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Friday, January 23, 2004

TNR ON KRUGMAN'S EXCUSES FOR ANTI-SEMITISM    The New Republic upbraids Paul Krugman for his naive and self-serving defense of the anti-Semitism of Malaysian dictator Mahathir Mohammed.

"For Paul Krugman, writing in The New York Times on October 21, Mahathir's anti-Semitic remarks were both 'inexcusable' and 'calculated,' made by a 'cagey politician, who is neither ignorant nor foolish.' Krugman did not elaborate on why such remarks are 'inexcusable.' Instead he preferred to see them as reflecting 'how badly things are going for U.S. foreign policy.' Mahathir may be 'guilty of serious abuses of power,' but he is also, said Krugman, 'as forward-looking a Muslim leader as we're likely to find.' Hence he should be encouraged, not denounced. His anti-Semitism is merely 'part of Mr. Mahathir's domestic balancing act.'

"...This is reminiscent of what many said about Hitler's anti-Semitism in the 1930s: it was inexcusable but calculated, and thus it was ultimately both excusable and in the service of a good cause, the modernization of Germany and its reintegration into the community of nations.

"For Krugman, Mahathir's 'hateful words' serve only to 'cover his domestic flank.' They do not tell you anything about his own thinking, but they tell you 'more accurately than any poll, just how strong the rising tide of anti-Americanism and anti-Semitism among Muslims in Southeast Asia has become.' And what is the cause of this tide? It is America's 'war in Iraq and its unconditional support for Ariel Sharon.' Just as Mahathir is not anti-Semitic, but merely a good reader of his people's collective mind, so, too, his people are not anti-Semitic, but merely outraged by the same things that outrage Krugman: Ariel Sharon and George W. Bush."

Posted by Donald L. Luskin at 3:15 PM | link  

DEAN PILES ON GREENSPAN    Al Sharpton is not the only radical Democrat to call for a new Fed chairman. Howard Dean piles on, saying,
""I think Alan Greenspan has become too political. If he lacks the political courage to criticize the deficits, if he was foolish enough -- and he's not a foolish man -- to support the outrageous tax cuts that George Bush put through, then he has become too political and we need a new chairman of the Federal Reserve."
He's echoing the words of the man whom he says he will appoint as his foremost economic advisor -- Paul Krugman. Thanks to Jill Olson and Caroline Baum for the link.

Posted by Donald L. Luskin at 1:21 PM | link  

WILL SOROS MAKE THE MARKET CRASH JUST TO NAIL BUSH?    Insight Magazine has the story. Luskin and Bartlett are quoted extensively.

Posted by Donald L. Luskin at 1:09 PM | link  

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At least Sharpton has a sense of humor. And at least he wants to replace Greenspan. From the Democratic debates last night:
JENNINGS: If during your term as president, if you become the nominee, and you have the opportunity to nominate someone to be chairman of the Federal Reserve Board, what kind of person would you consider for the job? You can name someone in particular, if you have someone in mind.

And maybe just take a minute or so to give us a little bit about your views on monetary policy.

SHARPTON: Well, first of all, let me say this. I wanted to say to Governor Dean, don't be hard on yourself about hooting and hollering. If I had spent the money you did and got 18 percent, I'd still be in Iowa hooting and hollering.



SHARPTON: So, don't worry about it, Howard.


DEAN: Thanks, Reverend.

SHARPTON: I think, first of all, we must have a person at the Monetary Fund that is concerned about growth of all, not setting standards that would, in my judgment, protect some and not elevate those that cannot, in my view, expand and come to the levels of development and the levels of where we need to be.

I think part of my problem with how we're operating at this point is that the IMF and the policies that are emanating there do not lead to the expansion that is necessary for our country and our global village to rise to levels that underdeveloped countries and those businesses in this country can have the development policies necessary.

JENNINGS: Forgive me, Reverend Sharpton, but the question was actually about the Federal Reserve Board.

SHARPTON: I thought you said IMF, I'm sorry.

JENNINGS: No, I'm sorry, sir. And what you'd be looking for in a chairman of the Federal Reserve Board.

SHARPTON: Oh, in the Federal Reserve Board, I would be looking for someone that would set standards in this country, in terms of our banking, our -- in how government regulates the Federal Reserve as we see it under Greenspan, that we would not be protecting the big businesses; we would not be protecting banking interests in a way that would not, in my judgment, lead toward mass employment, mass development and mass production.

I think that -- would I replace Greenspan, probably. Do I have a name? No.

HUME: Thank you, Reverend Sharpton. Thanks very much.

Thanks to Greenspan-watcher Caroline Baum for pointing this out.

Posted by Donald L. Luskin at 11:52 AM | link  

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A local paper reports on the sold-out show by Bush-bashers and book-promoters Paul Krugman, Al Franken and Kevin Philips in -- where else? -- Berkeley. For Krugman, it was the same old signature lie about Bush's tax cuts:
"That the event had the air of a major rock concert or sporting event was evidenced by the number of people at the corner of Allston Way and Milvia Street holding up signs seeking tickets...

"Krugman, a professor of economics and international affairs at Princeton University, New York Times columnist and a senior economic adviser for one year during the Reagan administration, questioned Bush tax cuts that he said mean little to the average person but provide a windfall to those in the top 1 percent income bracket.

"He cited the income tax reduction that was claimed to return an average of $1,000 to households.

"'Let me explain average to you,' he said. 'If Bill Gates walks into a bar, the average income of everyone goes up by several million dollars.'"

I've already thoroughly debunked this signature Krugman lie using statistical evidence from Krugman's own hand-picked source. But now reader Vivek Rao points out a new paper by academic economists John Graham and Alok Kumar, stating:
"The stock holdings of retail investors indicate a preference for dividend yield that increases with risk aversion and age (the latter is consistent with life-cycle or consumption preferences) and decreases with income (consistent with low-tax investors holding high-yield stocks)...

"These results have important policy implications because they indicate that recent reductions in the dividend tax rate are not exclusively a 'tax break for the rich.' In fact, the income streams of older and less wealthy investors benefit from the reduction in dividend taxes."

Posted by Donald L. Luskin at 10:26 AM | link  


Posted by Donald L. Luskin at 10:15 AM | link  

KOHN VERSUS KELLER    Bob Kohn, the author of Journalistic Fraud: How The New York Times Distorts the News and Why It Can No Longer Be Trusted tells Times editor Bill Keller: apologize to "public editor" Dan Okrent or resign. I agree. If Okrent is to be more than an in-house critic kept as something between an exotic pet and a fig-leaf, the Times has to respect him and respond substantively to his views. From what I can see, he's being stonewalled.

Posted by Donald L. Luskin at 9:15 AM | link  

Thursday, January 22, 2004

THE HIGH PRICE OF REFORM    The definitive laundry list of everything that's wrong with Sarbanes Oxley -- from Insight Magazine.

Posted by Donald L. Luskin at 3:23 PM | link  

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New York Times editorial page editor Gail Collins has responded to our query about whether last Saturday's swarm of trivial corrections on the op-ed page signified a new glasnost on W. 43rd Street. Was the op-ed page adopting its own, separate corrections department? Did it intend to hold columnists accountable for their errors, rather than relying on them to police themselves by issuing their own corrections within their own columns? Sadly, no. Here is Collins' response:

"Dear Mr. Luskin,

"There has been no change in our policy. The corrections on the Op-Ed page of the Sunday paper regard errors of fact in previous Op-Ed pieces. They do not relate to the columnists. As you have noted, all of them involve very minor errors. The Op-Ed editors try to be scrupulous about this sort of thing, and they have run corrections just like these in the past.

"The policy of columnists correcting their own errors within their columns is the same as ever.

"Gail Collins"

For the moment, the foxes remain firmly in control of the henhouse. At some point will "public editor" Daniel Okrent dare to take on this most sacred of cows, and try to shame the op-ed page into accountability?

Update... Our friend Bruce Bartlett adds, "So outside writers for the Times are held to a higher standard than those the Times actually employs? At most papers, it would be the reverse."

Update 2... Here's the state of play on the Times' columnist corrections policy from Robert Cox at The National Debate.

Posted by Donald L. Luskin at 9:27 AM | link  


Posted by Donald L. Luskin at 9:15 AM | link  

Wednesday, January 21, 2004

DELONG ADMITS WRONG    Who would have thought? Brad DeLong departs from the standard of behavior set by his mentor, and admits error -- to a supply-sider, no less. Good going, Bruce.

Posted by Donald L. Luskin at 7:44 PM | link  

SOWELL WRITES OFF DEAN   A scathing put-down of Dr. Dean by Dr. Sowell. I must say, has the quality of printing an obit before the guy has died.
"The prevalence of image over reality was painfully apparent in the fact that Governor Dean, who never governed as many people as a mayor of Houston or Phoenix, was considered qualified to be President of the United States in a time of deadly national peril."

Posted by Donald L. Luskin at 4:01 PM | link  

REWRITING JFK'S TAX-CUTTING HISTORY    Slate's reputation for biased, one-sided economic analysis continues with this revisionist history of John F. Kennedy's historic tax-cuts. We can't wait for Bruce Bartlett's inevitable counterblast.

Posted by Donald L. Luskin at 3:08 PM | link  

THIS STRIKES EVEN ME AS GOING TOO FAR    The Village Voice examines New York Times columnist Thomas Friedman's supposedly nefarious connections to a Bethesda synagogue.

Posted by Donald L. Luskin at 11:11 AM | link  

JOKE OF THE DAY    Looks like somebody beat Bush to Mars...

Posted by Donald L. Luskin at 5:01 AM | link  

"HATE DOES TERRIBLE THINGS TO PUNDITS"    An especially good critique of Krugman's column yesterday at Power Line.

Posted by Donald L. Luskin at 4:59 AM | link  

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My, how many tens of thousands of words the punditocracy has churned out since Monday night to explain why the presumed Democratic front-runner, Howard Dean, got tromped in the Iowa caucuses. The poor fools. They should have asked me.

It's all so simple. The day of the caucuses, the Wall Street Journal revealed that Dean, if elected president, would appoint Paul Krugman as his "foremost economic policy adviser."

That's all it took. From front-runner to "run screaming" in a single day. Apparently having America's most dangerous liberal pundit actually influencing real-world economic policy is too horrifying even for Democrats to contemplate.

Okay -- I'm kidding. I have no idea whether any Iowa delegates even gave Paul Krugman a thought on Monday. But at the same time, the caucuses were a big blow to the whole "angry liberal" movement that Dean and Krugman have staked their careers on.

Krugman has been increasingly clear in his New York Times columns that he endorses Dean, with Wesley Clark serving as an understudy -- the two "angry" candidates. In his January 2 column, he came within an inch of urging all the Democratic candidates other than Dean and Clark to drop out of the race so that the two front-runners -- the front-runners then, that is! -- could rage at President Bush unobstructed. In his column Friday -- the last one before the Iowa caucuses -- he endorsed Dean and Clark again, saying that they were the ones angry enough to land on the right side of "the great Democratic divide...between those who are willing to question not just the policies but also the honesty and the motives of the people running our country, and those who aren't."

About the nicest thing Krugman has ever said about Iowa winner John Kerry is that he wishes the press would stop talking about his hair (in fact, Krugman wishes that so much he's mentioned it in no less than three Times columns -- here, here and here -- what's up with that?).

But then came Iowa. Could it be that Democratic voters lap up Krugman's anger shtick in the pages of the Times -- but they actually have very little to be angry about? Krugman keeps predicting economic catastrophe -- but the economy is booming, with US household wealth at all-time highs. Krugman keeps talking about the failure of the war on terrorism, but there hasn't been a terrorist act on American soil since September 11, 2001, Saddam Hussein is behind bars, and Afghanistan has a new constitution. He keeps talking about the Republicans' "coded appeals to racism", but the Bush administration is visibly the most ethnically and gender-diverse one in history.

Most important, perhaps, Krugman keeps telling voters that they should be angry because they didn't really get a tax cut. Almost all Bush's tax cuts went to the rich -- so Krugman's story goes -- which means that Bush lied when he said ordinary Americans would get a tax cut, too.

But it turns out that here too, in this key pocketbook issue, voters have very little to be angry about. Indeed, they should be thrilled. That's because it's not Bush who lied about tax cuts: it's Krugman. Since all the Democratic candidates -- angry and otherwise -- are calling for some form of repeal of the Bush tax cuts, let's have a closer look.

Using his authority and credibility as a Princeton economics professor, Krugman has made the claim that Bush lied about the tax cuts the centerpiece of his case against Bush. In fact, Krugman cited this when he was asked by Alan Colmes on Fox News' "Hannity and Colmes" to prove that George Bush is a liar (this was the same show, by the way, in which Krugman the angry liberal got so angry that he slandered me by claiming that I "stalked" him "personally").

"KRUGMAN: ...I've got the goods, you know. I've got the facts."

"COLMES: How can you prove a lie? Can you prove that they lied?"

"KRUGMAN: Oh, sure. Look, when Bush in his State of the Union said 92 million Americans will receive an average tax cut of $1,000, it turns out that half of tax payers either received nothing or less than $100. There was a technical sense in which what he said was true but it was designed to mislead."

Where can we go to get the facts, to see if Krugman is right? Let's consult the Urban Brookings Tax Policy Center, which Krugman himself once described as:

"...particularly useful for distributional analyses - whose taxes get cut. Again, the orientation is Democratic - Republicans think that it's evil even to ask such questions - but the work is impeccable. ...the best, worth reading deeply and often."

According to Urban Brookings' analysis of the tax cuts described in that State of the Union address, about 53% of "tax units" (individuals, married couples, households, and so on) got nothing or less than $100. Does that mean Krugman is right when he says "half of tax payers either received nothing or less than $100"?

No, because here's what Bush really said in his 2003 State of the Union address:

"The tax relief is for everyone who pays income taxes -- and it will help our economy immediately: 92 million Americans will keep, this year, an average of almost $1,000 more of their own money."

Note that Bush was talking about people who pay income taxes. Jeffrey Rohaly, the director of tax modeling at Urban Brookings, told me that virtually all the tax units who got no tax cut -- 36% out of the 53% who got less than $100 -- paid no income taxes in the first place. In fact, thanks to refundable child credits, many of them have what amount to negative income taxes -- the government pays them. By shifting the argument from income tax payers to all taxpayers, Krugman stacked the deck. As he might say, "it was designed to mislead."

So let's drop out the 36% who pay no income taxes to begin with, and see what the Urban Brookings' analysis tells us about which income tax payers got what kind of tax cut:

  • The average income tax payer got a cut of $1,159 -- 15% more than Bush claimed
  • 55% of income tax payers got a cut from $1 to $500
  • 42% of income tax payers got a cut from $501 to $5000

That's a lot of real money in the hands of real people -- not just "the rich." So did Bush lie? No -- Krugman did. Are those tax cuts anything to be angry about? No. In fact, voters might start getting angry at candidates who are so angry that they might take those tax cuts away.

So what are angry liberals like Krugman and Dean and Clark supposed to be angry about at this point?

Well... just wait till November. They're going to be pissed as hell.

Posted by Donald L. Luskin at 4:46 AM | link  

Tuesday, January 20, 2004

ENTER, STAGE RIGHT    Our friend David Hogberg debuts on National Review Online.

Posted by Donald L. Luskin at 1:20 PM | link  

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Paul Krugman, October 10, 2003:
"It's the season of the angry liberal."
January 2, 2004:
" seeking to undermine the election prospects of a man [Howard Dean] who may well be their party's nominee, Mr. Lieberman and Mr. Kerry have reminded us of why their once-promising campaigns imploded. Most Democrats feel, with justification, that we're facing a national crisis — that the right, ruthlessly exploiting 9/11, is making a grab for total political dominance. The party's rank and file want a candidate who is running, as the Dean slogan puts it, to take our country back. This is no time for a candidate who is running just because he thinks he deserves to be president."
Apparently the Democrats in Iowa have a different idea of who deserves to be president.

Posted by Donald L. Luskin at 11:24 AM | link  

JOKE OF THE DAY    Wag the dog... or something like that...

Posted by Donald L. Luskin at 11:20 AM | link  

Monday, January 19, 2004

MYSTERY SOLVED    Turns out the "lost gnome" ads were teasers for Travelocity. And to think... all along we thought they were advance publicity for Paul "Gnome Chomsky" Krugman's new book.

Posted by Donald L. Luskin at 10:20 PM | link  

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Fortunately, there's ample room there. From an interview with Brad DeLong:
"What has been your best blogging experience? > There have been a lot of wonderful experiences. The best? I'll have to think about that…

"What has been your worst blogging experience? > Donald Luskin."

Thanks to reader Peter Mork for the link.

Posted by Donald L. Luskin at 7:15 PM | link  

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Howard Dean in today's Wall Street Journal, "Dean on Dean":
"Who [sic] would you rely upon as your foremost economic policy adviser? Former Treasury Secretary Bob Rubin and New York Times Columnist Paul Krugman."

Thanks to reader Jeff Jacobson for the link.

Posted by Donald L. Luskin at 11:51 AM | link  

JOKE OF THE DAY    Is this from Paul O'Neill? A blind man in a room full of blonde people...

Posted by Donald L. Luskin at 7:51 AM | link  

Sunday, January 18, 2004

UNFACT OF THE DAY: ODD ODDS    From our long-lost informer "Irrational Exuberance":
"Barring a repeal of the laws of probability and common sense, a recent adulatory CNNMoney commentary on mutual fund manager Bill Miller warrants un-fact designation.

"The story, under the sub-head 'Miller: He did it again', proclaims that '[t]he odds of a manager beating the S&P for 13 years are one in 149,012.' The assumption underlying this computation -- a 40% prospect of beating the index in any year -- seems reasonable and the choice of 40% rather than 50% presumably reflects the empirical tendency of the median fund manager to underperform the index.

"In the penultimate paragraph, though, Miller's sycophant Lisa Gibbs writes the un-fact: 'What are the chances he'll beat the S&P a 14th year? (One in 372,529 ...)' The chances the a manager will beat the S&P in this year (or any given year) is one in 2.5, or a 40% prospect by earlier assumption. The statistic that Gibbs provides is the chances that a manager will beat the index in a 14-year period at the outset of the period, while the relevant computation is the probability of beating the market a 14th year conditional upon already having eclipsed in the prior 13 years. Gibbs quotes CSFB investment strategist Michael Mauboussin for the statistics, but it would be a fallacy of authority to allow his credentialization to overwhelm common sense. "

Posted by Donald L. Luskin at 1:53 PM | link  

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Daniel Okrent assures us that the New York Times has not been unduly rough on Democratic presidential front-runner Howard Dean.

Posted by Donald L. Luskin at 12:02 AM | link