politics of the world, and to burrow into their own self-contained warrens of discourse.

(1) It is really unfair not to talk about the Eighteenth Brumaire here, and how Marx's attempt to understand the rise of Napoleon III is an analysis of ideological "hegemony" and "false consciousness" that provides at least as useful a pattern as one can get out of Gramsci and far more useful than one can get out of Althusser, but I've wasted too much time on this already.

"When Johhny Comes Marching Home" Lyrics

We were watching "Doctor Strangelove," and it turned out neither of the kids knew the original words to the background song:

"Johhny I Hardly Knew Ye" Lyrics:

While goin' the road to sweet Athy, hurroo, hurroo
While goin' the road to sweet Athy, hurroo, hurroo
While goin' the road to sweet Athy
A stick in me hand and a drop in me eye
A doleful damsel I heard cry,
Johnny I hardly knew ye.

With your drums and guns and drums and guns, hurroo, hurroo
With your drums and guns and drums and guns, hurroo, hurroo
With your drums and guns and drums and guns
The enemy nearly slew ye
Oh my darling dear, Ye look so queer
Johnny I hardly knew ye.

Where are your eyes that were so mild, hurroo, hurroo
Where are your eyes that were so mild, hurroo, hurroo
Where are your eyes that were so mild
When my heart you so beguiled
Why did ye run from me and the child
Oh Johnny, I hardly knew ye.

Where are your legs that used to run, hurroo, hurroo
Where are your legs that used to run, hurroo, hurroo
Where are your legs that used to run
When you went for to carry a gun
Indeed your dancing days are done
Oh Johnny, I hardly knew ye.

I'm happy for to see ye home, hurroo, hurroo
I'm happy for to see ye home, hurroo, hurroo
I'm happy for to see ye home
All from the island of Sulloon
So low in flesh, so high in bone
Oh Johnny I hardly knew ye.

Ye haven't an arm, ye haven't a leg, hurroo, hurroo
Ye haven't an arm, ye haven't a leg, hurroo, hurroo
Ye haven't an arm, ye haven't a leg
Ye're an armless, boneless, chickenless egg
Ye'll have to put with a bowl out to beg
Oh Johnny I hardly knew ye.

They're rolling out the guns again, hurroo, hurroo
They're rolling out the guns again, hurroo, hurroo
They're rolling out the guns again
But they never will take our sons again
No they never will take our sons again
Johnny I'm swearing to ye.

The Future of South Africa

Tim Burke writes:

Easily Distracted: South Africa'9s Deputy President Phumzile Mlambo-Ngcuka comments that South Africa can learn a lot from Zimbabwe's land reform, namely, how to do it faster. South Africa needs a bit of "oomph"D she says, and maybe should get some colleagues from Zimbabwe to come and advise on how to get that oomph. Polite laughter.

South Africa's an interesting case. Can a constitutional process of transition, a good political precedent in the practices of the first democratically elected leader, a political culture that prizes dissent, and the best hopes of many millions be enough to keep the consistently bad impulses of nationalist political leaders from self-destruction?

The examples of Botswana and Mauritius tell us that it is possible.

Continuing Labor Market Disappointment

Gene Sperling writes:

Bloomberg Columnists: No one would argue that the 207,000 gain in jobs in July beat both market expectations and was a vast improvement over typical monthly job growth during this recovery. Yet... everyone got so used to dismal job growth... that diminished expectation led many to cheer any report that was into six digits.

Consider the following: during the previous four recoveries that lasted 44 months or longer, job growth averaged 11 percent by this point. With today's workforce, that job growth rate would have meant an average of 285,000 jobs a month. But job growth in this recovery has been a fifth that rate.... I don't claim to fully understand why job growth has been so weak. But we should be willing to acknowledge its weakness and ask... "why is this job recovery weaker than all other job recoveries?"

It would be simplistic and unfair to suggest that the sole cause for such weak job performance is President George W. Bush's economic policies. It would be even more over the top to point to these weak job numbers as proof that Bush's policies are a raging success. What we need is a sober analysis of whether policies are impairing job growth or hindering a job market characterized by stagnant wages, low participation in the labor force and long-term unemployment.... [L]et's at least acknowledge these are not great times for job growth and debate why and what we might do about it.

Why Oh Why Are We Ruled by These Incompetents? (Bush Labor Department Issue)

David Wessel writes about the drawbacks of having the government run by people who don't care whether or not its programs work: - Capital: To qualify for wage insurance, a group of workers must declare interest when they apply for conventional trade aid, and then must show they lack easily transferable skills, a very hard-to-interpret standard.... [T]he ball moved to the Labor Department, which waited until the day the law said the program was to begin... to issue guidelines.... 38 states reported "at least some difficulty" in implementing the program....

Initially, the Labor Department trade-adjustment-assistance application form didn't even include a box to check to apply for wage insurance... the current form still requires employers... to know what "alternative trade adjustment assistance" is.

Workers laid off by VF Intimates LP of Johnstown, Pa., were denied wage insurance in September 2004 because no one checked the box. After eight months of back and forth... the [Labor] department reversed itself in May and declared the workers eligible.... [I]n contrast to some other Labor programs, wage insurance gets surprisingly little marketing. "Our federal partners haven't issued flyers or anything like that," says Curtis Morrow of North Carolina's Employment Security Commission. The Labor Department's Web site is far from user-friendly, in contrast to Agriculture and Commerce department sites for aid to farmers and firms hurt by trade.

Howard Rosen, a former Democratic congressional staffer long involved with helping workers hurt by trade, is baffled and frustrated by the administration's lack of enthusiasm for what he deems the most efficient way to help dislocated workers because it nudges them back to work. "I just wish the Labor Department was as aggressive in pursuing trade adjustment assistance as the U.S. Trade Representative is in pursuing free-trade agreements," he says.

Calling attention to workers hurt by trade is uncomfortable for free traders. They prefer to focus on benefits of low-cost imports and high-paying export jobs. But the only way to persuade the public and politicians not to erect barriers to globalization and trade is to equip young workers to compete and protect older workers who are harmed. Creating programs with a few votes in Congress, and then botching the execution, doesn't help.

Economics Weblogs

Barry Ritholtz of The Big Picture points us to Agnes Craine: - Tracking the Numbers: [T]he floodgates are really open: The economists -- including prominent names from universities and even the Federal Reserve -- have started blogging, posting their thoughts on the Web on a variety of things, including the rise in oil prices and the future of interest rates. While many investors continue to take their cues from traditional outlets, the real news junkies -- including those who aim to get a trading idea before they hear about it from their broker -- have bookmarked the blogs, or Web logs. Even Wall Street itself is paying heed. "It's all about the 'memes,' " says Stan Jonas, head of interest rate strategy at Fimat USA in New York, employing a word that describes ideas that spread quickly by word of mouth -- or Web. "Those guys say it and about a week or two later, the guys on Wall Street pick it up."...

A current favorite is Econbrowser (, penned by James Hamilton, a professor of economics at the University of California, San Diego, and a well-respected oil watcher. Because bloggers provide a multitude of quick-links to other online postings, a thought developed in one place can quickly jump to other sites at the click of a mouse. Investors get a variety of views and ideas -- and the bloggers get exposure. "This linking business is like a virus," says David Altig, economist and associate director of research at the Federal Reserve Bank of Cleveland who launched his site, Macroblog (, a year ago. "I linked to somebody who started reading. Somewhere down the line, he linked to me. Then I became very visible."

Visibility is what counts for many of these economists who, like other bloggers, have turned to this medium precisely to get their voices heard. "Nobody was asking me to write a column, and almost all previous attempts to even publish op-eds were denied," says Andrew Samwick, professor of economics at Dartmouth College, also known as Vox Baby ( Now he has total autonomy -- and readers.

The top blogs in terms of the number of daily visits, still belong to those writing about politics. But the economists are making headway. Longtime blogger Brad DeLong (, a professor of economics at the University of California at Berkeley and Barry Ritholtz, chief market strategist at the Maxim Group and the man behind The Big Picture (, have cracked the top 100, according to Web site, which tracks blog traffic., a left-leaning political blog, is still No. 1.

Most economics blogs have a bias. Some even read like rants. But the medium has given voice to those that have been drowned out by established venues. And that means trading ideas. The more sober blogs, meanwhile, lend legitimacy to the medium.

Mr. Hamilton only began Econbrowser this summer, but he's already much read by his peers, and others value his analysis and frequent posts. "I did it in part because all my career I've been following oil markets," he says. Bloggers themselves also benefit from the contact with readers.

"On a professional level, I've been making contacts that I would have never made before," says Mark Thoma, associate professor of economics at the University of Oregon, Eugene. Mr. Thoma is also a self-described left-of-center Democrat and author of

"I haven't stepped foot in a library in five years," says Nouriel Roubini, associate professor of economics at New York University's Stern School of Business and founder of the site Roubini Global Economics Monitor (, a one-stop Web site of economics research and blogs.For years investors have had pretty good access to the finest economic thinkers, via research reports and print and television media.

Mark A. R. Kleiman Has Decided that John Roberts Does Not Belong on the Supreme Court

He writes:

Mark A. R. Kleiman: Roberts and the abortion brief: [T]he amicus [brief] was filed in support of Operation Rescue, hardly a peaceful protest movement... a civil jury in Chicago found that Operation Rescue was a racketeering enterprise.... Eugene Volokh points out that the Court, by 6-3, upheld the position in the brief, and argues that therefore the brief can't be said to have been outside the mainstream of legal thinking. Fair enough.

But that brief had political as well as legal meanings. Operation Rescue was then engaged in a violent, and largely successful, attempt to deny access to abortion to as many women as possible by closing down the clinics. The attorneys general of Virginia and New York both filed amici arguing that their states lacked the capacity to fight off Operation Rescue's efforts.

The Solicitor General's office was under no obligation to file an amicus in a civil lawsuit. Ask yourself whether the SG's office would have intervened similarly in a case involving violent protesters against U.S. support of the Contras, or Earth First, or the Animal Liberation Front, or Al Sharpton's shake-down crew, whatever the legal merits. No, I don't think so either.

If the Bush I Administration had in fact opposed anti-abortion violence and merely doubted that the anti-Klan law could properly be made to apply, it could have offered legislation making interference with the clinics a federal matter; such legislation was in fact passed under the Clinton Administration. But of course the administration did no such thing.

By arguing that the most successful terrorist campaign waged in this country since the days of the Klan was a matter for state and local jurisdiction (an echo, of course, of the argument offered against federal anti-lynching legislation in the 1930s and 1940s), Roberts and the rest of the Bush I crew was in effect backing the terrorists against their victims. That's not "excusing" violence, but it's not exactly opposing, either.

And Roberts signed the brief, and delivered the oral argument. That seems to me to be a legitimate reason for Operation Rescue to support him, and for those who support abortion rights and oppose domestic terrorism to oppose him.

Lobbyist Central Station

Julian Sanchez writes:

Notes from the Lounge: Et tu, TCS?: Y'know, I frequently disagree with pieces TechCentralStation runs--I expect to--but I don't usually expect to feel embarassed for them. On Monday they ran this ridiculous defense of Intelligent Design, and I'm embarassed for them.... I say this not by way of rebuttal--that would treat the article with a seriousness it scarcely merits--but just to express a modicum of dismay that a site that runs a fair amount of science reporting that, whether or not it happens to be correct on other points, is at any rate serious and interesting, would commit this kind of credibility seppuku...

Isn't that a little naive, Julian? Look at what's on the front page of TCS right now. Including the Spencer article that (rightly) makes you blush, I count six things that make me embarrassed:

I am embarrassed for them by James Glassman's mendacious defense of his Dow 36000 book: TCS: Tech Central Station - My Stalker: "By the way, none of the tumultuous events of the past six years has changed our minds about our thesis. In fact, despite terrorist attacks and a recession, price-to-earnings ratios have remained high, in historic terms, just as we predicted..." We all know that Dow 36000 predicted not that price-earnings ratios would remain at their ca. 1999 levels, but would triple over the next three to five years--i.e., by 2002-2004.

I am embarrassed for them by John Tabin's inability to grasp the point that there is good reason to fear that the private sector won't do enough basic R&D because that kind of intellectual property is hard to appropriate: TCS: Tech Central Station - Big Government Libertarianism: "It's true enough that NIH has long loomed large in funding this sort of research. But must it be so? Consider the larger research and development picture. About two-thirds of American R&D is now funded by the private sector, with taxpayers picking up the tab on the remaining third. As recently as 1970, the figures were reversed: Two-thirds of R&D funding came from Washington. Meanwhile, total R&D funding has in recent decades grown sharply. It should be no surprise that when government support stays relatively flat, the private sector more than picks up the slack. Is there any reason to think that research on embryos should be different?..."

I am embarrassed for them by Douglas Kern's strange take of U.S. history coupled with denunciations of the "apathy and indolence" of the Basrans: TCS: Tech Central Station - Hope Springs Infernal: "Consider the civil rights movement in the United States. The hagiographers of the baby boomer generation would have you believe that the enlightened preciousness of students and liberals made the civil rights revolution possible. But the true spark that lighted the fire of justice was the huge economic improvement that blacks enjoyed after World War II.... This taste of comfort provided an irresistible impetus for a growing, motivated black middle class to stand up against injustices that stood between them and the lives they had almost achieved.... [T]he average Iraqi now enjoys prospects and possibilities that were unimaginable three years ago.... The freedom to succeed and prosper is also the freedom to fall... in an underdeveloped country, failure means disease and empty bellies.... [A] thimbleful of prosperity creates a hunger for an affluence that may exceed the abilities of the current generation. Through television, through the internet cafés, and through conversation with Americans, the average Iraqi is aware of a world of colossal wealth, spectacular science, and undreamt-of desires, all seemingly within reach.... [Y]et his ability to thrive in a democratic, capitalist country grows slowly and unevenly. The ensuing envy, shame, and frustration are ripe for revolutionaries and utopians to exploit. So behold Basra: a city whose thriving middle-class citizens demand a first-world infrastructure even as they maintain third-world habits of apathy and indolence."

I am embarrassed for them by Ryan Sager's belief that we shouldn't try to set up better governmental institutions because "politicians are politicians," coupled with the declaration that Senator McCain and his Republican followers are a "front group funded by eight liberal foundations": TCS: Tech Central Station - Where Angels Fear to Tread: The FEC: "What this means, however, is that what's often called the "reform community" -- actually, it's a collection of front groups funded by eight liberal foundations -- is constantly left clucking its tongue at the "corrupt" FEC.... [T]he speech police have absolutely no standing to whine and moan when their proposed picks -- a list of uber-reformers being floated by Sen. McCain's office -- are dismissed out of hand. Politicians are politicians all of the time.... There aren't any in Congress or at the White House. And the sooner arrogant reformers like Sen. McCain and Fred Wertheimer realize that they're no angels either, the better for all of us -- and for the Constitution."

Last, I am embarrassed for them by Frederick Turner's misrepresentation of the debate over whether "Intelligent Design" should be taught in science classes as one in which both those you say "yes" and those who say "no" are equally wrong: TCS: Tech Central Station - Divine Evolution: "Religious views -- whether theistic or atheistic -- are, alas, the same: for our view to be right, all the others must be wrong. But as the evolution/design debate develops, more serious and thoughtful voices have joined in -- people whose thinking does not seem to be limited by partisan or ideological preconceptions, and who are not making the issue, as others have, a proxy for a fight about theology or atheism. Such voices include TCS's Lee Harris, James Pinkerton, and Nick Schulz, and the participants in the interesting dialogue at Natural History magazine.... A common vocabulary is emerging. The ground may now be prepared for a transformation of the debate from a partisan wrangle into a true conversation, a fruitful inquiry that includes good biological science but does not exclude the insights of other disciplines..."

Given its place in the DCI Group (see, TCS must fail to have proper intellectual controls. It must, sooner or later, commit the "gross lapse[s] in editorial judgement... [that] leave the intellectually serious casual reader fully justified in dismissing anything that appears there in the future."

Boredom: An Interdisciplinary Approach

Wonkette reports that the Treasury Department was underutilized (to say that it was out-of-the-loop would be to falsely imply that there was a loop) during the first Bush administration:

Wonkette - The People's Excruciatingly Tedious Business: Flush from reporting the breaking news that tourists are often confused, the Washington Post breathlessly delivers the scoop that government workers are often bored. Once we were able to get the blood rushing back to our head, we heeded Amy Joyce's tale of Bruce Bartlett's many lost afternoons as deputy assistant secretary for economic policy in the Treasury Department:

boredom occasionally drove him from his cushy Washington office to seek relief at the movie theater. One afternoon, he ran into a friend who was a senior official in another department.

"It was kind of awkward," he said.

Since I took Bruce's seat at the Treasury when the Bush administration turned into the Clinton administration, let me recount one 10:30 PM conversation I had at the Treasury in the spring of 1993 with one of the career economists. "Yeah. It was kind of boring around here for the past couple of years. We used to wish that we would be asked by the White House to do more." Pause. "I suppose the lesson is: 'Be careful what you wish for'."

Disaster Movies and Family Harmony

Michael Berube wrestles with "popular culture":

Invasion of the Marriage Disaster Flicks: So Janet and I saw War of the Worlds last night, a movie we wanted to see precisely because it has no emotional content whatsoever. We were pleased, however, to find out that (and I think I’m paraphrasing a reviewer here, but I can’t remember which one) a brutal alien invasion will get Tom Cruise back in touch with his children (Dakota Fanning and Justin Chatwin). I suppose there’s more to say about the film, particularly about Tim Robbins’s bizarre appearance as himself in Mystic River (apparently he’s now ready to re-enact the child molestation in the basement bit, this time with himself as the molester). But what Janet and I wanted to know, as we left the theater, was how the hell the marriage between Mary Ann (Miranda Otto) and Ray Ferrier (Cruise) could ever have happened in the first place. That’s far less plausible than a mass invasion of insect-lizard aliens driving huge tripods around the globe.

As for the closing scene, in which Cruise delivers the kids to Otto (who’s in Boston with her second husband) and Chatwin finally calls him “dad”: what is it with this narrative trope, anyway? There’s a disaster or an invasion or a lethal virus or a mysterious bunch of aliens living in our oceans, and the story ends when the family romance is completed in some way? Quoi? And pourquoi?

I’ve been wondering about this for some time, and even tried to write about it a few years ago, but I don’t really know what to do with it aside from pointing it out. So, dear readers, I cheerily invite you to give it a go. Here are your Texts for Analysis. Please remember to write legibly!...

Well, it seems to me that what what Michael and Janet regard as a strange deviation from the disaster-movie genre is an attempt by Hollywood to stretch the movie's appeal by combining typical narrative patterns expressed by preschool-age boys and girls. The boys want (and tell) stories about power, violence, chaos, and destruction. The girls want (and tell) stories about people embedded in family relationships doing things which end with the reaffirmation or restoration of the harmonious family.

Here, for example, is Agelike Nicolopoulou of Lehigh, analyzing stories told by 4-year-olds at a western Massachusetts nursery school

The preschool makes strong and deliberate efforts to create an egalitarian, nonsexist atmosphere.... [O]ne of the teachers' intentions in using this storytelling and story-acting practice is to help generate greater cohesion and a common culture.... [T]o a great extent, however, [the children]... build up two subcultures within the classroom, not one.... The kinds of stories told by the boys and girls differ systematically... in both form and content... embody two distinctive types of genuine aesthetic imagination (surprising as it may seem to assert this about preschoolers), each with its own inner logic and coherence.... The girls' stories show a strain toward order, whereas the boys' stories show a strain toward disorder....

The older girls in this group told stories that largely fit within what I call a "family genre"... start... with characters already embedded... in stable and given networks of social relations, the most favored of these being the family unit.... [T]he world outside the home may be a source of danger and disruption....

Once upon a time there was a castle, and a king and a queen and a prince and a princess and a unicorn and a pony lived in it. And they went for a walk. And they found a playground and they swang on the swings, and they slide down the slide, and then they went back home. But they had some trouble finding the way. But then a dog came to them and said, "I'll help you find the way home," and he did. The End.

[W]hen the girls do introduce a danger, threat, or surprise, they are almost always careful to resolve it in a positive way before ending the story....

In short, the girls' stories are... organized around the representation, maintenance, and restoration of order... rooted in a frameork of stable social relationships... anchored topographically in the home....

In contrast, the overwhelming majority of 4-year-old boys' stories start with isolated individual characters... defined... through their actions.... The characters most often used by boys tend to be either big and powerful animals.. superheroes, villains, and other cartoon action characters... [and] a small number of small but lethal characters.... The stories focus on struggle and destruction... straightforward descriptions of destruction and/or chaos are not uncommon:

Once there was Robin Hood. Then Batman came. Then prince John came--he's the king. Then Superman came. Superman battled with Batman and Batman died. Then he came alive again. Superman died. And then Splinter, Raphael, Donatello, and Michelangelo came. Then an Indian came on a horse with a bow and arrow. Then a cowboy came on a horse with a bow and arrow just like the Indian and shot Superman so he wouldn't ever come alive again. And they lived happily ever after. The end.

The standard action movie pattern used to be (a) that the movie ended when the antagonist had been overthrown and (b) that ending was announced by the clinch between the hero and the ingenue. This new "combinatory" narrative pattern is a shift. And I do not think it is a successful shift--the attainment of harmonious family relationships is simply grafted on, and does not emerge organically out of the central action of the movie.

Hollywood is aware that it has an audience bifurcation problem with movies like "War of the Worlds," and it is trying to figure out how to fix it, but it is failing. In spite of the restoration of harmonious family relationships at its end, "War of the Worlds" does not make it as a chick flick. "Sisterhood of the Traveling Pants" is a much better movie, even though it lacks death rays and large explosions.

Why Oh Why Can't We Have a Better Press Corps? (Vroom Vroom Vroom Department)

Hilzoy performs the painful task of reading Charles Krauthammer on stem cells. She writes:

Obsidian Wings: Krauthammer On Stem Cells: Krauthammer gets the science wrong. He writes this about the President's stem cell policy:

It failed practically because that cohort of embryos is a diminishing source of cells. Stem cells turn out to be a lot less immortal than we thought. The idea was that once you created a line, it could replicate indefinitely. Therefore you would need only a few lines. It turns out, however, that as stem cells replicate, they begin to make genetic errors and to degenerate. After several generations some lines become unusable.

In addition, there has been a new advance since 2001. Whereas stem cells in those days had to be grown on mouse feeder cells, today we can grow stem cells on human feeder cells. That makes them far more (potentially) therapeutically usable.

I don't know who the 'we' is who were surprised that when you get DNA to copy itself repeatedly, errors creep in. It certainly wasn't the scientific community, which warned against this from the get-go. The only 'we' I know of who ever thought the President's policy made enough lines available consists of George Bush, Tommy Thompson, and (apparently) Charles Krauthammer. And it's an understatement to say that lines not grown on mouse feeder cells are 'far more (potentially) therapeutically useful' than the lines the President's policy lets people work on, since the latter are almost certainly not usable therapeutically at all. I mean, you could also say that driving a car is a far better way of getting from one place to another than sitting on the ground and saying 'vroom vroom vroom'. It's true, but it rather understates the difference...

Tax Shifts

One of the most marvelous things about George W. Bush is how he has managed to make Max Sawicky sound like the Concord Coalition:

MaxSpeak, You Listen!: G.O.P. TAX HIKE WATCH: There are no tax cuts. Banish that phrase from your mind. You haven't seen any. Republican control of the White House and Congress has yielded trillions in tax increases since January of 2001. How can this be? Simple. When you spend more, and when you pass laws that commit the government to spending more in the future, you increase taxes, sooner or later. Spending not financed by current taxes will be financed by future taxes. A debt increase is the present value of future increased taxes. If taxpayers merely pay interest on the debt incurred, forever, the present value of the interest payments is the initial increase in debt.

Suppose you raise future spending on X but later you cut spending on Y? You have still raised taxes. If you had cut spending on Y and foregone the spending on X, taxes would be lower. To spend is to tax. There are no tax cuts. There are only tax shifts.... Exhibit A in the Hall of Bush Tax Hikes is of course the Medicare drug benefit. The cost of this over the indefinite future is $23.5 trillion-with-a-T (of which $18.2T is not matched by any dedicated financing source -- p. 112).... Exhibit B is our largest new government program, known as "Iraq." This is not nearly as big, assuming we slink out of there with our tails between our legs before the next election, proclaiming mission accomplished all the while. Approximate dollar cost to the taxpayer would be about $250 billion. The more important human cost is of course beyond ordinary economic calculation.

Exhibit C is a capital gains tax increase, otherwise known to morons as "death tax repeal." The Estate and Gift Tax termination legislation provides for the taxation of capital gains on assets bequeathed to heirs, when said heirs sell those assets (and "realize" the gains as income). Under current law, any gains up until the point of transfer are not taxed as income. For most heirs, they are not taxed under the Estate Tax either. Hence the "death tax repeal" is really a tax shift to beneficiaries of smaller estates whose bequests currently fall under the minimum taxable threshold.

Exhibit D is the merry run-up in non-defense discretionary spending, in what I call The Era of Hard Work for Limited Government. In keeping with our 'compared to what' stricture above, any assumption about a baseline rate of growth ought to be made explicit. I should stipulate that in general I welcome this sort of spending/tax increase myself. So how big is it? If we grant that this sort of spending "ordinarily" tracks GDP, then growth in excess of GDP growth should be defined as an increase....

Who will pay for these tax increases? Increasingly, as the "Bush tax cuts" (sic) focus the Federal tax system on wages, it will be current and future workers. You may recall that these are the folks upon whom we were told it would be immoral to bequath an insolvent (sic) Social Security system.

So pay no attention to rumors of tax cuts. To be sure there are rewards for assorted vested interests, as so-called tax cuts grease the skids for heavier taxation of wages in the future. Your invoice will be in your pay envelope.

Unfortunately, the Concord Coalition no longer sounds like the Concord Coalition. Its Republican members are pretty quiet.

It's no longer clear to me that there ever were many grownup Republicans. They're certainly thin on the ground today. In an average day I see more wild turkeys than I do grownup Republicans

Baghdad Apparently Has a New Mayor!

Matthew Yglesias writes:

TAPPED: August 2005 Archives: NICE MAYOR YOU HAVE THERE... It's a bit hard to know what to say about something like "Armed men entered Baghdad's municipal building during a blinding dust storm on Monday, deposed the city's mayor and installed a member of Iraq's most powerful Shiite militia" except that it hardly bodes well. The obvious thing to say is that we wouldn't have these problems if the administration hadn't failed to complete -- or really even attempt -- the militia demobilization process. On the other hand, the administration had perfectly good reasons for not doing so, namely that we apparently wouldn't have been able to make it work without pouring far, far more troops into Iraq than we actually did.

And, again, they had perfectly good reasons for not putting 500,000 soldiers on the ground, namely that the soldiers didn't exist and the political will to find and deploy them certainly wouldn't have existed before the war. Which is a roundabout way of saying that the real mistake here was trying to do something that we lacked the capacity to do. The fact that Shiite militias are roughly speaking "on our side" in the new Iraq is the only thing that makes our position there tenable over the short term. If we added them to our enemies list along with the Sunni Arab insurgency, we'd be in a hopeless situation. But you can't build much of a liberal democracy in partnership with Islamist militias.

Ummm... Allies. Ummm... U.N. Security Council. The biggest reasons for diplomacy--for coalition building, and for seeking U.N. blessing--are two:

  1. We are much, much more powerful and capable when we are leading a coalition that can put 500,000 Arabic-speaking military police on the ground.
  2. States that fear that the U.S. is a loose cannon--unconstrained by the Security Council and the concordium mundi--work very hard to acquire nuclear weapons once David Frum has put them on The List.

Ben Bernanke Goes to Crawford

Ben Bernanke reports on what he said to Bush. He apparently failed to stress two important things:

  1. Bush administration fiscal policy is way out of balance in the long run, and this is a very serious problem: if the government doesn't balance its budget (in the sense of keeping real debt growing no faster than real GDP), then the market will balance the budget for it in ways that nobody will like.
  2. Bush administration international economic policy is way out of balance as well: the administration should be doing much more than it is doing--i.e., nothing--to try to minimize the size of the financial crisis should foreigners suddenly decide to dump their dollar assets on a large scale.

These are two things that George W. Bush and his inner circle need to hear as often as possible. And I'm scared that nobody is telling them.

Here's his statement to the press:

Press Briefing by Director, National Economic Council, AL Hubbard, and Chairman, Council of Economic Advisors, Ben Bernanke: CHAIRMAN BERNANKE: Thanks, Al. I'm Ben Bernanke, the Chairman of the Council of Economic Advisors. We had a very interesting discussion this morning, as Al said. It covered a wide range of issues; went on into lunch. It fell to me as the CEA Chairman to report to the President on the state of the economy, and I was pleased to be able to report to him that the U.S. economy is in a strong and sustained expansion at this point.

I stressed for him four key indicators, which, like many other economists, I think are really central to looking at the state of the economy. First is economic growth. Economic growth delivers stronger output, stronger incomes. In the last couple of years, we've seen 4.1 percent real growth per year; 3.6 percent in the last year. This is a very strong rate of output expansion.

Second, jobs. So far this year, we've had 191,000 jobs per month added to U.S. payrolls, almost 4 million jobs since the trough for the job market in May of 2003, so the labor market is improving and getting stronger.

Third, inflation. The Federal Reserve moved today. Inflation is well contained, under control. The core inflation rate over the last year is about 2 percent, and I see inflation remaining well contained going forward.

And, fourth, the statistic which economists really think is very important and perhaps doesn't get enough attention in the media is productivity growth. Productivity growth ultimately determines how much an economy can produce, what the living standards will be, and what wages and profits will be. The U.S. economy in recent years has been remarkable in terms of productivity. We got new numbers this morning. Looking back over the last four years, the U.S. economy has averaged 3.6 percent productivity growth per year in the non-farm business sector; 5.6 percent in productivity growth in the manufacturing sector. These are remarkable numbers, much higher than long-term averages, and they bode very well for the sustainability of the economy.

We talked also about issues and problems. There certainly are risks to the economy; two I would mention. One is high energy prices. Energy prices remain very high. There's a very tight supply-demand balance for oil in the world economy, drives -- has driven crude oil prices up above $60. Those high oil prices are a burden on U.S. families, on firms, the production costs. But the good news is that at least so far the U.S. economy has not been slowed by the high energy prices. It has been a resilient economy, it's responded well. And growth has -- and job creation has proceeded apace.

The other concern which Al alluded to already is the rising cost of health care and health insurance. This is a major problem. As we discussed in our white paper that we circulated, the rising cost of health insurance is one of the reasons why rising total compensation for production workers has not translated into as great an increase in their take-home real wages. We think this is a major issue. The President has made a number of proposals to try and address health care costs, including his health savings accounts, which allow people to purchase -- purchase -- pay for medical care on a pre-tax basis.

Various programs for trying to subsidize people's purchases of insurance: health information technology, which will make doctors better able to communicate with each other and keep abreast of latest developments; changes in medical malpractice; and association health plans that allow small businesses to pool together to buy insurance on a pooled and more efficient basis.

So those are just some of the measures that we've talked about in the past. This is an area we're going to continue to look at in the future. These are two issues that remain very important. But to come back to what I said earlier, and to reiterate what Al said, coming from where we were in 2001 and 2002, following 9/11, following the corporate scandals, this economy has turned around, and it's currently on a very strong and sustainable growth path.

The FOMC Does Not Pause But Keeps Raising Interest Rates

Interest rates rise as the Federal Reserve keeps on its course: - Fed Raises Key Rate to 3.5%, Continuing String of Increases: WASHINGTON -- The Federal Reserve, citing "elevated" price pressures in the U.S. economy, boosted its key interest rate to a four-year high Tuesday and said it aims to extend the campaign of gradual interest-rate increases it began in mid-2004.

Amid signs the economy is gaining speed despite record oil prices, Fed policy makers voted unanimously to raise the key federal-funds rate a quarter percentage point to 3.5%. The increase, the tenth since June 2004, made the campaign of rate hikes the longest since Alan Greenspan became Fed chairman in 1987.

"Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor-market conditions continue to improve gradually," the Fed's Open Market Committee said in a statement. It reasserted its previous view that "pressures on inflation have stayed elevated" but added that "core inflation has been relatively low in recent months and longer-term inflation expectations remain well-contained."

The committee hinted it intends to raise the funds rate at least once more, possibly as early as Sept. 20, saying the rate remains too low -- "accommodative" in Fed parlance. It pledged, however, to raise the rate in "measured" increments. That phrase so far has signified increases of a quarter percentage point at a time.

The decision, widely expected on Wall Street, came as economic forecasters began to reassess their views on how much more the Fed will need to raise the funds rate to hold inflation down. Until a few weeks ago, most forecasters expected the Fed to "pause" its interest-rate campaign later this year, possibly opting to forgo a rate increase in December.

More News About the Second Quarter

More productivity growth and less wage growth than I had thought we would see: - Productivity, Labor Costs Cooled Off in 2nd Quarter: The Labor Department reported Tuesday that nonfarm business productivity grew at a seasonally adjusted annual rate of 2.2% from April through June, down from the revised 3.2% rate in the first quarter. Meanwhile, unit labor costs grew at an annual rate of 1.3% in the second quarter, the slowest increase in a year. Unit labor costs in the first quarter grew at a revised 3.6% rate.... Adjusted for inflation, compensation per hour fell at a 0.6% rate during the second quarter, compared with a revised 4.5% annual growth rate the previous quarter. Output growth edged up slightly to a 4.4% annual rate in the second quarter from a revised 4.3% in the first quarter. Workers' hours rose to a 2.1% growth rate in the second quarter from a 1.1% rate in the previous quarter.

In the nonfinancial corporate sector, the report showed productivity grew at a 3.6% annual rate in the January-March quarter, the latest for which the data are available. That was down from a revised 8.5% rate in the previous quarter. The Labor Department also lowered its estimates for productivity growth in the past three years to reflect revisions in gross domestic product announced late last month. Productivity grew by 3.4% last year rather than the previously reported 4% gain. Productivity growth in 2003 was lowered to 3.8% instead of 4.3%, and to 4% in 2002 rather than the previously reported 4.3%...

Why Oh Why Are We Ruled by These Idiots? (Larry Diamond's View Department)

Larry Diamond's view on what he saw after he agreed to Condi Rice's pleas to go to Iraq:

War and Piece: Larry Diamond: So I would say that the truly cardinal sin was not the war itself but the decision to go to war without adequate preparation or support: leaving Iraq to burn in chaos in the days and weeks after Saddam fell, having no effective plan for the postwar period, not having nearly enough troops, not giving them nearly enough protection and equipment, not having fully mobilized our own country for the scope of challenge we were clearly going to face in the postwar period. It was war on the cheap, war without sacrifice except by the soldiers and families asked to risk--and too painfully often to make--the ultimate sacrifice. It was war without any fiscal discipline or sense of urgency; "we're at war--let's party" as Tom Friedman wrote in a column in the months leading up to the invasion. This was truly sinful and inexcusable, what I call in the book (speaking metaphorically and morally, rather than legally) criminal negligence. I think history will render a harsh judgment on all of those responsible in this Administration.

Before the Storm

Rick Pearl... Paerl... Aperl... Lrep... Perlstein writes:

Just a little note to folks who've said nice things about Before the Storm. It's going out of print, at least for a while now (a new edition may be forthcoming in coordination with the release of my next book some time next year), so spread the word to those who might want to snap up a new copy while they can...

Can this be? There are hundreds of thousands of people serious and interested in politics--on the left and the right--who have not read and do not own Before the Storm.

Buy one. Buy ten, and give them to your friends.

European Growth

For "Nightly Business Report," August 8, 2005 [TV]:

The International Monetary Fund has recently cut its estimate of western European economic growth this year from 2.2% down to 1.3%, and its estimate of growth next year from 2.3% to 1.9%. And the IMF is optimistic: it is hoping that the second half of the year will be better than the first half has been.

This is not a recession. But it is far from a boom. And it is far below what we would hope to see for a region where, after all, the unemployment rate is still near ten percent.

The problem that the IMF sees is that local European demand growth is anemic. Jumps in oil prices have raised costs and retarded demand. Stagnant wages--themselves in part a consequence of "structural reform" have led to low consumption growth. As a result, a truly satisfactory European economic expansion requires strong demand outside Europe. The leading component of demand has to be exports if the economic expansion is to lift the boats. And that strong demand for Europe's exports does not look like it is in the cards.

Now it is not as though rising inflation prevents Europe's central bankers from cutting interest rates from their current 2% level. Forecasts inflation for the next year are low: 1.1% for Germany, 1.6% for France, and 1.5% for the Eurozone as a whole.

However--even when there are no pressures pushing up inflation--Europe's central bankers simply do not see boosting employment as an important part of their job. Here in America, we have central bankers who have a more balanced view of their role--see their mission as to to try to get both stable prices and high employment.

We here should be thankful.

I'm Brad DeLong.

Why Oh Why Can't We Have a Better Press Corps? (Calling Dr. Aristotle Edition)

We have a logic emergency here! Charging RINO quotes Morton Kondracke in Roll Call

Charging RINO: Kondracke: Centrists Must Organize: Kondracke goes on to lament the lack of a viable moderate structure within the Republican Party which could call out the GOP's leadership from going off on wild right-wing goose chases like limiting funding for stem cell research, banning emergency contraception, pushing for the teaching of "intelligent design," and limiting the rights of homosexuals to be united through civil unions.

"There's no question that the Democratic Party is just as much captive of the left as the GOP is of the right," Kondracke notes, correctly. "But the Democratic Party has an influential moderate wing, led by the Democratic Leadership Council, with which a number of 2008 presidential candidates are affiliated, including frontrunning Sen. Hillary Rodham Clinton (N.Y.)."

Let's watch that again in slow motion.

Kondracke says that the Democratic and Republican Parties are equally polarized ideologically:

"There's no question that the Democratic Party is just as much captive of the left as the GOP is of the right."

And Kondracke says that they are not equally polarized ideologically:

"The Democratic Party has an influential moderate wing, led by the Democratic Leadership Council, with which a number of 2008 presidential candidates are affiliated, including frontrunning Sen. Hillary Rodham Clinton (N.Y.)."

To the Aristotle phone, now!

The New Republic: Straight Out of Boston

The last piece in the New Republic that came straight out of Boston was truly bizarre and rather thin:

Greg Mankiw | Personal Dispute (print): Harvard University is, by some measures, one of the most left-wing institutions on the face of the earth. So you may be surprised to hear that it has endorsed George W. Bush's proposal for Social Security reform.... Harvard's retirement plan is essentially the nonprofit sector's version of a 401(k).... I am perfectly happy with Harvard's retirement plan.... If the liberal Harvard faculty is content with the defined-contribution structure for their private retirement income, why are liberals... so appalled that Bush would propose moving the public retirement system in the same direction?... [T]here are three reasons... the president proposed it... they could destroy one of its favorite battle cries: the alleged conflict between evil capitalists and oppressed workers... [for] much of the left's rhetoric is a less elegant paraphrase of [Karl Marx's] worldview... [and] simple paternalism.... Democrats are more averse to an economic system in which people play a larger role in taking care of themselves.... [T]he nation should take this opportunity to give all Americans a retirement system as reliable as the one Harvard gives its faculty.

The key point Mankiw overlooks is, of course, that a good program to sit on top of the defined-benefit tranche of retirement income that is Social Security is not going to be a good program to replace Social Security. And there are many reasons besides simple paternalism and warmed-over Marxism to have opposed and to keep on opposing George W. Bush's Social Security proposals. Ferguson and Kotlikoff, neither of whom has an ounce of paternalism or warmed-over Marxism in their makeup, list some, for they have a new piece in the New Republic that also comes straight out of Boston. It begins very well:

The New New Deal: President Bush's Social Security proposal looks to be dead in the water--and a good thing, too. The plan was half-baked and fiscally irresponsible. The American public took one look and realized it provided neither personal nor national financial security. Even many Republican congressmen didn't buy it. So much for the president's post-election political capital....

There were four problems with [Bush's plan]... diverting money into individual accounts would have... push[ed] the system into deficit much sooner... individual accounts would have done away with one of the biggest advantages of a state pension system, namely economies of scale and reduced risk.... [T]he president's scheme would have made an already bad position even worse for younger Americans, making them reliant on a risky, costly, and inadequate private-account alternative. Finally... it would have done nothing to address the much deeper fiscal imbalance between all the projected revenues of our government and all its existing commitments... a whole raft of other nondiscretionary expenditures, of which the Medicare system is by far the biggest....

[W]e really do have a problem: a truly grave demographic, fiscal, and economic problem. It's a problem that Bush inherited, but one he has done nothing to make better and much to make worse. We refer here to the president's three major tax cuts, his major increase in discretionary spending, his major expansion of entitlement programs, and his massive deficits. And that was just the first term.

But after this nice beginning, Ferguson and Kotlikoff's piece flags and loses coherence. Ferguson and Kotlikoff propose:

...a new New Deal--a combination of fundamental Social Security reform, health care reform, and tax reform. A new New Deal could help Democrats win the voters they failed to persuade last November. It could also help a Democratic administration deal with our country's immense demographic and fiscal problems...

They call for replacing Social Security with a Personal Security System program, replacing the income taxes with a sales tax, and replacing our current health-care system with one of government-funded vouchers plus private insurance. The end state will be a federal government that taxes and spends some 21% of GDP--or maybe (counting the PSS program) 25% of GDP: it's not completely clear.

Their plan to replace the income, payroll, and gift and estate taxes with a national sales tax plus a set of rebate checks (to make the sales tax progressive) would reduce marginal tax rates on savings in the future while double-taxing those who have saved in the past: those who have already paid income taxes on the money that they have channeled into their savings would pay another round of taxes--sales taxes--whenever they spend what they had previously saved. Such a revamping of the tax system will create lots of winners and losers, which makes me anxious when I contemplate the Ways and Means Committee writing transition rules. Would the gains be worth the costs? Ferguson and Kotlikoff argue for the plan with two sentences: "[I]t will shift spending away from consumption goods and services to investment goods, which will help the economy grow through time. As today's China and yesterday's Japan show, economies that shift from consuming to saving and investment can achieve tremendous performance." And they don't tell readers why this is a Democratic plan, rather than a Republican one.

Their proposed Personal Security System--funded by a 7.15% of payroll tax--would be a prefunded Social Security system in which "neither Wall Street nor the insurance industry would get its hands on workers' money. There would be no loads, no commissions, no fees. Nor would there be all the risks associated with individual investing. This is because PSS would continue to take advantage of the overwhelming advantages enjoyed by all state systems of social insurance: economies of scale and reduction of risk through government guarantee." If their plan did achieve genuine prefunding, such a boost to national savings would be extremely valuable plus on its side. But once again the argumentation is too thin: I think that I can follow why they wish this transformation of Social Security, but almost no other readers of the New Republic will be able to do so.

Their proposal for national health vouchers to "pay for basic inpatient and outpatient medical care, prescription medications, and long-term care over the course of each year. If you ended up costing the insurance company more than the amount of your voucher, the insurance company would make up the difference. If you ended up costing the company less than the voucher, the company would pocket the difference" is an attempt to create managed competition: to "promote healthy competition in the insurance market, which would go a long way toward restraining health care costs." They see as an added benefit that "the government could limit its total voucher expenditure to what the nation could afford. Unlike the current fee-for-service system, under which the government has no control of the bills it receives, MSS would explicitly limit its liability": if Americans wanted a more comprehensive and generous national health program, they would have to vote for politicians who would raise the tax rate. But once again the discussion goes by too fast: those who have strong views and detailed knowledge of the debate about health care and its costs will understand why Ferguson and Kotlikoff are walking down this road, but others will not.

It is as if J. Peter Scoblic and the rest of the New Republic editorial staff simply did not do their job. After every paragraph, they should have asked Ferguson and Kotlikoff two questions: (1) Have you explained to our representative reader why this proposal is a good thing? (2) Have you explained to our representative reader why this proposal is a Democratic thing?

The fact that they don't answer the second question sufficiently comprehensively is, IMHO at least, very interesting. For the article sells Ferguson and Kotlikoff's proposal not as a Republican plan (which it strikes me that it is) or a bipartisan compromise plan (which it strikes me that it could become with a little more attention to progressivity) but a a Democratic plan. I suspect that they are doing this because they too are coming to the conclusion that, policy-wise, the Republican Party is a completely lose cause.

Michael Kinsley Strikes Out

From the Downing Street Memo:

The secret Downing Street memo - Sunday Times - Times Online: [Britain's equivalent of the CIA Director] reported on his recent talks in Washington. There was a perceptible shift in attitude. Military action was now seen as inevitable. Bush wanted to remove Saddam, through military action, justified by the conjunction of terrorism and WMD. But the intelligence and facts were being fixed around the policy. The NSC had no patience with the UN route, and no enthusiasm for publishing material on the Iraqi regime's record. There was little discussion in Washington of the aftermath after military action....

In the New York Review of Books, Michael Kinsley continues to pretend that when Britain's intelligence head holds "talks" in Washington he does not talk to "actual administration decision makers," but instead merely learns the conventional wisdom of the chattering classes:

TomDispatch - Tomgram: Kinsley: ...the document... basically says that the conventional wisdom in Washington in July 2002 was that Bush had made up his mind and war was certain. "What," Danner asks, "could be said to establish 'truth' -- to 'prove it'?" I suggested in the column that it would have been nice if the memo had made clear that the people saying facts were fixed and war was certain were actual administration decision-makers. Danner asks, Who else could the head of British intelligence, reporting on the mood and gossip of "Washington," be talking about if not "actual decision-makers"? He has got to be kidding. In short, the DSM will not persuade anyone who is not already persuaded. That doesn't make it wrong. But that does make the memo fairly worthless...

Why Kinsley is maintaining this extremely implausible position--one that the people who have been in government who I have talked to find laughable by a count of 27-3--is not at all clear.

Why Are We in Iraq?

Atrios writes:

Eschaton: Iraq will be with us in '06, '08, '10.... No amount of lights and corners and tunnels will change that. I don't think all the pro-war types need to flagellate themselves publicly for their stand, but it still shocks me that in '04 more Democrats couldn't have simply said what Joe Hoeffel said when asked if he'd still have voted to authorize the war: "Absolutely not. I voted for the war because I was convinced we needed to disarm Saddam Hussein of weapons of mass destruction. I am now convinced we were lied to." Hoeffel took it further another time: "I am now convinced I was lied to, specifically by George Tenet and Condoleezza Rice, on Oct. 2, 2002, in the Roosevelt room of the White House, and generally, lied to by the president and all of his people in the White House."

If you really do care about getting good government for Iraq, you wait to invade until you have 300,000 Arabic-speaking military police in your coalition.

Design for Confusion

Paul Krugman writes:

Design for Confusion - New York Times: You might have thought that a strategy of creating doubt about inconvenient research results could work only in soft fields like economics. But it turns out that the strategy works equally well when deployed against the hard sciences.

The most spectacular example is the campaign to discredit research on global warming. Despite an overwhelming scientific consensus, many people have the impression that the issue is still unresolved. This impression reflects the assiduous work of conservative think tanks, which produce and promote skeptical reports that look like peer-reviewed research, but aren't. And behind it all lies lavish financing from the energy industry, especially ExxonMobil.

There are several reasons why fake research is so effective. One is that nonscientists sometimes find it hard to tell the difference between research and advocacy - if it's got numbers and charts in it, doesn't that make it science?

Even when reporters do know the difference, the conventions of he-said-she-said journalism get in the way of conveying that knowledge to readers. I once joked that if President Bush said that the Earth was flat, the headlines of news articles would read, "Opinions Differ on Shape of the Earth." The headlines on many articles about the intelligent design controversy come pretty close. Finally, the self-policing nature of science - scientific truth is determined by peer review, not public opinion - can be exploited by skilled purveyors of cultural resentment. Do virtually all biologists agree that Darwin was right? Well, that just shows that they're elitists who think they're smarter than the rest of us.

Which brings us, finally, to intelligent design. Some of America's most powerful politicians have a deep hatred for Darwinism. Tom DeLay, the House majority leader, blamed the theory of evolution for the Columbine school shootings. But sheer political power hasn't been enough to get creationism into the school curriculum. The theory of evolution has overwhelming scientific support, and the country isn't ready - yet - to teach religious doctrine in public schools.

But what if creationists do to evolutionary theory what corporate interests did to global warming: create a widespread impression that the scientific consensus has shaky foundations?

Creationists failed when they pretended to be engaged in science, not religious indoctrination: "creation science" was too crude to fool anyone. But intelligent design, which spreads doubt about evolution without being too overtly religious, may succeed where creation science failed.

The important thing to remember is that like supply-side economics or global-warming skepticism, intelligent design doesn't have to attract significant support from actual researchers to be effective. All it has to do is create confusion, to make it seem as if there really is a controversy...

For the Bushies, Loyalty Runs One Way Only...

Soldiers on trial for torturing and killing prisoners wonder why:

Suburban Guerrilla: The rotten apples are still at the top of the tree:

In the first interview granted by any of the accused soldiers, a former guard charged with maiming and assault said that he and other reservist military policemen were specifically instructed at Bagram how to deliver the type of blows that killed the two detainees, and that the strikes were commonly used when prisoners resisted being hooded or shackled.

"I just don't understand how, if we were given training to do this, you can say that we were wrong and should have known better," said the soldier, Pvt. Willie V. Brand, 26, of Cincinnati, a father of four who volunteered for tours in Afghanistan and Kosovo.

Supply Shocks

Oil prices rise further: - Crude Futures Rise to Near $64 On Geopolitical, Supply Worries: Crude futures rose to a new high Monday, nearing $64 a barrel, as the U.S. government announced the closure of its embassy and consulates in Saudi Arabia due to security threats and on continued concerns that earlier shutdowns of U.S. oil refineries would reduce supply. Light, sweet crude for September delivery on the New York Mercantile Exchange rose as high as $63.95 a barrel, up $1.64 from its record close of $62.31 a barrel on Friday. Oil traders suggested $65 oil may be a foregone conclusion, as crude futures contracts for late 2005 and early 2006 shot past $65 and $66 a barrel Monday. "I guess we're going to $65 a barrel -- you can pick out almost any variable right now and it's all pointing to the upside," said Michael Guido, director of commodity strategy in New York for French bank Societe Generale. "Holding short in this market has been a losing proposition."