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March 2007

Why Oh Why Can't We Have a Better Press Corps? (Michael Kinsley Edition)

Ah. More journamalism. Michael Kinsley decides that it is time to carry water for George W. Bush and Alberto Gonzales. Matthew Yglesias deals with it, calling Kinsley an unbearable second-rate Kinsley imitator:

Matthew Yglesias / proudly eponymous since 2002: [I]t's like he's playing a second-rate imitator of himself:

I’m sorry, but I just can’t see how firing eight can be heinous but firing 93 is perfectly OK. Nor can I see —- if the issue is neutral justice -- how firing someone from your own party is worse than firing someone from the other party.

I can't imagine that Kinsley can't actually see the difference here. The issue, obviously, isn't the crude quantity of firings, but the nature of the firings. Bill Clinton beat George H.W. Bush in an election, took office a few months later, and swiftly fired all of Bush's appointees for US Attorney jobs. He then replaced them with people chosen, in practice, by the relevant local [Democratic] political stakeholders.... The message this sends to people working in US Attorney's offices throughout the country is that... US Attorneys will lose their jobs if the partisan control of the White House switched.

George W. Bush, by contrast, fired a handful of US Attorneys who had displeased the Bush team's political fixers, under circumstances where (contrary to historic practice) the White House got to hand pick their successor[s]. The message this sends to federal prosecutors throughout the land is that US Attorneys' are now considered part-and-parcel of George W. Bush's political team and that those who fail to act accordingly will be sacked.

The implications of the two actions are entirely different.... A world in which there's 100 percent turnover of US Attorneys when partisan control of the White House switched, but who otherwise can expect to continue in their jobs as long as they maintain basic standards of conduct, has no particular implications for the neutral administration of justice. A world in which US Attorneys are subjected to the day-to-day whims of the West Wing has completely different implications.


Bookmarked at Del.icio.us for 2007-03-19


Why Oh Why Are We Ruled by These Liars? (Alberto Gonzales/George W. Bush Department)

Alberto Gonzales:

Think Progress » Gonzales Gave Kyle Sampson New Justice Dept. Office After His Supposed ‘Resignation’: Attorney General Alberto Gonzales planned to install his former aide Kyle Sampson as a lawyer in the Justice Department’s environment division even after Sampson’s “resignation,” NPR reported today. Media outlets have reported this week that Sampson, Gonzales’ ex-chief of staff, resigned over the U.S. Attorney scandal on Monday.... Gonzales on Tuesday... indicat[ed] that Sampson was still on the department payroll. “His transition — as a technical matter, he is at the Department as he transitions out and looks for another employment.”... Gonzales “started to set up a new office for Sampson” in the Justice Department... in the legislative section of the department’s environment division...

George W. Bush:

Think Progress » Bush ‘Pugnacious’ As GOP Strategists, White House Allies Call For Gonzales Resignation: President Bush is the lone man holding up the resignation of Attorney General Alberto Gonzales, GOP sources say tonight. CBS News reports:

Republicans close to the White House tell CBS News chief White House correspondent Jim Axelrod that President Bush is in “his usual posture: pugnacious, that no one is going to tell him who to fire.” But sources also said Gonzales’ firing is just a matter of time.

The White House is bracing for a weekend of criticism and more calls for Gonzales to go. One source tells CBS News he’s never seen the administration in such deep denial, and Republicans are growing increasingly restless for the president to take action.

Also tonight, CNN’s Suzanne Malveaux reported: “Wolf, I have to tell you, I’ve spoken to a lot of people who are friends of those here at the White House and GOP strategists. They want Gonzales gone. They’re putting a lot of pressure on this president. One of them said, look, Gonzales has a constituency of one, and that is the president. But tonight, Wolf, White House officials who I’ve spoken to say that that is exactly the person who’s saving his job, that the president does not intend to let him go.”


Cory Doctorow: Death of the Novel? Film at 11

"You do too like reading off the computer screen," says Cory Doctorow. You just don't like reading novels when there is other, more interesting fare to be had--just as you don't spend much time sitting around the campfire listening to a blind poet chant all XXIV books of the Iliad any more:

Locus Online Features: Cory Doctorow: You Do Like Reading Off a Computer Screen: "I don't like reading off a computer screen" — it's a cliché of the e-book world. It means "I don't read novels off of computer screens" (or phones, or PDAs, or dedicated e-book readers), and often as not the person who says it is someone who, in fact, spends every hour that Cthulhu sends reading off a computer screen. It's like watching someone shovel Mars Bars into his gob while telling you how much he hates chocolate.

But I know what you mean. You don't like reading long-form works off of a computer screen. I understand perfectly — in the ten minutes since I typed the first word in the paragraph above, I've checked my mail, deleted two spams, checked an image-sharing community I like, downloaded a YouTube clip of Stephen Colbert complaining about the iPhone (pausing my MP3 player first), cleared out my RSS reader, and then returned to write this paragraph.

This is not an ideal environment in which to concentrate on long-form narrative (sorry, one sec, gotta blog this guy who's made cardboard furniture) (wait, the Colbert clip's done, gotta start the music up) (19 more RSS items). But that's not to say that it's not an entertainment medium — indeed, practically everything I do on the computer entertains the hell out of me. It's nearly all text-based, too. Basically, what I do on the computer is pleasure-reading. But it's a fundamentally more scattered, splintered kind of pleasure. Computers have their own cognitive style, and it's not much like the cognitive style invented with the first modern novel (one sec, let me google that and confirm it), Don Quixote, some 400 years ago.

The novel is an invention, one that was engendered by technological changes in information display, reproduction, and distribution. The cognitive style of the novel is different from the cognitive style of the legend. The cognitive style of the computer is different from the cognitive style of the novel.

Computers want you to do lots of things with them. Networked computers doubly so — they (another RSS item) have a million ways of asking for your attention, and just as many ways of rewarding it.

There's a persistent fantasy/nightmare in the publishing world of the advent of very sharp, very portable computer screens. In the fantasy version, this creates an infinite new market for electronic books, and we all get to sell the rights to our work all over again. In the nightmare version, this leads to runaway piracy, and no one ever gets to sell a novel again.

I think they're both wrong....

Take the record album. Everything about it is technologically pre-determined. The technology of the LP demanded artwork to differentiate one package from the next. The length was set by the groove density of the pressing plants and playback apparatus. The dynamic range likewise. These factors gave us the idea of the 40-to-60-minute package, split into two acts, with accompanying artwork. Musicians were encouraged to create works that would be enjoyed as a unitary whole for a protracted period — think of Dark Side of the Moon, or Sgt. Pepper's.

No one thinks about albums today.... The idea of a 60-minute album is as weird in the Internet era as the idea of sitting through 15 hours of Der Ring des Nibelungen was 20 years ago. There are some anachronisms who love their long-form opera, but the real action is in the more fluid stuff that can slither around on hot wax — and now the superfluid droplets of MP3s and samples. Opera survives, but it is a tiny sliver of a much bigger, looser music market. The future composts the past: old operas get mounted for living anachronisms; Andrew Lloyd Webber picks up the rest of the business.

Or look at digital video. We're watching more digital video, sooner, than anyone imagined. But we're watching it in three-minute chunks from YouTube....

The problem, then, isn't that screens aren't sharp enough to read novels off of. The problem is that novels aren't screeny enough to warrant protracted, regular reading on screens.

Electronic books are a wonderful adjunct to print books. It's great to have a couple hundred novels in your pocket when the plane doesn't take off or the line is too long at the post office... cool to be able to search the text... excellent to use a novel socially.... But the numbers tell their own story — people who read off of screens all day long buy lots of print books and read them primarily on paper. There are some who prefer an all-electronic existence (I'd like to be able to get rid of the objects after my first reading, but keep the e-books around for reference), but they're in a tiny minority...


Cringing and Whinging About the Economist

Economist staffer Lane Greene takes the offensive against Tom Scocca, Henry Farrell, and James Fallows:

Crooked Timber» Cringe and whinge: I’m a staffer for The Economist, full disclosure. In case you don’t know, there is a thread over in the Economist’s Democracy in America blog on this subject, if anyone wants to know what our readers think—including their criticisms. http://www.economist.com/blogs/democracyinamerica/2007/03/passively_fascinating.cfm

I’ll resist the urge to answer most of the criticisms here; the only one I’ll respond to is our oft-cited condescension and snobbishness. What bothers me about this is the assumption that a million readers are idiots, or are masochists who enjoy being condescended to by a bunch of upper-class English twits. Who is really condescending here? Us, or James Fallows, Henry Farrell and Tom Scocca, who are think that we’ve somehow snookered these million fools with nothing more than a bit of Oxford-Union sneer? If you think our readers are stupid, that is your right. We rather respect and like them.

As a longtime reader of the Economist, let me just say that in the past six years I have come to the conclusion that in five important issue areas--U.S. politics, U.S. economics, finance (U.S. and global), Middle Eastern politics, and African politics--anything the Economist states that I did not already know is likely to be wrong. That's a terrible thing to have happened. And it's the reason I pay much more attention these days to the Financial Times.


Finally! Much Delayed...

At long, long last:

CNS: AirBears Guest Account Service: Guest accounts allow visitors short term access to the UC Berkeley AirBears wireless network where available on campus. Accounts may be created by Faculty and Staff and are valid for a period of up to a week. AirBears guest accounts only allow access to the wireless network; they do not provide access to wired network services such as LIPS, campus email or other services. Longer term visitors who require such services must apply for an affiliate CalNet ID in order to be eligible.... Faculty and Staff may create, view and modify guest accounts via the guest account management system.


Fire David Broder Today (Why Oh Why Can't We Have a Better Press Corps?/Washington Post Department)

Five years. I give the Post as we know it five years. Today David Broder comes out against accountability:

David S. Broder - Congress's Oversight Offensive - washingtonpost.com: Ten weeks into the new Congress, it is clear that revelation, not legislation, is going to be its real product. While President Bush threatens to use his veto pen to stop some bills and Senate Republicans block other measures from even reaching his desk, no force in Washington can halt the Democrats' investigative juggernaut from uncovering the secrets inside this administration....

You have to feel a twinge of sympathy now for the Bush appointees who suddenly find unsympathetic Democratic chairmen such as Henry Waxman, John Conyers, Patrick Leahy and Carl Levin investigating their cases. Even if those appointees are scrupulously careful about their actions now, who knows what subpoenaed memos and e-mails in their files will reveal about the past?...

With their major initiatives, from a minimum-wage boost to a shutdown of the Iraq war, stymied by Republican opposition, the Democrats are understandably making "accountability" their new goal -- meaning more and more investigations....

The Democratic sponsors said that this accountability offensive is exactly what people voted for in November, meeting what Waxman termed "the public's call for fundamental reform." Accountability is certainly important, but Democrats must know that people were really voting for action on Iraq, health care, immigration, energy and a few other problems...


Bush Administration Cannibalism Department

Bush Administration hack Joseph DiGenova announces that cossack Alberto Gonzales and company don't work for Czar George W. Bush at all:

Gonzales' plight puts Bush at risk - Los Angeles Times: other Republicans defended Rove. "There's no suggestion of illegality in anything he has done," DiGenova said. "He wasn't the one making inaccurate representations on Capitol Hill. I would think that would trump any demand [from Congress] for testimony." Rove, speaking at a university last week, dismissed the controversy as groundless. "We're at a point where people want to play politics with it," he said....

[T]he Justice Department and White House made matters worse by repeatedly issuing inconsistent and incomplete accounts of how the U.S. attorneys had been fired."The incompetence has been amazing," DiGenova charged. "Managing crises, beginning with preventing crises, is what life in Washington is about.... But these guys didn't have a plan ready to answer questions once the problem became public. They still don't have their stories straight. "There are too many Stepford husbands in this administration: young men who are perfectly coiffed and have great clothes, but very few of them have ever been in a courtroom," he added.


Bookmarked at Del.icio.us for 2007-03-18


Bookmarked at Del.icio.us for 2007-03-17


How to Lose Our Soft Power

Gideon Rachman hopes to enter the U.S.:

Gideon Rachman's Blog: Next week I hope to visit the US. I will put it no more strongly than that. I have learnt not to take my right to visit America for granted – ever since being ignominiously deported in 2003. When I rang my wife from Dulles airport to tell her that I was being put on the first plane home, she briefly feared that I was about to reveal a double life as an international drug-smuggler or pornographer. Nothing so interesting. I had simply forgotten to get myself a journalist’s visa.

The best stories of this sort usually involve the innocent foreigner being shackled or bundled off to the state penitentiary. Not in my case. The officials dealing with me were polite, sympathetic – but implacable. I protested feebly that I was a former Fulbright scholar who had lived in the US for several years. I had written for American journals, I knew important people, Britain was fighting alongside the US in Iraq. None of it cut any ice. As one of the immigration people explained: “We could have made an exception before 9/11, but not now.”...

As a result of my unfortunate oversight, entering the US is always a bit of a performance. I am now wearily familiar with the look of consternation that crosses the immigration officer’s face, as my name comes up on the computer. Then I get pulled over for a “secondary inspection”. Usually, after 15 minutes or so, I am on my way.

But I am far from alone in feeling uneasy when I find myself in an American immigration line. In November, a survey of more than 2,000 regular foreign travellers found that 66 per cent of them agreed with the statement: “If you make a simple mistake or say the wrong thing to US immigration or security officials, you might be detained for hours or worse.”... 39 per cent of regular travellers rate the US “worst” for immigration and entry procedures; the Middle East came second on 16 per cent. Discover America complains of a “climate of fear” and a “travel crisis”. It cites a “near 20 per cent drop in the United States share of overseas travellers since 2000” and claims that this has cost 200,000 jobs and $93bn in revenue.


Dresdner’s Lapthorne Turns into a Bear

Andrew Lapthorne thinks stocks are overvalued:

FT Alphaville » Blog Archive » ‘E’ is disappearing, says Dresdner’s Lapthorne: DK’s global quant strategist Andrew Lapthorne has joined the cautionary chorus. “Those fond of word counts may want to search on the phrase ‘fundamentally nothing much has changed’, for as far as I can tell every person and their dog seems to be trotting this out,” Lapthorne notes. “From our perspective, if indeed fundamentally nothing has changed then equities are still in trouble as a US driven slowdown was already well underway!”

Lapthorne says that, historically, a peak in US interest rates has been associated with a peak in the US profits cycle....

US 12-month forward EPS growth expectations have turned sharply lower from around 12 per cent then, to approaching 7 per cent today....

While this pull-back is broadly-based, investors seem sanguine about prospects for profits, seeing growth moderating rather than earnings actually falling. But earnings are already well above trend in both the US and Europe, and "under pressure from lower productivity and higher costs.... [O]nce you make any kind of cyclical adjustment or look at the more static valuation models such as dividend yield or price to book, then equities look expensive. As such any decline in profits will put pressure on investors’ perception of value..."


Ezra Klein vs. One of the Horsemen of the Stupidoclypse

Why Oh Why Can't We Have a Better Press Corps? (Mickey Kaus's Journamalism Department)

It's really too bad that Ezra Klein has to deal with Mickey Kaus's crap. Somebody as generous, public-spirited, and intelligent as Ezra would, in a better world, not be spending time fishing Kaus's turds out with a rake in the hope of cleansing the polluted river of liberal discussion.

Fortunately, Ezra doesn't have to spend much time, or energy:

Ezra Klein: Kaus's Bloggingheads... wasn't nearly as enraging as I'd expected: Kaus is too petulant to be genuinely offensive.... [M]y judgment that "neoliberals did much to correct the Democratic Party's image, but not much to update its policies"... overstated that case somewhat, but not by much. Kaus, however, is a breathing, walking, balding example of my unadulterated argument.

His criticisms of me... [are] that I'm on "the far left"... [and] that I'm young. Now, unless your spectrum runs from Al From to Sam Brownback, it's six types of absurd to place me on the "far left."... Mickey's latest post at Slate is anchored by a gushing encomium to my friend Jon Cohn... [who] is... farther left on health policy than I am....

[F]or Kaus, the question is style points. Jon Cohn and I both focus on social policy, both believe approximately the same things, and both are working towards much the same outcome. But I'm the "far-left." Why? Style. I'm young, I'm partisan, I'm pro-union, I'm insufficiently impressed with Mickey's years in the trenches of neoliberalism.... That's what's so fundamentally unimpressive about writers like Kaus. Their ideology is underpinned by a grudge... aesthetic, characterological, and above all, personal. They hate unions and so they worry about productivity costs, loathe Jesse Jackson and so can't think seriously think about racial justice....

The substance is immaterial. Neoliberalism was, for [Kaus]... an attitude first and an ideology second. In recent years, Kaus has become an embarrassingly public exhibition of that prioritization scheme.

Kaus has always been remarkable: A self-proclaimed Democrat who can't figure out in October 2000 that there is even a dime's worth of difference between Al Gore and George W. Bush? A self-proclaimed neoliberal who claims not to know whether Bush's reversal of the real Clinton neoliberals' balancing the budget is "good or bad for the country," and claims that it is immaterial that the Bushies' policies, like" the Bush tax cut [are] based on lies... it's not enough to criticize a policy to say that it's based on lies"? A man who fared worse in his self-declared war against Paul Krugman than the Black Knight fared against King Arthur--Kaus, after all, cut off all four of his own limbs, while King Arthur had to cut the Black Knight's limbs off?

Truly Ezra does us all a good service in dealing with this guy, one of the Four Horsemen of the Stupidoclypse unleashed upon the world by Marty Peretz and Michael Kinsley in that dreadful laboratory "accident." But it's a shame it has to be done at all.


Foreclosure vs. Renegotation in Non-Standard Home Mortagages

No money down!

Steven Pearlstein - 'No Money Down' Falls Flat - washingtonpost.com: Which of these products do you think makes sense? (a) The "balloon mortgage," in which the borrower pays only interest for 10 years before a big lump-sum payment is due. (b) The "liar loan," in which the borrower is asked merely to state his annual income, without presenting any documentation. The "option ARM" loan, in which the borrower can pay less than the agreed-upon interest and principal payment, simply by adding to the outstanding balance of the loan. (d) The "piggyback loan," in which a combination of a first and second mortgage eliminates the need for any down payment. (e) The "teaser loan," which qualifies a borrower for a loan based on an artificially low initial interest rate, even though he or she doesn't have sufficient income to make the monthly payments when the interest rate is reset in two years. (f) The "stretch loan," in which the borrower has to commit more than 50 percent of gross income to make the monthly payments. (g) All of the above.

If you answered (g), congratulations! Not only do you qualify for a job as a mortgage banker, but you may also have a future as a Wall Street investment banker and a bank regulator.

No, folks, I'm not making this up. Not only has the industry embraced these "innovations," but it has also begun to combine various features into a single loan and offer it to high-risk borrowers. One cheeky lender went so far as to advertise what it dubbed its "NINJA" loan -- NINJA standing for "No Income, No Job and No Assets." In fact, these innovative products are now so commonplace, they have been the driving force in the boom in the housing industry at least since 2005. They are a big reason why homeownership has increased from 65 percent of households to a record 69 percent. They help explain why outstanding mortgage debt has increased by $9.5 trillion in the past four years. And they are, unquestionably, a big factor behind the incredible run-up in home prices.

Now they are also a major reason the subprime mortgage market is melting down, why 1.5 million Americans may lose their homes to foreclosure and why hundreds of thousands of homes could be dumped on an already glutted market. They also represent a huge cloud hanging over Wall Street investment houses, which packaged and sold these mortgages to investors around the world....

Instead of packaging entire mortgages, Wall Street came up with the idea of dividing them into "tranches." The safest tranche, which offers investors a relatively low interest rate, will be the first to be paid off if too many borrowers default and their houses are sold at foreclosure auction. The owners of the riskiest tranche, in contrast, will be the last to be paid, and thus have the biggest risk if too many houses are auctioned for less than the value of their loans. In return for this risk, their bonds offer the highest yield.It was this ability to chop packages of mortgages into different risk tranches that really enabled the mortgage industry to rush headlong into all those new products and new markets -- in particular, the subprime market for borrowers with sketchy credit histories.

Selling the safe tranches was easy, while the riskiest tranches appealed to the booming hedge-fund industry and other investors like pension funds desperate for anything offering a higher yield. So eager were global investors for these securities that when the housing market began to slow, they practically invited the mortgage bankers to keep generating new loans even if it meant they were riskier. The mortgage bankers were only too happy to oblige.

By the spring of 2005, the deterioration of lending standards was pretty clear. They were the subject of numerous eye-popping articles in The Post by my colleague Kirstin Downey.... But it wasn't until December 2005 that the four bank regulatory agencies were able to hash out their differences and offer for public comment some "guidance" for what they politely called "nontraditional mortgages." Months ensued as the mortgage bankers fought the proposed rules with all the usual bogus arguments, accusing the agencies of "regulatory overreach," "stifling innovation" and substituting the judgment of bureaucrats for the collective wisdom of thousands of experienced lenders and millions of sophisticated investors. And they warned that any tightening of standards would trigger a credit crunch and burst the housing bubble that their loosey-goosey lending had helped spawn.

The industry campaign... did delay final implementation of the guidance until September 2006, both by federal and many state regulators. And even now, with the market for subprime mortgages collapsing around them, the mortgage bankers and their highly paid enablers on Wall Street continue to deny there is a serious problem.... What we have here is a failure of common sense. With occasional exceptions, bankers shouldn't make -- or be allowed to make -- mortgage loans that require no money down and no documentation of income to people who won't be able to afford the monthly payments if interest rates rise, house prices fall or the roof springs a leak. It's not a whole lot more complicated than that.

The horse is out of the barn, and Steve's true point that the door should not have been left open is not enough to deal with the current situation. In those states of the world in which the economy slows and interest rates rise and millions of homeowners begin missing their payments, what should be done? I can see one constructive thing that bank regulators can do: they can publicly note that foreclosure is an appropriate response to individual cases in which payments are not being made because idiosyncratic things have gone wrong with individual household's finances, but that foreclosure is not an appropriate response to a systemic problem triggered by macroeconomic risks that have come calling. The appropriate response when it is an aggregate rather than an idiosyncratic shock is to renegotiate the loan--not to foreclose on a homeowner. And banks that do the second rather than the first are not fulfilling their responsibility to the system of which they are a part.


Burke on Burke's Political Philosophy

Tim Burke: Hoisted from the Comments: Burke talks about Burke:

Comment on: Jacob Levy Hates People Who Are Intolerant!: One objection I have here is that I read another point in Burke in the Reflections, rather similar to what Bruce Moomaw describes above. There's a selectivity about what Burke regards as an admirable tradition, certainly. But there's also a theory of directed change over time in Burke which suggests that the more ambitious and wide-reaching a desired progressive or emancipatory change might be, and the more sudden the time scale of proposed change is, the less likely it is to achieve its aims.

Burke, as I understand him, is suggesting in part that progressive or emancipatory politics has to derive from the organic substrate of a given society, and not deviate in some startling or disjunctive manner from those organic precedents.

This is the aspect of Burke's thought that I think could properly be called "conservative liberalism" rather than reactionary conservatism per se. It would be correct to point out that most contemporary American conservatives are anything but Burkean in this respect, certainly.

I see two strands in Burke relevant to Burke's comment here. The first is that Burke argues that the means you choose shape the ends--not the ends you aim at but the ends you obtain. Call on a society's own internal traditions of justice, fairness, solidarity, mutual prosperity, and liberty, and you will attract to your side those who like justice, fairness, solidarity, mutual prosperity, and liberty. Call on your faction's superior ability to use organization, terror, and violence, and you will attract to your side those who like to boss, to frighten, and to kill. The first road produces a system in which your predominant politician is likely to be someone similar to James Madison. The second road produces a system in which your predominant politician is likely to be someone like Napoleon Bonaparte. This strand in Burke is, I think, very wise.

The second strand in Burke relevant to Burke's comment is, I think, much more problematic. The way I think of it, it starts off from Machiavelli's declaration in Il Principe that it is good to be the (hereditary) king--in the particular example he chooses, it is good to be Ercole I or his son Alfonso I d'Este, hereditary Dukes of Ferrara:

Machiavelli: The Prince - Chapter II: Concerning Hereditary Principalities: I will... discuss how such principalities are to be ruled and preserved. I say at once there are fewer difficulties in holding hereditary states, and those long accustomed to the family of their prince, than new ones; for it is sufficient only not to transgress the customs of his ancestors, and to deal prudently with circumstances as they arise, for a prince of average powers to maintain himself in his state, unless he be deprived of it by some extraordinary and excessive force; and if he should be so deprived of it, whenever anything sinister happens to the usurper, he will regain it.

We have in Italy, for example, the Duke of Ferrara, who could not have withstood the attacks of the Venetians in '84, nor those of Pope Julius in '10, unless he had been long established in his dominions. For the hereditary prince has less cause and less necessity to offend; hence it happens that he will be more loved; and unless extraordinary vices cause him to be hated, it is reasonable to expect that his subjects will be naturally well disposed towards him; and in the antiquity and duration of his rule the memories and motives that make for change are lost, for one change always leaves the toothing for another...

But in Reflections on the Revolution in France, Burke is not advising Louis XVI Bourbon on how to maintain his hereditary state, he is advising a "young gentleman" patriot of Paris. Now neither Burke nor the Young Gentleman are "conservative": neither of them wishes to preserve France's true political past, the corrupt and over-bureaucratized absolutist monarchy established by Richelieu, Colbert, and Louis XIV. So what is Burke's advice to the Young Gentleman? It is to think hard about what a good governmental structure for France would be, think hard about what elements of the French past can be ripped from context, and think hard about a structure as close as possible to the ideal can be sold, sell the result as France's "true" traditional historical institutions, and thus gain as much as possible of the advantages of traditional authority while avoiding as much as possible of its downside--which is, of course, that France's real traditions suck.

This second strand is, I think, best characterized as a form of Marxist political philosophy . Groucho Marxist, that is. As in: "The secret of life is honesty and fair dealing... If you can fake that, you've got it made!"

IIRC, when Michael Walzer lectured in Government 106b, he mused about whether Burke was engaged in political philosophy or political prestidigitation before reading this extended passage aloud:

Edmund Burke: Reflections on the Revolution in France: It is now sixteen or seventeen years since I saw the queen of France, then the dauphiness, at Versailles, and surely never lighted on this orb, which she hardly seemed to touch, a more delightful vision. I saw her just above the horizon, decorating and cheering the elevated sphere she just began to move in — glittering like the morning star, full of life and splendor and joy. Oh! what a revolution! and what a heart must I have to contemplate without emotion that elevation and that fall! Little did I dream when she added titles of veneration to those of enthusiastic, distant, respectful love, that she should ever be obliged to carry the sharp antidote against disgrace concealed in that bosom; little did I dream that I should have lived to see such disasters fallen upon her in a nation of gallant men, in a nation of men of honor and of cavaliers. I thought ten thousand swords must have leaped from their scabbards to avenge even a look that threatened her with insult. But the age of chivalry is gone. That of sophisters, economists; and calculators has succeeded; and the glory of Europe is extinguished forever.

Never, never more shall we behold that generous loyalty to rank and sex, that proud submission, that dignified obedience, that subordination of the heart which kept alive, even in servitude itself, the spirit of an exalted freedom. The unbought grace of life, the cheap defense of nations, the nurse of manly sentiment and heroic enterprise, is gone! It is gone, that sensibility of principle, that chastity of honor which felt a stain like a wound, which inspired courage whilst it mitigated ferocity, which ennobled whatever it touched, and under which vice itself lost half its evil by losing all its grossness.

THIS mixed system of opinion and sentiment had its origin in the ancient chivalry; and the principle, though varied in its appearance by the varying state of human affairs, subsisted and influenced through a long succession of generations even to the time we live in. If it should ever be totally extinguished, the loss I fear will be great. It is this which has given its character to modern Europe. It is this which has distinguished it under all its forms of government, and distinguished it to its advantage, from the states of Asia and possibly from those states which flourished in the most brilliant periods of the antique world. It was this which, without confounding ranks, had produced a noble equality and handed it down through all the gradations of social life. It was this opinion which mitigated kings into companions and raised private men to be fellows with kings. Without force or opposition, it subdued the fierceness of pride and power, it obliged sovereigns to submit to the soft collar of social esteem, compelled stern authority to submit to elegance, and gave a domination, vanquisher of laws, to be subdued by manners.

But now all is to be changed. All the pleasing illusions which made power gentle and obedience liberal, which harmonized the different shades of life, and which, by a bland assimilation, incorporated into politics the sentiments which beautify and soften private society, are to be dissolved by this new conquering empire of light and reason. All the decent drapery of life is to be rudely torn off. All the super-added ideas, furnished from the wardrobe of a moral imagination, which the heart owns and the understanding ratifies as necessary to cover the defects of our naked, shivering nature, and to raise it to dignity in our own estimation, are to be exploded as a ridiculous, absurd, and antiquated fashion.

On this scheme of things, a king is but a man, a queen is but a woman; a woman is but an animal, and an animal not of the highest order. All homage paid to the sex in general as such, and without distinct views, is to be regarded as romance and folly. Regicide, and parricide, and sacrilege are but fictions of superstition, corrupting jurisprudence by destroying its simplicity. The murder of a king, or a queen, or a bishop, or a father are only common homicide; and if the people are by any chance or in any way gainers by it, a sort of homicide much the most pardonable, and into which we ought not to make too severe a scrutiny.

On the scheme of this barbarous philosophy, which is the offspring of cold hearts and muddy understandings, and which is as void of solid wisdom as it is destitute of all taste and elegance, laws are to be supported only by their own terrors and by the concern which each individual may find in them from his own private speculations or can spare to them from his own private interests. In the groves of their academy, at the end of every vista, you see nothing but the gallows. Nothing is left which engages the affections on the part of the commonwealth. On the principles of this mechanic philosophy, our institutions can never be embodied, if I may use the expression, in persons, so as to create in us love, veneration, admiration, or attachment. But that sort of reason which banishes the affections is incapable of filling their place. These public affections, combined with manners, are required sometimes as supplements, sometimes as correctives, always as aids to law. The precept given by a wise man, as well as a great critic, for the construction of poems is equally true as to states: — Non satis est pulchra esse poemata, dulcia sunto. There ought to be a system of manners in every nation which a well-informed mind would be disposed to relish. To make us love our country, our country ought to be lovely...

The problem is, of course, that Ancien Regime France was not a particularly lovely regime, and the court at Versailles not a particularly noble and chivalrous institution. Burke's pretense that it was is... disturbing. As Tom Paine wrote, Burke "pities the plumage and forgets the slaughtered bird." (Of course, Paine wrote that before he had to flee France before his revolutionary comrades separated his head from the rest of him.)


Bookmarked at Del.icio.us for 2007-03-16


Your One-Stop-Shop for Yet More Melian Dialogue Blogging

Donald Kagan scares Jonathan Schwartz. A lot:

A Tiny Revolution: Donald Kagan: Yikes: I already knew he's one weird scary dude. But it turns out his weird scariness goes deeper than I'd imagined. Here's why:

The Peloponnesian War... one of the most famous sections... the Melian Dialogue.... The Melians... have no quarrel with Athens, wish only to remain neutral, and appeal to morality:

MELIANS: ...you should not destroy what is our common protection, the privilege of being allowed in danger to invoke what is fair and right.

The Athenians scoff at such ideas:

ATHENIANS: ...you know as well as we do that right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must... Of men we know, that by a necessary law of their nature they rule wherever they can.... [A]ll we do is to make use of [this law], knowing that you and everybody else, having the same power as we have, would do the same as we do...

This is clearly a bleak, frightening tale.... Kagan wrote a book called The Peloponnesian War. Here's what he says about the Melian affair:

...a campaign against Melos provided the Athenians with the outlet they needed for their energy and frustration... [...] The Melians, alone of the Cycladic islanders, had refused to join the Delian League... [...] A further conflict was inevitable, for the Athenians could not long allow their will and authority to be flouted by a small Cycladic island...


Retire David Broder Today (Why Oh Why Can't We Have a Better Press Corps?/Washington Post Department)

Greg Sargent watches yet more journamalism from David Broder, who trashes the New York Times's Adam Nagourney and Megan Thee for being insufficiently obsequious to today's Republican Party:

Horses Mouth March 15, 2007 09:08 AM: Tuesday's Times story was a fairly straightforward report on a big poll the paper did that was full of bad numbers for the GOP. It was entitled, "G.O.P. Voters Voice Anxieties on Party's Fate." Broder didn't like this -- not one little bit. In response, he attacked the Times, thundering:

Months before the first votes are cast in the campaign of 2008, some in the media are conducting last rites for the Republicans. The rush to bury the GOP is as hasty as it is premature.... The headline atop Page 1 of Tuesday's New York Times read, "GOP Voters Voice Anxieties on Party's Fate." It sounded like a death knell for the party that has held the White House for 26 of the past 38 years. But the evidence was thin.... I would say that the problem seems to lie in the eyes of those political observers who are impatient to judge an election that is many months, not weeks, away...the only thing we know for certain about the 2008 election is that we know none of the vital facts that will determine its outcome.

Broder... said the [Times's] rush to judgment was premature. But... guess what Broder didn't tell his readers... the Times piece... aired exactly the same point that Broder did -- that it would be premature to use such data for a long-term prognosis -- not once, but twice. It said this:

And by a 20-point margin, respondents said that if the election were held today they would vote for an unnamed Democrat for president rather than a Republican. Such questions are hardly predictive of the outcome of an election so far away, but they do offer an insight into the health of the party today.

And it also quoted someone else making the same point:

Republican strategists said they were not surprised about the poll's findings, though they said Republicans were too pessimistic in concluding now that the party could not win in 2008. "People should be concerned"... said Glenn Bolger, a Republican strategist. "But if you go back in time to 1991, the Democrats had a lot of the same concerns, both about the candidates running and their possibility of winning. And it turned out pretty well for them."

Broder... snip-snip-snipped those inconvenient facts away. Snip!...

[W]hat... enraged Broder so much about this piece[?] One guess might be that in Broder's Bipartisan House of Worship no one can whisper aloud that one party is doing far better than the other.... [But] when the GOP was dominant... the priests didn't seem to mind so much back then.


Income Inequality Trends: Robert Waldmann Has a Suggestion for Thomas Piketty and Emmanuel Saez

Robert Waldmann proposes what sounds to me to be a better way to estimate the distribution of income from capital:

Robert's Stochastic thoughts: When one attempts to measure inequality, one faces the problem that much of the income of the very rich is... capital gains and the deeper problem that the variable of interest is income plus capital gains and not income or even income plus realised capital gains.... A standard approach to this problem is to report the distribution of income excluding capital gains and the distribution of income plus realised capital gains.

I have a suggestion for a third calculation....

In theory retained (reinvested) profits should show up as capital gains to shareholders. In (simplistic) theory realised capital gains should be a moving average of capital gains obtained year by year. In practice, the stock market bounces up and down insanely and realisations are, in the short run, extremely sensitive to changes in the tax code....

[A] simple way to assign retained earnings to individuals which is crude but might be useful. There are aggregate data on... [the] dividend payout ratio.... There are individual data on dividends received. Why not just divide dividends received by the dividend payout ratio? This will give dividend income plus the corresponding share of retained earnings owned as a shareholder. If there were not systematic differences in the dividend payout ratio of firms whose shares are owned by high and low income people, this will work fine. There are such systematic differences of course, but I doubt that they are huge....

This is a way to immunise estimates of the upper tail of the income distributions to changes in dividend payout without infecting the estimates with vulnerability to irrational exuberance....

[There are] tax shelters in which overstated depreciation of structures hides true income, and then when the structure is sold the hidden income appears as a capital gain. The amount of this activity fluctuated enormously.... When accelerated depreciation was introduced in 1981... it became huge... tax rates were cut and the practice was specifically banned in 1986.... The period after tax reform shows a huge spike in reported personal income of the richest 1%....

I would guess that true inequality increased even more than inequality of reported personal income in the period 1979-1986 as increasingly massive amounts were hidden from the IRS in this period. Similarly, I would guess that the huge increase in the share of the top 1% from 86 through 89 is largely the effect of a reduction in such sheltering...


Bookmarked at Del.icio.us for 2007-03-15


Two Ways of Looking at Data on Income Inequality...

A correspondent reminds me of this from Greg Mankiw, which at the time seemed to me to indicate that Greg was still high on the Bush administration koolaid he had drunk:

Greg Mankiw's Blog: New Data on Income Inequality: Paul Krugman calls attention to the update of the Piketty-Saez data on income inequality, although Paul describes the data differently than I would. Here is what I see: After rising substantially from 1986 to 2000, income inequality is essentially the same in 2004 (the most recent year of data) as it was in 2000.

Greg wrote this last year, before the IRS issued the data underlying the 2005 data point in this:

Market income excluding capital gains


History as Tragedy: The Peloponnesian War: Hoisted from the Archives

Atrios is talking about the Kagan family--Yale historian father Donald and neoconservative hack children Fred and Robert. This reminds me that I wrote something about the (relatively) smart one--father Donald--several years ago, back when we were reading his one-volume Peloponnesian War:

History as Tragedy: The Peloponnesian War: Hoisted from the Archives: The Thirteen-Year-Old got Donald Kagan's (2003) Peloponnesian War (one volume) for Christmas.... [T]he New Yorker's Daniel Mendelsohn [certainly] doesn't think much of it:

Daniel Mendelsohn: Critic at Large: Kagan... informs us that... he wants his work to "meet the needs of readers in the 21st century"... "an uninterrupted account will better allow readers to draw their own conclusions." Uninterrupted, yes, but not unbiased... you tend to come away from his history with an entirely different view of the war than the one you take away from Thucydides....

The only way to do this, unfortunately, is [for Kagan] to flatten Thucydides's presentation of the Peloponnesian War, stripping away the many voices and points of view that [Thucydides] worked so hard to include.... Thucydides tends to be shy about overtly intruding.. not so Kagan. This is most apparent in [Kagan's] revisionist championing of Cleon and other Athenian hawks, whose policies he consistently presents as the only reasonable choice. "It is tempting to blame Cleon for the breaking off of the negotiations," goes a typical bit of rhetorical strong-arming. "But what, realistically, could have been achieved?" Anyone who hasn't read Thucydides will be inclined to agree. [Thucydides's own] explanation of the Athenians' distaste for peace was that "they were greedy for more."

The desire to rehabilitate Cleon inevitably results in a corresponding denigration of the [Athenian] peace party (with its "apparently limitless forbearance") and of the cautious policies recommended first by Pericles and then by Nicias, a figure for whom Kagan has particular disdain. Here Kagan's revisionism borders on being misleading. Nicias had tried to bluff the Athenian Assembly into abandoning the invasion of Sicily, declaring that it would require far greater expense than people realized; but they simply approved the additional ships and troops. This leads Kagan, bizarrely, to characterize the Sicilian Expedition as "the failed stratagem of Nicias." As for the Athenians' massacre of the Melians, Kagan dismisses it as "the outlet they needed for their energy and frustration."

Kagan's perspective on events and personalities at first suggests an admirable desire to see the war with fresh and unsentimental eyes. But after a while it becomes hard not to ascribe his revisionism to plain hawkishness, a distaste for compromise and negotiation when armed conflict is possible. His book represents the Ollie North take on the Peloponnesian War: "If we'd only gone in there with more triremes," he seems to be saying, "we would have won that sucker."

It is certainly the case that I have always found it very strange that Kagan is not much, much more hesitant than he is to dismiss and overturn Thucydides's analytical conclusions and moral judgments. Thucydides, after all, was there. We know next to nothing about the Peloponnesian War that he did not. He knew a great deal about the Peloponnesian War that did not make it into his book. His judgments are based on much more information than we have now, whether he lays out that information in a manner that is to Donald Kagan's liking or not.

Actually, we do know one important, big thing about the Classical Greek world that Thucydides did not know (and that, strangely, Kagan appears not to know). There is a deep, powerful sense in which time was on the side of Athens and its empire. Each decade that the war between Sparta and Athens remained cold rather than hot was a decade for metics and immigrants to the Geek world to think whether they wanted to live in Spartan-allied oligarchies dominated by a closed guild of landowners, or in Athenian-allied places where the (male, citizen) demos ruled and where there was much more growth, commerce, trade, and opportunity.

Each decade that the war between Sparta and Athens remained cold rather than hot was a decade for rich Spartiates to marry the daughters of other rich Spartiates, and for poor Spartiates to find that they could no longer afford the Spartan lifestyle and so drop out of the citizen body--and of the main line of battle. By 350 Sparta could--this is a guess--put only one-fifth as many professional hoplite soldiers into the line of battle as it could have two centuries before. Each decade that the war was postponed was a decade for Athens, its economy, its trade network, and its empire outside of Achaea and Aetolia to grow. A policy of postponing the showdown--even if one of "apparently limitless forbearance"--was a policy of greatly increasing the relative strength of the Athenian side.

But what is most disappointing to Mendelsohn (and most disappointing to me) is that he finds Kagan's Peloponnesian War to be a very different and much less interesting thing than Thucydides's Peloponnesian War (or, I would argue, than the Peloponnesian War wie es eigentlich gewesen). The lessons from Kagan's Peloponnesian War appear to be that war against Bad Guys calls for Harsh Measures and Total Mobilization.

By contrast, Mendelsohn writes, the lessons from Thucydides's Peloponnesian War:

...are no different from the ones that the tragic playwrights teach: that the arrogant self can become the abject Other; that failure to bend, to negotiate, inevitably results in terrible fracture; that, because we are only human, our knowledge is merely knowingness, our vision partial rather than whole, and we must tread carefully in the world...

But let's give Thucydides himself the last word:

[W]ar... proves a rough master that brings most men's characters to a level with their fortunes... the cunning of their enterprises and the atrocity of their reprisals. Words had to change their ordinary meaning.... Reckless audacity came to be considered the courage of a loyal ally; prudent hesitation, specious cowardice; moderation was held to be a cloak for unmanliness; ability to see all sides of a question, inaptness to act on any. Frantic violence became the attribute of manliness; cautious plotting, a justifiable means of self-defence.

The advocate of extreme measures was always trustworthy; his opponent a man to be suspected. To succeed in a plot was to have a shrewd head, to divine a plot a still shrewder; but to try to provide against having to do either was to break up your party and to be afraid of your adversaries.... The fair proposals of an adversary were met with jealous precautions... not with a generous confidence. Revenge also was held of more account than self-preservation. Oaths of reconciliation... only held good so long as no other weapon was at hand; but when opportunity offered, he who first ventured to seize it... thought this perfidious vengeance sweeter than an open one, since... success by treachery won him the palm of superior intelligence....

The leaders in the cities... on the one side with the cry of political equality... on the other of a moderate aristocracy... [recoiled] from no means in their struggles... in their acts of vengeance they went to even greater lengths, not stopping at what justice or the good of the state demanded, but making the party caprice of the moment their only standard.... Thus every form of iniquity took root...


Emmanuel Saez Writes in About American Income Inequality Rising Rapidly in 2005

He says:

The IRS has released yesterday the preliminary stats for year 2005 which I have used to extend my [and Thomas Piketty's] series [on the top income share by tax return unit] to 2005, posted at: http://elsa.berkeley.edu/~saez/TabFig2005prel.xls

2005 shows a very large increase in income concentration: the top 1% gains 14% in real terms from 2004 while the bottom 99% gains less than 1% (when including capital gains). The [previous] record peak of 2000 is surpassed even though 2005 is less of a high capital gains, high stock option year than 2000. By 2005, it looks like top incomes are showing strongly along all components: wages, business income, dividends, and capital gains.

The striking thing about 2003-2005 is the huge increase at the top with quasi-stagnation below the top 1%. In the late Clinton years, the top gained enormously but at least the bottom was also making progress (something you can see on Fig A2)...

Market income excluding capital gains


Bookmarked at Del.icio.us for 2007-03-14


The Muffin Joke Is So Funny!

Jack Balkin says that the muffin joke is so funny:

Balkinization: Repeat after me: The Muffin Joke is NOT funny: This article [by John Tierney] in the New York Times asserts that the muffin joke is not funny; we only laugh at it because we want to get along with other people in social situations.I disagree. When I first heard the muffin joke, I thought it was very funny. Still do.... The muffin joke is funny because it is self-undermining. The punch line undermines the suspension of disbelief that the joke's narrative presumes. It is kind of like breaching the fourth wall in drama. It's like the line in Dr. Strangelove "You can't fight in here. This is the War Room!" or the Atheist Hymn we came up with in high school: "There is no God, there is no God, He told me so himself"...

I agree: I think the muffin joke is so funny. Why, it is even funny when told by as low-status an individual as John Tierney:

What’s So Funny? Well, Maybe Nothing - New York Times: Plato, Aristotle, Hobbes, Kant, Schopenhauer, Freud and the many theorists who have tried to explain laughter based on the mistaken premise that they’re explaining humor. Occasionally we’re surprised into laughing at something funny, but most laughter has little to do with humor. It’s an instinctual survival tool for social animals, not an intellectual response to wit. It’s not about getting the joke. It’s about getting along....

“Laughter is an honest social signal because it’s hard to fake,” Professor Provine says. “We’re dealing with something powerful, ancient and crude. It’s a kind of behavioral fossil showing the roots that all human beings, maybe all mammals, have in common.”... Professor Panksepp thinks the brain has ancient wiring to produce laughter so that young animals learn to play with one another. The laughter stimulates euphoria circuits in the brain and also reassures the other animals that they’re playing, not fighting. “Primal laughter evolved as a signaling device to highlight readiness for friendly interaction,” Professor Panksepp says. “Sophisticated social animals such as mammals need an emotionally positive mechanism to help create social brains and to weave organisms effectively into the social fabric.”...

Which brings us back to the muffin joke. It was inflicted by social psychologists at Florida State University on undergraduate women.... The women put in the underling position were a lot more likely to laugh at the muffin joke (and others almost as lame) than were women in the control group.... In some cases the woman watching was designated the boss; in other cases she was the underling or a co-worker of the person on the videotape. When the woman watching was the boss, she didn’t laugh much at the muffin joke. But when she was the underling or a co-worker, she laughed much more, even though the joke-teller wasn’t in the room to see her. When you’re low in the status hierarchy, you need all the allies you can find, so apparently you’re primed to chuckle at anything even if it doesn’t do you any immediate good...


Is 1.5 Million Home Foreclosures This Year a Big Number or a Small Number?

Bob Ivry on the housing bust:

Bob Ivry: Foreclosures May Hit 1.5 Million in U.S. Housing Bust: March 12 (Bloomberg) -- Hold on to your assets. The deepest housing decline in 16 years is about to get worse. As many as 1.5 million more Americans may lose their homes, another 100,000 people in housing-related industries could be fired, and an estimated 100 additional subprime mortgage companies that lend money to people with bad or limited credit may go under, according to realtors, economists, analysts and a Federal Reserve governor....

The spring buying season, when more than half of all U.S. home sales are made, has been so disappointing.... ``The correction will last another year,'' said Mark Zandi, chief economist for Moody's Economy.com in West Chester, Pennsylvania. ``Fewer people qualifying for mortgages means there will be less borrowers, and that will weigh on demand.''.... [N]ew-home sales have declined 28 percent since September 2005....

The subprime crisis ``has taken the fuel out of the real estate market,'' said Edward Leamer, director of the UCLA Anderson Forecast in Los Angeles. ``The market needs new money in order to appreciate, and all of that money is gone for a very long time. The regulators are not going to allow it to happen again.''


Impeach Alberto Gonzales. Impeach Him Now

Alberto Gonzales lies to Congress:

Think Progress: Attorney General Alberto Gonzales assured the Senate Judiciary Committee....

GONZALES: And so let me publicly sort of preempt perhaps a question you're going to ask me, and that is: I am fully committed, as the administration's fully committed, to ensure that, with respect to every United States attorney position in this country, we will have a presidentially appointed, Senate-confirmed United States attorney. I think a United States attorney who I view as the leader, law enforcement leader, my representative in the community -- I think he has greater imprimatur of authority, if in fact that person's been confirmed by the Senate.

But in mid-December, an e-mail by Gonzales's chief of staff, D. Kyle Sampson (who resigned yesterday), showed that the Justice Department clearly intended to... appoint U.S. attorneys that would serve until the end of Bush's term [without confirmation]:

There is some risk that we'll lose the authority, but if we don't ever exercise it then what's the point of having it?

Gonzales also told the Senate Judiciary Committee that the Justice Department was "working with home state senators."... But... e-mails show... Justice officials "discussed bypassing the two Democratic senators in Arkansas, who normally would have had input into the appointment."


Kash Mansouri on the Sectoral Distribution of Unemployment

Kash writes:

The Street Light: February Jobs Report: [J]ob creation for February. .. was about as expected: "Nonfarm payroll employment continued to trend up (+97,000), and the unemployment rate (4.5 percent) was essentially unchanged in February, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment grew in some service-providing industries but declined sharply in construction. Manufacturing employment continued to trend downward. Average hourly earnings rose by 6 cents, or 0.4 percent, over the month."

The job market has been gradually cooling over the past several months (not that it was ever really hot), and this report is consistent with that trend.... And what parts of the economy are cooling down the most, you wonder?... [T]he construction industry has led the way toward a weaker job market, but nearly all sectors of the economy have seen some slowdown in job creation, with the exception of the government and leisure & hospitality sectors.

Hand-in-hand with weaker job growth comes weak earnings growth by workers, of course. To the $10 per week increase in take-home pay that the average production worker has received since the year 2000, in February they were able to add another $0.30. Unfortunately, that only made up for about half of the fall in average weekly pay that they took home in January.


Atrios Is Unhappy with Andrea Mitchell

Found at Eschaton:

Eschaton: Andrea Mitchell, Hardball just now: "They're going to try to really tamp this down and appeal to the polling which indicates that most people think, in fact, that he should be pardoned. Scooter Libby should be pardoned." CNN poll says 18% support pardon. Ah, modern journalism.


Middle Class Risks

I'm sorry I missed this:

The Jefferson Memorial Lectures Committee, on behalf of the Graduate Council of the Academic Senate, cordially invites you to a public lecture by:

Elizabeth Warren, Leo Gottlieb Professor of Law, Harvard University: "The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net" Thursday, March 8, 2007 – 4:10 p.m. International House Auditorium, 2299 Piedmont Avenue, Berkeley

The lectures are free and open to the public. No tickets are required. For information, please visit our web site at http://www.grad.berkeley.edu/lectures, or contact us by phone at 510.643.7413, or by e-mail at lectures@berkeley.edu


Cuba--The Dictatorship of the Castro Brothers

Morning Coffee Videocast: Cuba--The Dictatorship of the Castro Brothers: MANY praise Cuba for having such a high level of social development for a country whose economy is in such sad shape. But back in 1957 Cuba was a developed, not an underdeveloped country--it ought today to look like Italy, Spain, Portugal, or Puerto Rico, and it doesn't. Thanks to the dictatorship of the Castro brothers.


Bookmarked at Del.icio.us for 2007-03-13


J. Bradford DeLong (2007), "Right from the Start? What Milton Friedman Can Teach Progressives"

J. Bradford DeLong (2007), "Right from the Start? What Milton Friedman Can Teach Progressives," Democracy: A Journal of Ideas 4 (Spring). (A review of Lanny Ebenstein (2007) Milton Friedman: A Biography (Palgrave Macmillan • 272 pages • $27.95

http://delong.typepad.com/pdf/20070308_108-115.delong.FINAL.pdf


Bookmarked at Del.icio.us for 2007-03-12


Berkeley vs. London

A high of 80F today in Berkeley. Strada at College and Bancroft didn't turn on its heat lamps until after dark. The first sunbathers of the year appeared.

I remember the... second time I ever went to London. It was the last weekend in May. We got there, and it was 65F or so at the high, with scattered clouds, and people were sunbathing in Russell Square. "Why are they doing this?" I wondered. "Don't they know the weather will be much better for sunbathing in a month?"

I was wrong. It wasn't. That was the best weekend of the summer.


Un-Discourse Situations...

I can think of seven wedges between the national net savings-investment rate as estimated by the National Income and Product Accounts and statistical estimates of the change in total measured household net worth:

  1. There is a gap between the rate of return on the average investment made in a year and the cost of capital, which means that $1 of savings on average produces more than $1 of value.
  2. The NIPA may well understate corporate savings and investment by counting a bunch of investments in organizational form as corporate operating expenses.
  3. All of us free-ride on technological research and development, reaping where we do not sow, gathering where we do not scatter, and profiting where we do not save and invest.
  4. Shifts in the distribution of income away from labor and toward capital increase measured household net worth--which includes the increased expected future profits from capital--but not true household net worth--which also includes the decreased expected future wages of labor.
  5. Declines in interest rates make the future more valuable relative to the present and so raise measured household net worth today--which is measured in today's dollars--without any outward shift in the true consumption-possibilities frontier.
  6. Government deficits that raise the debt lower national savings but not measured household net worth.
  7. Good news about the future produces windfall gains and bad news windfall losses which alter this year's household net worth without telling us much about over-all long-run accumulation trends.

I was sitting on the right end of an nine-person panel at the New School Friday morning http://www.cepa.newschool.edu/events/events_schwartz-lecture.htm#webcast. Bob Solow was sitting on the left end--Solow, Shapiro, Schwartz, Rohatyn, Kudlow, Kerrey, Kosterlitz, Hormats, DeLong. Bob Solow expressed concern and worry over the declines in the U.S. savings rate over the past generation. Larry Kudlow, in the middle of the panel, aggressively launched into a rant--about how the NIPA savings rate was wrong, about how the right savings rate was the change in household net worth, about how there was no potential problem with America saving too little, that the economy was strong, and that that day's employment report had been wonderful, and that Paul Krugman had predicted nine out of the last zero recessions, et cetera, et cetera, et cetera.

What is one to do? You watch a guy--Bob Solow--one of the smartest and most thoughtful people I know, having his intellectual impact neutralized by a guy--Kudlow--who really isn't in the intellectual inquiry business anymore. Kudlow clearly has not thought through the biases and gaps in the household net worth number: if he had, there is no way he could say what he is saying.

On paper, in print, on the screen, one can point out that the employment report was anemic--it was not a bloodletting by any means, but it was a bit disappointing. On paper, in print, on the screen, one can say that there is reason to worry about the decline in housing demand and the possibility that it might trigger a recession. On paper, in print, on the screen one can say that reasons (4), (5), and (6) pushing up measured household net worth are reasons to discount that statistic as misleading because they do not reflect any true increase in appropriately-defined wealth, that any increase in household net worth caused by (7) is a transitory phenomenon that tells us little about permanent saving and accumulation patterns, that (1) and (2) affect the level but not the trends of saving, and do not speak to Solow's worry about the savings-investment rate's decline, and thus that only reason (3)--the effects of the now decade-long computer-and-communications real investment boom on our total wealth--provides a reason to even begin to think about whether Bob Solow's worries about declining savings as measured by the NIPA are at all overblown.

But there are ninety minutes for a panel with nine people on it. To the audience it looks like two cocksure economists who disagree for incomprehensible reasons. And my ten minute share will come too late to try to referee Solow-Kudlow in any fair, balanced, and effective way.

It's an un-discourse situation: Kudlow doesn't acknowledge--may not know--the flaws in his chosen statistic. And I can't help wonder what Kudlow would be saying if a Democrat were president.

It's an intellectual Gresham's Law in action...

What can I do? I can blog about it.


Jacob Levy Hates People Who Are Intolerant!

He takes on Alan Wolfe:

Open University: [Wolfe's essay] is, as as I wrote at the time, "friend-enemy politics posing as an opposition to it. It is Wolfe who sees [the 2004] election as an apocalyptic contest between liberal democracy and its opponents rather than a competition between two legitimately opposed parties in an ongoing contestatory system."... The essay compares unlikes to unlikes in the service of equating liberalism to nice intellectual approaches and conservatism to thuggishness: "Schmitt had an explanation for why conservative talk-show hosts like Bill O'Reilly fight for their ideas with much more aggressive self-certainty than, say, a hopeless liberal like Alan Wolfe." (I have an explanation, too: it rests on the distinction between talk-show hosts and thoughtful academics.)...

It's popular in the blogosphere to trot out the other side's most obnoxious and venomous and extreme spokespeople (Pat Robertson! Noam Chomsky! Ward Churchill! R.J. Rushdoony! Ann Coulter! Al Sharpton!) as a substitute for debate.... But a one-sided list of bad actors can't be used as evidence in an evaluation of which side has worse actors....

Here at OU Alan has been busy warning people against what he takes to be the censorious impulse involved in suggestions of anti-Semitism (regardless of underlying merit). [Karl] Schmitt was a Nazi. Throwing around claims like "conservatives have absorbed Schmitt's conception of politics much more thoroughly than liberals" seems to me at least as... uninviting of further discussion... as some of the claims that he's suggested illegitimately manifest a desire to censor....

I'm no conservative, but I found the claim that liberals do, and conservatives do not, care about process over outcomes, about precedent, about the boundedness of state power and the autonomy of society, and about engaging with their opponents as legitimate participants in debate very offputting. Linking that claim up with Schmitt made it all the worse.

My problem is that in America today I don't see many conservatives. I see plenty of Bush-apologists. But I don't see very many people who think that the traditions we have inherited deserve respect because they are our traditions. People who advance such arguments--that "women should be discriminated against" and "homosexuals should be beaten up" and "abortion should be banned" and "couples in movies should always have three feet on the floor" because that is the way things have been--always seem to stop short when the traditions that we have inherited are things like "workers should be unionized" or "taxes should be progressive" or "people should be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures" or that those "quaint Geneva conventions" are the law of the land.

As Max Weber said, the materialist interpretation of history is not a streetcar that you can get on and off where you wish. Similarly, one would think that a conservative philosophical orientation is not something to be applied to support those past institutions and practices you like and to be ignored when past institutions and practices are things you don't like. But it is.

In fact, in practice, it always has. A conservative philosophical orientation has always been a streetcar to get you to where you already knew you wanted to go.

When Edmund Burke in his Reflections on the Revolution in France makes the argument that Britons should respect the organic political tradition of English liberty that has been inherited from the past, he whispers under his breath that the only reason we should respect the Wisdom of the Ancestors is that in this particular case Burke thinks that the Ancestors--not his personal ancestors, note--were wise.

Whenever Burke thought that the inherited political traditions were not wise, the fact that they were the inherited Wisdom of the Ancestors cut no ice with him at all. It was one of the traditions and institutions of Englishmen that they would conquer, torture, and rob wogs whenever and wherever they were strong enough to do so. That tradition cut no ice with Edmund Burke when he was trying to prosecute Warren Hastings. It was one of the traditions and institutions of Englishmen that all power flowed to Westminster. That tradition cut no ice with Burke when he was arguing for conciliation with and a devolution of power to the American colonists. It was one of the traditions and institutions of Englishmen that Ireland was to be plundered and looted for the benefit of upwardly-mobile English peers-to-be. That tradition, too, cut no ice with Burke.

Even in Reflections on the Revolution in France, Burke doesn't argue that Frenchmen should build on their own political traditions--the traditions of Richelieu and Louis XIV, that is. He argues--well, let's let him talk:

Burke: Reflections on the Revolution in France: We [in Britain] procure reverence to our civil institutions on the principle upon which nature teaches us to revere individual men; on account of their age; and on account of those from whom they are descended.... You [in France] might, if you pleased, have profited of our example, and have given to your recovered freedom a correspondent dignity. Your privileges, though discontinued, were not lost to memory. Your constitution... suffered waste and dilapidation; but you possessed in some parts the walls, and in all the foundations, of a noble and venerable castle. You might have repaired those walls; you might have built on those old foundations. ... In your old [E]states [General] you possessed that variety of parts corresponding with the various descriptions of which your community was happily composed; you had all that combination, and all that opposition of interests, you had that action and counteraction which, in the natural and in the political world, from the reciprocal struggle of discordant powers, draws out the harmony of the universe.... Through that diversity of members and interests, general liberty had as many securities as there were separate views.... [B]y pressing down the whole by the weight of a real monarchy, the separate parts would have been prevented from warping and starting from their allotted places.

You had all these advantages in your antient [E]states [General].... If the last generations of your country appeared without much lustre in your eyes, you might have passed them by, and derived your claims from a more early race of ancestors. Under a pious predilection for those ancestors, your imaginations would have realized in them a standard of virtue and wisdom.... Respecting your forefathers, you would have been taught to respect yourselves. You would not have chosen to consider the French as... a nation of low-born servile wretches until the emancipating year of 1789.... [Y]ou would not have been content to be represented as a gang of Maroon slaves, suddenly broke loose from the house of bondage....

Would it not... have been wiser to have you thought... a generous and gallant nation, long misled... by... fidelity, honour, and loyalty... that you were not enslaved through any illiberal or servile disposition... [but] by a principle of public spirit, and that it was your country you worshipped, in the person of your king? Had you made it to be understood... that you were resolved to resume your ancient [liberties,] privileges[, and immunities]... you would have given new examples of wisdom to the world. You would have rendered the cause of liberty venerable in the eyes of every worthy mind in every nation. You would have shamed despotism from the earth...

Burke's argument is not that France in 1789 should have followed its ancestral traditions. Burke's argument is, instead, that France in 1789 should have dug into its past until it found a moment when institutions were better than in 1788, and drawn upon that usable past in order to buttress the present revolutionary moment. This isn't an intellectual argument about how to decide what institutions are good. It is a practical-political argument about how to create good institutions and then buttress and secure them by making them facts on the ground.

What are good institutions? Burke sounds like Madison: checks-and-balances, separation of powers, rights of the subject, limitations on the state. Burke's views on what good institutions are are Enlightenment views--that branch of the Enlightenment that took people as they are and politics as a science, that is, rather than the branch that took people as Rousseau hoped they might someday be and politics as the striking of an oppositional pose. Because he finds that the English past is usable as a support for his Enlightenment-driven views, Burke makes conservative arguments in Reflections. But whenever conservative arguments lead where Burke doesn't want to go--to Richelieu or Louis XIV or the plunder of Ireland or the Star Chamber or Warren Hastings or imperial centralization--Burke doesn't make them. England's inheritance of institutions and practices is to be respected wherever it supports Burke's conception of properly-ordered liberty, and ignored wherever it does not.

You see, for all that Alan Wolfe is an intolerant wolf in tolerant sheep's clothing in his attack on conservatives for being intolerant, Alan Wolfe is right. Conservativism is at its base a form of intellectual thuggishness: a hitting-one's-adversary-on-the-head with the blackjack of tradition when doing so seems likely to gain one a momentary rhetorical advantage. That warped it at its origin, and warps it today.

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Clay Risen's Democracy

I hope there's space for it to sustain itself:

Democracy Journal Mission Page: The mission of Democracy is to build a vibrant and vital progressivism for the twenty-first century that builds on the movement's proud history, is true to its central values, and is relevant to present times. Democracy will publish on a quarterly basis and serve as a place where ideas can be developed and important debates can be spurred.... [W]e seek breakthrough thinking on the concepts and approaches that respond to the central transformations of our time: the breakdown of the ladder of upward mobility; the promise and problems of an information-based, globalized economy; new national security threats which cross old boundaries and defy old assumptions from jihadist terrorism and nuclear proliferation to climate change, pandemics, and poverty; and a society where people work and live in new and different ways.

Progressives have been at their best when we are both rigorous in looking at the world as it is and vigorous in introducing creative approaches to remake the world as we believe it should be. Democracy is not interested in either reiterating the conventional wisdom or maintaining unity around outdated orthodoxies. We see our role as upsetting tired assumptions, moving past outdated and obsolete divisions, and stretching the envelope of what is accepted by and of progressives.


More Great Depression Blogging

Anna J. Schwartz and Edward Nelson are considerably less coherent than I thought. Consider this passage:

'WHO WAS MILTON FRIEDMAN?' - The New York Review of Books: The 1930-1933 increase in the monetary base did not reflect official ease, as Krugman implies, but the general public's flight into currency in response to their distrust of banks. Only the currency component of the base rose; the bank reserves component declined.

Krugman contends that Friedman distorted the Monetary History in journalistic outlets, offering as evidence Friedman's statement that the Depression was "produced by government mismanagement." A comparable formulation was used by Bernanke, who noted that the Federal Reserve failed to execute its duty "to improve the management of banking panics." There was, in short, government mismanagement.

If Friedman's intention was to distort the Monetary History to noneconomist readers, then his 1973 Playboy interview offered an ideal opportunity. Yet Friedman told Playboy:

Just as banks all around the country were closing, the Fed raised the discount rate; that's the rate they charge for loans to banks. Bank failures consequently increased spectacularly. We might have had an economic downturn in the thirties anyway, but in the absence of the Federal Reserve System--with its enormous power to make a bad situation worse--it wouldn't have been anything like the scale we experienced.

Friedman clearly characterized the problem as Federal Reserve failure to support commercial banks. Friedman did not imply--as Krugman suggests--that "the Depression wouldn't have happened if only the government had kept out of the way.

With respect to the first paragraph, Schwartz and Nelson appear to have simply forgotten that what the Federal Reserve controls via its open-market operations is the sum of currency and bank reserves--that's why we call it the "monetary base"--and not each component individually. Banks can take their reserve deposits at the Fed and turn them into currency. Banks can take their currency and deposit it at the Fed in order to obtain reserve deposits. That one of these two is going up or down tells us nothing about Federal Reserve policy, which controls only the total and not the mix.

With respect to the second paragraph, there is a difference between Bernanke's formulation--that a Great Depression was coming and the Fed could have headed it off if it had properly-handled the banking panic--and Friedman's statement taht the Depression was produced by government mismanagement. There was government mismanagement, but Krugman would say--and I would agree--not that it caused but that it failed to head off the Great Depression.

With respect to the Playboy interview, Friedman appears to have forgotten that the absence of a Federal Reserve would not have produced a lower but a higher overnight bank-to-bank interest rate. The Federal Reserve raised the discount rate, yes, but it also loaned banks a lot of money at that discount rate. In the absence of the Federal Reserve--under a full-fledged automatic gold standard--money loaned to banks to boost their reserves would have had to have come in from England by ship in specie, and in the meanwhile the lack of liquidity would have caused the equivalent of the discount rate to have risen by much, much more than the Fed raised it.

It is true that you do not absolutely need a central bank to increase the money supply in a panic or a depression--a dominant financial oligarch can substitute and do so if other people are scared enough of him to accept what he decrees good as legal tender, as I note here that J.P. Morgan did in the Panic of 1907. But there was no such dominant oligarch in 1930-1933 who was blocked by the Fed from taking action.

In the absence of the Federal Reserve the quantity of bank reserves would have fallen by more, not less; the number of failing banks would have been greater, not lesser; the fall in the money stock would have been larger, not smaller; and the Great Depression would have been even greater.


J. Bradford DeLong (2004) "Comment on James Stock and Mark Watson (2003), 'Has the Business Cycle Changed?': Hoisted from the Archives

Comment on Stock and Watson: Hoisted from the Archives:

J. Bradford DeLong (2004) "Comment on James Stock and Mark Watson (2003), 'Has the Business Cycle Changed?' in Monetary Policy and Uncertainty: Adapting to a Changing Economy (Kansas City: Federal Reserve Bank of Kansas City):

James Stock and Mark Watson's paper challenges things that I thought I knew, and tells me that I am going to have to rethink a bunch of issues--going to have to mark my beliefs to market once again.

To the extent that there has been a conventional wisdom among economic historians, the extraordinary moderation of the business cycle--the reduction in the size of swings in the unemployment rate, and in the variance of annual output growth--has been due to very important learning about how to better conduct monetary policy. Christina Romer has been the most powerful advocate of this line of narrative. And this has been what I have taught my students over the past several years.

The founding of the Federal Reserve brought the possibility of an elastic currency, and of avoiding the great liquidity catastrophes that afflicted the U.S. in the late nineteenth century. The silver-agitation crises of the 1890s, the great crash of 1873 when British investors grew nervous about the "crony capitalism" of America (a crisis with remarkable similarities to the 1997-1998 East Asian crisis), the Panic of 1907 (mitigated by J.P. Morgan's getting the New York Clearing House to expand the effective money supply via printing Clearing House Loan Certificates, and then cramming them down the throats by telling banks that they would incur his permanent displeasure if they did not accept them as valid and liquid instruments).

But the Fed's performance in its first two decades was not impressive. The disaster of the Great Depression brought further institutional changes. The coming of deposit insurance to avoid the radical instability of the money multiplier that was such a powerful features of the Great Depression in America. Keen awareness of the dangers of, as Milton Friedman's teachers put it, "unbalanced deflation." The role of fiscal policy when short-term safe interest rates are near their zero nominal bound floor and yet risk, default, and term premiums remain high. Before World War II an economic disaster of the magnitude of the Great Depression was always a live possibility. With the institutional and organizational changes, since World War II a macroeconomic disaster of the magnitude of the Great Depression is--well, before the recent Japanese experience, I would have said impossible.

Nevertheless, when you compare the pre-Great Depression to the post-World War II period there is less of a reduction in the size of the business cycle than economists hoped or, in the case of Arthur Burns and many others, confidently expected. Improved credit markets allowed households to smooth their spending. Automatic stabilizers meant that incomes varied less than production. In his 1959 presidential address to the American Economic Association, Arthur Burns went as far as to say that deep recession--large spikes in the unemployment rate--were no longer a problem.

He was wrong. Look at 1975. Look at 1982-1983. In Christina Romer's interpretation, Arthur Burns was wrong because he did not recognize the developing stop-go nature of Federal Reserve policy. Most of the time the Fed worried about achieving maximum purchasing power. Some of the time the Fed worried about achieving price stability. While it was worried about achieving maximum purchasing power it successfully stabilized production, but at too high a level that allowed inflation to rise. As the late Rudi Dornbusch used to say, expansions in the U.S. before 1985 did not die of natural causes: they were killed by a Federal Reserve that had shifted to a mindset in which reducing inflation was job #1. Thus the first four post-World War II decades saw longer expansions, fewer recessions, but still substantial output variance driven by large inflation-control recessions. And the conventional wisdom has been that the remarkably good performance of the last two decades has been due to the Federal Reserve's greater success at maintaining its balance: at acting pre-emptively and maintaining an appropriate balance between price stability and maximum purchasing power, rather than careening from one objective to the other.

Now come James Stock and Mark Watson to challenge this belief. The reduction in output volatility is there, is real, is very large. (Although, as Larry Summers was saying in the shadow of Mt. Moran an hour ago, the fact that Stock and Watson's index of the size of the business cycle has fallen by 3/4 over a time period in which the average German unemployment rate rose from 2% to 8% makes one wonder whether the variance of output is what belongs on the left-hand side.)

But Mark Watson and Jim Stock look hard and find little sign that reduction in output volatility is due to changes in how the Federal Reserve reacts to economic circumstances. By process of elimination, they conclude that the reduction in the output business cycle is primarily due to luck and not to skill: primarily to smaller shocks hitting the American (and the other OECD economies) and only secondarily to better monetary policy.

This surprises me. This is a shock. I would have bet serious money that Stock and Watson's calculations would have come out the other way. I need to mark my beliefs about this to market. Clearly I have some serious rethinking to do before I give my "macroeconomic stability" lecture to my graduate students at the end of the semester.

But humans are, as cognitive psychology teaches us, really bad at changing their minds. We are really good at finding ways to explain away and ignore new information.

So let me now try to explain away and ignore Stock and Watson's results:

First, their idea of "policy" is limited to "systematic reactions by the Fed that change interest rates now and in the future in response to past changes in inflation and in economic growth rates." This is a very limited definition of "policy." For one thing, it leaves out much of what Christina Romer sees as harmful in pre-1984 policy: the fact that the Fed reacted in one way when it was worried about price stability, and reacted in another very different way to a similar economic situation when it was worried about maximum purchasing power. Stock and Watson's Taylor Rule framework can't see this at all. (Now it is true when Stock looks for evidence that such stop-go policy he fails to find it, but our econometric techniques are not very good at picking up such non-linearities.)

Second, it is not at all clear that the actual shocks to the economy have been smaller since 1984. Before 1984 we have the Vietnam War, the oil shocks of 1973 and 1979, et cetera. Since 1984 we have the stock market crash of 1987, the dot-com bubble and then the NASDAQ crash, the extraordinary near-panic of 1998 (which one low-ranking LTCM employee is supposed to have characterized as a nine-sigma shock: the universe will not last long enough for there to be an even chance of even one nine-sigma shock happening ever), 911, presidential warnings that all Americans are at risk of attack by Iraqi drone aircraft carrying weapons of mass destruction. These shocks are smaller than the earlier shocks in Stock and Watson's framework, but are they really smaller in reality?

Doesn't the swift reaction of the Fed to 1987, to 1998, to 2001--swift reactions that find no place in Stock and Watson's measures of "policy"--play a role in reducing the size of the business cycle? Doesn't the emergence of more private-sector willingness to speculate on stability as a result of confidence in the Fed reduce the magnitude of what Stock and Watson call "shocks"?

So my rationalization is that a lot of what Stock and Watson's framework calls "shock" is actually "policy". This is not a criticism, really: they have done a very good job. But it is a product of the limitations of our analytical tools.


Responses to Comments:

First, let me thank everyone--Alice Rivlin and Anne Krueger, Bill Poole and Allen Sinai, Marty Feldstein and Larry Summers, John Berry and Chairman Greenspan--who has tried in the discussion to stiffen my backbone and restore my full and unblemished confidence in the conventional wisdom. But it is worth remembering that ex ante I would have bet serious money that Stock and Watson's calculations would have come out the other way. And it is still a shock to me that it did not.

Second, let me underscore Antonio Fraga's point. Any interpretation of recent events that points to a smaller magnitude of shocks to the world economy has to explain why things have looked so different--look like the shocks are bigger--from a developing-country standpoint.

Looking back at my career, I see many local analytical low points. But my personal global analytical nadir came in early 1994, when I wrote a memo for my Treasury boss saying that yes, the Bank of Mexico's policy was inappropriate and overstimulative, but that the magnitude of the policy mistake was small and there was no reason to expect it to generate a serious problem. Now I still think the Bank of Mexico's sins against the Gods of Monetarism in 1994 were small, were venial, not mortal. But the punishment was swift and awful. And that is hard to reconcile with the view of a placid, low-shock world economy.