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Saturday, August 13, 2005

THAT REALLY WAS A HATTORI HANZO SWORD   The unindicted co-counterconspirator in chief becomes the first guest ever on CNBC to bring a weapon on-air.

Posted by Donald L. Luskin at 8:56 PM | link  

HILLARY VS PIRRO, AND THE PRESIDENTIAL SPILLOVER   More thoughts on how the Tradesports GOP 2008 presidential futures contracts popped on Friday at the same time as the Hillary Clinton Democratic presidential nominee contracts tanked. Our "prediction markets" guru Chris Masse writes,

It is always tricky to interpret the political futures markets. Let's be prudent. (Sometimes, it's only after a while that a reason comes up in the news. "Insiders knew something!") Let's also keep in mind that the political futures markets have a "margin of error" (inappropriate term) of around 1.5% on the eve of the election. However, years before election day, it's maybe 10 or 20 points or more -- or much, much more. (Which renders any political prediction inaccurate, unless the U.S. presidential futures market tells us it's over 70% for the Republican or Democratic candidate!)

You agree that the Democrat-for-president futures contract dropped because another political futures market showed Hillary slipping a bit in the Democratic primary. OK. The traders must have had in mind that a re-centered, national Democratic figure having the active support of Bill Clinton (who has a pro-growth, job creation record, according to public perception) would do slightly better than any Republican champion. What the presidential futures market tells us today (with this Hillary slump) is that the voters will not automatically punish the Republican candidate for Bush's war in Iraq (or any of his alleged misdeeds). The U.S. presidential futures market is saying that the deck is not stacked against a Republican -- contrary to what the liberal propaganda says.

Now, should we link Hillary's recent slump in the Democratic primary futures market with Jeanine Pirro's entry in the New York senate race? My take: the slump in the Hillary Democratic primary futures market shows more uncertainty. But that could be temporary. It's important to revert to the locals. They know better than we (French me, or Californian you). Perry Eidelbus, who lives and works in New York, thinks so.

And speaking of Perry Eidelbus, here he is:

Jeanine Pirro wasn't given a snowball's chance until she formally announced her candidacy. One polls shows that since the previous poll in the spring, there's been a 14 point drop in those who would "likely" vote for Hillary. They apparently shifted toward "undecided." Here's the New York Post's cover.

Here's a Post story mentioning a poll showing Hillary's 63-29 (!!!) advantage. But here's another Post story showing sudden drop in solid Clinton support. The Hillary campaign is scared already, otherwise they wouldn't try to dismiss Pirro as not having won the nomination yet. I think this time, Hillary's opponent can successfully drive home the point that the Clintons are just carpetbaggers, that Hillary is using New York as a "doormat." A key difference between 2000 and 2006 is that after Giuliani dropped out in 2000, the GOP senatorial nomination went to Rick Lazio, a relatively insignificant (and too conservative) Republican from Long Island. Jeanine Pirro is a high-profile DA in a significant county, and she's moderate enough while still trumpeting her tough-on-crime record. Pirro has already put Hillary on the defensive. If Hillary won't pledge to finish out her second Senate term if re-elected, Pirro will have proven what the rest of the country knows: like her or hate her, Hillary just used the Senate seat as a stepping stone.

Update... Masse points out that Tradesports has just started listing contracts on the New York senate race. Looks like Hillary has a solid lead.

Update 2... Prediction markets go after the famously most difficult thing in the world to predict: the weather.

Posted by Donald L. Luskin at 6:41 PM | link  

MORE LYING LIARS OF THE LEFT   Move over Michael Moore and Dan Rather. It looks like another case of lies from the Angry Left. On July 19th I linked to extraordinarily paranoid anti-Bush remarks attributed to investor Julian Robertson, as reported on the website Andongkim. The same day I appended an update noting that several readers believed that the Andongkim report was in error about the remarks -- in essence, that the whole thing was a hoax. Today I received a letter from Robertson's attorneys drawing my attention to the fact that Andongkim has retracted its story. A CNBC interview had been cited as the original source, and CNBC has run a segment disputing Andongkim's report. It appears that the original source was Al Martin, on his ultra-leftist paranoid hate-site Al Martin Raw. Martin describes himself on the site as a "Whistleblower," having once been a "fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government." That site is subscription only, so I can't point you to Martin's retraction -- but a partial screenshot is reproduced below, as it appeared on Andongkim. .

In light of all this I have removed the July 19 posting from this site.

Posted by Donald L. Luskin at 4:47 PM | link  

Friday, August 12, 2005

...are European economies really doing that badly? The answer is no. Americans are doing a lot of strutting these days, but a head-to-head comparison between the economies of the United States and Europe -- France, in particular -- shows that the big difference is in priorities, not performance.
Headline from the BBC today:
French economy grinds to a halt

French economic growth weakened in the three months to June, mirroring a slowdown across the 12-nation eurozone...France's economy grew by 0.1% in the second quarter, compared to 0.4% in the first three months of the year, according to government figures...Figures released on Thursday showed that overall eurozone growth slowed to 0.3% in the second quarter, from 0.5%.

Thanks to readers Frederick and Jeannette Hawkins for the link.

Posted by Donald L. Luskin at 7:54 PM | link  

ARE YOU SITTING DOWN?   Paul Krugman admits that the Bush tax cuts created jobs. As Keith Burgess-Jackson points out, it's grudging. And I'd add that it completely misses the point of how the tax cuts really did create jobs (not by "putting money in people's pockets" so they can "spend" it). But be that as it may, here it is:
And it's true that some portion of the tax cuts, which amounted to $225 billion this year, must have been spent in ways that created jobs.

Posted by Donald L. Luskin at 7:49 PM | link  

SOMETHING'S UP!   For some reason the Tradesports futures contract on the 2008 presidential election is showing the GOP favored to win with a 51% probability -- spiking up from 48-1/4% just a few days ago, and making a new all-time high.

Update... Our "prediction markets" guru Chris Masse notes:

Correlation: Mrs. Clinton went from 51% to 43%, in the Democratic primary futures market.


Update 2 [8/13/2005]... Irwin Chusid has the answers: HRC's drop in the futures market seemed to coincide with the announcement of Jeanine Pirro challenging her for her senate seat in '06. So is the TradeSports Dem prez drop largely attributable to Pirro entering the Senate race?

Posted by Donald L. Luskin at 2:03 PM | link  

Thursday, August 11, 2005

THE OTHER APPOINTMENT   Our antitrust guru Skip Oliva offers a provocative meditation on a critical Bush appointment now facing Senate approval. Not John Roberts, but William Kovacic, recently nominated to fill an open seat on the Federal Trade Commission.

Like Judge Roberts, Kovacic is considered a mainstream conservative with the requisite credentials for his office. And therein lies the problem—Kovacic is a defender of the status quo, and with the current Federal Trade Commission, that means he’s a violent opponent of free markets and individual rights...

Kovacic’s record as an antitrust academic and regulator is that of a pragmatist...who favor[s] a “trial-and-error” approach where businesses are test subjects for antitrust “experiments” to decide, after the fact, whether a particular business practice should be legal. ...There have been no markets or shareholders to call him to task for the negative consequence of his “experiments.”

Lack of accountability is always a feature of state intervention but it is a particular problem with antitrust enforcement. This past May, the Wall Street Journal opined on the departure of then-Antitrust Division chief Hewitt Pate (another career antitrust lawyer) by criticizing his earlier decision to block the merger of US Airways and United Airlines. Pate cited this intervention as a key accomplishment of his tenure, but the Journal correctly replied: “It takes creative antitrust lawyering to conclude that two airlines bleeding cash could have dominated any market.”

Posted by Donald L. Luskin at 10:08 PM | link  

ARE YOU ETHICAL ENOUGH FOR THE NEW YORK TIMES?   Now you, too, can take the "business ethics test" that all New York Times employees are required to take. As the New York Observer's "Off the Record" observes about the test questions,

They cover subjects including circulation padding (hint: it’s wrong), bribery (also wrong) and insider trading (wrong, wrong, wrong)—but not plagiarism, faking datelines from a Brooklyn apartment, or hiring a stringer to do your legwork.

So let's see how you do...

1. Which of the following information would be okay for you to reveal publicly?

A. An advertiser’s campaign plan for the fall season.
B. A vendor’s pricing information.
C. Employee Social Security numbers.
D. None of the above.

2. Which of the following statements best describes the Company’s policy on recordkeeping?

A. You should get your supervisor’s permission before establishing an undisclosed Company fund.
B. You should make no false entries on the records of the Company or its subsidiaries.
C. You should get your supervisor’s permission before you make a payment on behalf of the Company that you know might be used for something other than the stated purpose.
D. It is sometimes necessary to underreport assets and earnings to balance the books, but it is never okay to overreport them.

3. You want to show your appreciation for the years of great service one of your vendors, who is based in Chicago, has provided.

Which of the following would probably be an acceptable gift?

A. Sending the vendor a department-store gift certificate so that he could buy that $500 watch he admired in the store window the last time he came to town.
B. Send the vendor on an all-expense-paid golf weekend to Pebble Beach, California.
C. Give the vendor a $350 gold fountain pen.
D. None of the above.

4. Who is responsible for protecting and maintaining the unique reputation of our Company?

A. The board of directors
B. Upper management
C. I am
D. All of the above

5. Which of the following employees is not involved in a conflict of interest?

A. Abby, who owns less than 1% of the outstanding public stock of a competing company.
B. Brent, who hires a company his brother owns to provide a charter flight for several reporters who need to cover a story.
C. Carol, who accepts a solid-gold Tiffany watch from a vendor as a thank you gift.
D. David, who cannot decide what gift to give a vendor and decides to just send cash.

6. Carl wants to notify all 250 people in his fan club that his band is playing at a bar on Saturday night.

How should he do that?

A. Create a flyer on his work computer, print it, use the department copier to make copies, and then use the Company postage machine to stamp the flyers.
B. Ask a few of his colleagues to use their downtime at work to call the 250 people in his fan club.
C. Create a flyer on his work computer, and then use his expense account to order a box of glossy paper that costs $2.50 a sheet on which to print the flyers.
D. None of the above.

7. You are a telephone advertising sales representative and want to get involved in the political process, but you are not sure what kind of action you are allowed to take.

The best way for you to participate in politics would be to

A. use your work computer to e-mail information to your colleagues about a rally for a candidate.
B. call in to a radio talk show and identify yourself as a New York Times employee who supports a candidate for office.
C. spend three evenings a week volunteering at the local office of your political party.
D. send all of the colleagues in your department daily e-mails in support of a candidate during the week before an election.

8. A vendor mails Dan a gift that might be okay for him to accept, but he is not sure. He reads the Business Ethics Policy but still does not know if he should accept the gift.

What should Dan do?

A. Ask someone in the human resources department for help.
B. Shove the gift under his desk and forget about it.
C. Ask a supervisor or the legal department for help.
D. Donate the gift to charity.

Posted by Donald L. Luskin at 9:48 PM | link  

FRANCE is facing an unprecedented new-generation exodus as many of its disillusioned younger people leave in search of a better life abroad.

French organisations offering help to those seeking to emigrate have reported an increase in requests for assistance from young people.

Fed up with a country they describe as rigid, racist and old-fashioned, French youngsters are opting for a new start in Britain, Canada, America or New Zealand where they can find housing and jobs more easily than in France.

Unemployment among the under-25s in France stands at 23.3 per cent, and 40 per cent of 18-30 year-olds describe their financial state as "difficult".

From Paul Krugman's July 23 column:
Because French schools are good across the country, the French family doesn't have to worry as much about getting its children into a good school district. Nor does the French family, with guaranteed access to excellent health care, have to worry about losing health insurance or being driven into bankruptcy by medical bills.

Perhaps even more important, however, the members of that French family are compensated for their lower income with much more time together...

American conservatives despise European welfare states like France. Yet many of them stress the importance of "family values." And whatever else you may say about French economic policies, they seem extremely supportive of the family as an institution.

Thanks to reader Jill Olson for the link.

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

WE BOW DOWN IN AWE AND ADMIRATION   for this fantastic site. The Group Name Picker alone is worth the price of admission. Thanks to Keith Burgess-Jackson for the link.

Posted by Donald L. Luskin at 8:13 PM | link  

BLAME THE MARKET   The Washington Post:
The Rise of a Market Mentality Means Many Go Hungry in Niger
Update... Reader Mark P. Neyer notes the best line from the story: "Some traders, he said, have raised prices in anticipation of the arrival of aid groups, which often buy food locally to save on transport costs."

Posted by Donald L. Luskin at 1:45 PM | link  

PROUD... HUMBLE AND PROUD   Luskin inducted into the Consumer Electronics Hall of Fame. Strange, since all I've ever done is bought the stuff.

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

MIRANDA RIGHTS   Well, I suppose it teaches me to mention the word "abortion" on this blog yesterday. Got lots of heated letters from readers, faulting me for criticizing the Wall Street Journal for accusing pro-choice organizations like NARAL of being after "abortion profits," rather than simply defending what they see as a right. Their arguments are, well, candidly I guess I have to say I don't grasp their arguments. They claim that the Journal's columnist Manuel Miranda has done nothing wrong to point out the "hypocrisy" of NARAL's seeming to take a principled stand that just so happens to preserve the profits of the abortion industry. First, it is surely that case that many members and supporters of NARAL are simply interested in the principle of abortion choice, not profits from the provision of abortions, so it is overbroad to paint an entire organization and its supporters with motives that may be held only by a few. Second, and this was my point yesterday, there is absolutely nothing wrong with a profit-seeking industry lobbying for the principles that make it possible for it to continue to exist legally and to make money. Should an industry that believes in the rightness of laws that allow it to exist stand by in silence while other people arbitrarily take it all away? If not silence, what should they say? Miranda would seem to suggest that they make the case that abortion rights should be preserved on the grounds of financial hardship -- "Please, Mr. Supreme Court justice, please don't take my job away. I know it's immoral to take an unborn life, but my family has to eat." Well, I really doubt they feel that way, although Miranda's entire claim as to their hypocrisy depends on believing that they do. It's just pro-business lobbying, of the type that the Journal normally supports heartily. These lobbyists are not "hypocrites" just because they are taking a position on a social issue that the Journal opposes. Let's save that term for the Journal itself, in this case.

Posted by Donald L. Luskin at 8:50 AM | link  

GOD, ECONOMICS, AND SCIENCE   Here are a couple of especially good reader observations, based on my "Unintelligent Design" column on National Review Online yesterday.

The Left has advocated science when it comes to stem cell research, and used a twisted form of science to terrify people about the environment. Oddly enough, the same people willing to manipulate the human genome are dead set against doing so in vegetables. The whole organic food industry is based on a fear of science. There is absolutely no evidence that genetically modified vegetables cause any harm to consumers and after a 25 year track record of safety, their are still fools dancing around in butterfly costumes.
I have also noticed that the left is more accepting of all sorts of "traditional" or "natural" medical rituals. How can anyone remotely adherent to the scientific method advocate something like acupuncture or aromatherapy. "By golly, I did just like you said and covered my head in wheat grass and sat under a spruce tree during a full moon. My aura improved by 25%!" How can you argue with results like that. This new, hip, "energy-center" consciousness reminds me of the transcendental movement of the late 19'th century. A lot of these herbal remedies seem to come right out of the patent medicine days. I wonder why when they demand aid for Africa, they abandon their faith in "natural" medicine. I guess that since those people are really sick, that perhaps Western medicine is the best cure. This lack of scientific knowledge also advocates such well held international conspiracy theories about oil companies buying up patents for cars that get 700 miles to a gallon. These people have no legitimate claim to science, and only use it to mock religious conservatives.

Adam Lysene

As a Bible-believing scientist who sees no battle (indeed, much agreement) between Moses and Darwin, I was put off by Krugman's condescending a(nti)theism. One thing that struck me about Krugman's diatribe, which you touched on, was his derogation of "think tanks" as bastions to which stupid, hapless, and discredited anti-scientific conservative hacks run to escape peer review. What really knocked me over was the fact that Paul Krugman, noted economist that he is -- former golden child of the Council of Economic Advisors, Ivy League professor, Nobel Prize candidate and so on --  went to the New York Times, an organization whose strict peer review process is so rigorous that Jayson Blair prospered there for many years. You can't make this stuff up.

J. W. Scott Wallace

Posted by Donald L. Luskin at 8:25 AM | link  

Wednesday, August 10, 2005

REVISIONIST HISTORY ON HARDBALL   Paul Krugman was on MSNBC's "Hardball" last night with Larry Kudlow, and took a nasty swipe at our friend. Speaking to guest-host David Gregory, Krugman said,
David, you should know there‘s a little bit of history here. Back in 2000, Larry wrote a number of scathing articles about self-important college professors who thought that the tech stocks were overvalued and urged his readers to go ahead and—and keep on buying tech stocks.

I mean, Larry always thinks the market is right. I sometimes think there is a bubble.

Yes, there is a little history here. In early 2000, near the height of the NASDAQ frenzy, Larry Kudlow was warning about the risks to stocks from too-high interest rates talking about the onset of a bear market. What was Krugman saying? In a February 2000 New York Times column, he wrote:
[Professor Robert]Shiller believes that the whole stock inflated by a speculative bubble... I'm not sure that the current value of the Nasdaq is justified, but I'm not sure that it isn't.
So, yes, as Krugman said, "Sometimes I think there is a bubble." The problem is that the top of the NASDAQ craze in 2000 just didn't happen to be one of those times.

Update... Kudlow and Krugman found one thing they could agree on in the show -- that there is no current risk of inflation in the economy.

KRUGMAN: The Fed is concerned about, you know, eventually, having some inflation, although there is no sign of that really in the numbers right now...

KUDLOW: At the risk of being read out of the conservative movement, that I agree with Paul Krugman.

I disagree with both of them. But at least Kudlow has been consistent in this belief. On the other hand, in an April Times column, Krugman said:
rising inflation in an economy still well short of full employment - has already arrived... inflation is creeping up, and it's doing so despite a labor market that is in worse shape than the official unemployment rate suggests.

Thanks to reader Brock Ellis for the link.

Update 2... Kudlow has the distinction of being the only one among the many persons smeared by Krugman in the Times to have gotten an all-out apology in the "paper of record."

In his column yesterday, Paul Krugman misattributed the source of the phrase "Clinton-Levitt recession," describing the current economic situation. Its author was Don Devine of the American Conservative Union, not Lawrence Kudlow. Mr. Krugman apologizes.

Posted by Donald L. Luskin at 12:36 PM | link  

IS THIS THE JOURNAL OR THE TIMES?   The Wall Street Journal should be ashamed of Manuel Miranda's column today attacking the pro-choice groups who are attacking Supreme Court nominee John Roberts. If Miranda is correct about the facts underlying the charges made against Roberts in NARAL-sponsored TV spots, then fine -- apparently those are lies, and should be exposed as such. But when he goes further to attack NARAL by saying its real motive is not just to defend abortion rights, but also the "abortion profits" earned by clinics, a line has been crossed. Since when -- especially in the editorial pages of the Journal -- has it been a sin for businesses to defend their profits against potential regulatory incursion? Since when is the seeking and defense of profits, in and of itself, evidence of malign intent? Regardless of where one stands on abortion rights, it's beneath the Journal to resort to the kind of anti-business anti-profit smear we've come to expect from the New York Times.

Posted by Donald L. Luskin at 8:46 AM | link  

Tuesday, August 09, 2005

THE STUPIDEST FAT MAN ALIVE   Brad (Jabba the Economist) DeLong quotes me quoting the Washington Post saying,
The U.S. current account deficit...means that the nation is consuming around $700 billion more than it earns each year and paying for the difference by mortgaging or selling assets.
Brad DeLong quotes me (with lots of dot-dot-dots) saying,
...focus on the factuality of the claim... that a trade deficit necessarily entails debt creation. This is simply not the case.
Brad DeLong bothers to observe,
I will not bother to observe that Luskin's quotes from the Post nowhere say anything close to "trade deficit necessarily entails debt creation."
I bother to observe, that when one speaks of consuming more than one produces and of mortgaging assets, one would certainly seem to be talking about debt creation. No, one would necessarily be talking about debt creation. Perhaps DeLong's problem is a definitional one. Does he understand that when the Post talks about consuming, it's not talking about jelly doughnuts?

Posted by Donald L. Luskin at 11:37 PM | link  

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One of the Left's sleaziest rhetorical tricks is to discredit conservative ideals for being based on religious beliefs, while claiming liberal ones are based on science. The Right, they sneer, is "faith based." The Left, they brag, is "reality based."

So we have Paul Krugman, America's most dangerous liberal pundit, claiming that conservative thought is "increasingly dominated by people who believe truth should be determined by revelation, not research." Krugman even thinks the conservative preference for lower taxes and higher economic growth is nothing more than a matter of right-wing religious zealotry. In his Friday New York Times column, Krugman called supply-side economics a "doctrine" that believes in "miraculous positive effects," which has "never been backed by evidence."

Of course Krugman believes his own Leftist "doctrines" are entirely scientific. He excoriates Tom DeLay and Rick Santorum for statements they have made about the religious foundations of their views. But he never objects to those same foundations when they serve the likes of Martin Luther King, Jr., Jesse Jackson, or even Al Sharpton.

In fact, Krugman doesn't seem to know that the modern liberal conception of the welfare state began as a great religious awakening, led by the Christian Socialist and Social Gospel movements of the late nineteenth century. Their central doctrine was that the power of the state must be harnessed to redistribute wealth to combat sin among America's crowded new urban populations. These movements gradually prevailed throughout the twentieth century, through the Progressive Era, the New Deal, and the Great Society, with the introduction of the federal income tax, Social Security, Medicare, and the regulatory state.

Today's seeming secular science of economics -- an establishment in which Paul Krugman is regarded as a leading authority -- was deliberately created to manufacture an intellectual imprimatur for the Christian Socialist and Social Gospel movements. It's the same way that Krugman, in his Friday column, claims conservative think tanks exist to manufacture evidence to oppose liberal shibboleths such as global warming.

The American Economic Association -- today's leading professional organization of economics -- was founded in 1885 to be, in the words of founder Richard T. Ely, "an influential movement which will help in the diffusion of a sound, Christian political economy." Its first mission statement called for combating "social problems whose solution is impossible without the united efforts of Church, State, and Science."

Science? Au contraire. Of the AEA's 50 founding members, more than 20 were former or practicing clergymen. And while Krugman warns today that the religious right has begun a "process that ends with banishing Darwin from the classroom," the AEA was founded explicitly to banish Darwin from economics. Darwinism was seen as buttressing the then-dominant paradigm of laissez-faire capitalism -- no matter that it was good science. As historian  Benjamin G. Rader put it in a biography of Ely, "Christian moral responsibility should be emphasized rather than the search for mechanistic laws."

The banishment of Darwin -- and science -- from economics continues today in the work of statists like Krugman, and the AEA continues to put its imprimatur on their work. Every two years the AEA awards the John Bates Clark medal  to the most distinguished American economist under the age of 40. Paul Krugman won it in 1991. Clark, an AEA founder, was a Christian Socialist. Though famous as the great theorist of "perfect competition," Clark believed, "Individual competition...ought to disappear...The alternative regulator is moral force."

It must be moral force -- it certainly isn't science -- that permits Krugman to claim that supply-side economics has "never been backed by evidence." What does he call the fact that federal tax revenues plummeted after peaking in 2000 (while tax rates remained high) -- and then recovered after the 2003 tax cuts were put in place? What does he call Krugman Truth Squad member Kevin Hassett's observation that the tax revenues currently anticipated by Congressional Budget Office for 2006 are about the same as those it anticipated for 2006 back in 1999 -- even though tax rates have been slashed since then?

Here's what I call it: scientific, empirical, real-world proof. Proof that supply-side economics works. Proof that low tax rates, high economic growth, and tax revenues go hand in hand in hand.

But despite the evidence, what economic "doctrine" would Paul Krugman prefer? He wants to see tax hikes -- big tax hikes. He recently said, "We should be getting 28% of GDP [gross domestic product] in revenue. We are only collecting 17%." It doesn't take much of a scientist to realize that he's talking about increasing federal taxes of all types by about 65% on average. But if Krugman were more of a scientist -- if he'd look at the evidence -- he'd realize that it can't be done.

Historically, federal taxes have never even been as much as 21% of GDP -- even though income tax rates have topped 90% (from 1944 to 1953). So what tax rate would Krugman propose in order to collect 28% of GDP in revenues -- when even 90% rates won't get revenues up to even 21% of GDP? Krugman Truth Squad member William Anderson reported on the VonMises Blog that Krugman himself once said that 70% income tax rates are "insane." So if rates even worse than insane won't do it, what will?

Sheer faith, apparently.

Historical sources:

Robert William Fogel, The Fourth Great Awakening (Chicago: University of Chicago Press, 2000)

Benjamin G. Rader, The Academic Mind and Reform: The Influence of Richard T. Ely in American Life (Lexington, KY: University of Kentucky Press, 1966)

Michael Perelman, The End of Economics (New York: Routledge, 1996)

Posted by Donald L. Luskin at 1:24 PM | link  

Monday, August 08, 2005

STALKEE BECOMES STALKER   It's the best! Thanks to reader David Duval, who was there at the original stalking that started it all.

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

'BAMAGATE JUST KEEPS ON ROLLIN'   Mike Cakora of the Columbia Record (in South Carolina) blogs with another media smear against US auto workers versus Canadian competition (as if Paul Krugman's smear weren't bad enough). Cakora finds automotive journalist Jonathan Yarkony writing for the American Auto Press with,
Canadian industry insiders also like to point out that Ontarios work force has a slight advantage in education, combined with the fact that Ontario is spending millions training workers specifically for high-tech automotive industry jobs and the nearby Cambridge facility can contribute their expertise and training to help get Woodstock on line.
But when the same journalist writes the same story for the Canadian Auto Press, it comes out with an additional phrase (in bold).

Canadian industry insiders also like to point out that Ontario's work force has a slight advantage in education, the slight advantage being while many workers in the southern states that were competing for the same factory often can't even read, Ontario is spending millions training workers specifically for high-tech automotive industry jobs and the nearby Cambridge facility can contribute their expertise and training to help get Woodstock on line.

Posted by Donald L. Luskin at 8:21 PM | link  

"FLATLAND"?   Reader Greg Sanderson is miffed by Paul Krugman's column today, in which he finds yet another way to snub ordinary Americans -- according to Krugman, only the coastal elites deserve a real estate bubble.

Since I live in the Twin Cities (Mr. Krugman calls this area "Flatland"), I'm surprised to learn that Minneapolis and St. Paul are not "real downtowns" and that a housing bubble "can't even get started."

Whether we are in a housing bubble or not remains to be seen, but I'm kind of stuck on the "real downtown" absurdity. Has Krugman even been to Minneapolis? How about Denver, Chicago, St. Louis, Dallas, Nashville. Has he ever been "downtown"? We actually have real buildings in Minneapolis. Some are actually over 50 stories tall. We have lofts, studios, condos, a stadium and an arena, a "real" river (Mississippi), lots and lots of businesses (Target Corp, Marshall Fields, Xcel Energy are just a few of the Fortune 500s located in downtown Minneapolis), a train, bars, restaurants, hoodlums, billionaires, churches, filth and glamour. It's a downtown by anybody's measurement.

I can only give anecdotal examples of the increase in housing values here:

  • 1995-bought house #1 for $104K,
  • 2000 sold house #1 for $225K, bought house #2 for $265K.
  • 2004 sold house #2 for $350K, bought house #3 for $331K.
  • 2005 House number # assessed at $390

I suspect that the rise in housing prices has very little to do with simply living in a coastal city, and more with the old real estate adage of "location, location, location."

Posted by Donald L. Luskin at 3:51 PM | link  

AH, SO HERE'S THE EXPLANATION   Now we know why Paul Krugman is so obsessed with socialized health care. From a recent discussion posted on the website of The Atlantic:
"As the possibilities for medical care expand, and if you don’t have public provision for everything that can be done, you’re returning to a Victorian environment in which the children of the working class are four inches shorter than the children of the elite."
Ah, yes, that old inferiority complex of his, rearing its ugly head. From Krugman's own website:
"I am just not imposing enough in person to be inspiring (if I were only a few inches taller ...)."

Posted by Donald L. Luskin at 3:33 PM | link  

FIGHTING BACK   Joe Sherlock nails the Daily Kos for ripping off his bandwidth. Check this out.

Posted by Donald L. Luskin at 12:30 AM | link  

Sunday, August 07, 2005

A PERFECT SHOT THAT MISSES   The Boston Globe's ombudsman takes a good shot at bias and inaccuracy on the op-ed page -- but on close reading, it turns out he's only talking about outside contributors. In-house op-ed columnists are sacrosanct, apparently, just as they are at the Globe's owner, the New York Times.

Thanks to Bruce Kesler for the link.

Posted by Donald L. Luskin at 7:37 PM | link  

AN INTELLECTUAL DEFICIT   Reader Robert Paci points us to an editorial in the Washington Post. It's just another catastrophist rant about America's trade deficit -- but it's worth looking at because it so perfectly articulates the two key fallacies held by the catastrophists. First, consider this passage:

The U.S. current account deficit has grown to an astonishing 6.5 percent of gross domestic product... This means that the nation is consuming around $700 billion more than it earns each year and paying for the difference by mortgaging or selling assets.

Let's ignore the dubious appropriateness of the loaded word astonishing in the first sentence, and focus on the factuality of the claim made in the second sentence. The claim, in essence, is that a trade deficit necessarily entails debt creation. This is simply not the case. When an American (1) labors or invests to earn money, (2) chooses to spend that money on foreign goods, and (3) the foreign maker of those goods doesn't spend that money on American goods, somehow debt is created. I don't see it. Where's the debt? Or at least, where is the debt that arises uniquely in virtue of the trade deficit? Seems to me that the American buyer in the situation has earned the money fair and square (with no debt necessarily involved), decided to spend it in Taipei instead of Texas (with no debt necessarily involved), and the Taipei seller doesn't immediately spend the money on US goods (again, with no debt necessarily involved). Now of course it may just so happen that the Taipei seller chooses to park his money in US debt securities, but those securities either existed already or would have been issued anyway -- nothing about the situation brings those debt securities into existence. The Taipei seller could just as easily keep the money in his mattress, invest it in stocks, real estate, or whatever. There's simply no debt involved, necessarily, anywhere in the transaction.

Yet the notion of debt is always evoked when the trade deficit is discussed. The very term deficit implies debt. It's as though by talking in terms of debt the trade deficit can be portrayed as some kind of overhanging Sword of Damocles -- some inescapable doom that inevitably awaits us, as though it were a debt that can never be repaid and will throw us into moral if not literal bankruptcy. But stop and think for a moment. What's the worst thing that can happen? All that can happen is: all that unspent money overseas will eventually be spent on US goods. And what's wrong with that? Isn't that what the trade deficit catastrophists are complaining should be happening now? If it's what they want to happen now, why are they afraid that it will happen in the future?

Now consider this passage from the Post editorial:

Every year Americans sell or mortgage a slice of their productive assets to foreigners, with the result that income from those assets must flow abroad in the future

If the invocation of the sin of debt isn't enough, the catastrophists can trot out this idea that when foreigners buy our productive assets -- our companies or our real estate -- rather than buy our goods, we are sacrificing all future benefits from those assets. This argument relies on an utter misunderstanding of how such assets are priced in an efficient market. If a share of stock in a company entitles its owner to a future flow of dividends and other benefits, then today's price reflects the market's appraisal of that flow. If you take money today in exchange for that share of stock, you have captured the present value of all its future benefits. In essence, an asset's price make you indifferent between holding the price in cash and holding the asset. What causes millions of people to buy and sell stocks every day is that they disagree with each other about the exact value of those future flows -- some are more bullish, and some are more bearish. But those subtle disagreements aside, America becomes no poorer when an American accepts Chinese cash for a share of IBM, or Unocal for that matter. When such transactions occur -- nothing changes. Before, the American held stock. After, the American held cash equal to the present value of the stock's future earnings potential.

Posted by Donald L. Luskin at 7:34 PM | link