Chronicle of the Conspiracy
Friday, April 30, 2004AN ORWELLIAN QUOTATION OF ORWELL Mickey Kaus faults Paul Krugman for his reading of Orwell. Good to see Mickey back on the Krugman beat.
Posted by Donald L. Luskin at 9:09 AM | link
NADER: EXPLOITER OF LABOR A former Nader staffer reveals inhumane and illegal treatment of labor -- himself -- by the great champion of labor rights. Thanks to Bruce Bartlett for the link.
Posted by Donald L. Luskin at 9:07 AM | link
Thursday, April 29, 2004NOT VERY AFFIRMATIVE ACTION Minority hiring? That's something only Republicans are supposed to do, I guess. And minority businessmen aren't happy with the piece of the pie they are getting for Boston's Democratic convention. Thanks to reader Jill Olson for the link.
Posted by Donald L. Luskin at 2:01 PM | link
THE ELECTED DICTATORSHIP That pesky Supreme Court appears poised to return America to dictatorship, where it was before 1972. Robert Musil has the story:
But the foolish majority of Justices seem to be indicating that they either don't think the 1972 law even applies -- or that it's unconstitutional if it does apply! How can they have gone so far off track? Aren't they reading Herr Doktrprofessor's column that bypasses all that silly constitutional law and statutory construction nonsense and gets right to the heart of the matter -- whatever that is after all the law is gone. Of course, the President does not agree with the plaintiffs - and neither did President Clinton when the exact same law was used to challenge Hillary Clinton's health care task force... That must mean that Bill and Hillary Clinton were also trying to turn the United States into some kind of dictatorship!
Posted by Donald L. Luskin at 8:25 AM | link
GORE'S LOCK-BOX OPENS FOR KERRY Here's why Al Gore lost in 2000 -- he didn't spend all his campaign money. Now he's giving $6 million to Kerry. Thanks to Bruce Bartlett for the insight.
Posted by Donald L. Luskin at 8:03 AM | link
Wednesday, April 28, 2004GUESS WHO'S NUMBER ONE ...over at MSN Money's Strategy Lab? Some guy who calls himself the "political economist."
Posted by Donald L. Luskin at 11:16 PM | link
AMEY STONE CATCHES ME IN A BULLISH MOMENT Tough after a downer like yesterday, but BusinessWeek Online quotes me wanting to buy the dip.
Posted by Donald L. Luskin at 11:15 PM | link
FREEDOM FOR ME, BUT NOT FOR THEE Why does Andrew Sullivan find it "horrifying" that Muslims in Canada may choose to settle private disputes within the framework of sharia, the Islamic law? Would he feel differently if the Muslims in question were gay? Then would they be entitled to some choice in their private affairs?
Posted by Donald L. Luskin at 2:04 PM | link
Mick, one reason I used the 10-year is because Paul Krugman himself
did in the column if was
dissecting. There are lots of rates you could use, but they all tell the
Posted by Donald L. Luskin at 7:14 AM | link
Tuesday, April 27, 2004A NEW COUNTER-CONSPIRATOR Matt Schiros may have been born yesterday, but he's been up all night fact-checking Krugman (whom he'd never heard of until now). Good start on Matt's new blog!
Posted by Donald L. Luskin at 9:42 PM | link
NOW WE KNOW WHERE THOSE PRODUCTIVITY FIGURES ARE COMING FROM Hamas bomber blows up self, two stick-up men. Thanks to reader Jill Olson for the link.
Posted by Donald L. Luskin at 3:55 PM | link
SHORT MEMORY (SO TO SPEAK) Eleven Day Empire wonders whether "Paul Krugman's memory only go back to January 20, 2001?"
Posted by Donald L. Luskin at 2:07 PM | link
WHAT ABOUT "LAFFER WAS RIGHT" DON'T YOU UNDERSTAND? Alvin Rabushka on the success of Russia's low flat tax rate after three years:
Posted by Donald L. Luskin at 10:52 AM | link
SOWELL ON HILLARYCARE REDUX Thomas Sowell reacted the same way I did to the title of Hillary Clinton's cover-story for the New York Times Magazine last week: "Now Can We Talk About Health Care?" Does the mere passage of time mean that her horrific plan to enslave the medical profession is now worth reconsidering? Or can we talk about it "now" because she is no longer involved in the planning? Or, most likely, are we to understand that since her initial proposal there has been a cavalcade of evidence to suggest that she was right all along?
As always, Sowell gets it right by going to first principles, and to the evidence of what has happened in other countries that have done it Hillary's way:
Posted by Donald L. Luskin at 10:03 AM | link
"JUST NUTS" Robert Musil has a devastating take on Paul Krugman's column today:
Posted by Donald L. Luskin at 9:44 AM | link
Monday, April 26, 2004
But rising rates are a tricky weapon for the Democrats, as Paul Krugman -- America's most dangerous liberal pundit -- is learning. In a New York Times column last week Krugman forecasted that 10-year Treasury bond yields will soar to 7% from their current 4.4%, and warned "...many American families and businesses will be in big trouble if interest rates really do go as high as I'm suggesting."
At the same time, though, the Democrats can't evade the reality that rising rates are strong evidence of the economic boom they've tried to deny and discredit. Even Krugman admits (between clenched teeth) that rates will rise "If the economy fully recovers — or even if investors just think it will..."
Krugman seems to find himself in the rather difficult position of arguing that "American families and businesses will be in big trouble" when "the economy fully recovers."
Fortunately for the Democrats, there's another way to spin rising interest rates: as the product of Bush's tax cuts and the present federal budget deficit. This gives Democrats the opportunity to retell their nostalgic myth about the prosperity of the late 1990s, kindled by low interest rates made possible when the Clinton administration brought "long-term budget deficits under control through a mixture of tax increases for upper-income families and spending restraint."
Krugman, an economics professor at Princeton, cites academic arguments in order to convert myth into fact:
Yes, it's true that Mankiw's textbook Principles of Macroeconomics does say that. It's even true that it says it in italics. But (with due respect to Mankiw), the myth is just a myth. The historical evidence simply doesn't bear out any such relationship -- indeed, it proves the opposite. When annual changes in debt are regressed against annual changes in interest rates, the result is a negative correlation -- precisely the reverse of what Krugman's politics (and Mankiw's theory) would dictate.
The chart below makes it crystal clear for anyone who wants to know the truth. From 1958 to 1974, rates rose while debt plummeted. From 1974 to 1982 rates soared while debt barely changed at all. From 1982 to 1993 rates collapsed while debt soared. After 1993, during the Clinton years, while debt fell sharply -- and again since 2001, during the Bush years, while debt has risen -- interest rates continued lower, moving in the same direction they'd been moving since 1982.
How could Krugman and Mankiw be so wrong? In Krugman's case, that's an easy one: he's just trying to score partisan political points, and the difference between right and wrong doesn't even enter into his considerations. In Mankiw's case it's a bit more subtle. He's dealing in the realm of abstract theory, in which propositions like the relationship between rates and debt can be considered in splendid isolation, without any of the complicating outside influences that inevitably interfere in the real world.
One such influence is taxes -- especially taxes on savings, such as the capital gains tax. The epoch of falling interest rates starting in 1982 coincides with a time of generally falling tax rates, starting with the Reagan revolution (and including a large cut in the capital gains rate forced on Clinton by a Republican congress in 1997). Of course Krugman would never mention it, but Mankiw's book says -- also in italics -- "if a change in the tax laws encouraged greater saving, the result would be lower interest rates..."
Another influence on interest rates is inflation. Since 1958 inflation and interest rates have moved hand-in-hand -- the two are positively correlated to the same degree that rates and debt are negatively correlated. Krugman mentions rising inflationary trends in his column last week. But until then he had been wringing his hands about just the opposite -- deflation (as reader Brian Briody reminded me). Krugman wrote in his Times column just over a year ago that "the threat of deflation is worse now than it was a year ago. In fact, by some measures deflation is already here...Will it be all over the newspapers a year from now?" The risk of falling into what he called the "black hole" of deflation was exacerbated (you guessed it) by "the Bush administration...playing politics with fiscal policy."
For the record, in the same week I wrote in my SmartMoney.com column that "deflation is dead." As Krugman now implicitly confesses in last week's column, I was right and he was wrong. But no matter: another day, another black hole -- and another chance to blame Bush.
Posted by Donald L. Luskin at 2:22 PM | link
TIMES NAILED ON PASSION A former New York Times staffer crucifies the Times for its trail-of-corrections coverage of Mel Gibson's The Passion of The Christ.
To Rich, it was an open-and-shut case that what Gibson had created was anti-Semitic propaganda. The Times' overall coverage seemed designed to support this view. Stories from the Times' Hollywood bureau declared that studio chiefs would no longer work with Gibson, citing Jeffrey Katzenberg and David Geffen of DreamWorks among those who "expressed anger over the film" -- a claim that resulted in another "correction."
Posted by Donald L. Luskin at 2:18 PM | link
JOKE OF THE DAY
Posted by Donald L. Luskin at 9:41 AM | link
BEST EVER TIMES ERROR Read it for yourself.
Posted by Donald L. Luskin at 9:32 AM | link
YET AGAIN, UNINTENDED CONSEQUENCES Housing regulations make it harder for Habitat for Humanity to build low-income housing. Zoning laws are like minimum wage laws -- mandating bigger, safer homes keeps people homeless, just as mandating higher wages leaves people jobless.
Thanks to reader Jill Olson for the link.
Posted by Donald L. Luskin at 9:29 AM | link
YOUR CALL John Kerry launches "Sportsmen for Kerry" initiative. Whaddaya think?
Thanks to reader Jameson Campaigne for the link.
Posted by Donald L. Luskin at 9:26 AM | link
HENTOFF: "60 MINUTES" OUTPACES TIMES ON PICKERING It's amazing what "60 Minutes" can do when Viacom doesn't have a book to sell. Here's Nat Hentoff celebrating Mike Wallace's truth-telling about Judge Charles Pickering -- and setting it against the New York Times' record.
So has the Times' semi-public editor (or ombudsman), Daniel Okrent. I say semi-public editor because if you telephone him, as I did twice on this story, you hear that you are likely to get a quicker response if you e-mail him. Otherwise, "Please limit your comments to 30 seconds."
I expect there may be a few hundred thousand New Yorkers, and more around the country, who do not have access to e-mail, and could find it difficult to compress their complaints into 30 seconds. The ombudsman has not returned my calls. Nor has Gail Collins, who is in charge of the editorial board. More democratic than Okrent, her office does not have a 30-second cutoff.
Thanks to reader Jameson Campaigne for the link.
Posted by Donald L. Luskin at 9:01 AM | link
COMPUTER SALES ROAR (REALLY) Raw government data on computer sales in February shows that computer orders rose 40.4% last month, and shipments rocketed 47.5%. Yet the official reports show "seasonally adjusted" orders with no growth at all, and shipments growing only 1.3% growth (compared to overall durable goods orders that grew 3.4% and shipments that grew 3.2%). People with too much power make policy based on these lies, you know...
Thanks to reader David Duval for the link.
Posted by Donald L. Luskin at 8:30 AM | link
KURTZ HAS IT RIGHT Are you surprised that there's a double standard?
But when news organizations screw up, their executives often fail to admit culpability or tell readers and viewers they're sorry. In many cases, they merely issue canned statements and slink into the shadows without answering questions from the sort of nosy reporters they employ to harass everyone else.
Posted by Donald L. Luskin at 8:10 AM | link