American journalism has a proud tradition of balloon-busters, but Dowd is H.L. Mencken without the piercing observations, Dorothy Parker without the brilliant wit. Her prose is filled with moral indignation, yet her cheap shots lower the level of discourse that she wishes were higher, and her focus on personal peccadilloes trivializes the pressing matters of state she pretends to care about.

This is my problem, not Dowd's. I'm expecting too much from her. Think of her not as a leading pundit but a stand-up comic with the best gig in America and her work can hold your interest for a few minutes twice a week. She might even make you laugh before you reach the end of her column and all memory of her words vanishes. Poof!

What powers lie in self-fulfilling prophecies? Can we rigorously delineate their dangers as they relate to the future of prediction markets?

Koleman Strumpf presented his paper, authored with Paul Rhode, "Manipulating Political Stock Markets" at the Mini-Conference on Information And Prediction Markets in London earlier this week. Part of their study traces the development of the seldom-remembered political betting markets of the late 19th and early 20th centuries, which peaked in volume in 1916. Here is a particularly fascinating passage:

Contrary to these sanguine assessments were the frequent assertions that active partisan involvement, especially by Tammany Hall, systematically distorted the betting odds and, in selected instances, speculative attacks and manipulation sought to change the momentum of the races and influence voter turnout. [...] As an example, in 1916, Democrats charged "the money was being sent to Wall street to force the betting odds to Wilson's disadvantage" [...] "Already," one prominent Democrat said, "we are hearing that many up-State farmers are struggling between their conscience and fear that Hughes will be elected and it might be found out that they voted for Wilson." (my emphasis)

Perhaps it was no coincidence that political betting fell off by the next Presidential election of 1920 in the wake of the Black Sox Scandal of 1919.

Scary

By JOHN C. WHITEHEAD
December 22, 2005; Page A14

Last April, The Wall Street Journal published an op-ed piece by me titled "Mr. Spitzer Has Gone Too Far." In it I expressed my belief that in America, everyone -- including Hank Greenberg -- is innocent until proven guilty. "Something has gone seriously awry," I wrote, "when a state attorney general can go on television and charge one of America's best CEOs and most generous philanthropists with fraud before any charges have been brought, before the possible defendant has even had a chance to know what he personally is alleged to have done, and while the investigation is still under way."

Since there have been rumors in the media as to what happened next, I feel I must now set the record straight. After reading my op-ed piece, Mr. Spitzer tried to phone me. I was traveling in Texas but he reached me early in the afternoon. After asking me one or two questions about where I got my facts, he came right to the point. I was so shocked that I wrote it all down right away so I would be sure to remember it exactly as he said it. This is what he said:

"Mr. Whitehead, it's now a war between us and you've fired the first shot. I will be coming after you. You will pay the price. This is only the beginning and you will pay dearly for what you have done. You will wish you had never written that letter."

I tried to interrupt to say he was doing to me exactly what he'd been doing to others, but he wouldn't be interrupted. He went on in the same vein for several more sentences and then abruptly hung up. I was astounded. No one had ever talked to me like that before. It was a little scary.

It's up to others to make their own conclusions. I have only set out here what happened.

Mr. Whitehead, former chairman of Goldman Sachs, is chairman of the Lower Manhattan Development Corp.

There's a little-discussed clause in the Constitution that says "the United States shall guarantee to every state in this union a republican form of government." There's not much academic writing or case law on what this clause means or what it actually authorizes the feds to do. A couple years ago, I argued in a brief for the Center for the Advancement of Capitalism that the Guarantee Clause authorized the Supreme Court to stop a "private attorney general" lawsuit filed against Nike by a California activist, because a state law deputizing every person in the state to act as the attorney general violated the core principle of republican government.

For awhile now, I've wondered if a Guarantee Clause argument could be made against actual state attorneys general that usurp legislative and judicial powers, and what the feds might do about it. As the article you cited about Spitzer this morning indicates, it's fairly clear Spitzer is not acting as an agent of republican govrenment.

Now, just recently I was following some threads of Wal-Mart bashing among various left-leaning commentators. Most amusing was watching purportedly market economists like Paul Krugman and Brad DeLong twist and cavil to sign on to this politically obligatory bashing, while looking for some rationale to keep from looking professionally absurd and hypocritical, even to themselves.

Krugman of course used to ridicule those who claimed that US jobs were destroyed by super-low wage foreign competitors that destroyed US firms outright while employing no one here in the US at all. It was just a matter of hot dogs and buns, he lectured -- if a hot dog maker increased productivity to make more hot dogs with fewer workers, this did not reduce employment but rather freed workers to move into making more buns. The result was both more hot dogs and more buns for the same amount of people -- so everybody became richer! Productivity increases that reduce employment in a particular industry were good. (See "agriculture" for the last 150 years.) The employment level is set not by the hot dog maker who lays off workers, but by the Federal Reserve.

But now he's signed on to the claim that firms located in the US that put out the "hiring sign" right here at home do destroy US jobs -- when they increase productivity and don't pay union-and-Democratic-party approved wages. It seems that in his mind Asian sweatshops that destroy US textile firms outright are better for US employment than a US firm that goes into a low income community, advertises to fill the 525 new jobs it is creating, and gets 8,000 applicants from those who are unemployed or in lesser jobs.

Krugman gives no explanation of this mystery -- but here his friend Brad DeLong has just stepped in.

Professor Delong has come up with the idea that Wal-Mart has a "monopoly" in the labor market(!) Yes, Wal-Mart is a monopolist, a noxious example, he says, of...

"using local monopoly power to sleaze and cheat your own workers"

Now, I don't know where Berkeley professors do their shopping, but the last Wal-Mart I went to was the anchor tenant of a mall that was host to several other retailers, which itself was on a commercial strip with dozens of other employers stretching out of sight in either direction -- retailers of all sorts, car dealerships, restaurants, grocers, gas stations, swimming pool sellers, contractors, you name it. This commericial strip with scores of businesses of all descriptions -- plus the entire surrounding local community with all its other businesses -- is a labor market over which one single Wal-Mart store has monopoly power! It's too amusing to be true.

Apart from the day The New York Times goes out of business -- and the stellar work Paul Krugman's column does twice a week helping people house-train their puppies -- the newspaper has done the greatest thing it will ever do in its entire existence...

Monday's Times carried a major expose on child molesters who use the Internet to lure their adolescent prey into performing sex acts for Webcams. In the course of investigating the story, reporter Kurt Eichenwald broke open a massive network of pedophiles, rescued a young man who had been abused for years, and led the Department of Justice to hundreds of child molesters...

In order to report the story, the Times said it obtained:

copies of online conversations and e-mail messages between minors and the creepy adults;

records of payments to the minors;

membership lists for Webcam sites;

defunct sites stored in online archives;

files retained on a victim's computer over several years;

financial records, credit card processing data and other information...

Would that the Times allowed the Bush administration similar investigative powers for Islamofacists in America!

In his column Monday [subscription link via New York Times; free link via CREW], Krugman excoriates conservative think tank scholars Peter Ferrara and Doug Bandow for taking money from indicted Republican lobbyist Jack Abramoff, allegedly in exchange for writing op-ed columns favorable to Abramoff's clients. Yes, the immediate intuition is that these men's ethics were compromised here. But, really, this is a little issue. Where's the beef? Everyone -- think tankers and op-ed writers included -- gets paid by someone. And those who pay, naturally, choose to pay scholars and journalists who tend to already agree with them. It seems unlikely, then, that Ferrara or Bandow would have written anything different whether or not Abramoff paid them.

Krugman himself is no different than Bandow or Ferrara. They are scholars at think tanks, and Krugman is a scholar at Princeton's Woodrow Wilson School of Public and International Affairs. And Krugman, too, gets paid by other people who rely on him to promote their viewpoints. First and foremost: that powerful liberal lobbying machine known as the New York Times. Since Krugman's Times column began in 2000, has he ever -- even once! -- taken a position substantively different from that of the ultra left-leaning Times editorial board -- the folks who write his extracurricular checks? 

Krugman has taken other extra-curricular paychecks over the years, and he's always promoted the points of view of whomever wrote those checks. He took Enron's money as a consultant on its advisory board -- and, while on the payroll, wrote a glowing column about Enron for Fortune. To be fair, he disclosed the connection then. At that time, Enron was riding high and Krugman was proud to take the corrupt company's money. But he failed to mention the connection later -- after the company failed and had to stop paying him -- in dozens of New York Times columns lambasting the Bush administration for its past Enron connections. Most egregiously, he failed to mention his previous role as an Enron consultant in a Times column lambasting Enron's consultants!

And when Krugman wrote a Times column justifying the anti-Semitic ravings of Malaysia's premier Mahathir -- the Times captioned that Krugman column "Anti-Semitism with a purpose" -- he failed to mention that he had once been Mahathir's guest at a Malaysian economics conference, and had contributed to Malaysia's economic policies.

But where's the beef? Krugman may well have written all the same things even if he hadn't taken Enron's money, or Mahathir's hospitality. Indeed, one suspects that Krugman would proudly recycle in his columns all the same talking points he finds on the Democratic National Committee's web site and all the ultra-Leftist hateblogs, even if he had to dip into his own pocket and pay himself.

Consider Krugman's column on Wal-Mart last week [subscription link via New York Times; free link via ReclaimDemocracy]. Krugman doesn't find anything corrupt about the "union-supported group, Wake Up Wal-Mart" that has run television ads demonizing the non-union retail giant. Would Wake Up Wal-Mart have run those ads anyway, without union money? Probably not, but Krugman would probably have written the same column, in which he makes the absurd claim that Wal-Mart -- by far America's largest employer -- destroys jobs. He even goes so far as to call Wal-Mart's claims to the contrary "the worst economic argument of 2005." Considering some of the loony economic arguments Krugman himself has made this year, that's quite a claim.

Who's paying Krugman to make such claims, other than the New York Times? No one that I'm aware of, at least not directly. But unions supply a large fraction of the filthy lucre that fills the war chest of the Democratic Party. So, naturally, Krugman will take up their cause -- however absurd, and however hypocritical. Back in 1993, when Krugman used to write as an economist, not a political hack, he called Wal-Mart "the most significant American business success story of the late 20th century," celebrating its application of "extensive computerization and a home-grown version of Japan's 'just in time' inventory methods to revolutionize retailing."

To back up his claims that Wal-Mart destroys jobs, Krugman cites the "sophisticated statistical analysis" in a paper by a University of California professor and two associates at the Public Policy Institute of California. But that paper only claims that Wal-Mart causes a drop in retail employment when it opens a store in a new community. Overall, it finds "there is some evidence that Wal-Mart stores increase total employment on the order of two percent."

A study by Global Insight goes further, but Krugman doesn't mention it. It says Wal-Mart is "responsible for 210,000 net jobs, a level of total factor productivity (general economic efficiency of the economy) that is 0.75% higher by 2004 than it would have been.... real disposable income is 0.9% higher than it would have been in a world without Wal-Mart." Why Krugman's silence on this study? The unions wouldn't be happy if he mentioned it.

Other liberal economists aren't so concerned with flattering the Democratic Party's paymaster. Jason Furman, a scholar at New York University (yes, he too, has another patron -- the leftist Center for Budget Policy and Priorities), has recently written a paper on Wal-Mart. Krugman once wrote that Furman's work at CBPP is "absolutely impeccable; there is nothing at all like it on the right, or anywhere else." Surely Krugman would not say the same thing about Furman's statement that "Wal-Mart is a progressive success story...resulting in huge benefits for the American middle class and even proportionately larger benefits for moderate-income Americans."

By the way, perhaps this is a good time to mention that I don't get paid a penny for writing the Krugman Truth Squad column at National Review Online. Not by NRO, not by Jack Abramoff, not by anybody. Why do I do it? Because, like President Bush, I'm worried about the big things. And one of the best ways I can help with the big things is by keeping the little things -- like Paul Krugman -- cut down to size.

Posted by Donald L. Luskin at 2:57 PM | link    

Posted by Donald L. Luskin at 9:44 AM | link    

Tuesday, December 20, 2005

Posted by Donald L. Luskin at 9:27 PM | link    

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

Monday, December 19, 2005

Posted by Donald L. Luskin at 3:04 PM | link    

Posted by Donald L. Luskin at 11:03 AM | link    

Posted by Donald L. Luskin at 10:26 AM | link    

Posted by Donald L. Luskin at 10:22 AM | link    

Posted by Donald L. Luskin at 9:43 AM | link    

Posted by Donald L. Luskin at 9:29 AM | link    

Sunday, December 18, 2005