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Unindicted co-counterconspirator-in-chief Donald Luskin will appear on CNBC's Kudlow & Company. Don will be talking about -- you guessed it -- politics, the economy, and the market.

Chronicle of the Conspiracy
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!

Saturday, February 07, 2004

IF THIS IS REFORM...    Here's the New York Times' idea of Social Security reform: cut benefits.

Update... Reader Mark Hessey notes,

"I particularly liked this excerpt:
"'Over the next 75 years, this partial move from wage to price indexing of initial benefits would greatly reduce the long-term deficit of the Social Security trust fund and extend the solvency of the system by decades.'
"Yes indeed!, let's do a partial move over 3/4s of a century to extend the solvency for a few decades... Presumably this means solvency will be extended all the way to about 2110 or so instead of just until 2079? I feel like I'm in a Monty Python skit."

Posted by Donald L. Luskin at 4:45 PM | link   

HOW ABOUT "CRIMINALS"?    The New York Times Sunday Magazine asks, "Are computer virus writers artists, pranksters or techno-saboteurs?"

Update... Reader Mark Hessey comments, "If they started calling hackers et.al. criminals, whatever would they then call terrorists?"

Posted by Donald L. Luskin at 1:18 PM | link   

JOKE OF THE DAY    Janet Jackson has really started something...

Posted by Donald L. Luskin at 2:28 AM | link   

OOPS    Maybe some of those Paul O'Neill documents really were classified. Thanks to Jill Olson for the link.

Posted by Donald L. Luskin at 2:26 AM | link   

THE BLAME-STORMING MANIA   Sylvain Galineau on what people really want from their pundits.

Posted by Donald L. Luskin at 2:24 AM | link   


Friday, February 06, 2004

DOONESKERRY    From 31 years ago.

Posted by Donald L. Luskin at 4:44 PM | link   

THE KERRY BOOM    I can't wait to hear what Brad Delong has to say about this nonsense from Reuters -- "If John Kerry wins the Democratic nomination and goes on to be the next U.S. president, experts say it would be good for Wall Street." Oh why, oh why, can't we have a better press corps? Hmmm... I'm not hearing anything coming from the direction of Berkeley... Thanks to reader Paul Anderson for the link.

Posted by Donald L. Luskin at 4:34 PM | link   

KOHN BLASTS SHIPLEY    Bob Kohn -- author of the indispensible Journalistic Fraud -- weighs in on the New York Times' fox-guards-the-henhouse columnist corrections policy. He blasts op-ed editor David Shipley for his complicit naivete:
"Mr. Shipley sidestepped this history by disavowing any responsibility for what regular columnists like Krugman and Dowd say on the op-ed page. The regular columnists 'do their own thing,' he says, and his only involvement with them is 'pretty much limited to filling the extra space when they go on vacation.'" ...Mr. Shipley correctly describes how a newspaper should be organized, but apparently, he doesn't read the rest of the paper. Editorials can appear on virtually every page of the Times. If he is going to disavow responsibility for anything over which he has no control, Mr. Shipley is in no credible position to comment on other parts of the paper.

Posted by Donald L. Luskin at 4:06 PM | link   

ANOTHER FORM LETTER    Some readers are reporting receiving an alternate form-letter from the office of New York Times "public editor" Dan Okrent.
Dear [...],

The opinion columns are governed by different rules than the news pages. In fact, the guidelines are very, very broad -- the Times doesn't allow obscenity, nor does it countenance libelous material. But opinion writers are, in fact, allowed to express their opinions.

Nonetheless, I do feel that the issue is a substantive one, and will look further into it as I get more comfortable in this difficult job.

Yours sincerely,

Daniel Okrent Public Editor


Posted by Donald L. Luskin at 3:24 PM | link   

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I'M MAD AS HELL AT PEOPLESOFT   
No, I'm not channeling Gretchen Morgenson. Sometimes there really is something to those shareholders' rights stories. This is one of those times. It's my column today at SmartMoney.com.

Antitrust laws are supposed to protect us little guys, right? Think again. Here's the story of how PeopleSoft Chief Executive Craig Conway is using the antitrust laws to deprive his own shareholders of the opportunity to sell their shares at the best price.

I'm a PeopleSoft shareholder — and I'm mad as hell about it.

As you probably know, Oracle has been trying to buy PeopleSoft since last June. It has raised its tender price twice since then, most recently on Wednesday, offering $26 a share — a price PeopleSoft hasn't seen since April 2002.

I'd love to sell my PeopleSoft shares to Oracle at $26 — or to anyone, for that matter. But PeopleSoft CEO Conway won't let me. From the very beginning he has adamantly opposed the deal.

Sure, CEOs are supposed to act like they are opposed to deals like this. It's a form of "playing hard to get" that gets the potential acquirer to bid more money for the company. But Conway is doing something else. When Oracle made its first bid last June, Conway said he "could imagine no price nor combination of price and other conditions to recommend accepting the offer."

So let me get this straight. If Oracle were to bid a million dollars a share, Conway would still oppose the deal? Seems so. And that's where the antitrust laws come in. Conway is using them to make sure that even if Oracle makes a killer bid, the antitrust authorities will kill the deal.

Under the Hart Scott Rodino Act, all corporate mergers must be preapproved by antitrust authorities. You'd think that Conway — working on behalf of his shareholders to get the best price for their shares — would be bending over backward to convince the Department of Justice that an Oracle acquisition of PeopleSoft presents no antitrust concerns. But it's just the opposite.

Conway is trying to convince the DOJ that the "antitrust issues here are significant. In a number of important areas, including the supply of core human-resource management and financial-management software to large corporations and government agencies — PeopleSoft, SAP and Oracle do stand alone. By reducing the number of competitors from three to two...we believe the transaction would harm customers through higher prices and lower customer service, functionality and innovation."

Even if that all were true, Conway shouldn't say it. He's a CEO, not an antitrust regulator. He has a duty to his shareholders to try to make this deal possible — not to get it killed.

And besides, it's not true.

Conway is carefully defining a narrow market — human-resources and financial software for large corporations and government agencies — in order to be able to claim that PeopleSoft, SAP and Oracle are the only important players in that market. But even that specialized market is nowhere near that simple.

For one thing, there are other competitors such as Lawson, SSA Global/Baan and Sage. And a little company called Microsoft has announced it's going to spend billions building what it takes to jump into the fray. And there are also a growing number of outsource providers like ADP and Fidelity who don't just provide HR software, but take on the whole job of running a company's HR function.

And just as important, let's remember who the buyers are in this market: the largest corporations and government entities. These aren't exactly a "victim class" — they're hardly the little guys that the antitrust laws are supposed to protect. When these buyers go out to bid for HR and financial enterprise software, they set the terms — not the software companies.

It must be said that there's more than a little irony in the way Conway is using the antitrust laws to thwart Oracle. Larry Ellison — Oracle's CEO — was perhaps the single most strident advocate of antitrust enforcement against Microsoft, and is now hoist by his own petard. But delicious as that may be for those — like me — who have always thought the antitrust laws were ripe for just this kind of corporate abuse, the bottom line is that two wrongs don't make a right. Whatever Ellison's sins, Conway is still wrong to use the antitrust laws, or anything else, to keep his shareholders from getting the best deal.

And Conway hasn't stopped there. Last year, PeopleSoft put in place an unusual program that guaranteed its customers refunds of from two to five times the dollar value of their PeopleSoft software license fees if the company were acquired. According to company filings, in the most recently reported quarter, the liability for this program was $807 million — that's how much Oracle would have to pay to PeopleSoft's customers, in addition to what it already paid to shareholders to acquire PeopleSoft in the first place. This has got to be a first — a "poison pill" that transfers shareholder wealth to the company's customers.

As Jim Finn, Oracle's vice president for world-wide corporate communications, told me, "I've actually been amazed at the lack of outrage."

Why is Conway doing it? He's a PeopleSoft shareholder himself, with stock valued at more than $115 million. And an Oracle takeover would make him wealthier still, thanks to a golden parachute of options and other benefits that would net him in excess of another $60 million if Oracle gives him the boot.

I don't know the answer. Maybe Conway just doesn't like Oracle — he used to be a senior executive there before joining PeopleSoft. Or maybe he likes the perks of being the boss. He wouldn't be the first CEO who cared more about hanging on to the trappings of power than going from fabulously wealthy to ultrafabulously wealthy.

PeopleSoft's spokesperson Steve Swasey wouldn't say anything about it for the record except that "our board, consistent with its fiduciary duties, will consider the revised offer."

How I came to be a PeopleSoft shareholder isn't irrelevant to all of this. I'd been a shareholder of J.D. Edwards, a small enterprise software company, which was acquired last year by PeopleSoft. And the only reason I was a J.D. Edwards shareholder is that it acquired an even smaller software company, YouCentric Corp., a private company in which I held a venture stake. You see, the little fish is always eaten by the big fish. And then the big fish, in turn, is eaten by the even bigger fish. And shareholders make money with each gulp.

Now it's time for the man we pay to run our company — yes, our company! — to do what we're paying him to do. Let the antitrust officials interpret antitrust laws for themselves. All Craig Conway needs to do is make sure that PeopleSoft gets eaten at a nice high price. Bon apetit!

Posted by Donald L. Luskin at 2:45 PM | link   

FAIR MODEL STILL FAVORS BUSH TO WIN    The elaborate econometric model of Yale's Ray Fair has Bush in a landslide -- and rising. Link from Bruce Bartlett. Tradesports is even more optimistic.

Posted by Donald L. Luskin at 1:54 PM | link   

JOKE OF THE DAY   

Posted by Donald L. Luskin at 1:51 PM | link   

KRUGMAN'S FORM LETTER    A reader notes that when you send Paul Krugman an email at krugman@nytimes.com you get a form-letter response. Funny, but after all this time of running the Krugman Truth Squad I've never sent him an email, so I have never seen this. From a reader:
"I sent Krugman a short email requesting his sources for an allegation in today's column that the Pentagon's OSP was created to 'offer a more alarming picture' of the Iraq situation. His reply was:
"'Dear Reader, Thanks for your email. I do read all the letters and emails that are fit to print, but though I wish I could respond to all of them, that wouldn't leave me time to do anything else. Regards, Paul Krugman'
"Oh, and what's the bad part of that?"

Posted by Donald L. Luskin at 1:40 PM | link   

COX ON THE FOX IN THE HENHOUSE    Robert Cox at The National Debate reminds us that Dan Okrent isn't the problem, he's part of the solution:
"We would offer one caution to Luskin Letter Writers - keep your eye on the ball. The issue is NOT Dan Okrent. The issue is Arthur Sulzberger, Jr. who did not follow through on his promise that concerns about 'Dowd's Deletion' last May would be addressed by asking Okrent to review the Times' columnist correction policy. I would like to suggest that Luskin readers follow up on their emails to Okrent with an email to Arthur Sulzburger, Jr. - publisher@nytimes.com."

Posted by Donald L. Luskin at 1:35 PM | link   

A LOOK INTO THE MOUTH OF HELL    And Bruce Bartlett is our Dante, pointing to this astonishing story from the Chronicle of Higher Education about the entirely earnest, unrepentant and utterly wrong-headed and unfair attempts by seemingly intelligent people to bestow "equal" rewards on people regardless of their merit:
"...the liberal value of freedom presumes that humans have an array of realistic choices. And having such choices...depends in turn on having at least a certain level of resources. Therefore society should guarantee everyone a basic income, which would be financed through progressive taxation. The basic income...should be as large as the economy can efficiently sustain."
Somehow when they say "society" I'm afraid they really mean me.

Posted by Donald L. Luskin at 12:57 PM | link   

AND THEN THERE'S THIS WAY OF LOOKING AT IT    Another Okrent letter from a reader:
Dear Mr. Okrent:

Donald Luskin, a member of the "Krugman Truth Squad," is encouraging his readers to email you to request that Mr. Krugman be held to accuracy standards in his columns. I am writing to disagree. When a prestigious columnist, in a newspaper that used to be called the "paper of record," is so loose with his facts and writes a column which is so egregiously partisan that he has a cadre of people who gleefully point out his errors and distortions, I think he should be left alone.

It is a source of great amusement to me to watch Paul Krugman get skewered over and over again. He manages to live in some alternate universe in which he is preaching to the faithful (I guess since they are liberal and read the Times it would be incorrect to call them "the great unwashed...") and apparently thinks, or used to think, that no-one would do anything except blindly accept his misstatements.

Leave him alone! Krugman and his columns reinforce my opinion of the New York Times and its readers, and it would be a shame to rein in his flights of fancy.


Posted by Donald L. Luskin at 11:02 AM | link   

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THE OKRENT LETTERS   
Thanks to all of you who sent emails to New York Times "public editor" Dan Okrent (public@nytimes.com) encouraging him to look into the Times' fox-guarding-the-henhouse columnist corrections policy. And special thanks for keeping the emails succinct and respectful. Many of you have copied me on Okrent's responses to you, and it appears his office is sending the same form letter back to everyone:

Dear [...],

Thank you for writing.

We have read Donald Luskin's article about Mr. Krugman and The Times columnist correction policy.

I assure you, Mr. Okrent will be writing a column about this issue at some point during his tenure.

Sincerely,
Arthur Bovino
Office of the Public Editor
The New York Times

One reader shot back:

Interesting turn of phrase: "during his tenure." Please elaborate. Days, weeks, months, years, decades?

Also, I find it curious that you seem to assume that I did my research by reading Mr. Luskin's article. I assure you I am quite capable of looking up budget figures from publicly available sources and doing simple arithmetic operations such as dividing and computing percentages. If I were as presumptuous as you, I would suggest that you hire my 12 year old as an intern for Mr. Krugman to help him out in that area.

Here are some more reader emails to Okrent:

An error is an error regardless of whether it's presented as news or opinion. Truth in fact may change an opinion, but an opinion will never change a fact. When facts are presented in error, they must be corrected even though presented in an article of opinion. Opinions are nice but numbers don't lie.

Truth to begin with is a good policy. Should truth lapse, admit mistakes and prevent them from occurring in the future.


I already consider everything written and published by the New York Times to be, in fact, liberal opinion, so I don't need further disclaimers for my benefit. However, it would seem that the Times does indeed have a horse in this race. Does it want to be perceived as an objective, reliable news organ that may tilt liberal but at least gets its facts straight? Or as a liberal/left propaganda machine that allows any lie or distortion as long as it is confined to the editorial page?

I hope the Times treats you well. I think you have a very difficult job, and respect you very much for taking it on.


An ideal solution would be to create an entire section for the staff of the New York Times to retract and correct the errors with which they barrage us. I think it would be a big hit given that between Krugman and Dowd the paper would be able to fill the newly created page for weeks to come.

Then again, just getting rid of those responsible for the documented dishonesty would go a long way to improving the quality of your paper.


Isn't it patently obvious that the New York Times has a duty to insure that its op-ed page is not used to disseminate factual inaccuracies? If it desires to maintain its credibility, I mean.


Published reports say that you are reviewing the New York Times policy of allowing columnists to check their own facts. I hope that you will revise this fox-in-the-henhouse plan in light of recent embarrassing inaccuracies published in the Times. Paul Krugman in particular has been a chronic abuser of this freedom, to the detriment of your once-great newspaper.


Just because they are columnists doesn't mean that they should be allowed to say anything without regard to the facts. As has been said, a lie repeated often enough eventually becomes the truth, and your newspaper seems to be exceptional in using that technique of political persuasion.

Your newspaper is known as "the newspaper of record", and unfortunately what it says is widely quoted as gospel throughout much of the nation (certainly in the over the air broadcast media and in many local newspapers). Therefore the New York Times should have an obligation to attempt to fairly represent all of the country, instead of just urban New York city. Good luck in seeing the forest for all the trees.


In the past, I was a daily subscriber to The New York Times. The Times appears to have completely lost its way in providing news that's fit to print, however, if such news does not support the political positions of its writers. I tend to view positions and facts trumpeted by True Believers, both liberal and conservative, with skepticism regarding completeness of the data presented. Skepticism quickly turns to disappointment, though, when it appears (i) "facts" being presented are not accurate and (ii) the use of such information is (at least tacitly) condoned. Examples include Paul Krugman's recent columns discussing federal spending on domestic programs, and the silence of the newspaper in commenting on his "facts" regarding increases in domestic spending once they were challenged.

I would be ecstatic to read a newspaper (including an editorial section) that truly informs and entertains. Like most Americans, I have significant concerns about the growing federal deficit, and am interested in a meaningful dialogue regarding its causes and cures. I'd appreciate being given a valid reason to resubscribe.


What worries me is that I keep reading about the New York Times having columnists that do not need to retract misleading or slanted statements. Maureen Dowd's venom often worries me. Another person who doesn't correct mistakes is a Mr. Krugman. I wish writers like these respected the truth as much as they respected their own writing.


Paul Krugman should be held to the same standards as your reporters at the Times. He should correct his own errors with apologies when appropriate. Anything less is unprofessional.


And then there's this one. A reader sent the following email to letters@nytimes.com:

When considering the number and magnitude of the errors on the corrections page, perhaps you should consider delaying your publication by a day or two and issuing one correct edition.

He got the following response:

It is certainly true that we make too many mistakes. All newspapers do. But I view our corrections page not as a sign of weakness but as a sign of strength. I am sure that any paper that prints as many words every day as we do (and there are not many) makes at least as many factual errors as we do. The difference is just that no other paper has a corrections policy that is nearly as diligent as ours.

Thanks for writing.

Best,

Bill Borders
Senior Editor

Just what kind of reality-distortion field do these guys live in on W. 43rd Street?

Posted by Donald L. Luskin at 12:01 AM | link   


Thursday, February 05, 2004

HOWIE CARR BODY-SLAMS JOHN KERRY    ...and there's hamburger all over the highway. Check it out. Thanks to Ashby Foote for the link.

Posted by Donald L. Luskin at 11:28 PM | link   

SUSKIND'S BUSH FILES    Ron Suskind -- "Author... Journalist... Documentarian" -- has posted online much of the source material behind his inaptly named book on Paul O'Neill, The Price of Loyalty. Great. Now you, too, can sift through what Suskind flatters himself by calling "files of compelling public interest" looking for damning gotcha's that can be pulled out of context to make whomever you wish to target look like a hypocritical manipulator. Have fun -- ain't democracy terrific? Thanks to Bruce Bartlett for the link.

Posted by Donald L. Luskin at 5:26 PM | link   

STRAIGHT TALK ABOUT GOVERNMENT DEBT    Cut through all the moralizing about the sin of debt, and you have some hardnosed decisions to make about whether to fund government spending with borrowing or with taxing. Here's Richard Rahn with a cogent analysis.

Posted by Donald L. Luskin at 5:16 PM | link   

JOKE OF THE DAY   


Posted by Donald L. Luskin at 5:00 PM | link   

IT ISN'T EVERYDAY WE AGREE WITH JONATHAN WEISMAN    But this is an exception...

Posted by Donald L. Luskin at 1:15 PM | link   


Wednesday, February 04, 2004

IS THIS THE TIMES' JOKE OF THE DAY?    Thank goodness New York Times op-ed editor David Shipley explained how the paper selects manuscripts for publication. Now we don't have to be quite so astounded that today's op-ed page runs an apparently entirely serious astrological profile of the Democratic presidential candidates.

Posted by Donald L. Luskin at 3:07 PM | link   

GEORGE BUSH: POKER FACE    Outstanding portrait of the president as Harvard MBA and as poker player.

Posted by Donald L. Luskin at 1:39 PM | link   

JOKE OF THE DAY   

Posted by Donald L. Luskin at 11:59 AM | link   

THE NOTE WANTS TO KNOW   Today's headline: "Paul Krugman's Smile: Could Will Rogers Have Been Wrong?"

Posted by Donald L. Luskin at 11:31 AM | link   

RECANTING DEAN.COM    Here's a pundit who's doing a big mea culpa for ever believing that Howard Dean's "internet candidacy" was ever anything more than an illusion. "Dean's campaign didn't just fail -- it dissolved on contact with reality." Thanks to Dave Nadig for the link.

Posted by Donald L. Luskin at 11:27 AM | link   

THE HEART OF SPAM DARKNESS    All that stuff doesn't just come out of thin air, you know...

Posted by Donald L. Luskin at 10:38 AM | link   

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KRUGMAN'S HERITAGE OF INNUENDO   
What do you do when you're caught saying something that turns out to be wrong -- or worse yet, a lie? There are four roads you can take, one high and three low.

Most people take the high road. They admit their fault, they retract the mistake or the lie, and they replace it with the truth.

New York Times columnists, on the other hand, usually take one of the other three roads -- the low roads. And they can get away with it because of the paper's policy that leaves corrections entirely at their own discretion. (Overheard on the PA system at W. 43rd Street: "Paging Mr. Fox… please report to the henhouse immediately!")

Usually Times columnists take the low road of just ignoring the whole matter. Or sometimes they'll restate the error or lie in a future column in a way that corrects it -- but without ever mentioning that it had ever been stated any other way. The classic example of that one is Maureen Dowd's infamous quotation of President Bush which she foreshortened in a way that distorted its meaning; she published the entire quotation several weeks later, as though by sheer happenstance, with no admission of prior fault.

But then there's Paul Krugman. America's most dangerous liberal pundit often takes the lowest road of all. When the Krugman Truth Squad catches him in a bald-faced lie, he takes the opportunity to tell another lie. A Krugman correction isn't the act of a journalist seeking to set the record straight. It's the act of an assassin whose first shot missed -- so he takes another one. 

In four years of Krugman Times columns -- over which the Truth Squad has documented a vast collection of errors, distortions, misquotations, invented quotations, contradictions and downright lies -- Krugman has made only two corrections worthy of the name. In January 2002 the Times ran a formal correction in which Krugman apologized to his bete noir Larry Kudlow for wrongly attributing an embarrassing statement to him. Nine months later, in a column, Krugman confessed error in citing unsubstantiated reporting about financial malfeasance by Secretary of the Army Thomas White -- having relied on research notes supplied to him by Jason Leopold, whom the Times itself later reported had been accused of plagiarism by the Financial Times with respect to the same story, and who had earlier resigned from Dow Jones as concerns emerged about the accuracy of his reporting for the Wall Street Journal.

But the rest of the time, such corrections as Krugman deigns to make look more like one that appeared in his Times column Monday, in which he replaced a lie with a bigger lie. Here's the whole story.

The original lie appeared in Krugman's January 27 column. There he wrote of a conspiracy of conservative think tanks to create an "urban legend" that an explosion in government spending has been responsible for the federal deficit. He said,

"According to cleverly misleading reports from the Heritage Foundation and other like-minded sources, the deficit is growing because Mr. Bush isn't sufficiently conservative: he's allowing runaway growth in domestic spending... Is domestic spending really exploding? Think about it: farm subsidies aside, which domestic programs have received lavish budget increases over the last three years? Education? Don't be silly...In fact, many government agencies are severely underfinanced."

After dissecting that column in a Krugman Truth Squad report for National Review Online, I was contacted by the author of those "cleverly misleading reports," Brian Riedl, a fellow for federal budgetary affairs at the Heritage Foundation. In a particularly delicious coincidence, it just so happens that Riedl was once an economics student of Professor Krugman's at the Woodrow Wilson School of Princeton University. While Riedl was flattered that his "cleverly misleading reports" had been singled out by a former teacher -- especially one whose own work reflects such deep expertise in all things cleverly misleading -- he nevertheless wished to set the record straight, and did so in a devastating posting on my website last week. There he reprised some of the highpoints from his many Heritage reports on spending. For example,

"Professor Krugman asserted that education spending is not increasing. In reality it jumped from $35 billion to $58 billion (65%) [in the two years] from 2001 to 2003.

"Professor Krugman draws a blank after asking 'farm subsidies aside, which domestic programs have received lavish budget increases over the last three years?' The answer he couldn't provide:

  • unemployment benefits (85%)
  • education (65%)
  • general government (63%)
  • air transportation (52%)
  • community/regional development (43%)
  • health research (32%)
  • veterans' assistance (27%)
  • Medicaid (24%) and
  • income security programs (21%).

"And these spending increases occurred in just two years (2001 to2003) -- a period even shorter than Professor Krugman's three-year range."

Think how Professor Krugman must have felt about that. His own student giving him an "F." So what does he do? Instead of acknowledging that he was wrong and that Riedl was right, he accuses Riedl of "innuendo." Get this:

"Over the past few months, many pundits have obediently placed the onus for rising deficits on 'a vast increase in discretionary domestic spending,' or words to that effect. By the way, the Heritage Foundation, which has orchestrated this campaign, is cagier than those pundits; it covers itself by relying on innuendo, never saying outright that domestic discretionary spending is the source of the deficit."

Huh? First Heritage is "cleverly misleading" because it said that spending is causing the deficits. And now it's charged with "innuendo" because it didn't say spending is causing the deficits?

When I talked to Riedl about this yesterday he was nonplussed. "I have no idea where he's coming from with this," he said, wondering why Krugman was now emphasizing Heritage's treatment if discretionary spending. He pointed me to many papers, such as last December's chiller, "$20,000 per Household: The Highest Level of Federal Spending Since World War II," in which he lays out the terrifying realities of exploding spending in both mandatory and discretionary categories.

Indeed, the innuendo is all Krugman's, because the distinction between mandatory and discretionary is a false one. The point is that the President and the Republican congress have permitted an explosion in discretionary spending and put in place whole new mandatory spending programs -- at a time when expenditures for the mandatory programs already in place were rising to begin with. Heritage has been all over all these types of spending from the beginning. Riedl says, "Go to our web page. You will be inundated by papers."

Krugman still owes Riedl and the Times' readers a correction for his first error in saying there is no explosion in spending. And now he owes Riedl and the Heritage Foundation an apology for his innuendo about Heritage's innuendo -- intended to cover his tracks on his original error with a thick layer of partisan attack. But until the Times changes its corrections policy, we'll see no real accountability from Krugman or any other Times columnist.

Krugman Truth Squad member Robert Cox of the National Debate website has reported that Times publisher Arthur Sulzberger, Jr., has committed to ask new "public editor" Daniel Okrent to review the columnist corrections policy. Okrent has, in fact, told me for the record that he is reviewing the policy. Times spokeswoman Catherine Mathis refused to comment, saying "As a matter of policy, we do not discuss what the public editor is planning to write before he does so."

Reasonable people may disagree about Krugman's politics. They might even disagree as to his methods, considering that his is merely an "opinion" column. But it seems virtually axiomatic, in my judgment, that a great newspaper like the New York Times should hold its columnists accountable to the same corrections process as it does the rest of its staff, with respect to matters of factual accuracy. 

If you agree, why not send a short and respectful note to Okrent. Go ahead. He's the "public editor," and you are the public. His email address is public@nytimes.com.

Posted by Donald L. Luskin at 2:12 AM | link   


Tuesday, February 03, 2004

JOKE OF THE DAY   

Posted by Donald L. Luskin at 11:12 PM | link   

RUSS SMITH ON GRAYDON CARTER    Russ wonders "when Vanity Fair editor Graydon Carter is going to wake up from his increasingly public nightmare...I’m baffled by his relatively sudden transformation from a purveyor of satire, celebrity, and keen cultural criticism to a disgruntled scold who appears headed for a nervous breakdown."

Posted by Donald L. Luskin at 6:26 PM | link   

SOCIAL SECURITY REFORM -- IT'S TIME    ...and here's Jack Kemp on how we're going to do it.

Posted by Donald L. Luskin at 7:14 AM | link   

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TAXATION AND SLAVERY: ROBERTS RESPONDS TO THE CRITICS   
The following was sent to me by Paul Craig Roberts, in response to criticism of his column comparing the income tax to slavery -- which I myself defended last week.
From time to time people write to me asking how they can become columnists. I tell them that they do not want to become columnists. Read on.

Many years ago when I was offered an appointment at the University of Rochester, I remember wide-ranging discussions of economic issues with the many distinguished economists who were at Rochester at that time. One Rochester theory that has stuck in my mind these many years is that the news media deals in entertainment, not in information.

This was before I became a part-time columnist, which I did in order to explain supply-side economics, rather than to allow its opponents to define it. In my quarter century of writing columns (Wall Street Journal, Business Week, Script Howard News Service, and Creators Syndicate), I have often wondered whether readers read my articles for entertainment or for information.

The Rochester theory, if I remember correctly, included as entertainment writing that massaged and verified the opinions of the readers. Most readers want to read what they agree with, not to have their blood pressure driven up by the babbling of some fool. Whether a columnist is an intellect or an idiot depends on the prejudices, information, and misinformation present in the reader.

Having had thousands, perhaps tens of thousands, of responses over the years, my poll results indicate that there is much truth in the Rochester theory of media. There are always a relatively few thoughtful people who write to express appreciation for a new insight, for giving them a different way of looking at an issue, for exploring ramifications not previously investigated, and for providing new information.

However, most readers either tell you how smart you are for agreeing with them or how dumb you are for writing what you did. Some even read your clear prose and come to the conclusion that you have said something entirely different, often the opposite, to what you did say.

The more misinformed a reader is and the more personally or emotionally involved the reader is with the issue, the more likely the reader is to spew venom and read you out of the human race.

I can illustrate this conclusion with a wide range of examples, but two recent ones will do.

My last column critiqued the Heritage Foundation’s freedom index. I pointed out, correctly, that the index abstracts from the historical definition of freedom: self-ownership. A person who does not own the product of his own labor is a serf or a slave. The Heritage index ranks many countries as free despite income tax systems that claim the same share of peoples’ incomes as feudal lords or 19th century slave owners.

I also pointed out, correctly, that historically, the drive toward freedom was a drive toward equality in law, and that the civil rights revolution had failed in this respect and, instead, revived status-based privileges.

I also noted, correctly, that the Blackstonian principles that made law accountable and a shield of the innocent had been eroded.

In conclusion I noted that if we had a true measure of our freedom, neoconservatives could claim far less virtue for the US and would have a weaker case for imposing our virtue on others.

Libertarians loved this column. Some even wrote that they forgave me for co-authoring that article about free trade with Senator Schumer.

Statists, however, went berserk. Brad DeLong, apparently an economics professor at UC Berkeley, whose load is so light that he has time to run a web site for people who worship government, gave me a new, very long, name: "Paul Slaves Were Happy! And Well Cared-For! Really Happy! Much Happier Than People Like Me, Who Have to Fill Out Schedule C Craig Roberts."

Of course, I said nothing in my column about the happiness or emotional state of slaves. I merely noted that they owned about as much of their own labor (necessary for subsistence and reproduction) as the modern successful American. The modern American, of course, is much more productive due to technology and accumulated capital, so his living standard is higher, but not his self-ownership.

This difference was too much for Professor DeLong to comprehend. The professor, however, was the model of intelligence compared to fans of his web site. Commentators damned me for failing to acknowledge that our government’s claims on the products of our labor are morally justified, because our government uses our incomes to do good for others, whereas the slave’s owner selfishly used what he extracted from the slave.

That I was against race and gender privileges was proof that I am a racist and a sexist. Moreover, it proved Ronald Reagan was, too, because he appointed me to the Treasury.

Many concluded that I was in favor of slaves being raped and lynched and having their families broken up. Some were so worked up against me that I might have been physically assaulted had I been present.

All in all an amazing response to a valid critique of an index of economic freedom. My conclusion from this experience is that the Rochester theory needs to be modified. The statists on DeLong’s web site were having every bit as much enjoyment, if not more, than the libertarians who appreciated the power of my argument. People do seek out contrary opinion, not to test their own, but to beat it up in demonstration of their moral superiority.

Before going to the next example, note the extreme degree of misinformation about basic economics on the web site of a Berkeley professor of economics. The professor and the commentators assume that people purchased slaves in order to mistreat them. A slave’s life consisted of whippings, having his daughters sold into prostitution, having his wife raped, being spat upon, kicked, starved, and murdered.

Only a deranged person would treat his investment in these ways. To starve or murder a slave is to destroy one’s investment. To mistreat a slave is to incur his ill will and to receive sullen, less productive performance. A regime of mistreatment creates powerful incentives to run away, thus losing one’s investment.

Some people are self-destructive and do behave irrationally. So does the government when it locks away billionaires like Michael Milken on trumped-up charges and forbids him from practicing his lucrative profession, thus denying the government a life-long stream of revenues at the maximum tax rate.

But, of course, if the government locks us all up, there will be no revenues. Indeed, people would revolt and kill the government. If slaves had been generally mistreated, Lincoln would have succeeded in stirring up a slave revolt when the South’s men were away at war and only women and children were left on the plantations to control the slaves.

To make these points is not to endorse slavery. I don’t even endorse the good kind of slavery that DeLong and his crowd like – the income tax. But it is to wonder about an economics professor and his fans who believe that profit maximization was not operative on cotton plantations.

Now for the second example: my columns on the US invasion of Iraq. When the World Trade Towers were destroyed, I took a hard line toward terrorism, but one far from invading and conquering the Muslim Middle East. I had not paid much attention to neoconservatives and thought of them as people who had opposed Soviet aims and who opposed the deconstruction of American values by cultural Marxists in the universities.

In response to my defense of America, kudos poured in, hundreds at a time, from readers of Heritage’s TownHall site. I was the greatest thing since sliced bread. However, I soon perceived the neocons’ intentions and declared neocons to be Jacobins outside the American tradition. I argued that conquering and occupying the Middle East was beyond our strength, against our interests and against Israel’s interests, as the unintended consequence would be to radicalize and to unify the Muslims.

To those who argued that Jews would suffer a second holocaust if we didn’t establish by force of arms democratic states and a deracinated Islam throughout the Middle East, I replied that such an undertaking would be a strategic blunder. Much better, I said, to offer the Israeli population refuge in the US. It was a rhetorical point to stress the danger to Israel of the neocons’ aggressive agenda.

The TownHall readers who loved me the week before now regarded me as an unpatriotic, pinko-liberal-commie, and a coward to boot, whom they would never read again. And TownHall has seen to it that they don’t get the chance. People started writing about how I had been a left-winger all my life and had infiltrated the Reagan administration in order to destroy conservatism with big deficits.

But this response was mild compared to what my offer of refuge to Israelis was to bring. A few Jews wrote to me and expressed appreciation for my awareness that generalized violence in the Middle East would forever end Israel’s prospects. However, Zionists from all over the world saw nothing but anti-semitism in my offer of refuge to five million Jews. During the 1930s it was anti-semitic to refuse refuge; in the 21st century it is anti-semitic to offer it, even as a rhetorical point.

One comment from a person from Pittsburgh proudly sporting M.D. and J.D. after his name: "Welcome to the vermin’s nest of virulent anti-Semites. Jews and the State of Israel need to be revitalized from time to time by asinine and vicious comments uttered by rotten bastards like you."

The outrage of Zionists was matched by the outrage of anti-semites, who told me in no uncertain terms that I should have been aborted, not born, that there were too many Jews in the US already, that I was a dirty Jew-loving commie pig for wanting to bring 5 million more Jews to America. And these were just for warm-ups.

One well-reasoned column making a rhetorical point produced a flood of virulent denunciation in which Zionists and anti-semites joined, their words and phrases interchangeable.

What I have learned from my life as a scholar, a public policymaker, and a columnist is that issues cannot be addressed until there is a crisis. Until a paradigm breaks down, it is difficult for a scholar with a different view to get a hearing. He is not so much shouted down as ignored. Keynesian demand management was immune from criticism until it collapsed in stagflation. A columnist who tries to check popular impulse is shouted down or run over.

The successful columnist is the one who understands that the job is one of entertainer. He finds an audience to which to play and gives up on educating anyone on any issue.


Posted by Donald L. Luskin at 12:05 AM | link   


Monday, February 02, 2004

JOKE OF THE DAY   

Posted by Donald L. Luskin at 8:20 AM | link   

MR. BUSH, YOU HAVE A SIMPLE CHOICE HERE    Cato's Chris Edwards says there is a political choice here between cutting spending and raising taxes. Uh oh.

Posted by Donald L. Luskin at 8:18 AM | link   

SCHOOL CHOICE COMES TO THE DISTRICT    A true profile in courage.

Posted by Donald L. Luskin at 8:14 AM | link   


Sunday, February 01, 2004

FILE UNDER "Y" FOR YEAH, RIGHT    New York Times op-ed editor David Shipley explains how submissions are accepted or rejected:
"If the editorial page...has a forceful, long-held view on a certain topic, we are more inclined to publish an Op-Ed that disagrees with that view."
The poor deluded bastard probably believes it, too.

Posted by Donald L. Luskin at 9:36 PM | link   


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