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Chronicle of the Conspiracy
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Friday, April 16, 2004
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In response to your article on the Misery Index, I think there's a few major problems with the picture you paint of a rosy economy without misery. Now, I'll definitely not argue with you that we don't want to return to the 70s, which was an entirely different set of circumstances. But let's look at a few of the points you brought up and I'll point out the holes in this theory...
Education costs: Well, to NOT consider these means we're only concerned about
Americans without families. Education costs are rising at twice the rate of
inflation, and this has real-world implications. Factoring these costs is pretty
much critical to the average American family. If we really want our kids to have
the same level of education as our generation don't we have to do something
about that? If we're short-changing the current generation on education what
does that say about the future competitive nature of America?
Rising healthcare: This has had a massive effect of everybody in the workforce.
To ignore this is folly. I am an equity partner a small, entrepreneurial,
employee-owned business. The fact is insurance rates have been jacked up
dramatically over the last three years. We have been profitable and some
employees have benefited from wage increases, but in general these wage
increases -- and company profits -- are being eaten away at by health insurance
costs. Not many folks are getting raises, and when they do, healthcare is
outrunning them. Often take-home pay decreases even if wages have gone up....
because of health insurance costs. What's wrong with this picture?
What about local taxes? This is not factored into much of the economic reality
of the Bush Administration -- or what economists say about "the economy." They
claim there is a flood of tax-cut money coming back to the middle class. What
they don't tell you is that many localities are in bad shape and because of a
poor economy (really, go out and ask folks on the street how the economy really
is) and federal tax cuts, they have been cutting services and raising
local taxes -- which again effects your take-home pay.
Do you really believe the government's data? I submit to you that whether a
Republican or a Democrat is issuing "numbers," these numbers do not present an
accurate picture of the current economy. For one, the unemployment number is a
joke. Everybody knows there are far more people unemployed, because many have
dropped off the rolls or left the workforce altogether after being discourage. I
propose you go out in the street and talk to folks --- small business owners,
working stiffs, whomever, and ask them how the economy is doing vis-a-vis
the government viewpoint. Things aren't nearly as rosy as you would believe. The
statistics are cooked, pure and simple.
If Kerry is indeed the tax-addicted liberal the Republicans make him out to be,
then yes, we may indeed be in trouble. But there is a middle ground that can be
struck with fiscal responsibility in trimming SPENDING and delivering only a
modest tax burden. The Bush administration has completely lacked in fiscal
responsibility... and spending has increased. I also believe that the
administration should be honest, and act with integrity, and try to get a
realistic picture of what's going on with the so-called average American. Some
of Kerry's points about healthcare and education costs are valid -- and to me
this is a much more realistic vision than Bush's propaganda that "everything is
fine," and his view that the government's roll is to resort to printing presses
and perhaps dumping money out of airplanes to give us the path to prosperity.
Well, that's just out of touch.
Scott Raynovich
I found your column of on the Misery Index particularly interesting. In fact,
a copy of it is now hanging outside my office cubicle. It strikes me that the US
economy is the great vanishing 2004 political issue for the Democratic party. As
a middle-aged (42), middle-class American I've been around long enough to know
what good and bad economic times mean to me. The entire Bush term has been in my
mind an economic success, particularly when reviewed in the context of terrible
current events. Clearly, 9/11 was a stunning disaster, both in terms of human
tragedy and economic impact. I truly credit President Bush and his
administration, (along with the members of Congress who went along, though some
kicking and screaming) with saving America from plunging into the financial
abyss after that terrible day.
I would tell Mr. Kerry that my taxes have gone down, my disposable income has
gone up, and (though I feel fortunate about it because of financial problems in
my company completely outside of any president's control) I've had steady
employment throughout Bush's tenure. I might mention to Mr. Kerry as well, that
he will push my employer. into bankruptcy if he implements his plan to tax hard
US corporations for based on their overseas profits. The only profits my
employer creates today are on their overseas operations and they are not easily
(which is really impossible because the companies current financials) or perhaps
at all able to be moved back to the States. Only a sad day in court awaits my
company if John Kerry takes up residence at 1600 Pennsylvania Avenue.
Kerry's chart is strange because of its upside down nature. But I find it
incredible that the chart suggests that the Carter economy and the Clinton one
were both times of great financial success. Clearly, the Internet bubble made
everybody feel wealthy for a time. But, that was a once in a lifetime anomaly
and something that the Clinton administration had nothing to do with. (Well OK,
maybe Al Gore helped his with inventiveness.) The Carter years were nothing
short of a disaster by any stretch of the imagination.
As a high school student, I was happy to be part of a part-time cleaning crew
making minimum wage. But those were not the "good times" as the chart seems to
suggest. Perhaps most amazingly, the chart seems to suggest that from about the
time Carter left office until Clinton arrived the US economy did nothing but get
worse! Utter nonsense!
Tom Stockum
Posted by Donald L. Luskin at 7:46 AM | link
Thursday, April 15, 2004
KERRY'S TAX PLAN BENEFITS HEINZ (AS IN HIS WIFE) Kevin Hassett explains how John Kerry's plan to close a corporate tax loophole manages to leave lots of wiggle room for Heinz, the company that is the source of his wife's fortune. Say what you will about George Bush and crony capitalism, but at least W was never married to Ken Lay.Posted by Donald L. Luskin at 1:35 PM | link
KRUGMAN THE CONSERVATIVE From Paul Krugman's TV appearance on "Uncommon Knowledge":
- "I'm a conservative. I want to preserve these programs we have and that unfortunately requires more revenue than we're collecting after the Bush tax cuts."
Posted by Donald L. Luskin at 10:38 AM | link
A SOROS CONSPIRACY? I wouldn't give John Berlau, a reporter for Insight Magazine , the conspiracy-theory evidence on George Soros that he was fishing for -- but he does his Procrustean best with my quotes. Sigh.
Posted by Donald L. Luskin at 10:31 AM | link
BEAUTIFUL Reader Jill Olson reports this line from Dennis Miller: "John Kerry wrote an op-ed piece about the war in Iraq in Tuesday's Washington Post. Apparently it was so full of inaccuracies he was offered a job at the New York Times."
Posted by Donald L. Luskin at 6:30 AM | link
Wednesday, April 14, 2004
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Never mind three back-to-back quarters of great GDP growth. Never mind new all-time high levels of household wealth. Never mind strong consumer spending, low inflation and a recovering job market. Presumptive Democratic presidential candidate John Kerry has come up with what he calls the "Middle-class Misery Index" -- and it purports to prove that the economy is sick, sick, sick.
It's all quackery, of course. And as you'll see in a moment, this economy is so healthy that even John Kerry and his brainless-trust of liberal economists couldn't come up with a fraud nasty enough to make it look really bad.
A traditional version of the Misery Index has been around for years, providing a rough-and-ready picture of the health of the economy as experienced by ordinary people. It's simple -- you just add up inflation and unemployment: the lower the total, the lower the misery (and the healthier the economy). The traditional Misery Index looks great right now, thanks to very low inflation coupled with about-average levels of unemployment. Check out the chart below -- there aren't a whole lot of periods when things have been less miserable than they are today (and lots when they've been plenty worse).
But that's a chart John Kerry doesn't want you to see, because he knows you won't vote for him unless you are really and truly miserable. So he's come up with his own version -- based on different economic indicators -- to show you just how miserable you really are. Below is a chart of it, from Kerry's website. Be careful when you compare it to the one above -- this one only goes back to 1976. And it's built upside-down: in the traditional Misery Index, lower readings are better, but in Kerry's version higher readings are better.
Instead of just adding up inflation and the unemployment rates, Kerry's Misery Index combines median family income, college tuition, health costs, gasoline cost, bankruptcies, the home ownership rate, and private-sector job growth. Other than the home ownership rate, all of these components have experienced negative moves in recent years. With a whole universe of economic statistics from which to choose, Kerry has deliberately picked economic measurements that tell a gloomy story (and threw in a single positive one -- home ownership) to make it all seem fair and balanced.
On this basis, Kerry claims that under President Bush the Middle-class Misery Index has just had its "Largest Three-year Fall on Record," giving Bush "the Worst Record of Any President Ever."
"Ever"? That's a big word -- too big even for the left-leaning New Republic. As Gregg Easterbrook points out on TNR's website, "'ever' only goes back only to 1976."
Be that as it may, take a hard look at the chart -- and set aside Kerry's overheated press-release rhetoric. You'll see immediately that even this hand-picked collection of negative statistics doesn't really make today's economy look especially bad. Looks about average to me.
The only years that were much better were during the bubble economy of President Clinton's second term (his first term was worse), and during President Carter's single term. No surprise that the good times according to Kerry's index would be under Democratic presidents, but as Easterbrook asks, "Can you find one single person in the United States who would want a time-machine ride to the economic conditions of 1978?"
It's remarkable that Kerry couldn't manage to make the economy look worse. Heaven knows he tried. Consider these dirty statistical tricks:
The non-partisan Annenberg Political Fact Check has pointed out that Kerry's median family income statistics are pre-tax: "The Kerry index reflects none of the benefit of the Bush tax cuts." Surely voters know from their own happy experience that taxes have been cut steeply under the Bush administration.
The Annenberg report also points out that the college costs included in Kerry's index are exclusively for public colleges -- where tuitions have risen almost three times as rapidly as private colleges. But when it comes to jobs, it's just the opposite. The Kerry index looks only at the number of private sector jobs (which has fallen), completely ignoring the number of public sector jobs (which has grown).
When Americans go to the polls in November, chances are they'll vote on the basis of how wonderfully unmiserable the economy really is. They won't be swayed by sleazy statistical quackery like Kerry's index. Or maybe they will -- maybe they'll decide they don't want to vote for a quack.
Posted by Donald L. Luskin at 2:46 PM | link
ATTENTION COMMUNICATORS: COMMUNICATE BETTER! The Boston Globe has this suggestion for the media, in response to recent polls showing deep public distrust -- "a disconnection between the public and the news media over motive."
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...if there is a rough consensus among people concerned about the media's declining public image, it is that the journalism business must do a better job of communicating -- not just news and information but journalism's virtues and values as well.
Posted by Donald L. Luskin at 2:35 PM | link
YOU KNOW YOU'RE REALLY SOMEBODY WHEN... ...you are quoted out of context in the lede of a column by a columnist you've never heard of. Just what is a Froma Harrop?
Posted by Donald L. Luskin at 7:57 AM | link
Tuesday, April 13, 2004
WHO KNEW? Dennis Hopper is a "W" man, according to Liz Smith.-
DENNIS HOPPER is the "Easy Rider" star-director who grew up surrounded by Democrats. In the '60 he marched with Martin Luther King and protested the Vietnam War.
But did you know that he is now a political conservative and has been since Ronald Reagan? He says, "I liked [Bill] Clinton, but I voted for Bush Sr. And I'm definitely voting for [George W.] Bush again."
Mr. Hopper's wife Victoria is a passionate Democrat who has raised money for John Edwards and John Kerry. Of her Democratic passions, Hopper says to the London Times: "I support Bush and I support my wife and what my wife's involved in. That's all. We don't talk politics. I respect her things, and you know, whether she respects mine doesn't really matter to me."
Posted by Donald L. Luskin at 9:54 PM | link
TIMES BIAS IN GRUTZ Here's an interesting take by reader Eric Soskin of the Ex Parte blog, "a group weblog managed by the Harvard Federalist Society, a student organization of Harvard Law School, and written by its student members."
This story in today's New York Times by Greg Winter -- "After Ruling, 3 Universities Maintain Diversity in Admissions" -- seems desperate to prove that the Grutz affirmative action ruling was bad. Here's my analysis at Ex Parte:Reporting on the impact of the Gratz case, Greg Winter of the Times is intent on insinuating that the case should have come out the other way, and is forced to look ridiculous in doing so.
His argument is that the Court has made ensuring diversity "far more" expensive, diverting resources from other worthy endeavors, and both parts of the argument are a real stretch. First, he splits hairs, claiming that just "[t]wo of the major universities" mentioned in the article "experienced only slight declines"
in minority admissions.
The article mentions three universities altogether. Here are the minority admissions statistics cited:
- Michigan - 2003: 11%; 2004: 10%. Net decline: 1%.
- UMass Amherst - 2003: 7%; 2004: 7%. Net decline: zero.
- Ohio State - 2003: 12%; 2004: 10%. Net decline: 2%.
So a 1% drop qualifies as "slight," but a 2% drop doesn't, even though the net admissions percentage is the same in both cases. I bet he doesn't even know how much of these numbers is due to rounding.
Why make this distinction? Because Mr. Winter is intent on showing that equivalent results can only be achieved by seriously hurting universities financially. Indeed, the off-lede in his article is a one-sentence paragraph making this point: "To maintain those levels, however, the universities spent far more on admissions than before."
According to the article, Michigan spent $1.8M more "to evaluate applicants this year," while Ohio State increased its spending my a mere $250,000.Interestingly, Mr. Winter reports that Ohio State used that money to hire 35 more applications readers (with an implied cost of about $7000 each) -- this certainly seems like a significant increase, so the only way to justify Michigan's spending is by claiming that Ohio State's process yields unsatisfactory results.
The article also tries to link the $1.8M spending increase to the $37M in budget cuts elsewhere in the institution. Fair enough -- but even if Michigan could have saved the spending on admissions, it could only have restored 5% of the cuts made elsewhere. Significant, but hardly crippling.
Another questionable criticism of the new system is here: "[N]one of these institutions has even half the percentage of underrepresented minorities as the nation as a whole." Hmm. But aren't these large, state schools that favor in-state applicants. Isn't the appropriate question how they compare to minority numbers within the state? The 2000 census statistics for Ohio, for example, report a minority percentage of 13.6%, much closer to OSU's admissions. With 18.1% minorities in the population, Michigan's performance looks less impressive by this metric. (This paragraph has defined "underrepresented minorities" as the article suggests -- including only black, Latino, and Native American persons.
Mr.Winter fails to mention another relevant fact: Minority applications are down 23% this year at the University of Michigan while overall applications are down a mere 18%. Since the decline in minority applicants is shrinking a pool that is already a fraction of the size of the overall pool, the grants of admission to minority students are being drawn from a much smaller group than in past years. Because the overall size of the admitted class is expected to be unchanged, this means that minority applicants are being admitted at a significantly higher rate than in the past. This could either lend support to the argument of Edward Blum, quoted by Mr. Winter, that the results are "suspicious," and may be indicative of a de facto quota system, or they could suggest that closer examination of applications is actually a process favorable to minority applicants. It's an interesting question, but not one that makes it into the pages of the Times.Conclusion: news bias at the Times continues...
Posted by Donald L. Luskin at 8:54 PM | link
JOKE OF THE DAY
Posted by Donald L. Luskin at 8:03 AM | link
Monday, April 12, 2004
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Sunday's Times ran a correction of an April 4 Elizabeth Bumiller "Week in Review" piece, admitting that "[Dick] Cheney said that [Richard] Clarke 'wasn't in the loop.' He did not say that Mr. Clarke was 'out of the loop.'" The only problem is that the April 4 piece was the second time that Bumiller made the same error. The first time it was in a news story, on March 25.
And the Times had been warned -- yet it did nothing to prevent the repeated error. Gee... I sound kinda like Richard Clarke, don't I?
You see, even Bumiller's March 25 story was not the first instance of the error in the Times. The first was in a Paul Krugman column on March 23, two days before Bumiller's first error. It's not unreasonable to speculate that Bumiller got the quote from Krugman's column, rather than from the original interview transcript on Rush Limbaugh's site.
I talked about the Krugman/Bumiller error here on March 27, and wrote editorial page editor Gail Collins and "public editor" Dan Okrent about it on the same day, as soon as it was pointed out to me by reader Carol Vitucci. Okrent wrote back several days later, dismissing the error as a triviality -- but at least he'd thought about it. Collins never even bothered to respond at all. I assume that she thinks it wisest not to read emails from me.
So now we have three errors. One correction. Bumiller takes the fall for Krugman. And Gail Collins' new columnist corrections policy marches into a glorious future that looks an awful lot like the glorious past. Job one is now and always: cover for Krugman The Infallible at all costs.
Thanks to reader Brian Sament for noting the correction on Sunday and drawing it to my attention.
Posted by Donald L. Luskin at 11:05 PM | link
JOKE OF THE DAY
Posted by Donald L. Luskin at 11:11 AM | link
MARKET RISKS OF A BUSH LOSS IN NOVEMBER Business Week Online quotes us extensively on the drop in George Bush's poll numbers, and the impact that could have on the market and the economy. Key message:
- "A factor can be bad twice," [Luskin] says, referring to Iraq. "It's bad in and of itself. Separately, it could cost George Bush the election, which would be a disaster for stocks."
Posted by Donald L. Luskin at 8:46 AM | link
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Posted by Donald L. Luskin at 8:44 AM | link
Sunday, April 11, 2004
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But it's also because America's most dangerous liberal pundit has backed himself into a corner when it comes to jobs. Remember what Krugman wrote in his October 31, 2003 column, trying to spin a pessimistic story out of the announcement that GDP had grown in the third quarter at a red-hot 7.2% (subsequently revised upward to a white-hot 8.2%):
"...unless we start to see serious job growth — by which I mean increases in payroll employment of more than 200,000 a month — consumer spending will eventually slide, and bring growth down with it."
All he asked for was a "start" -- and that's what we got in March. And 308,000 is bigger than 200,000, even in the economics department at Princeton. So what's left for Krugman to say?
In Friday's column Krugman tries to denigrate the creation of 308,000 jobs as "nothing special." He notes that during the Clinton presidency "[t]here were 23 months with 300,000 or more new jobs." Well, no -- there were actually 26 according to the Department of Labor's Bureau of Labor Statistics payroll survey. This is one error Krugman might actually correct, since 26 instances makes 308,000 jobs seem more like "nothing special" than 23. But even at 26 months out of Clinton's 96 in office, we're talking about something more than "nothing special" -- job growth greater than 300,000 happened 27% of the time.
And why did Krugman use 300,000 as his yardstick when March's job growth was actually 308,000? Simple: to make that kind of growth seem as "nothing special" as possible, of course. During the Clinton years there were only 21 months with 308,000 or more new jobs. That's only 22% of the time -- very much more than "nothing special."
Krugman tries to brush away the fact that "[w]eekly first claims for unemployment insurance are down — but they're still above the 2000 average, and job growth in 2000 barely kept up with population." So now even 2000 -- the climax of the halcyon Clinton economy -- isn't a high enough benchmark against which to judge the Bush economy. But Krugman has made another error here. The Clinton climax wasn't all that halcyon. Jobs growth fell well short of population growth in2000. According to the DOL's household survey (the source of population numbers for labor statistics), jobs grew by 3.1 million in 2000, but the working-age population grew by 4.9 million. (Gail Collins, call your office: columnists "are expected to correct every error.")
Krugman carps that "Average weekly hours, sometimes a clue to future hiring, fell in March — in fact, they fell so much that total hours worked declined even as the work force increased." Another error! Hours worked comes from the DOL's payroll survey, and growth of the work force comes from their household survey. These two surveys are conducted on entirely different bases, as Krugman well knows because he's written about the distinctions -- data from the two surveys simply cannot be cross-compared like this.
Besides, average weekly hours only fell by a lousy one tenth of one percent in March-- or six minutes out of a whole week. They were up by as much in December, but Krugman didn't mention that.
And why no celebration from Krugman that "the work force increased"? Isn't that a good thing? After all, Krugman has complained over and over that the work force is shrinking. He falsely claimed in his December 30 column that it is due to the "unusually large number of people have given up looking for work:" (ignoring DOL statistics that show that the number is not at all unusual). He falsely claimed in his March 12 column that this "entirely" explains the drop in the unemployment rate since last summer ("entirely" ignoring the fact that there has been a net increase in employment since then, too).
As his final attack on the good news of 308,000 new jobs, Krugman claims that superior job growth is nothing less than our due: "After three years of lousy job performance, we should be seeing very big employment gains." In fact for Krugman it's a whole new "right" -- a "job boom" is something "we both need and have a right to expect after three bad years."
Yet another error -- as we quickly discover when we do some real economic analysis instead of political posturing. When we examine the entire series of data from the DOL payroll survey, we find that below-average three-year periods of percentage job growth are actually negatively correlated with subsequent above-average one-year, two-year and three-year performance. There is no three-year "bounce back" effect. It is the opposite.
And here's another thing we find in the payroll data -- yet another error. It turns out we have had almost four bad years, not three. Monthly percentage job growth has been below its long-term average value since May 2000. The jobs recession began on Bill Clinton's watch, well before George W. Bush was even nominated to run for the presidency.
So it rings especially hollow when Krugman says,
"...this year's election will be a contest between a candidate who advocates a return to economic policies that were associated with eight years of very solid job growth, and one who advocates continuation of policies that have, after three years, yielded exactly one good monthly jobs report."
One swallow does not make a spring, yet spring begins with one swallow. And job booms begin with one good jobs report. All the better that this was a great jobs report.
That October column in which Krugman dissed the third quarter's huge GDP growth was dismissively called "A Big Quarter." That was followed by another big quarter. And another. And now Krugman's Friday column is dismissively called "One Good Month." But there will be another. And another. This "one month" was the "start" that Krugman challenged George Bush's economic policies to produce. They've produced it.
Correction 4/12/04: The title of Krugman's October 31 column was "A Big Quarter." As originally posted, I had it incorrectly as "A Good Quarter." It has been corrected above. Thanks to an alert reader.
Correction 4/12/04: The number of months in the Clinton presidency with 300,000+ new jobs was 26, not 27 as stated in the original posting. It has been corrected above. Thanks to an alert reader.
Posted by Donald L. Luskin at 11:50 PM | link