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Saturday, October 16, 2004

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BUSH FUTURES BEING MANIPULATED   
There is now no question whatsoever that the  Bush re-election futures contract at Tradesports.com is being manipulated. Yesterday the price of the futures were sold down from about 55 (indicating the market's estimate of a 55% probability of Bush's re-election) to 10 (indicating on a 10% probability) with a single 10,000-lot order entered by a single trader. An order that size represents twice the normal volume of an entire typical day's trading. Within moments after the order was completed, the price recovered back to the low-mid-50's.

According to sources at Tradesports, yesterday's order was entered by the same individual who has heavily sold the Bush futures three times over the past month. The first instance was on September 14, when this trader sold the futures down from the mid-60's to 49.6. The second instance was in the middle of the second presidential debate on October 8, when the futures were sold down from the high 50's to 51.5. The third instance was right after the third presidential debate on October13. As the debate began the futures were priced at 57, and by the end of the debate they had risen to 60. Then a few moments later they were beaten down to 54 in a matter of minutes.

In markets this kind of behavior is called a "speculative attack." The idea is not to sell at the highest price possible -- the normal profit-maximizing strategy of a typical seller. Rather, the idea is to use one's selling to deliberately cause prices to fall. Why would any sane trader try on purpose to sell at low prices? In some cases it is in order to panic other traders into selling at even lower prices, so the attacker can buy back what he sold at a profit -- traders call that a "bear raid." But in a speculative attack the motive is more complicated. It is to cause people in the real world -- not just other traders -- to panic.

The classic example of a speculative attack is when George Soros massively shorted the British pound in September, 1992. The Bank of England was obliged to support the pound's exchange rate under the European Exchange Rate Mechanism. With the pound plunging and the BoE pouring billions into supporting it, prospects for the British economy were damaged -- making the pound even weaker. Eventually the BoE exhausted its will to support the pound , and had to pull out of the ERM. The pound collapsed -- and Soros is said to have made a billion dollars on this speculative attack.

It's all based on what Soros has often written about as his "theory of reflexivity." It's when financial markets affect the real world, and then the real world in turn affects financial markets. It's a vicious cycle set in motion on purpose. Here's a speculation of a different sort: could Soros be behind the manipulation of the Tradesports Bush futures? The amounts of money involved are pocket change to Soros. And it would fit his avowed intention to unseat the President. It would be a cheap way for Soros to damage Bush's credibility and panic his troops. I have no idea whether Soros is behind this or not. But it would fit.

Posted by Donald L. Luskin at 9:41 AM | link  


Friday, October 15, 2004

MINIMUM WAGE, MINIMUM INTELLIGENCE    Here are a couple of smart emails from smart readers on the letter signed by 562 stupid economists supporting a stupid increase in the minumum wage.
Among the signers are Dr. Carol O'Cleireacain and her husband Dr. Seamus O'Cleireacain. Seamus teaches economics at Columbia and SUNY Purchase; I was one of his students at the latter, taking several of his courses as part of earning my B.A. in economics.

With all respect to this distinguished couple, they're two more examples of brilliant people who are misguided. Modern liberals cannot accept that labor is a commodity like anything else: if government mandates a higher price than its true worth to buyers, people will buy less than equilibrium. Dr. O'Cleirecain, though, has chosen the "bleeding heart" view that we should impose a cost on everyone for the benefit of a few. However, he wisely chose Mankiw's textbook for our Macro I class; God knows how I'd have turned out if he had picked Samuelson.

Incidentally, Brad DeLong and James Galbraith are among the signees...where's Krugman? Or was he too busy writing his latest hack-piece? Joseph Stiglitz signed the "Economists say Bush's tax cuts are bad" a few years ago, but I guess they couldn't get him to sign this one.

Kerry's solution to the "working poor" is more government. Sadly, Bush's counter was lost on the average American: those at the bottom don't need higher wages, but better education so they can get into higher jobs.

Perry Eidelbus


First, they should call this the "Teenage Under-Employment Act."

Second, I am surprised that they include at least three law professors as economists.

As a graduate of Vanderbilt Undergraduate and MBA School, I noticed that 6 Vanderbilt economists are included. One, Margaret Blair of the Law School, cannot be claimed as an economist as much as I can. Any reasonable person knows that someone employed in a law school cannot really be an economist.

I am also shocked to see my old economics advisor, Malcolm Getz, on the list. I believe I learned from him how the minimum wage puts immigrants and teenagers out of work. How sad.

David Easthope


I have never taken a course in economics, but years ago I started reading great books in the field: Adam Smith, Ricardo, Menger, von Mises, Hayek, Friedman, and so on. I've even read Keynes's General Theory. I knew, though, that there were some basic concepts in contemporary economics (especially the graphs and equations) that I had never picked up in these earlier works. So on the recommendation of a professor who teaches an intro to econ course, I picked up Case and Fair's textbook Principles of Economics, and started working through it, especially the macro part.

I couldn't believe how bad much of it is. It treats the economy like a steam engine -- turn this valve and you let off steam, throw more coal in and you build up pressure. Everything is very simple and direct. There are things in the book that strike me as basic errors. For instance the authors talk about inflation as if it were totally independent of the money supply. And the Aggregate Supply Curve!!! Oh my god! That is used to demonstrate all sorts of nonsense.

The whole book is written as if the 1980's never happened, as if the Reagan tax cuts had no effect on the economy, and as if Keynes's ideas still had validity. I have filled the margins of the book with notes like these: "Friedman would scream!", "von Mises demonstrated that this was wrong 70 years ago!", and just plain "nonsense." Given what they were taught in their basic textbooks (and what they continue to teach), I'm not surprised that hundreds of economists want to increase the minimum wage--many of them don't have a clear grasp of how an economy works.

An English literature professor

Correction: 10/16/2004... As originally posted I erroneously said 368 economists had signed the letter. The correct number is 562, as corrected above.

Posted by Donald L. Luskin at 10:28 PM | link  

4    The number of Nobel laureate economists stupid enough to sign a statement supporting an increase in the minimum wage. One is Paul Samuelson, whose textbooks have educated today's generation of economists. Be afraid.

Posted by Donald L. Luskin at 9:53 AM | link  

KRUGMAN ON THE CAMPAIGN TRAIL    From the Daily Californian, on a speech Paul Krugman gave at UC Berkeley:
Although Krugman said The New York Times prohibits its columnists from openly endorsing political candidates, his heavily partisan remarks had the air of a classic stump speech.
The Times, and it's "public editor," will surely not lift a finger to stop this violation of its own rules -- a violation that Krugman essentially admits. There are no rules anymore. Ends justify means. As in:
He opened with a reference to "Fahrenheit 9/11," the controversial Michael Moore-directed documentary, which he called "sloppy," "self-indulgent" and "somewhat misleading" but nonetheless a "very great movie."

Posted by Donald L. Luskin at 7:40 AM | link  


Thursday, October 14, 2004

THE ECONOMISTS' FALLACY    A superior posting from Keith Burgess-Jackson. Here's the link, but it's so right-on I'm reproducing the whole thing below.
Argumentum ad Verecundiam A friend from my graduate-school days (whoís now a full professor) just forwarded a letter written by 170 economists to President Bush. Among other things, they take him to task for widening the gap between rich and poor. Where do economists get moral expertise? And if they donít have moral expertise, why should anyone care about the moral judgments they make? Economists, like philosophers, are technicians. They can tell you that if you want X, you must give up Y, just as a philosopher can tell you that if you believe p, you cannot believe q. But economists canít tell you to pursue X any more than a philosopher can tell you to believe p!

The economists are committing a brazen fallacy, known in English as the appeal to authority. They are appealing to their technical expertise in order to persuade people to accept their evaluative claims. This is like a medical doctor arguing that abortion is wrong. This is not within the scope of a medical doctorís expertise. Judgments about right and wrong, good and bad, just and unjust, fair and unfair are not within the scope of an economistís (or philosopherís) expertise. Economics, sadly, has become politics (or morality) in disguise. Donít be taken in by the fallacy.

Here's a related link on Keith's site, too.

Posted by Donald L. Luskin at 3:12 PM | link  

OKAY, THIS IS OVER THE TOP    ...but nevertheless....

Posted by Donald L. Luskin at 8:30 AM | link  

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NEW DEBATE, SAME KERRY LIES (AND A NEW ONE, TOO)   
In the third presidential debate last night John Kerry repeated -- twice more! -- a lie about the number of jobs lost during the Bush administration. He told the same lie -- also twice! -- in the second presidential debate, too.

From last night: first --

He's also the only president in 72 years to lose jobs -- 1. 6 million jobs lost.

and second --

And this is the first president in 72 years to preside over an economy in America that has lost jobs, 1. 6 million jobs.

Truth: according to the Bureau of Labor Statistics, the number of payroll jobs lost is actually 821 thousand (or only 585 thousand if you include the expected upward revision that BLS announced last week). Kerry's 1.6 million is the number of private sector payroll jobs lost. Kerry is arbitrarily and capriciously excluding the public sector payroll jobs that have been gained. Why? No good reason except that he wants to have a number larger than a million. It sounds so much worse. Okay -- you like numbers larger than a million? You like 1.6 million in particular? Well, that happens to be the number of jobs gained during the Bush administration if you include both payroll and self-employment jobs, also according to BLS.

The Washington Post excused those lies then, saying "Kerry misspoke. He meant to qualify that statistic by referring to 'private sector' jobs" (isn't it just amazing how the Post knows what Kerry "meant" to do?). Paul Krugman in the New York Times excused those lies, too, saying "Mr. Kerry sometimes uses verbal shorthand that offers nitpickers things to complain about." Fine. Give him the benefit of the doubt -- the first time. But this time he can't say he wasn't warned -- by the Washington Post and the New York Times, no less. This time it's flat-out, willful lying. No excuses. Fool me twice, shame on you.

Kerry also told another lie last night about the future costs of President Bush's spending proposals. Claiming (falsely) that "the president's plan" for reforming Social Security (the President has announced no such plan) would cost $2 trillion, Kerry said last night,

Now, the president has never explained to America, ever, hasn't done it tonight, where does the transitional money, that $2 trillion, come from?

He's already got $3 trillion, according to The Washington Post, of expenses that he's put on the line from his convention and the promises of this campaign, none of which are paid for.

Kerry is referring to a September 14 Washington Post story by Mike Allen, in which Bush's spending plans were said to total $3 trillion. However, the $2 trillion cost of Social Security reform was already included in the $3 trillion. When Kerry says "He's already got $3 trillion," he is implying that the $2 trillion for Social Security reform would be in addition -- in other words, that the total would grow to $5 trillion.

At this point Kerry's just in love with the sound of his own voice -- so he arrogantly repeats lies that have been identified even by his own apparatchiks, and casually over-embellishes his soundbites into silly exaggerations. It's back to pure Bush-bashing, Michael Moore style -- where lies and exaggerations don't matter, because the end justifies the means, and the more you lie the more the adoring audience of the faithful applauds. We now have three weeks to wait -- for Kerry to blow himself up with this arrogant crap.

Posted by Donald L. Luskin at 1:31 AM | link  


Wednesday, October 13, 2004

WE DO WHAT WE CAN    to turn back the evil tide of Kerrynomics. We're quoted here, among 368 economists who signed a statement condemning Kerry's economic agenda.

Posted by Donald L. Luskin at 1:10 PM | link  

GREAT ELECTION RESOURCE    Here's a website that aggregates all the different methods of election forecasting -- polls, betting markets, quant models, the whole nine yards. It's still looking like Bush -- but barely.

Posted by Donald L. Luskin at 12:54 PM | link  

THE QUOTABLE KRUGMAN    Matthew Schiros at Radio Free Roider has his own point-by-point takedown of Paul Krugman's column yesterday, and he makes some good points I missed. Of special interest is a little appendix he adds at the end, featuring some amazing Krugman quotes from over the years.
The Nightly Business Report October 31, 1996, Thursday

PAUL KRUGMAN, ECONOMICS PROFESSOR, MIT: There's probably not very much that the government can do to change the wages that people are being paid, not very much we can do stop people from being laid off from one job and finding another job that's not as good.

Times Newspapers Limited, October 17, 1996

Paul Krugman, a leading American economist, argues: "The way to be a two-term President is to ride into office on a recession that started under your predecessor, and to be re-elected on the strength of the recovery."

The American Prospect September, 1996 - October, 1996

"It would remain tolerable even if we continued borrowing at current rates for the rest of the century."

The New York Times, August 24, 1996

"Nothing Government has done -- for good or evil -- seems to have mattered," concluded Paul Krugman, an economist at Stanford University. Given the size of the American economy and the difficulty of altering its course, "it's like using a water pistol to shoot an elephant."

Business Week, July 8, 1996

Even if the Fed had its foot on the economy's brake, a tap on the accelerator wouldn't help long-term growth. Suppose the central bank could push down the unemployment rate by a further half-point, to around 5%, without accelerating inflation. The result, says Stanford's Krugman, is that ''we'd get one year of 3.2% growth -- and that's all. The next year, we'd be back at 2.2%. It wouldn't help the trend a bit.'

Chicago Tribune, March 14, 1996

"Productivity isn't everything, but in the long run it is almost everything," wrote Stanford University economist Paul Krugman in "The Age of Diminished Expectations." A nation's "ability to improve its standard of living over time depends almost entirely on its ability to raise output per worker."

The Weekly Standard February 26, 1996

"There is a lesson in all this," writes Krugman, "namely, that some of our most influential economic commentators are not in the habit of doing much homework before issuing their pronouncements."

Foreign Affairs, May 1998

Nonetheless, it is likely though not certain that the sustainable unemployment rate has fallen. Weaker unions, worker reluctance to demand wage increases in an era of downsizing, reluctance of employers to grant such increases in an era of greater competition, and a more flexible labor market due to the growth of temporary work may all imply that 5 percent unemployment isn=t what it used to be. Taking recent experience into account, a middle-of-the-road estimate of the unemployment rate that is now consistent with stable inflation would be somewhere between 5 and 5.5 percent. The Administration uses 5.4 percent for its budget estimates; it is possible, though difficult, to make the case for 5 percent.


Posted by Donald L. Luskin at 12:47 PM | link  

THE LAST TIME THE TIMES WAS UNBIASED    Try Googling "Election Day 1996". The first result you come up with is this: a link to a story about the New York Times' crossword puzzle the day before the election. Talk about bending over backwards to be unbiased between the two candidates! Check it out. Thanks to reader Dennis Mahoney for his recollection of this puzzle.

Posted by Donald L. Luskin at 12:23 PM | link  

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KRUGMAN'S KERRY CHEAT-SHEET   
Paul Krugman's New York Times column yesterday was a list of things Krugman thinks President Bush will say in the final presidential debate tonight with John Kerry. Krugman calls all those things "lies or distortions." But everything Krugman thinks Bush might say is, in fact, perfectly true. Krugman's column amounts to -- literally -- a cheat-sheet for Kerry, to help him counter Bush truths with Krugman lies.

Let's take it point by point (indented bold text represents quotations from the column).

Mr. Bush will talk about the 1.7 million jobs created since the summer of 2003...

Actually, President Bush could make an even bigger claim. According to the "establishment survey" of the Bureau of Labor Statistics, 2 million jobs have been created since the summer of 2003. 1.8 million jobs are in the official statistics already (not 1.7 million), and on October 8 BLS announced it expects to revise them upward by 236 thousand jobs at next February's annual "rebenchmarking."

Mr. Bush is the first president since Herbert Hoover to preside over a decline in payroll employment.

Note that Krugman says "payroll employment" rather than just "employment." Indeed, payroll jobs are down 821 thousand since Bush took office (or down 585 thousand, including  BLS's expected upward revision). But overall jobs -- including self-employment and employment by small companies and partnerships without official payrolls -- is up 1.6 million, according to the BLS "household survey." Not bad for the first president since Herbert Hoover to take the reins just when an historic stock market bubble was about to burst -- and not bad for the first president in history to have to deal with a large-scale terrorist attack on American soil at the same time.

John Kerry did Krugman proud in the second presidential debate -- he lied three times about jobs, as I documented last week on my blog. Twice he said that the US economy has lost 1.6 million jobs under Bush, doubling the official figure of 821 thousand (and tripling the revised figure of 585 thousand). Kerry puffed up the number to 1.6 million by only counting private sector jobs, and arbitrarily excluding those in the public sector. At one point he even claimed that 1.6 million jobs had been lost just since the enactment of the tax cuts in May 2003.

The third Kerry jobs lie was about his own jobs record -- if he can even claim one at all as a mere junior Senator.  He said, "We balanced the budget. And we paid down the debt of our nation for two years in a row, and we created 23 million new jobs at the same time." Sorry, Senator, but the number of jobs created in the surplus years of 1999 and 2000 was actually 5 million.

Krugman does not let himself get concerned about Kerry's lies, though. Krugman says, "Mr. Kerry sometimes uses verbal shorthand that offers nitpickers things to complain about. ...Mr. Kerry can, at most, be accused of using loose language; the thrust of his statements is correct." Apparently it's just as Krugman once said of Michael Moore -- he "tells essential truths."

Mr. Bush will boast about the decline in the unemployment rate from its June 2003 peak... The labor force participation rate - the fraction of the population either working or actively looking for work - has fallen sharply under Mr. Bush...

At 65.9% today, it's an absurd exaggeration to say that the labor force participation rate has "fallen sharply" from where it was when Bush took office -- 67.2%, at the peak of the "bubble economy," and just one tenth of one percent away from all-time highs. As Krugman himself once admitted of Bush's jobs challenge after the bubble era, "I think you have to say that it's unlikely that Bush who came into office with a near-full employment economy and a slower-growing population, is going to be able to exceed that or even match it."

Mr. Bush will claim that the recession and 9/11 caused record budget deficits. Congressional Budget Office estimates show that tax cuts caused about two-thirds of the 2004 deficit.

A high ranking official of the Congressional Budget Office told me flatly that CBO has never published any such estimates. This makes the second time in a week that Krugman has lied about his source for this claim. No doubt what Krugman has done (or what someone at the Kerry campaign did, and Krugman uncritically parroted it) is add up Congressional Joint Committee on Taxation forecasts of the revenue effects of Bush's tax cuts, forecasts made back in 2001, 2002 and 2003 for the tax cuts of those years. Sure enough, these total $272 billion (last week Krugman said the number was "more than $270 billion"), and that makes 66% of the latest estimate of the 2004 deficit of $415 billion.

CBO, JCT -- it hardly matters. What's important is that when Krugman pieces together old forecasts from the past, and calls them estimates of what's going on in the present, the results are wildly exaggerated -- because past forecasts of the revenue losses from Bush's tax cuts have all turned out to be wrong. The "Budget and Economic Outlook" published by CBO in August 2003, after the large 2003 tax cuts had already been enacted (and yes, this one really is from CBO), forecasted that personal income tax revenues in 2004 would be $765 billion -- actually lower than they had been in 2002. Now, in the latest "Monthly Budget Review" published last week, CBO estimates that 2004 income tax revenues will be $810 billion. At the same time, corporate and social tax revenues -- buoyed by the same strong economic recovery, are now estimated to be, respectively, $189 billion (versus a $161 billion forecast last year) and $753 billion (up from a $734 billion forecast). A new report from the American Shareholder Association documents all this and more in great detail.

Mr. Bush will claim that Senator John Kerry opposed "middle class" tax cuts. But budget office numbers show that most of Mr. Bush's tax cuts went to the best-off 10 percent of families, and more than a third went to the top 1 percent, whose average income is more than $1 million.

Well, Kerry did oppose middle class tax cuts. He voted against the expansion of the 10 percent tax bracket, the increased refundable child tax credit, and marriage penalty relief. And though Bush's tax cuts did indeed benefit the wealthy -- the people who pay the overwhelming majority of income taxes to begin with -- CBO numbers prove that the middle class benefited disproportionately. As I showed in a National Review Online column in August, effective income tax rates have fallen for all taxpayers -- and the wealthiest taxpayers now pay a larger proportion of overall taxes than they did before any of Bush's tax cuts were enacted.

Mr. Bush will claim, once again, that Mr. Kerry plans to raise taxes on many small businesses. In fact, only a tiny percentage would be affected.

False support for this false claim comes from the Urban-Brookings Tax Policy Center (a source for tax statistics of whom Krugman once said "the orientation is Democratic...but the work is impeccable"). A table on TPC's website shows that 71 thousand small businesses with employees would face a tax increase under Kerry's plan -- about 4% of the total. Yet TPC admitted in an email alert to its subscribers that its estimate excluded S-corporations and partnerships. When those small businesses are taken into account, "a total of 471,000 small employers would face a tax increase under the Kerry plan." Oops. Despite this emailed correction, TPC's website still shows the "impeccable" 71 thousand figure. And Kerry still cites it, as he did in the second presidential debate.

Mr. Bush will claim that Mr. Kerry proposes $2 trillion in new spending. That's a partisan number and is much higher than independent estimates. Meanwhile, as The Washington Post pointed out after the Republican convention, the administration's own numbers show that the cost of the agenda Mr. Bush laid out "is likely to be well in excess of $3 trillion" and "far eclipses that of the Kerry plan."

If we're going to use the Washington Post as an authority, then according to an August 25 story by Washington reporter Jonathan Weisman, both the $2 trillion Kerry figure and the $3 trillion Bush figure are too high. Weisman wrote that Kerry's "tax cut and spending proposals could still add as much as $1.3 trillion to the deficit over a decade. That total is close to the bottom line of Bush's plan, which could add about $1.35 trillion."

But if Krugman can cite the "impeccable" Democratic-leaning Urban-Brookings Tax Policy Center, then I can cite the "impeccable" conservative-leaning American Enterprise Institute. AEI's Kevin Hassett and Eric Engen have done an exhaustive study of Kerry's spending proposals, and they come up with $2 trillion. Rather generously, it seems to me, they note that if Kerry fully succeeds in his ambitious wish to crack down on "corporate welfare," the figure could be reduced to $1.7 trillion. Hassett suggested to me that if he had it to do over again, he'd set the cost of Kerry's proposals even higher. He had assumed $969 billion for Kerry's health care proposals (the Kerry campaign estimates $720 billion) -- but now a new study by his AEI colleague Joseph Antos sets that cost at $1.5 trillion.

Now how about Krugman's claim that the Post is now saying Bush's proposals will cost $3 trillion? Indeed the Post said that, in a September 14 story by Mike Allen. But Krugman is lying when he say the story is based on "the administration's own numbers." Allen writes, only $1 trillion of it is "according to administration estimates." Indeed, he adds "The White House has declined to provide a full and detailed accounting of the cost of the new agenda." The rest of the $3 trillion? Allen says that's "according to the calculations of independent domestic policy experts" -- none of whom are named.

The $2 trillion difference between the administration's $1 trillion and the "policy experts'" $3 trillion is the cost of "Bush's proposed changes in Social Security to allow younger workers to invest part of their payroll taxes in stocks and bonds." But there is no specific administration proposal to do this -- so how can it have any specific cost for "policy experts" to calculate? Besides, private accounts plans may even pay for themselves in the long-run. In exchange for allowing young workers to divert their payroll taxes to private accounts, those same workers opt out of the system and thus remove themselves as a future liability, reducing the long-term net costs of cleaning up the inevitable Social Security crisis. According to the Social Security Administration actuary, even the most aggressive private account plan actually enhances the long-run fiscal stability of the system.

On Friday, Mr. Bush claimed that he had increased nondefense discretionary spending by only 1 percent per year. The actual number is 8 percent, even after adjusting for inflation. Mr. Bush seems to have confused his budget promises - which he keeps on breaking - with reality.

Krugman is lying. Bush's current budget proposal is, indeed, for a less than 1% year-over-year increase. But Krugman is trying to make it seem as though Bush made the ridiculous claim that spending has increased at only 1% per year during his administration, which it obviously has not. What Bush said was, "today it's less than 1 percent, because we're working together to try to bring this deficit under control."

Krugman Truth Squad member Caroline Baum pointed out to me how ironic it is that Krugman is willing to forgive far more egregious budget statements from Kerry. Krugman says that Kerry "talks of the $200 billion cost of the Iraq war; actual spending is only $120 billion so far. But nobody doubts that the war will cost at least another $80 billion."

Mr. Bush will claim that Mr. Kerry wants to take medical decisions away from individuals. ...It would do nothing to restrict patients' choices.

Oh yeah? Kerry's plan would dramatically expand Medicaid and the State Children's Health Insurance Program, and put government in the major-medical re-insurance business. Krugman himself said, in an August 27 Times column celebrating Kerry's health care proposals, "Does this mean that the American way is wrong, and that we should switch to a Canadian-style single-payer system? Well, yes."

We've reached the end of the list of Bush truths and Krugman lies. I have no doubt that John Kerry has read Krugman's column and studied these lies, and will use them to attack the President in tonight's debate. I actually hope he does. Because if the President has read this column, he can expose Kerry for the liar that he is, and put him away once and for all.

Posted by Donald L. Luskin at 12:35 AM | link  

OKRENT IS CHECKMATED    New York Times "public editor" Dan Okrent really may have to resign over his horrible lapse of judgment in his Sunday column, revealing the name and city of a man who had written what was, in fact, a mildly heated email to a Times reporter, and portraying the man as a hate-mongering coward. Read the man's impassioned reply in this open letter to Okrent -- I defy anyone to find Okrent in the right on this one.

When I questioned Okrent about it on Sunday, asking whether he had the man's permission to publish his letter, he said, "We called Schwenk only to confirm his authorship. He got furious, but in so doing confirmed. I neither asked for permission nor felt it necessary." If anyone at the Times was looking for an excuse to bag Okrent, he's found it.

Thanks to reader Bob Taylor for the link.

Posted by Donald L. Luskin at 12:20 AM | link  


Tuesday, October 12, 2004

KERRY'S BAD RAP    Check it out. Thanks to reader Jill Olson for the link.

Posted by Donald L. Luskin at 1:05 PM | link  

NOBEL LAUREATE APPLAUDS BUSH TAX CUTS    Yet another reason to be glad Paul Krugman didn't win the Nobel Prize in Economics yesterday. Here's the man who did:
Edward Prescott, who picked up the Nobel Prize for Economics, said President George W. Bush's tax rate cuts were "pretty small" and should have been bigger.

"What Bush has done has been not very big, it's pretty small," Prescott told CNBC financial news television.

"Tax rates were not cut enough," he said.

Lower tax rates provided an incentive to work, Prescott said.


Posted by Donald L. Luskin at 12:21 PM | link  

IF IT'S GOOD ENOUGH FOR DAN RATHER    it's good enough for me! Click here and scroll all the way down to the scanned image at the bottom. Thanks to reader David Mandel for the link.

Posted by Donald L. Luskin at 8:48 AM | link  

PRESIDENTIAL FORMULA DISCOVERED!    Here it is -- a foolproof formula for predicting who will win the election:
Here we ...an algorithm, which determines the likelihood that a candidate will win a presidential election depending on the number of years they have served as President, Vice President, U. S. Senator, U. S. Representative, and Governor. It also takes into account whether the candidate was Director of Central Intelligence, a four- or five-star general officer in the United States Armed Forces, and/or ordered the combat use of nuclear weapons. We find that the best jobs for presidential candidates to have are Director of Central Intelligence, general officer in the United States Armed Forces, Governor, President, and U. S. Representative (in that order). Contrary to popular belief, our formula suggests that experience as Vice President or U. S. Senator actually lowers one's chances to be elected President of the United States. We also found that ordering the combat use of nuclear weapons substantially increases a President's chances for reelection.
Thanks to reader Tom Demas for the link.

Posted by Donald L. Luskin at 12:07 AM | link  


Monday, October 11, 2004

WHAT ABOUT "IT WORKED" DON'T YOU UNDERSTAND?    From the good folks at the Cato Institute:
Cato has released a new study examining dividend payouts by each of the S&P 500 companies before and after the May 2003 dividend tax cut, "Show Me the Money! Dividend Payouts after the Bush Tax Cut."

The study finds that dividends are up about 20% in the year following the cut and 22 companies are now paying a regular dividend that did not previously. The stock market gained about $2 trillion in value following the 2003 cut to dividend and capital gains tax rates.


Posted by Donald L. Luskin at 8:16 PM | link  

NO NOBEL, NO IG EITHER    Reader Jim Glass points out that Paul Krugman was passed over for the Ig Nobel Prize again this year, too.
"The 2004 awards were just handed out and there are some pretty interesting real-life papers reaping prizes. Nothing for Krugman though. The poor guy can't win for losing. Better luck next year."

Posted by Donald L. Luskin at 12:34 PM | link  

NO NOBEL FOR KRUGMAN    Whew! We've gotten through another year without the Nobel Prize in Economics going to Paul Krugman. The winners are Finn Kydland and Edward Prescott, "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles." Prescott was by far the favorite on Nobelpreisborse, the online betting market in Nobel Prizes.

Here's Keith Burgess-Jackson's take.

Posted by Donald L. Luskin at 10:07 AM | link  

OKRENT: NO TIMES BIAS IN CAMPAIGN COVERAGE   

Three months ago New York Times "public editor" Dan Okrent addressed the question, "Is The Times a liberal newspaper?" He answered, "Of course it is."

Yet, remarkably, yesterday he took on the question, "Is The Times systematically biased toward either candidate?" And his answer: "No."

One has to ask one's own question here: "Has the Times' 'public editor' lost his mind?" And one has to answer: "Yes."

Okrent goes on at length to cite examples of "campaign coverage" stories that he has studied, favorable and unfavorable to both candidates. He tried to prove that while there are individual instances of favoritism, it all balances out in the end with no net favoritism. Yes, such diverse instances can be found, but what matters is the relative frequency of one type of favoritism or the other. Okrent doesn't even begin to quantify that.

Nor does he define what he means by "campaign coverage." In a presidential election year, any mention of the administration or its policies, or those of the opposition, in or out of the news pages -- and whether or not explicitly about the "campaign" -- is an implicit or explicit comment about the election. For example, when the Sunday Times Magazine covers healthcare, it's an article by Hillary Clinton -- and when it covers the phenomenon of political blogging, all the featured bloggers are liberals, and most of them Bush-loathers. Yesterday's style section even did a "What I'm Wearing Now" feature on John Edwards' daughter (seemingly without irony, she is pictured wearing flip-flops). On this, Okrent cannot escape what he said three months ago: the Times is a liberal newspaper.

How about war coverage and economic coverage? Even when the candidates' names are not mentioned, the Times' relentlessly negatively-spun stories are inevitably a slap at Bush and a boost to Kerry.

And Okrent gives nary a mention of the Times' editorial positions. Sure, William Safire and David Brooks labor mightily on the op-ed pages as token conservatives. But all the other op-ed columnists are liberal, some -- like Paul Krugman -- rabidly so. And the daily house editorials, almost without exception, promote Kerry and Democratic/liberal causes. Even the Times' arts and entertainment opinion is liberally biased: not a Sunday goes by that Frank Rich's column doesn't find some way to use themes from movies, television or stage to bash Bush.

Yet Okrent dismisses all this, and blames the public -- the same public for whom he is "public editor" -- for feeling any differently about the Times' bias. He quotes reader emails complaining about bias in both partisan directions -- and dismisses them as the products of "passion," which is "a distorting lens that makes it hard to perceive the shape of things."

But Okrent's lens is distorted in its own ways, too. He says, "I will stipulate here that I'll be voting for John Kerry next month," as though by declaring such he can rule out his own "passion." Yet the conclusion Okrent has come to about the Times' campaign coverage is precisely the one you'd expect from a Kerry voter: the Times' massively pro-Kerry and anti-Bush stance is simply "neutral," because it perfectly maps to one's own prejudices.

And then there's the simple fact that Okrent works for the Times. It's evident in a thousand ways -- from his columns and his public statements -- that he loves the Times and thinks it's way cool to be its first "public editor." If readers are disqualified from having an opinion about the Times because of their political passion, then why is Okrent any less disqualified because of his passion for the Times? For Okrent, it's all about rocking the boat just enough to stay credible, but not so much as to not be reasonably liked around the water-coolers of W. 43rd Street. Thus yesterday's column, that picks a variety of nits but, essentially, gives the Times a pass.

Another distortion for Okrent is the constant pressure from the torrent of email complaints he gets from readers. He quotes many examples in yesterday's column, from partisans on both sides. Yet he doesn't explore the distorting implications of something he has told me privately -- that the overwhelming number of complaints come from the Times' overwhelmingly liberal readership. That means that while a small number of conservatives complain that the Times is too liberal, a large number of liberals complain not that it's too conservative, but that it's not liberal enough. This, too, contributes to Okrent's perception that the Times' systematic liberal bias is "neutral" -- simply in virtue of being less liberal than the majority of vocal readers wish.

Apparently it's not just the relative volumes of reader complaints, but their relative intensities as well. In yesterday's column Okrent reprints a line from a piece of liberal hate-mail received by one Times political reporter, and notes "how debased the level of discourse has become":

"As nasty as critics on the right can get (plenty nasty), the left seems to be winning the vileness derby this year. Maybe the bloggers who encourage their readers to send this sort of thing to The Times might want to ask them instead to say it in public. I don't think they'd dare."

Bravo to Okrent for acknowledging the hatefulness of liberal fanatics -- egged on by the very blogs that the Times Magazine itself celebrated two weeks ago. Yet Okrent is seemingly blind to the power of liberal hatefulness to shift the definition of "neutral" leftward, by redefining the left-most boundary of discourse. Sure -- compared to ultraleftist blogs and the hate-mail they spawn, the Times is the model of nonpartisanship.

Or is it? Okrent fails to acknowledge that the Times itself has played a role in the debasement of the level of discourse, and the shift of its center toward the left. How can Okrent overlook the way Paul Krugman, Maureen Dowd and Frank Rich have used the pages of the Times to attack an incumbent president with a ferocity and relentlessness never before witnessed in mainstream journalism? And how can Okrent fail to see that these columnists have validated the rumors and lies that emanate from the very blogs he disdains by reprinting their talking points in the Times?

After reaching the bland conclusion that the Times' campaign coverage is not systematically biased -- a finding controversial only in the utter falseness of its claim that there is no controversy -- and one destined to disappoint Times readers and delight Times management -- Okrent lamely states, "This piece turned out to be more of a rant than I intended." Sadly, Okrent has turned out to be more of a fig-leaf for the Times than we had hoped.

Posted by Donald L. Luskin at 8:48 AM | link  

NOTED SEEMINGLY WITHOUT IRONY    John Edwards' daughter Cate is the subject of a "What I'm Wearing Now" feature in the New York Times style section yesterday.

The feature concludes with: "'I hope it doesn't get too cold in October,' she said. 'I don't want to have to stop wearing my flip-flops.'"

Don't worry, honey. You won't have to stop wearing those until early November.

Posted by Donald L. Luskin at 7:06 AM | link  

"I HAVE A PLAN"    On watching for a second time Friday's debate between the presidential candidates, I am struck by the sheer number of extravagant promises tossed out by John Kerry. They're not just promises -- they are "plans." In fact, Kerry used the word "plan," or some form of it, 37 times in the second debate. Some samples:

  • What means something is: Do you have a plan?
  • And I want to talk about my plan some more -- I hope we can.
  • I have a plan.
  • I've proposed a plan that can capture it and contain it and clean it within four years.
  • I have a plan that will help us go out and kill and find the terrorists.
  • They'll plan.
  • My plan does a better job.
  • But I'll also have a better plan of how we're going to deal with Iraq: training the Iraqi forces more rapidly, getting our allies back to the table with a fresh start, with new credibility, with a president whose judgment the rest of the world trusts.
  • I have a plan to provide for our schools so we keep the standards but we help our teachers teach and elevate our schools by funding No Child Left Behind.
  • I have a plan to protect the environment so that we leave this place in better shape to our children than we were handed it by our parents.
  • And you'll find a tort reform plan.
  • I have a plan to put people back to work.
  • I have a plan for energy independence within 10 years.
  • I have a plan to provide health care to all Americans.
  • I have a plan to lower the cost of health care for you.
  • I have a plan to cover all children.
  • I have a plan to let you buy into the same health care senators and congressmen give themselves.
  • I have a plan that's going to allow people 55 to 64 to buy into Medicare early.
  • And I have a plan that will take the catastrophic cases out of the system, off your backs, pay for it out of a federal fund, which lowers the premiums for everybody in America, makes American business more competitive and makes health care more affordable.
  • Choose your doctor, choose your plan.
  • Now, you didn't hear any plan from the president, because he doesn't have a plan to lower the cost of health care.
  • I have a plan to cover those folks.
  • And it's a plan that lowers cost for everybody, covers all children.
  • Let me begin by saying that my health-care plan is not what the president described.
  • I have laid out a different plan, because the president's plan is not working.
  • Yes, we have to succeed, and I have a better plan to help us do it.
  • The Wall Street Journal said 96 percent of small businesses are not affected at all by my plan.

Will voters assign any credibility to this mountain of chicken-in-every-pot campaign promises masquerading as "plans"? Or will they remember the penultimate line of Dr. Strangelove?


Posted by Donald L. Luskin at 12:04 AM | link  


Sunday, October 10, 2004

THE POST COVERS UP KERRY'S JOBS LIES    Saturday the Washington Post ran a column supposedly fact-checking dubious statistics cited by the presidential candidates in Friday's debate. It's a classic case of how the liberal media lets their favorite son John Kerry off the hook, time and again.

Kerry at one point said that "the president has presided over an economy where we've lost 1.6 million jobs." Kerry misspoke. He meant to qualify that statistic by referring to "private sector" jobs. The net number of jobs lost since Bush became president is about 800,000, because of growth in the public sector.

The Post utterly fails to note that Kerry "misspoke" about 1.6 million jobs twice in the debate. Kerry said,

After 9/11, after the recession had ended, the president asked for another tax cut and promised 5.6 million jobs would be created. He lost 1.6 million, ladies and gentlemen.

Again, the 1.6 million figure is with respect to only "private sector" jobs. And it's cumulative from the beginning of the Bush administration. If you look at the number of jobs lost since the tax cut Kerry was referring to (it was enacted in May, 2003), it's not a loss at all. It's a gain of 1.7 million jobs. As to that "promise" of 5.6 million jobs, no White House estimate of job creation ever talked about anything like that over a short period like 16 months -- the time since the tax cuts in question were enacted.

Here's another Post cover-up of Kerry's lies about jobs:

Kerry responded that he was "involved in" 1997 legislation that extended the solvency of the program, adding: "We balanced the budget and paid down the debt of the nation." In fact, his role was limited to voting for the Balanced Budget Amendment that was designed to keep Medicare afloat through 2030.

What does that have to do with jobs? Take a look at Kerry's whole sentence -- not just the fragment the Post chose to criticize:

We balanced the budget. And we paid down the debt of our nation for two years in a row, and we created 23 million new jobs at the same time.

The number of new jobs created from 1997 to the end of the Clinton administration -- that is, "at the same time" -- was actually 14 million. It you think "at the same time" refers to when "we paid down the debt of our nation for two years in a row" -- that is, the surplus years of 1999 and 2000 -- then the number of jobs gained is only 5 million.

Posted by Donald L. Luskin at 8:45 PM | link