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Media Infiltrations: Republicans and the Populist Temptation  Wall Street Journal February 9, 2010 Why Taxing Stock Trades Is a Really Bad Idea Wall Street Journal January 6, 2010
"What has been your worst blogging experience? "That's a guy who actually stalks me on the Web and once stalked me personally." "I'm saying this...guy's a jerk."
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Thanks to Irwin Chusid, public editor.
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Chronicle of the Conspiracy
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!
Friday, January 15, 2010
MORE ON RAND, GOD, BOWYER AND ALL THAT I keep getting letters about my confrontation with Jerry Bowyer several weeks ago on the Kudlow show concerning Ayn Rand, and Bowyer's silly belief that capitalism can only be justified by making recourse to religious beliefs. Here's a particularly thoughtful one from Shawn Hansen:As usual you were on topic, rational and presented very convincing arguments. I am surprised at Bowyer's behavior. I can't think of too much that I have disagreed with him on in the past (with my surface level knowledge of economics and finance) but the overly combative style, and the contention that he was answering your questions when at some points he clearly was not, made him look like a politician. I happen to agree with the idea that a higher power was behind the creation and success of this country. I don't require my neighbor to hold my beliefs. And when I questioned a very religious financial industry friend of mine about something that Ayn Rand wrote he told me I was in danger of getting onto his commie list (joking) and that he doesn't go to Ayn Rand for spiritual knowledge, he reads her because she is one of greatest defenders of capitalism and rational self-interest, without which we have tyranny. Not much freedom of religion under tyranny.I was actually surprised to hear that you are an Atheist. I wouldn't have guessed that. I have deduced that you are a libertarian as opposed to a conservative. That's what I think may be the case anyway. You strike me as a very decent, honest, moral person that cares about his fellow man and American liberty and capitalism. I can see that it bothers you, and you correct the record where you can, when people blow their own horn and give out faulty or uninformed financial advise. Also, you should receive this nation's highest award for your work exposing Krugman for the fraud, ignoramus, and political hack that he is.
This is coming from a guy who grew up in Sebastopol, Sonoma County, as a pretty far(out) lefty Atheist. I have moved all the way to staunch conservative, supply-side, baptised Christian (LDS). I have never known so much peace and what I believe to be light and truth.That being said, I do not like to see anything that can be painted as "kooky religious right". Kooky religious right gets you a man hooked on releasing people that should be in prison. (Huckabee) Now there are 9 children who lost a parent because someone professed to have "found Jesus". All I hear from you has the ring of truth. When I listen to him I hear lies.
I hold you in very high regard, whatever your religious beliefs. I have learned a lot from you. I learned a lesson from you when I sent out an email regarding mark-to-market accounting rules on info I learned from Wesbury and Steve Forbes only to find out later from you that maybe it wasn't that simple. I can't argue with you on that, still confused about where my position is on it though. Maybe that brings out the combative debates. One has to get up pretty early in the morning to present a position counter to yours on national television. You clearly do your homework and have mastered your discipline. Your responses are immediate, clear, and concise. It irritated and disappointed me that Boyer hogged the airtime. That's what the liberal idiots do, not the adults.
Something else I learned from you was to avoid "dogmatic adherence to a set of simplistic ideas which he repeats with the tone of great authority and knowledge. The real world is subtle and complex, and simplistic ideas never lead you to the right conclusion except by luck. He got lucky this time." I could apply that to myself at times. I am sufficiently cognizant of shades of gray, but I prefer to mold many of my views closer to black and white. Does that make me shallow? But isn't Atheism a fairly black and white way of looking at the world. If it can't be empirically proven to me, how can I believe it? So does my instinct and what I perceive to be super compelling evidence all around me telling me that there is a creator working through methods (possibly including a form of evolution) not necessarily known or even knowable to me make me someone aware of the subtleties and complexities of reality?
Truth be told, in the best of all possible worlds, concerning monetary and fiscal policy, Luskin, Wesbury, Kudlow, and Forbes would always agree and always be right. I have a feeling you would differ with me on that. I like your pragmatic and, esoteric if I may, analysis, but I also like what I see as the informed optimism of Kudlow, Wesbury, and Forbes. I have to say that it is a lot more enlightening to watch supply-siders debate than to have to listen to mindless drivel, psychobabble, poisoned crybaby ideology, and outright lies from the likes of Krugman, Reich, and Quentin Hardy. I do respect your insight and analysis. Poorandstupid.com and Trendmacrolytics.com are with Drudge on my daily reading list. Thank you for all that you do.
Posted by Donald L. Luskin at 5:50 AM |
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THE READERS RESPOND Here are several letters to the editor from this morning's Wall Street Journal, responding to my op-ed co-authored with Chris Hynes about the proposed tax on stock transactions.
Posted by Donald L. Luskin at 5:47 AM |
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Thursday, January 14, 2010
OP-ED OF THE YEAR! And it's only January 14! Read this scorcher by Michael Boskin in today's Wall Street Journal, decrying the global trend toward faking economic numbers for politcal purposes. Here's a long excerpt, but you really must read the whole thing.America has not been immune from this dangerous numbers game. Every president is guilty of spinning unpleasant statistics. President Richard Nixon even thought there was a conspiracy against him at the Bureau of Labor Statistics. But President Barack Obama has taken it to a new level. His laudable attempt at transparency in counting the number of jobs "created or saved" by the stimulus bill has degenerated into farce and was just junked this week.The administration has introduced the new notion of "jobs saved" to take credit where none was ever taken before. It seems continually to confuse gross and net numbers. For example, it misses the jobs lost or diverted by the fiscal stimulus. And along with the congressional leadership it hypes the number of "green jobs" likely to be created from the explosion of spending, subsidies, loans and mandates, while ignoring the job losses caused by its taxes, debt, regulations and diktats.
The president and his advisers—their credibility already reeling from exaggeration (the stimulus bill will limit unemployment to 8%) and reneged campaign promises (we'll go through the budget "line-by-line")—consistently imply that their new proposed regulation is a free lunch. When the radical attempt to regulate energy and the environment with the deeply flawed cap-and-trade bill is confronted with economic reality, instead of honestly debating the trade-offs they confidently pronounce that it boosts the economy. They refuse to admit that it simply boosts favored sectors and firms at the expense of everyone else.
Rabid environmentalists have descended into a separate reality where only green counts. It's gotten so bad that the head of the California Air Resources Board, Mary Nichols, announced this past fall that costly new carbon regulations would boost the economy shortly after she was told by eight of the state's most respected economists that they were certain these new rules would damage the economy. The next day, her own economic consultant, Harvard's Robert Stavis, denounced her statement as a blatant distortion.
...The Obama administration claims a dubious "Keynesian" multiplier of 1.5 to feed the Democrats' thirst for big spending. The administration's idea is that virtually all their spending creates jobs for unemployed people and that additional rounds of spending create still more—raising income by $1.50 for each dollar of government spending. Economists differ on such multipliers, with many leading figures pegging them at well under 1.0 as the government spending in part replaces private spending and jobs. But all agree that every dollar of spending requires a present value of a dollar of future taxes, which distorts decisions to work, save, and invest and raises the cost of the dollar of spending to well over a dollar. Thus, only spending with large societal benefits is justified, a criterion unlikely to be met by much current spending (perusing the projects on recovery.gov doesn't inspire confidence).
Even more blatant is the numbers game being used to justify health-insurance reform legislation, which claims to greatly expand coverage, decrease health-insurance costs, and reduce the deficit. That magic flows easily from counting 10 years of dubious Medicare "savings" and tax hikes, but only six years of spending; assuming large cuts in doctor reimbursements that later will be cancelled; and making the states (other than Sen. Ben Nelson's Nebraska) pay a big share of the cost by expanding Medicaid eligibility. The Medicare "savings" and payroll tax hikes are counted twice—first to help pay for expanded coverage, and then to claim to extend the life of Medicare.
Posted by Donald L. Luskin at 4:59 AM |
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Wednesday, January 13, 2010
FURTHER PROOF FOR MY THEORY THAT THOMAS FRIEDMAN IS WHAT I LIKE TO CALL AN "IDIOT" Joe Weisenthal writes,...since his latest one [i.e. Friedman's latest column] is about China, whether it's a bubble, and whether Jim Chanos is right to bet against it, we figured we had to make some comment.Friedman is just trying to write colorfully. But of all the ways to write colorfully, he always picks the most narcissistic. If he were a florid novelist instead of a florid columnist, he wouldn't begin "It was a dark and stormy night...", but rather "I saw that a dark and stormy night swirled all around me..."Right near the top, it starts with what we're sure Taibbi would agree is an instant classic of a Friedmanism:
China’s markets may be full of bubbles ripe for a short-seller, and if Mr. Chanos can find a way to make money shorting them, God bless him. But after visiting Hong Kong and Taiwan this past week and talking to many people who work and invest their own money in China, I’d offer Mr. Chanos two notes of caution.How on earth can Friedman say that's always served him well? Has he really considered shorting various countries, but then always passed up when considering their $2 trillion in foreign currency reserves? What other country has this ever applied to? (And since we don't think it's ever applied to another country in history, how could this possibly be a rule, or a guide to whether or not China is a bubble).First, a simple rule of investing that has always served me well: Never short a country with $2 trillion in foreign currency reserves.
Thanks to our monetary affairs correspondent "Irrational Exuberance."
Posted by Donald L. Luskin at 8:29 AM |
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Tuesday, January 12, 2010
DOES HIS HATRED KNOW NO BOUNDS? I admit it, Brad DeLong has reason to hate Kevin Hassett, who exposed his academic economnics work as sloppy fraudulence. But really, this takes the cake. Today on his blog DeLong accusses Hassett of advocating the murder of scientists. Click on the link if you are interested in a whole new meaning of "shameless."Posted by Donald L. Luskin at 8:31 PM |
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LET'S MAKE A LIST, DOGGY-STYLE! From the kennels of Washington, my DC-insider friend "Mick Danger":
Politico reports today each and every Senate Democrat has participated in a group-think project to develop their policy agenda for 2010:Senate Majority Leader Harry Reid (D-Nev.) tasked Majority Whip Dick Durbin of Illinois and Democratic Policy Committee Chairman Byron Dorgan of North Dakota with crafting a measure late last summer.Wow. 121 policy ideas for 2010?The two Democrats spent months meeting with every Democrat in the caucus. By December, they had 121 policy proposals grouped into broad categories such as small-business job creation, green technology, infrastructure development and the protection of public-sector jobs.
Of course, 101 of them are dogs.
Let’s look at that darn Durbin-Dorgan list again, this time with commentary by your trusted guide, Mick Danger, in parentheses:
1. small-business job creation (no more tax increases or health care fees? expect it to be either meaningless, insulting or both)
2. green technology (why isn’t the current appropriation -- still mostly unspent -- $60 billion enough? how much more can you do?)
3. infrastructure development (OK, but you’ve promised this before yet didn’t deliver.)
4. the protection of public-sector jobs (ah, yes, can’t allow those states and locals to use a real crisis in state budgeting to lower their expenses)
Posted by Donald L. Luskin at 7:55 PM |
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Monday, January 11, 2010
KRUGMAN DOES EUROPE Here is Paul Krugman in today's New York Times:...Europe’s economic success should be obvious even without statistics. For those Americans who have visited Paris: did it look poor and backward? What about Frankfurt or London?What a strange know-nuttin' thing for a Nobel Prize-winning economist to say! Or maybe not so strange. He goes on to offer some statistics, nevertheless:
Since 1980, per capita real G.D.P. — which is what matters for living standards — has risen at about the same rate in America and in the E.U. 15: 1.95 percent a year here; 1.83 percent there.But that's strange too. The US did better, right? But it's not just that. Krugman acts as though growth rates are all that matters. Here's the ever-so-polite Greg Mankiw on his blog today, reminding us that levels of real GDP per capita matter too.
Here is GDP per capita, adjusted for differences in price levels (PPP), from the IMF, for the United States and the five most populous countries in Western Europe:Thanks to reader Bob Ferguson.United States 47,440
United Kingdom 36,358
Germany 35,539
France 34,205
Italy 30,631
Spain 30,589
Update... From reader Stan Greer:
I agree with you that the very statistic cited by Paul Krugman the other day to establish the EU’s economic dynamism didn’t prove his point. But I would go even further.The fact that per capita GDP in Europe has increased at roughly the same rate (though not quite as fast) as per capita GDP in the U.S. since 1980 actually undermines Dr. Krugman’s point. In 1980, the total fertility in what eventually became the EU was about the same as in the U.S. Both the proto-EU and the U.S. had a total fertility right around two children per woman.
Today the EU’s total fertility is about 1.6 children per woman, whereas the U.S.’s is 2.1.
Therefore, other things being equal, assuming no child labor (a very reasonable assumption, I think), per capita GDP growth in the U.S. would be much less than in what is now the EU over the past three decades, because the EU today as so many fewer “capitas” under 16 than we do. The fact that nevertheless the EU’s GDP growth per capita has been a bit less than the U.S.’s suggests that, per available/potential worker, the EU’s GDP growth has been distinctly subpar.
I bet it’s not often someone quibbles with you for giving Paul Krugman too much credit, but that’s what I’m doing today!
Posted by Donald L. Luskin at 10:31 PM |
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Sunday, January 10, 2010
MY RESEARCH INTO POLITICS, GROWTH AND STOCK RETURNS My friend Eric Tyson has a very nice write-up about it in his syndicated column. Thanks!Posted by Donald L. Luskin at 5:08 PM |
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HERE'S A NEW ONE FOR THE OBAMA ADMINISTRATION TO TRY Well, actually an old one. From World War II. A rationale for why paying higher taxes is good, including all the privations that go along with is, because it keeps inflation down! Greg Walker sent in this vintage 1944 poster. First a blow-up of the relevant passage, then the whole thing.
Posted by Donald L. Luskin at 5:01 PM |
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COMING WEDNESDAY! IT'S THE BELTWAY EXERCISE COMMISSION! From my DC-insider friend "Mick Danger":
Sanity requires that we dial down our hearing aids whenever some self-proclaimed reformer announces that he or she is “going to get to the bottom” of what “really caused” the ____ "crisis" so that “it never happens again.”Here’s a recent column by Frank Rich in the New York Times which points to an upcoming opportunity to turn down the volume.
Rich says:
Phil Angelides, the former California treasurer who is the inquiry’s chairman, told me in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation.Oh, golly, go get the popcorn! This time, the pitch-forkers are bringing lawyers with them. Yes, I, too, detest bloviation unless it’s tooth-ful.Look, this Commission could be different. It could be serious. There are serious people on it. No need to get tix thru StubHub, it’s coming Wednesday the 13th to a webcast near you.
I do not know Mr. Angelides, but I know Bill Thomas, the former Republican Chairman of the Ways & Means Committee who serves as “Vice Chairman.” In D.C., “Vice Chairman” usually means “not in charge.” True that, but I’ve never seen anyone out-think, out-work or be a bigger jerk than Bill Thomas.
So, let’s give this bunch a chance. Will they prove to be:
1. Out to establish the truth? If the financial crisis was a tsunami, what earthquakes(s) caused it? Excessively loose monetary policy? Runaway ARM mortgages? Fannie & Freddie? Satan?
2. Or, out for blood? As in blue blood drawn from those very smart financiers who (merely) surfed on the tsunami (making big money) but who haven’t yet suffered either a physical or a career death.
Hey, Commish, if you want good political theater, ask Andrew Cuomo to testify. During the Clinton Administration, he was Secretary of HUD and threatened Fan & Fred if they didn’t push up homeownership rates by pushing hyper-aggressive lending.
Have a nice Beltway Exercise! Don’t forget your teeth!
Posted by Donald L. Luskin at 4:42 PM |
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OK, HERE'S THE OUTRAGE Some readers react to my wondering why the Left isn't frying MIT economist Jonathan Gruber, nationalized health care advocate, for being on the take from the Obama administration.
Insurance maven William Heasley has his own thoughts about so-called "Cadillac" insurance plans. Wonder what the aministration would pay Gruber to reply to Heasely?
David Hogberg has a terrific post at his IBD blog listing a rogues gallerty of double-standard hypocrites.
And here's a reader (who asked for anonymity) with some observaitons:
As I'm sure you know, Krugman has cited Gruber a bunch of times, including here and here.Also, did you see how WellPoint eviscerated a Guber paper (pages 9-11 below) after the White House trashed the detailed WellPoint analysis last fall?
Funny, too, how the White House asked how the WellPoint analysis could possibly disagree with the vaunted CBO. But then the White House didn't point to the CBO analysis; it pointed to the Gruber analysis. WellPoint then shows how the CBO analysis that the White House thought it was citing actually agreed with WellPoint, not Gruber. Too much!!!
Posted by Donald L. Luskin at 4:34 PM |
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