Grasping Reality on TypePad, by Brad DeLong

David Sirota is now Grand Heresiarch of the Ancient and Hermetic Order of the Shrill:

Sirotablog: ABC News: We're Not Interested in Covering the Iraq War: Why do Americans think journalism is a complete and total joke? Maybe because news organizations treat the most serious, somber news as a a complete and total joke. Just look at this from ABC News's 'The Note' today:

'Brides gotta run, planes gotta stray, and cable news networks gotta find a way to fill a lot of programming hours as cheaply as possible.... We say with all the genuine apolitical and non-partisan human concern that we can muster that the death and carnage in Iraq is truly staggering. And/but we are sort of resigned to the Notion that it simply isn't going to break through to American news organizations, or, for the most part, Americans.... What is hands down the biggest story every day in the world will get almost no coverage.'

Let me reiterate how unbelievable this actually is: A MAJOR AMERICAN MEDIA OUTLET HAS NOW DECLARED THAT THEY SIMPLY ARE NOT INTERESTED IN LETTING THE CARNAGE IN IRAQ 'BREAK THROUGH' IN THEIR NEWS COVERAGE - AS IF IT IS SIMPLY NOT NEWSWORTHY. You can just imagine the pathetic newsroom attitude: we don't cover cats getting stuck in trees, we don't birthday parties at the local McDonalds, and we don't cover America's multi-billion dollar war in the Mideast. Sorry America, the insulated, out-of-touch, Washington media is simply uninterested in providing any real coverage about the war. Because remember, the media has to be 'very deferential' because 'no one want[s] to get into an argument with the president at this very serious time.' Truly nauseating.

Let's strengthen Al Qaeda!

Informed Comment : The Guardian reports that news (from Newsweek) that US soldiers desecrated the Koran--and at one point flushed pages of it down the toilet as a technique for humiliating and breaking detainees at Guantanamo--has provoked a second day of protests and then rioting in Jalalabad, this time with loss of life. On Tuesday, 2000 students had demonstrated. On Wednesday, 5,000 to 10,000 university, medical and K-12 students came out, and then they went on the attack, including against US troops. Four died and 70 were injured.... In secular American society, I suppose the shock value here could only be hinted at if we imagined someone flushing a small American flag down the toilet. But probably we can't imagine it at all. The technique of humiliating Muslims as a way of 'breaking' them for interrogation has often veered toward torture at Guantanamo and Abu Ghraib, and it wasn't effective as a technique. The Israeli flag was also used at one point, apparently. The US military has a tradition of such humiliations, going back to treatment of the Filipino Muslim rebels in the early 20th century. But there is a difference between humiliating Muslim prisoners and humiliating Islam. Whatever goddam military genius came up with the bright idea of flushing the Koran down the toilet at Guantanamo should be court-martialed, and Bush had better get out there apologizing before this thing spirals further out of control.

Mark Thoma reads National Review so that the rest of us don't have to. It's a dirty job. He's a brave man to dare to do it:

Economist's View: Kudlow: Fed a Bunch of "Soviet-Style Bureaucrats": Larry Kudlow is unhappy with the Fed's interest rate increases. Therefore the Fed is full of "Soviet-style bureaucrats" trying to manipulate the economy. What he's really unhappy about is not the manipulation per se, but that they aren't manipulating things according to his desires. I always knew Greenspan, Bernanke, and company were a bunch of pinko communists:

The Economy in the Fed's Hands? Our money-meddlers in Washington are up to their old tricks, Larry Kudlow, NRO: Does anyone really know what Alan Greenspan is up to? %u2026 Is there a theory behind this money-tightening policy that can justify the threat it poses to future economic growth?.... Take, for example, the latest monetary data from the Federal Reserve Bank of St. Louis. The data show a marked slowdown in key money-supply measures.... Instead of targeting inflation-sensitive, forward-looking market-price indicators... Keynesian fine-tuners at the Fed are up to their old tricks.... Vladimir Putin%'s remaining Soviet-style bureaucrats have nothing on our money-meddlers in Washington.

Darn communists at the Fed

J. Bradford DeLong
U.C. Berkeley and NBER

Democratic Policy Committee
192 Dirksen
May 13, 2005, 10 AM

3385 words

Any discussion of Social Security reform needs to begin with one too-rarely-asked question: Why is the American political system focusing its attention on Social Security? Is this really the aspect of American fiscal policy that should be absorbing our attention right now?

The answer is that we shouldn't. We shouldn't be focusing on Social Security right now. America has three problems with the fiscal policy pursued by the Bush administration:

• The current 5% of GDP on-budget deficit, the likelihood of major legislative changes (like extensions of expiring tax cuts) that will blow further holes in the budget, and the risks of economic crisis and recession and slowed long-run growth created by this Bush-league fiscal policy.
• The generational explosion of federal health-care costs we expect to see. From one perspective, this is not so much a problem but an opportunity: we expect our doctors, nurses, and druggists to do even more wonderful things for us in a generation. We would like for all Americans--not just those with thick wallets--to benefit from the advances in health care that we confidently anticipate. But this will be expensive: we need to figure out how much publicly-funded health care for the poor, the disabled, and the old we as a society wish to buy, and what taxes are going to fund these public health-care programs.
• The likelihood--not the certainty--that the Social Security system as currently structured will be in deficit by mid-century.

The first of these--the current Bush deficits--is the most urgent. The second of these--the health care funding "opportunity"--is the largest. The third of these--Social Security--is both the least urgent and the smallest. So why are we spending our time on it? There's no good reason. As Berkshire-Hathaway Chairman Warren Buffett, no bleeding-heart liberal he, said last week:

...a [Social Security] deficit of $100 billion a year, something, 20 years out, seems to terrify the administration. But the $400 plus billion dollars deficit currently does nothing but draw yawns....

Over at a Fistful of Euros, Tobias Schwartz has a very nicely-argued piece about Guenter Grass:

A Fistful of Euros: Shifting points of reference?: [DeLong's] reading of the article was most certainly influenced by the date on which it appeared. Of course it is almost natural to believe that a German author... on May 7, would be mainly concerned with the era that ended on VE-day, not the one that began.... [H]ad Grass been predominantly concerned with the Nazi dictatorship, not explicitly referring to the Holocaust would have mattered a lot more than it does with respect to the time thereafter. But Grass was mainly concerned with the latter....

Brad probably made the same mistake the NYT editors made: They haven’t realized to which extent the current economic problems, and political narratives, are influencing the way Germany is remembering its past. For the first time that I can remember, Germany is not only looking back to the before 1945, not only comparing its presence to the Nazi-era, but also comparing it to misty-eyed memories times of the economic miracle, “les trentes glorieuses”, the “Modell Deutschland”....

May 8 is a complicated and important watershed for Germany in so many ways that it can easily be applied in a number of discourses. What Günter Grass did - and what Brad Delong probably could not see - was using the date to reflect about the time thereafter.

Of course, there will always be occasions and dates that will remain less ambiguous - as yesterday’s official opening of Peter Eisenman’s Holocaust memorial in Berlin. And I bet Grass was there, too.

Very nicely argued...

But doesn't Grass write on May 8 for a reason--he wants to get his electrical juice and power from the horror of the era that ended in May 1945? To call the "power of capital" a "new totalitarianism" and described it as "backed... by the world's last remaining ideology"--the equivalences are implicit, but they are very clear and very disturbing.

And there are the claims that "Parliament is no longer sovereign in its decisions. It is steered by the banks and multinational corporations.... Lately, perhaps too late, we have come to recognize that... Public Enemy No. 1, comes not from right-wing radicalism but rather, from the impotence of politics, which leaves citizens exposed and unprotected." The claim is not that the Social Democratic Party has made a mistake in pushing Harz IV--that the neoliberal approach to economic reform is wrong, and that the analyses of people like me and my friends are flawed. The claim is that the duly-elected representatives of the people do not represent the people, and are in fact "Public Enemy No. 1."

These rhetorical moves by Grass strike me as (a) very false, and (b) very ugly--especially because the historical memory of May 8 is not a taxicab that takes you whereever you want to go: it is much more powerful than that.

An (unfortunately still early) draft of my paper for the IFPRI/Cornell conference on threshold effects and nonlinearities in economic growth:

Adding to the Marshallian Toolkit: Big Push and Nonlinearity in History and Theory

J. Bradford DeLong
U.C. Berkeley and NBER
May 2005

ABSTRACT: Most of economics practiced, even today, uses the Marshallian toolkit. But there is an often-undervalued thread of economic theory--with traces in Smith, and visible in writers like Hirschman and Rosenstein-Rodan--that has focused on virtuous circles that, it is claimed, produce powerful non-linearities in growth and development. Looking back at economic history, one cannot be struck by how much of the economic past that is truly interesting is inaccessible to the neo-Marshallian toolkit. My hope, at least, is that a closer engagement with economic history will help economists build alternatives to the Marshallian toolkit, and help specify the situations under which "big pushes" are beneficial in that the whole is greater than the sum of the parts, and under which small changes in incentives may produce powerful changes for good or ill.

Mark Schmitt writes:

The Decembrist: Peter Ferrara: Too Busy Being a Hack: From Franklin Foer's article on Jack Abramoff and the corruption of Washington think tanks, I learn.... Consider the case of Peter Ferrara, the fellow who wrote a paper on privatizing Social Security in college and supposedly has spent the twenty years since refining and promoting the idea. Only he wasn't. What he was doing was Abramoff's errands:

As money-for-influence scandals unwind, pundits usually invoke Deep Throat's famous aphorism, 'Follow the money.' But, to understand Abramoff's success, you must follow the byline. Seemingly every time Abramoff acquired a client, Norquist or ATR's chief counsel, Peter Ferrara, would write a Washington Times column making that client's case. In the mid-'90s, Channel One, a TV network beamed into schools, paid Abramoff several hundred thousand dollars. Meanwhile, Norquist argued, 'Channel One has come up with a brilliant free-market innovation that can translate into lower taxes.' In 1998, the Puerto Rican statehood movement shelled out $400,000 for Abramoff's services. That year, Ferrara made the conservative case for that client's cause: 'Moreover, unlike the United States, Puerto Rico has school vouchers and school prayer. Polls indicate it would be another bastion for the religious right.' After Abramoff reportedly began working with the Malaysian government, a Ferrara op-ed argued, 'The U.S. should reaffirm its relations with Malaysia and collaborate closely with it in the global war against terror.'

The Republican scandals and the Republican policy failures, it turns out, are intimately related in more ways than you might realize.

It writes:

: The Dog That Hasn't Barked?: Is it just me, or do none of the reports on the current offensive in northwestern Iraq advert to "Ccombined US and Iraqi forces," as customary in Pentagon PR for most of a year? The reporting makes it sound like a pure American play. Are the Iraqi troops all off painting schools?

The Great Depression II

The New Deal as Macroeconomic Policy: Did It Do Any Good?

Parts of the New Deal that Boosted Demand:

• Abandonment of the gold standard
• Banking-sector reorganization
• Abandonment of Hoover's balanced-budget rule
• Relief expenditures
  • Which of these were most important? W. Arthur Lewis believed that banking-sector reorganization and abandonment of the gold standard--which broke deflationary expectations--were the most important...

But There Were Also Parts of the New Deal that Reduced Demand:

• The cartelization program of the National Industrial Recovery Act (struck down as unconstitutional in 1934)
• After fears of deflation were broken in 1933, any further attempts to boost prices (agricultural price floors, support of unionization, et cetera)
• The Federal Reserve's disastrous decision to raise reserve requirements in 1937
  • Federal Reserve saw enormous "excess reserves" in the hands of banks
  • Raised reserve requirements to "soak them up" and regain control of the money supply
  • Found that the banks really wanted those excess reserves--really wanted them as a cushion against emergencies
  • Economy crashed as a result
  • Second-term Roosevelt recession possibly the second-worst economic catastrophe of the pre-World War II period

And There Were the Parts of the New Deal that Created the American "Mixed Economy"--America's version of social democracy:

• Unions: the NLRA and the NLRB
  • Unionization supported at the state level as well: Michigan and the UAW
• Social Security
• Aid to Families with Dependent Children--now TANF
• Finance: the SEC, the Public Utilities Holding Companies Act, other steps that strengthened management at the expense of finance
• Unemployment insurance
• Aggressive antitrust enforcement
• Most important: the belief that the health of the American economy was the government's business

Still, the Great Depression had not lifted by the end of the decade: unemployment rates still 12% or so at the end of the 1930s. Roosevelt's New Deal greatly reduced the size of the Great Depression and eased the misery caused by the Great Depression. It did not cure the Great Depression. For that, we needed the surge in demand that was World War II.

Practice Final

Ah. It becomes clearer and clearer why nobody in the administration who knew anything about Social Security substance was trotted out the week before last to provide details on Bush's endorsement of Pozen's "progressive price indexing." The numbers are ugly.

Jason Furman reports:

The Impact of The President's Proposal On Social Security Solvency And The Budget, 5/10/05: In an April 28 press conference, the President announced sliding-scale benefit reductions modeled on a plan proposed by investment executive Robert Pozen. Unfortunately, the White House has not released the traditional analysis by the Social Security actuaries of the effect of its plan on Social Security solvency. It is standard practice for policymakers and outside analysts who present Social Security plans to provide the actuaries’ analysis when, or shortly after, they release their plans.

In the absence of an analysis by the Social Security actuaries, this analysis provides some of the standard actuarial and fiscal estimates of the President’s proposal. The analysis is based on the actuaries’ analysis of the Pozen proposal, which has been released, analyses by the actuaries of other private-account plans that contain features similar to those of the President’s plan, analysis by the actuaries of the President’s private accounts through 2015, and the data in the 2005 Social Security trustees report....

Because the sliding-scale benefit reductions (also called “progressive price indexing”) that the President has proposed would not start until 2012 and would be small initially, this proposal would move back the date when Social Security’s benefit costs will first exceed its tax revenues by only two months, to slightly later in 2017. [Note that Bush and the Bushies have been pushing the 2017 date as a "crisis" point for months.] The sliding-scale benefit reductions would have a somewhat larger effect on the date when Social Security would become "insolvent" — the benefit reductions would move that date back by six years, from 2041 to 2047.

The President’s private accounts, however, would accelerate the date on which Social Security begins to have a cash-flow deficit, as well as the date of insolvency, because establishing the accounts requires diverting large sums from Social Security to the accounts. When the sliding-scale benefit reductions and the private accounts are considered together (i.e., when both components of the President’s plan are examined), the plan is found to move forward the year in which Social Security would become "insolvent" from 2041 to 2030. This result could be averted only by large cash transfers from the Treasury or additional benefit reductions or tax increases. The plan also would accelerate the year in which the program begins to run cash-flow deficits from 2017 to 2011.

The President’s sliding-scale benefit reductions, by themselves, would close 59 percent of Social Security’s long-term (i.e., 75-year) funding shortfall.[2] (White House statements that the benefit changes would close 70 percent of the cash flow gap are somewhat misleading; they refer to the percentage of the gap that would be closed in a single year — 2079, the 75th year — not to the share of the cumulative 75-year gap that would be closed.)

When the private accounts are added in, however, the President’s plan as a whole is found to close only 30 percent of the 75-year gap. [Here Furman assumes a--high, as assumed by the SSA actuaries--3% real Treasury borrowing rate. With a lower, more realistic borrowing rate private accounts make money for the government (it borrows at 2% and lends at 3%) and lose money for beneficiaries.]

More than two-thirds of the gap would remain. Additional benefit reductions, new revenues, or large transfers from the rest of the budget would be necessary to fill the substantial remaining gap.

Peter Temin and Hans-Joachim Voth (2005), "Credit Rationing and Crowding Out during the Industrial Revolution: Evidence from Hoare's Bank, 1702-1862":

Qualitative evidence reinforces the view that quantity rationing was frequent. Hoare's bank told one of its clients who sought to take out a loan that... it could not extend credit:

At present we do not advance Money to anyone on any security.... The uncommon supply of millions and millions granted and now raised [to pay for the Seven Years' War] obliges all of our Profession to be prepared for the Payments [to customers moving their money from the bank into government stock] coming on, so that instead of lending out money, we have called it in on this occasion...

He writes:

The Final Insult - New York Times: Hell hath no fury like a scammer foiled. The card shark caught marking the deck, the auto dealer caught resetting a used car's odometer, is rarely contrite. On the contrary, they're usually angry, and they lash out at their intended marks, crying hypocrisy. And so it is with those who would privatize Social Security. They didn't get away with scare tactics, or claims to offer something for nothing. Now they're accusing their opponents of coddling the rich and not caring about the poor. Well, why not? It's no more outrageous than other arguments they've tried. Remember the claim that Social Security is bad for black people?...

In last fall's debates, Mr. Bush asserted that 'most of the tax cuts went to low- and middle-income Americans.' Since most of the cuts went to the top 10 percent of the population and more than a third went to people making more than $200,000 a year, Mr. Bush's definition of middle income apparently reaches pretty high. But defenders of Mr. Bush's Social Security plan now portray benefit cuts for anyone making more than $20,000 a year, cuts that will have their biggest percentage impact on the retirement income of people making about $60,000 a year, as cuts for the wealthy.... Let's consider the Bush tax cuts and the Bush benefit cuts as a package. Who gains? Who loses?

Suppose you're a full-time Wal-Mart employee, earning $17,000 a year. You probably didn't get any tax cut. But Mr. Bush says, generously, that he won't cut your Social Security benefits. Suppose you're earning $60,000 a year. On average, Mr. Bush cut taxes for workers like you by about $1,000 per year. But by 2045 the Bush Social Security plan would cut benefits for workers like you by about $6,500 per year. Not a very good deal. Suppose, finally, that you're making $1 million a year. You received a tax cut worth about $50,000 per year. By 2045 the Bush plan would reduce benefits for people like you by about $9,400 per year. We have a winner!

Mr. Bush likes to play dress-up, but his Robin Hood costume just doesn't fit.

John McKinnon writes:

WSJ.com - White House Defends Reining in Pensions of Affluent: The White House... releas[ed] an internal analysis showing their payouts still would be higher than those the Social Security system can actually afford by the middle of the century.... The White House analysis sought to further highlight the upside of their proposal. It showed that by 2050, middle-income retirees would be receiving about $1,532 a month in today's dollars under Mr. Bush's proposals, compared with the $1,208 that the system would actually be able to pay. That includes the effect of Mr. Bush's proposed scaling back of promised benefits, and also the prospective investment returns from the personal retirement accounts he wants to create using part of Social Security's payroll-tax revenues. The administration assumes an inflation-adjusted return of 4.6% on personal retirement accounts. The promised benefit is $1,670 in today's dollars -- but Mr. Bush and other administration officials note that the system is now projected to go bankrupt in 2041, meaning that those benefits can't be paid without a payroll-tax increase that could cripple the economy....

Democratic critics... noted that the plan that serves as the model for Mr. Bush's proposal would only delay the Social Security system's insolvency to 2047.... A senior administration official said the administration plans to work with Congress to find additional ways to make the program completely solvent, so didn't reduce the payout under its proposals...

Three interesting things here:

1. The last sentence is an endorsement of tax increases to close the Social Security funding gap: you can't pay higher benefits than current-law revenues generate without additional revenues. That's new. That's the big news here--but McKinnon underplays it.
2. This "payroll-tax increase that could cripple the economy." Where does that analytic judgment come from? I pity the poor (anonymous) fool that made it, and McKinnon for swallowing it: he should do better.
3. The 4.6%-above-inflation expected return on private accounts: that's simply not a sensible forecast when inflation-protected Treasury bonds are yielding 1.8% per year, and when dividend yields are as low as they are today. Once again, McKinnnon should call them on this: demand at the very least numbers from more realistic scenarios with lower private-account returns.

Praktike reports:

Development Porn | Liberals Against Terrorism: Lounsbury, everyone's favorite expat, reads a World Bank report, and then goes on a hot date:

[T]he minimum capital for starting... [businesses is exceedingly high in the MENA region, almost five times as high as the world average and well above any region of the world... the requirement is "a measure of the amount an entrepreneur needs to deposit in a bank account to obtain a company registration number.".... Eyeballing the chart, Egypt requires minimum capital (c. 2004) equal to 800 percent of per capita income, Jordan somewhat over 1000 percent of per capita income, Morocco somewhere around 750 percent, Syria around 5000 percent... Tunisia... 350 odd percent, UAE, 400 odd percent, Kuwait, somewhat under 180 percent. By way of comparison, the chart reflects an average for Latin America in the 50 percent rage, Asia-Pacific in the 180 percent range.

[...]

Now, I have all kinds of observations in this connexion but let me share rather a conversation I had, about this very point with my afternoon coffee companion. A banker for one of the largest (fully private, international) banks in the region.

[...]

I shared my outrage and incomprehension over these figures with her (Yes, sadly in taking coffee with attractive young women on the weekend, I remain unable to have light conversation. I am afraid she only puts up with it because she wants to bed me and my handsome passport. I remain coy. Ha...) and I believe rather got something of a window on the thinking -- perverse, conservative and risk-averse-- behind these otherwise completely incomprehensible numbers....

First, she argued that high minimum capital requirements are very positive because that ensures that undercapitalized companies are not created.... [S]he most interestingly asserted that the "wrong kind of people" would create firms if just anyone with a little capital was allowed to do so.... She also argued that there would be "too much" firm creation by doubtful types and that this would lead to explosion of failures, of bankruptcies.... As one might suspect, this absolutely horrified me and provoked a perhaps too excited anti-regulation rant.... The moronic mistake of the anti-globos, pushing for more "protection" for workers in terms of useless laws that will only present opportunities for rent seeking corruption...

Tyler Cowen refuses to forecast interest rate changes, but will forecast the quality of Revenge of the Sith:

Marginal Revolution: Revenge of the Sith review: Variety.. in my opinion they write the most reliable reviews available. Most of all, they do not conflate or blur together predictions of quality and predictions of commercial success. Variety, which is written for industry insiders, evaluates movies explicitly in both terms, and also for overseas box office. A newspaper also will hire a movie critic to meet the tastes of its readers, but this is typically at a lower level.

I do believe it will be awesome.

Alex Tabarrok finds a nice graph from Alan Auerbach and Kevin Hassett on how silly our current marginal tax rates are:

Marginal Revolution: Tax Reform: "The graphic below shows how under the current system the marginal tax rate rises and falls arbitrarily.

Mark Thoma directs us to Robert Samuelson in Newsweek on Washington's apparent lack of concern about the budget deficit:

MSNBC - A Deficit of Seriousness : There's no one in Washington--no one with any power--trying to balance the budget. President George W. Bush's budget did not ever envision reaching a balance. The Republican Congress's new budget resolution purports to halve the budget deficit by 2010 but does so only on the basis of optimistic assumptions. Balancing the budget is simply too much trouble. It requires asking unpopular questions about who deserves help, which government programs actually work--and how to pay for the rest. Plenty of programs could disappear without serious ill effects....

In this debate, there is no high moral ground. To critics, the Republican budget strategy is 'starve the beast'--cut taxes and use the resulting deficits as an excuse to squeeze spending. Agree or disagree, that's principled; it's a means to an end (smaller government). In practice, the real Republican strategy is more cynical--cut taxes and feed the beast. As a share of national income, federal taxes in fiscal 2004 were 16.3 percent, the lowest since 1959. Meanwhile, budget increases go well beyond defense and homeland security. Even excluding these categories and 'mandatory' programs (Social Security, Medicare, etc.), federal spending has risen 4.8 percent a year (after inflation) under Bush, estimates Stephen Slivinski.... In 2003, Bush proposed and Congress approved the biggest new spending program since Lyndon Johnson, the Medicare drug benefit. It was all deficit financing; there was no new tax for any of it. Gone is any sense of shame about overspending and undertaxing. For 2006, the... estimated deficit close to $400 billion. Bridging that gap would require Republicans and Democrats to do what neither want--scrub government of less useful spending and then raise taxes. Democrats prefer to deplore Republican 'irresponsibility.' Republicans prefer to tax less and spend more...

My first reaction was, "Huh?" I thought that the Democrats in the House of Representatives had offered a plan to balance the budget--by 2012, in fact.

But Samuelson explains this away:

In floor debate, the Democrats never offered a realistic balanced budget. The closest they came was in the House, where they promised balance by 2012. But that happens only by assuming that all of Bush's tax cuts expire in 2011--a position that even many Democrats reject...

Ah. Now I see. The Democratic leadership's plan was not "realistic." The only "realistic" plan, in Samuelson's eyes, is one that (a) keeps the Bush tax cuts for the rich, and (b) balances the budget by cutting spending.

But then shouldn't somebody make his lead be different, and accurate? It's not "There's no one in Washington... trying to balance the budget," it's "The Republicans are cynical feckless cowards who aren't trying to balance the budget, and the Democratic leadership is trying to balance the budget in a way that I don't like." Truth in packaging would be a good thing, after all.

UPDATE: Well, the original title is wrong: Guenter Grass is not minimizing the holocaust by comparing Nazi Germany to globalization. And I should not call him crypto-Nazi scum.

But there is, still, something very wrong with claiming not that the neoliberal approach to economic reform is wrong, and that the analyses of people like me and my friends are flawed, but that we and I are the standard-bearers of a new totalitarianism. There is something very wrong with claiming that that the decision of the Social Democratic Party to push Harz IV is not a mistake, but rather a reflection of the Social Democratic Party's subservience to multinational capital.

Chancellor Schroeder is working for the interests of the German people as he sees them, and deserves a better quality of critic.

Well, well, well...

I find, in my New York Times this morning, this Nobel Literature laureate closing his article, "The Gravest Generation," with: "We can only hope we will be able to cope with today's risk of a new totalitarianism, backed as it is by the world's last remaining ideology... we should freely resist the power of capital, which sees mankind as nothing more than something which consumes and produces."

I confess that I knew that there were Germans who asserted the moral equivalence (both "totalitarianisms") of Hitler's Thousand-Year Reich and today's political-economic order--but I had (naively) thought that they were limited (in the past) to stooges of Stalin and ex-Nazis, and (in the present) to those who dressed in SS uniforms in the privacy of their bedrooms. And I had thought that even they stayed quiet around the anniversaries of the downfall of the Nazi regime: on this and other such anniversary weekends, attempts to minimize the crimes of the Nazis by false comparisons do rise from the level of lies to crimes. Consider:

• Grass's scorn for the "complacent official speeches [calling May 8] liberation day" and for the early post-WWII "spokesmen for the rhetoric of liberation... self-appointed anti-fascists" echoes Nazi scorn for the November criminals who had accepted that Germany lost World War I and tried to build the Social Democratic Weimar Republic.
• Grass's scorn for the "Federal Republic's almost unconditional subservience to the United States" echoes Nazi demands for a Germany freed from the chains and limitations of the Treaty of Versailles.
• Grass's scorn for the Bundestag--"our freely elected members of Parliament... no longer free to decide... lobbyists... multifarious interests... disharmony... Parliament is no longer sovereign... banks and multinational corporations"--is the classical fascist condemnation of the cretinism of parliaments: once the people's representatives are no longer the representatives of the people, you need to find alternative sources of legitimacy, like the Fuehrer Principle.
• Grass's scorn for establishment politicians who are the real enemy--"the threat to the state, or what should be regarded as Public Enemy No. 1, comes not from right-wing radicalism but rather, from the impotence of politics, which leaves citizens exposed and unprotected from the dictates of the economy."

But what creeped me out above all else were tow was one additional rhetorical move by Grass. In the first, he perversely asserts that Germany is in fact morally elevated above Japan, Turkey, Spain, France, and Britain:

The second is far uglier. The second It is ugly. It is an absence: Grass writes 2191 words. Not one of them contains the syllable "Jew." That cannot be an accident.

It was Hermann Goering who said, "A thousand years shall pass and the guilt of Germany will not be erased." Yet here after only sixty Guenter Grass finds the particular Nazi animus against Jews not worthy of mention.

[Jacob Levy has pointed out to me that the Soviet and East German narratives of the Nazis had no place for the Jews either.]

George W. Bush blames Winston Churchill (and Franklin Roosevelt) for not starting World War III in central Europe in July 1945:

Bush: U.S. Had Hand in European Divisions - Yahoo! News: 'We will not repeat the mistakes of other generations, appeasing or excusing tyranny, and sacrificing freedom in the vain pursuit of stability,' the president said. 'We have learned our lesson; no one's liberty is expendable. In the long run, our security and true stability depend on the freedom of others.' Bush singled out the 1945 Yalta agreement signed by Roosevelt in a speech opening a four-day trip focused on Monday's celebration in Moscow of the 60th anniversary of Nazi Germany's defeat.... 'Once again, when powerful governments negotiated, the freedom of small nations was somehow expendable,' the president said. 'Yet this attempt to sacrifice freedom for the sake of stability left a continent divided and unstable.'... 'Secret deals to determine somebody else's fate %u2014 I think that's what we're lamenting here today, one of those secret deals among large powers that consigns people to a way of government,' Bush said...

Bush has the excuse of not understanding what the alternative to Yalta that he is wishing really would have been like. Condi Rice has no such excuse.

I am asked:

Talking Points Memo: by Joshua Micah Marshall: May 01, 2005 - May 07, 2005 Archives: If you have to read a long magazine article (such as a New Yorker profile), do you prefer to read it: on a website, in a printed magazine, printed from a website from a printer, or not at all?

My answer: re: I prefer to read it in a printed magazine, in the bathtub--but only if I want to read it in the very week that it comes out.

If it's not the very week that it comes out, I have no chance of finding the magazine anywhere in the house (even if it has not been recycled). So in that case I prefer to read it on a website...

Earlier this week, Paul Krugman wrote apropos of Bush's "progressive indexing" Social Security proposal:

The New York Times > Opinion > Op-Ed Columnist: A Gut Punch to the Middle: The average worker - average pay now is $37,000 - retiring in 2075 would face a cut equal to 10 percent of pre-retirement income. Workers earning 60 percent more than average, the equivalent of $58,000 today, would see benefit cuts equal to almost 13 percent of their income before retirement.But above that level, the cuts would become less and less significant. Workers earning three times the average wage would face cuts equal to only 9 percent of their income before retirement. Someone earning the equivalent of $1 million today would see benefit cuts equal to only 1 percent of pre-retirement income.In short, this would be a gut punch to the middle class, but a fleabite for the truly wealthy...

Today, David Brooks writes:

Calling Democrats' Bluff - New York Times: [Bush] has asked us to redistribute money down the income scale. Why should programs for children and families be strangled so Donald Trump can get bigger benefit checks?...

Shouldn't the New York Times have columnists who can read their own paper?

Perhaps the senior management of the Times could provide us with some insight into their lack of quality control?

Today it's the nearly-always-unreliable John Tierney, claiming that Social security is in trouble because: Place Your Bets: "Congress spent our money, leaving the Social Security trust fund with a file cabinet full of i.o.u.'s in the form of Treasury bills."

Congress... Isn't it a fact that the *President's* signature is also required on legislation? Isn't it a fact that the President proposes to Congress a budget for the United States for each fiscal year? Isn't it a fact that those budgets--even those declared "dead on arrival" substantially guide taxing and spending decisions? That it is very, very rare for actual spending and taxes to significantly deviate from what the President wishes?

Different Presidents wish for very different things. The Congress in 2002 was very similar to the Congress in 2000; the Congress in 1994 was very similar to the Congress in 1992; and the Congress in 1982 was very similar to the Congress in 1980. Yet the Presidents were different--and the deficit outcomes were very different.

One of the most striking patterns in recent American budgetary history is the way that every newly-elected Republican President blows the budget deficit wide open in his first term. Here's the federal "on budget" budget balance--the thing that doesn't count the Social Security surplus, and that would under a good government be at or moving toward balance:

But this is not something that Tierney is anxious to tell his readers, is it? No responsibility allowed. There are no "Reagans," "Bush Is," and "Bush IIs" in the text of his article--none of the Presidents who submit the exploding-deficit budgets, are there? There are not even any of the budget-busting Republican Congressional leaders--no Bakers, no Doles, no Gingriches, no Armeys, no DeLays, no Lotts appear. Just a faceless "Congress."

But people do make a difference. In fact, let's add another President to our graph: here's what happens to the budget deficit in the first term after we elect a Democratic President--Clinton.

Again, not something Tierney is eager to remind his readers of, is it?

Bill Keller, this is pathetic: you need to change your lineup, and you need to do it fast.

Michael Froomkin directs us to First Draft, where we learn that Al Qaeda's number threes include:

• Abu Faraj al-Libbi
• Saif al-Adel
• Khalid Sheikh Mohammed
• Mohammed Sheikh Mohammed
• [a] senior operational leader, who gave Faris his orders... identified in court documents as 'C-2'

You know that car? The one with the "U.C. Berkeley Eye Center" one-day parking pass? The one drifting over into your lane? It really *doesn't* see you.

John Stuart Mill was wrong. The conservative party is not the stupid party. The conservative party is the bizarro mind-numbingly extreme stupid party.

Ezra Klein informs us of the Carpetbagger's report on House Judiciary Committee Chair James Sensenbrenner:

Ezra Klein: Doesn't this sound more like... Saturday Night Live... than an actual strategy tried out on the floor of Congress?

About a week ago, the House Judiciary Committee was prepared to approve the Child Interstate Abortion Notification Act. Dem committee members offered some fairly reasonable amendments to shield some parties from criminal responsibility...For example, one amendment, offered by Rep. Bobby Scott (D-Va.), sought to exempt "cab drivers, bus drivers and others in the business transportation profession from the criminal provisions in the bill." So, if an underage woman takes a bus to another state to have an abortion, the bus driver, who probably wouldn't have any knowledge of the abortion, couldn't be charged with a federal crime. Judiciary Committee Chairman James Sensenbrenner (R-Wis.) not only helped kill the amendment, he decided to rephrase it for the official record:

'Mr. Scott offered an amendment that would have exempted sexual predators from prosecution if they are taxicab drivers, bus drivers, or others in the business of professional transport.'

Sensenbrenner did this multiple times. Every Dem attempt to amend the legislation was manipulated to make it appear Dems were trying to protect sexual predators. Whether one supports the bill or not, this was pathetic.

Yesterday, Sensennbrenner backed down and removed the 'sexual predator' language from the record. Fact is, however, it stil happened, and the floor of Congress, is, officially, one poorly-conceived skit.... Welcome to Congress.

Calculated Risk Reports:

Calculated Risk: Buffett and FDR: Warren Buffett was on CNN's Lou Dobbs Tonight on Wednesday. Here is an excerpt:

DOBBS: Are you surprised when you focus on the two deficits we just talked about, the trade deficit, and the budget deficit? The budget deficit is 3.6 percent of our GDP. The trade deficit is reaching just almost 6 percent of GDP. And the president is talking about reforming Social Security. Does that surprise you?

BUFFETT: Well, it's an interesting idea that a deficit of $100 billion a year, something, 20 years out, seems to terrify the administration. But the $400 plus billion dollars deficit currently does nothing but draw yawns. I mean the idea that this terrible specter looms over us 20 years out which is a small fraction of the deficit we happily run now seems kind of interesting to me. There is no question that the Bush Administration is ignoring the most serious economic problems facing America and that they are more interested in ideological driven issues. The most serious fiscal issues are: the General Fund deficit, the current account / trade deficit, and health care. Why are we talking about Social Security?

I'm reminded of this letter that FDR wrote in 1924 to Delaware attorney Willard Saulsbury.

"I remarked to a number of friends that I did not think the nation would elect a Democrat again until the Republicans had led us into a serious period of depression and unemployment", FDR, Dec 9, 1924

Buffett might find the denial of our serious problems "interesting", but I'm worried that FDR's prediction might ring true again.

I hope not. I remain an optimist; I believe if we acknowledge our problems and address them in a rational manner, we can fix them.

But all I see from the Bush Administration is denial and wishful thinking.

Matthew Yglesias writes:

TAPPED: May 2005 Archives: Some people have written in to question my assertion that conservatives probably could have privatized Social Security in the late 1990s had they not decided to pursue the Monica Lewinsky matter again... take a look at what Prospect editor Bob Kuttner was writing about seven years ago: "Fast forward to 1998. Several Democrats, led by Senators Robert Kerrey and Pat Moynihan, have now endorsed plans for partial privatization. There is a near universal sense that the program is in grave financial crisis. And the Clinton administration, having bought a little time by proposing that the budget surplus be earmarked for Social Security, is close to concluding that some form of privatization is inevitable..."

At this point, we need to take a deep breath, undergo a cortico-thalamic pause, and distinguish between the privatization1 that would have been proposed by the Clinton Treasury and the privatization2 that Bush wants to serve us.

Privatization1 would have:

1. Created private accounts that were a good deal for beneficiaries.
2. Been part of an overall plan that would have raised national saving.
3. Preserved a baseline defined-benefit component of Social Security.
4. Been implemented by highly-competent and public-spirited centrist technocrats.

By contrast, privatization2 would:

1. Create private accounts that--with the 3% real clawback--are quite possibly a bad idea for many if not most beneficiaries.
2. Be part of an overall plan that is at least as likely to reduce as to add to national saving in the medium run.
3. May well eliminate (we're not sure because the devil is in unreleased details) the baseline defined-benefit component of Social Security.
4. Be implemented by deranged monkeys--the ones who brought us our current deficit, the steel tariff, the bizarre Medicare drug benefit, last year's corporate tax monstrosity, and the Iraqi nuclear weapons program.

These are not the same thing at all, are they? The fact that they are called the same does not mean that they are the same, any more than that you can call them both "food" makes tiramisu identical to moose-dropping pie.

Pythagoras, if I recall correctly, got into similar problems. For Pythagoras, the one word "pneuma" meant "wind," "breath," "spirit," "ghost," and "soul." Thus the Pythagorean doctrine that eating beans was destructive of your soul...

Alan Greenspan says:

FT.com / Capital markets - Greenspan warns on credit derivatives : By Richard Beales and Gillian Tett in New York: Rapid growth in the credit derivatives markets has created considerable uncertainty about how the global financial system might react to any new economic shocks, Alan Greenspan, chairman of the US Federal Reserve, warned on Thursday.The sheer complexity of derivatives instruments, in particular, coupled with the consolidation in the financial industry, made it increasingly hard for regulators and bankers to assess levels of risk, he said...

Translated into English, this means: "We don't know what financial institutions might be underwater after a large sudden drop in the dollar or spike in interest rates."

Chad Orzel is fortunate to get a better class of spam than most of us:

Uncertain Principles: Now We're Talking: This morning's spam sweep shows signs of increasing sophistication, as this header jumped out at me: "Need 532nm green laser?" Now that's what I want in spam. Don't try to offer me billions of ill-gotten African wealth in a transparent Spanish Prisoner update. I'm all about illicit laser technology...

As it happens, I don't need a 532 nm green laser at the moment. But if you throw in a Ti:Sapph laser to go with it, you might just get me to click a link.

E.S. Browning writes about mid-century asset meltdown scenarios:

WSJ.com - As Boomers Retire, a Debate: Will Stock Prices Get Crushed?: By E.S. BROWNING: For tens of millions of baby boomers and younger workers, the basic long-range financial plan is simple: accumulate stocks and bonds while working, then slowly sell them off to keep up a comfortable lifestyle in retirement. Not so fast, says Jeremy Siegel... a flood of boomer retirees with trillions of dollars of assets to sell over the next 20 to 40 years threatens to crush stock and bond prices. He says it will take a massive investment in U.S. stocks by people in India, China and other developing countries to prevent a market meltdown.

Robin Brooks, an economist at the International Monetary Fund... thinks the wealthy individuals who own a large percentage of U.S. stock won't need to sell, and companies may boost dividends so retiree investors can hang on to their shares.... The ratio of working-age people to retirees will decline over the next 30 years to an estimated 2.6 to 1 from 4.9 to 1 today. Simple supply-and-demand economics suggests that as retirees dump their holdings into a thin market, stock prices could plummet.... "Whether we will see some sort of crash or slow crumble over the next decade or so, I don't know," says Andrew Abel, another finance professor from the Wharton School at the University of Pennsylvania. "But it is certainly likely enough that it has got to enter into people's planning."...

Prof. Siegel's model highlights a fundamental contradiction between common expectations today and reality. He starts with several reasonable-sounding assumptions: Productivity will continue to rise modestly but not leap forward. Taxes, the retirement age, immigration and life expectancy will stay broadly in line with current expectations -- as will the percentage of income that working people consume. In that case, the model suggests, retirees can't possibly maintain 90% of their preretirement standard of living, the typical level they now seek. Prof. Siegel thinks it's likely retirees would try to sell their assets -- stocks, bonds and real estate -- in a desperate effort to keep up their living standard. But in the aggregate they would fail.... The imbalance between U.S. buyers and sellers would drive stock prices downward, leaving people with far less money than their account statements today suggest they'll have.

The cumulative gap between what retirees would need to keep 90% of their standard of living and what they'll actually get -- given all those assumptions -- is about $123 trillion between now and 2050, the model suggests. That's the U.S. figure; if the same calculation includes Japan, Europe and other industrialized regions, the gap rises to $347 trillion....

When he built a model covering the entire world, he was amazed: People in countries such as China, India, Indonesia, Brazil, Mexico and even Russia were projected to increase their wealth substantially.... They could dramatically increase their purchases of U.S. stock. "By the middle of this century, I believe the Chinese, Indians and other investors from these young countries will gain majority ownership in most of the large global corporations" in the U.S., Europe and Japan.... "The whole country is going to be like Florida," he says in an interview -- meaning the U.S. will slowly sell assets to foreigners just as retirees in Florida live by selling their stocks and bonds to people in other states. But "if the Chinese and the Indians don't come in, it will be bear-market times."...

Prof. Siegel has plenty of allies, however. Yale University economist John Geanakoplos argues that baby boomers have influenced stocks for decades, contributing to a slow market in the late 1960s and the 1970s as they came of age and aiding the long post-1982 boom as they started building nest eggs. "Baby boomers are reaching the end of the line and soon are going to have to be selling," says Prof. Geanakoplos, a boomer himself. "We should not rationally expect the same rates of return on our investments that our parents did."...

I have a very hard time getting Jeremy Siegel's results out of my own favorite back-of-the-envelope models. I find that even big sell-offs of assets by the elderly have little effect on the prices of reproducible assets--the sell-off takes generations, and (mostly) has the effect of reducing corporate investment as firms decide that they can use their cash better to merge than in boosting their own capital stock and capacity. But just because my own favorite back-of-the-envelope models don't show it doesn't mean it isn't there...

David Wessel writes:

WSJ.com - Capital: More significantly, the president's prime-time comments highlighted the contrast between his vision for Social Security and his critics', sharpening the choice that politicians and the public now face. The president argues that Social Security should be a safety net to keep the elderly out of poverty, not a broad social-insurance plan that pays retirement benefits to the poor, the middle class and the rich. He says it should be a way for Americans to save and build wealth, not a way for them to share the risk of death, disease or destitution.... 'Why should people not be allowed to own and manage their own assets who aren't the...investor class?' Mr. Bush said. 'I think everybody ought to be given that right.' In Mississippi this week, he said, 'I want it so that people can say: 'I own something.''...

Contrast that with Franklin D. Roosevelt's words in 1934: 'These three great objectives -- the security of the home, the security of livelihood and the security of social insurance... constitute a right which belongs to every individual and every family willing to work.'... Adding Bush-style private accounts would further reduce traditional benefits: Private accounts would grow or shrink with stocks and bonds, but traditional benefits would be reduced to reflect the payroll taxes a worker diverts from the government program. This two-fisted squeeze on traditional benefits means some high-wage workers would still pay into the government Social Security program, but would see a very small benefit check, perhaps none, when they retire in midcentury.... [T]his is a very big change in the essence of Social Security.... The erosion of FDR-style social insurance -- not just Social Security, but Medicare and unemployment insurance, too -- would be applauded by some. 'Unemployment-insurance programs raise unemployment,' Harvard University economics professor Martin Feldstein declared recently. 'Retirement pensions induce earlier retirement and depress saving. And health-insurance programs increase medical costs.'... Others fiercely argue that individual accounts have merit but not as a substitute for social insurance. 'It's extrapolating the germ of a good idea to wildly inappropriate settings,' says Peter Orszag, a Brookings Institution economist.... The Social Security debate is often bogged down in dueling myths and incomprehensible arithmetic... this actually is a debate about the fundamental nature of America's most popular government program.

I do wish David had pointed out that "own and manage their own assets" is *not* in Bush's plan. Bush's plan--what we know of it--allows you to place your private account in one or more of three and only of three places: a money-market index fund, a bond index fund, and a stock index fund. (If they're smart they'll limit beneficiaries' ability to churn among these three as well.) I suspect that Bush doesn't fully understand how tightly constrained and regulated his individual accounts are--if he did, he wouldn't be talking about people managing the assets in their private accounts.

Can't say no to teaching extra classes, that is. Well, it is a low-workload seminar. And *somebody* should smooth the path so that interdisciplinary social science students who want to finish their theses next fall to be able to do so. And if not me, who? There's no money in the budget to actually pay somebody to do it, and I'd feel uneasy about trying to get anybody else to "volunteer":

However, some people are very happy about this:

Good news! An honors thesis-writing seminar will be offered next fall by Prof. Brad DeLong. This seminar will bring students together from DS, LAS, MES, PACS and PEIS into a small group format for support and assistance with writing the honors thesis. Chair DeLong will be your first reader. You still get to choose your second reader, a faculty mentor who is familiar with your topic who will guide your research.

To enroll in the fall H195 seminar, you must:

1. Have completed IAS 118 or IAS 102, be currently enrolled in IAS 102, or be planning to take IAS 102 in the summer.
2. Have a viable research prospectus by the first day of the fall semester.
3. Will have at least a 3.5 cumulative and 3.6 major GPA by graduation.

Once written, you can send your completed research prospectus to Prof. DeLong ([email protected]).

The date and time of the class is yet to be determined, but I will email it to this list-serve as soon as it is scheduled.

Matthew Yglesias looks into the abyss and shudders as he realizes that, as far as America's right is concerned, Max Boot is about as good as it gets--and that's none too good:

Matthew Yglesias: Taxes, Spending, and Britain: Max Boot, what passes for an intelligent conservative op-ed writer, offers some advice to the Tories:

Much of the Tories' trouble is due to the skill with which Blair has seized the political center. He has run a tough, pro-American foreign policy while not interfering with a domestic economy that has produced 13 years of growth. Yet there are still issues on which he could be vulnerable, even if the Tories stay away from the 'third rail' of British politics, the National Health Service.The first of these is taxes. Although the Labor government has kept top income tax rates where they were after the Thatcher cuts of the 1980s, it has presided over dozens of stealth tax increases. The share of the economy taken by government has edged up from 35% in 1997 to a projected 42% today. (In the U.S., it's 29%.) The Tories should be promising big tax relief, as Ronald Reagan and George W. Bush did. Instead they're offering a paltry $7.5 billion in cuts, just 0.6% of the budget. . . .

Admittedly the Tories have some credibility problems in all these areas because of the disastrous John Major government, which took Britain further into the EU, raised taxes and cut the defense budget. But Major has been out of office since 1997 -- long enough for the Tories to have recovered. The reason they haven't is that they've been focused more on political posturing than on principled policies. As Bruce Anderson writes in the Spectator, Britain's leading conservative magazine: 'For the past seven weeks, the Tories have been suffering the consequences of seven years' timidity.'

[Boot] thinks the Conservatives ought to propose large tax cuts, large increases in defense spending, and promise not to cut the U.K.'s largest domestic program, the National Health Service. Most astoundingly, this mathematically illiterate advice is explicitly contrasted with 'political posturing' and put forward instead as a 'principled' alternative. That should give you a sense of the ridiculously poor quality of substantive policy thought on the contemporary American right -- this crowd wouldn't know serious thinking if it smacked them in the face.

The other takeaway point is the sheer irrationality of the tax cut jihad. Britain, as anyone paying attention to today's election will know, and as Boot even manages to concede, has had very strong economic growth during the Blair years despite having significantly higher levels of taxation than the United States. Nevertheless, conservatives insist that further tax cuts are necessary to make the American economy succeed and that the Tories do poorly by not slavishly imitating the nonsensical policies of their pals across the Atlantic. The real lesson should be precisely the reverse -- if over the next several decades we fully-fund Social Security's promises, extend health care coverage to all Americans, recommit to investments in public infrastructure, maintain a strong miltiary, and provide some more liberal goodies taxes will need to go up. They'll need to go up quite a bit. And the economy will be -- just like the British economy -- just fine even if we do it.

Ray Ginger on Clarence Darrow, from Ray Ginger (1975), The Age of Excess: The United States from 1877-1914 (Prospect Heights, IL: Waveland Press: 0192486013954), pp. 358-9:

Lawyer: Clarence Darrow: The name of Clarence Seward Darrow (1857-1938) conjures up the Monkey Trial and Leopold-Loeb. He is remembered as the foremost defense lawyer of his generation, spokeman for the accused in dozens of murder trials. This view is badly distorted. He was a courtroom advocate only in his waning years. The truth is far more complex.

Darrow found his springboard into the Chicago bar in the practice of civil law, not of criminal. His friendship with John Peter Altgeld made him the corporation counsel of Chicago, representing the city in such mundane actions as land titles and tax assessments. Next he was general attorney for the Chicago and Northwestern Railroad, trying to fend off the regulatory efforts of municipalities and legislatures and the federal authorities. It was his appearance as attorney for Eugene V. Debs in the Pullman boycott of 1894 that projected him onto a larger and more brilliantly lighted stage. For the next twenty years his best-known clients were a cross-section of the trade union officials of the nation.

Even after he became a famous labor lawyer, Darrow continued to represent large corporations--if they would pay his fee. His friends in the settlement houses sometimes challenged the contradiction in his behavior. He replied thus, probably in 1895, to one of them:

I undertook to serve this company or these people, believing they had an ordinance, procured by the aid of boodle. Judged by the ordinary commercial and legal standard of ethics I did right.... I am satisfied that judged by the higher law, in which we both believe, I could not be justified, and that I am practically a thief. I am taking money I did not earn, which comes to me from men who did not earn it, but who get it, because they have a chance to get it.... I came to Chicago about eight years ago, before I came I lived in a small country town.... I determined to take my chance with the rest, to get what I could out of the system and use it to destroy the system. I came without friends or money. Society provides no fund out of which such people can live while preaching heresy. It compels us to get our living out of society as it is or die. I do not choose yet to die, although perhap it would be the best...

Darrow was in a quandary. The lawyers he knew as a youth were private practitioners, each his own man, picking his own clients, serving in a wide spectrum of causes. But the legal firms on the ascendant in 1900 were bureaucratic teams of experts. Not only was each attorney a victim of the division of labor, so were most firms (specialists in municipal bonds, or railroad reorganizations, or land development). Darrow was the marginal man, teetering between these ways of life. In the long haul, he liked the old ways better than the new.

The British election will be weblogged:

What You Can Get Away With - Nick Barlow's weblog: OK, I have no idea what's going on - Lib Dems lose Newbury on a 6% swing to the Tories, but hold Cheadle (the most marginal LD seat) on a 4% swing away from the Conservatives. Now, Labour hold Edgbaston with the Tories making almost no gain against a 6% drop in Gisela Stuart's vote.

I have no idea what's going on as Labour have now held Ynys Mon (Anglesey) from Plaid, so if anyone has a clue, please say so.

Actually, I'll make one prediction: at the next election, all three main parties will have new leaders.

Hornsey and Wood Green - Lib Dem gain with a 15% swing! Barbara Roche, you just took one hell of a beating!

Current predictions: BBC say 359/201/59, Phil Hunt says 365/190/60.

The Fifteen-Year-Old is upstairs writing an essay using Microsoft Word. I open Excel, and am told that I cannot do so: that my copy of Microsoft *Office* is already in use on the LAN. It seems that I do not have one license to use Word, one license to use Excel, and one license to use Powerpoint--I just have one license to use *Office*.

Time to see if the spreadsheet will open in NeoOffice/J... It will! I'm free! I'm free!

Cory Doctorow decides that it's time to give Phillip Lenssen his "I am Spartacus!" moment as Phillip comes under attack from Search Engine Optimization, Inc. Please join in:

Boing Boing: Bullying Search Engine Optimization, Inc uses legal threats to silence critics: Phillip Lenssen blogged some material about a 'Search Engine Optimizer' (a company that helps web-developers inflate their rankings with search-engines) called Search Engine Optimization, Inc. The service had all but vanished from Google's database, and Phillip, a commentator on this industry, noted that this boded poorly for the company, indicating that they'd probably done something wrong to incur the wrath of Google (the 'Google Death Penalty'), which meant that they ended up looking totally incompentent: not only couldn't they improve your site's PageRank, they couldn't get themselves ranked on Google.

The company responded with a threatening, bogus Cease-and-Desist letter telling Phillip that he had to take his page down or face legal action. Never mind that Phillip's post contained nothing actionable, he couldn't afford a lawsuit and poof, these bullies were able to censor their critics off the Internet. Here's the stuff that they believe gives them grounds to sue Phillip. I think you'll agree that this is about as bogus a claim as we can imagine:

It's kind of ironic that SEOInc.com, a search engine optimization company which for a while was on the Google number 1 spot for the highly competitive query 'search engine optimization', is now nowhere to be found in the Google results. This is likely due to the recent PageRank update and even more algorithm tweaks implemented by Google. Enter 'SEOinc' into Google.com, and SEOInc.com is nowhere in the top 10; and the SEOInc.com PageRank has dropped to 'none'. Only by entering 'site:seoinc.com' into Google will you see the site is still indexed in some way. And while a low or non-existent Google ranking is bad enough for sites outside the SEO industry, it hits everyone in the SEO business twice as hard: not only are SEOInc not being found with search engines anymore, they've also lost their biggest proof their services are worth paying for.

Of course, the fact this site has seen the Google death penalty hints that they've overoptimized using 'black hat' search engine optimization (such as linkfarms, for example). In either case, these days it pays out more than ever to optimize your content and to deliver valid, accessible HTML, without spending a second thought on what search engines may like. They're just too flaky to be trusted.

The best response to this kind of bullying is shining a light on it. Looking for SEO, Inc in Google won't bring you to their website, but I'm pretty sure it will get you to this blog-post, where you can read all about what kind of censorious activity this company gets up to when someone points out their failings.

Link to Google cache of Phillip's post, Link to PDF of C&D letter

Now if we could only get back to more normal rates of employment growth, the future would look bright indeed:

Productivity and Costs, First Quarter 2005, Preliminary : The Bureau of Labor Statistics of the U.S. Department of Labor today reported preliminary productivity data--as measured by output per hour of all persons--for the first quarter of 2005. The seasonally adjusted annual rates of productivity change in the first quarter were: 2.1 percent in the business sector and 2.6 percent in the nonfarm business sector.

Productivity in the business sector grew more slowly than in the fourth quarter of 2004, when it increased 3.7 percent. In the nonfarm business sector, however, productivity increased more in the first quarter than it had in the previous quarter. Nonfarm business labor productivity increased 2.1 percent in the fourth quarter of 2004.

In manufacturing, productivity changes in the first quarter were: 3.9 percent in manufacturing, 6.3 percent in durable goods manufacturing, and 1.3 percent in nondurable goods manufacturing. Productivity growth in manufacturing in the first quarter of 2005 reflected a 3.3-percent increase in output and a drop of 0.7 percent in hours worked in the sector. Output and hours in manufacturing, which includes about 13 percent of U.S. business sector employment, tend to vary more from quarter to quarter than data for the aggregate business and nonfarm business sectors...

Walk around Berkeley in a coat and tie--or even lose the tie and walk around in a tweed jacket with shiny black dress shoes, a button-down shirt, and dark well-pressed wool pants--and you carry your own cone of silence and zone of insulation with you. People approaching you part so as to pass at least three feet from you as you go by. People talking animatedly get quieter and quieter and finally fall silent until you have passed..

Walk around Berkeley in white tube socks, sneakers, running shorts, and a t-shirt, and the experience is very different--particularly if your running shorts have a three-inch rip in the seam caused by catching them on a pole as you jumped over a fence in pursuit of America's Silliest Dog^TM, and if you are unshaven because you fell asleep nose-in-computer while you were working on a draft of a piece for Slate, had to finish it in the morning, and so ran out of shaving time. Then you appear to be one of those random souls wandering around Berkeley whose brain has been fried by too much time nose-in-Grundrisse or contemplating the poetry and drawings of William Blake:

"Oh, you should definitely take 101b!"

"Are you sure? After 1, 101a has been quite a shock."

"But the math in 101b is not nearly as ferocious. And the professor teaching 101b in the fall--he wrote the textbook. Do it!"

"I'm not sure..."

"Excuse me. I'm Brad DeLong. A tenured professor here at Berkeley with my office in Evans Hall. I'm teaching Economics 101b this fall..."

"Ulp!"

"How can I help?"

"Well, should I take Economics 101b? Or 100b?"

"It depends. Are you a person who finds math congenial? Are equations and mathematical concepts aids to your understanding? Or are they unpleasant obstacles you have to clamber over? If they are the second, you won't enjoy 101b. If they are the first, you probably will."

"'Enjoy'?"

Brad Setser muses:

Brad Setser's Web Log: Specializing in the production of houses: The big policy question, of course, is what, if anything, the Fed should do (or should have done) to try to limit the risk that the US is becoming too specialized in the production of houses. After all, the easiest way to reduce the incentive to produce houses would be to raise interest rates. By taking away the incentive to borrow against rising home prices to support current consumption, the Fed could bring US demand growth back in line with US income growth (See this FT oped by former Fed international staff director/ Treasury Ast. Secretary Ted Truman). But in the process, the Fed also might put a damper on employment growth.

A very good line of Kashif Mansori of Angry Bear:

Angry Bear: Month by month, the non-service portion of the US economy has slowly been evolving from a goods-producing economy into a house-producing economy...

Rain (as opposed to fog drip) in Berkeley on May 4 is completely ridiculous.

Norman Ornstein speaks:

Norman Ornstein: "These Five Senators Know Better Than to Go Nuclear. Don't They?" Roll Call May 4, 2005: The fate of the Senate now rests in the hands of a handful of Republicans who have been great figures of the Senate, custodians of its traditions and its essence. They will soon come to a crossroads on the “nuclear” option.... All, I believe, know better, and each will be judged by history on their choice in this matter. They include Dick Lugar of Indiana, Ted Stevens of Alaska, John Warner of Virginia, Thad Cochran of Mississippi and Pete Domenici of New Mexico.... One late evening... I turned to Domenici and asked him why he was spending so many hours on a thankless task like ours. After all, his constituents would never notice, and any changes we recommended... were likely to be opposed vigorously.... He replied that service in the Senate was the highest honor he could receive, and he was determined to leave the place a better institution than when he arrived....

The Senate is on the verge of meltdown over the nuclear option, an unprecedented step that would shatter 200 years of precedent over rules changes and open up a Pandora’s box of problems in the years ahead.... [L]et’s look at the means used to achieve the goal of altering Senate procedures to block filibusters on judicial nominations.... [T]he Senate will have to get around the clear rules and precedents, set and regularly reaffirmed over 200 years, that allow debate on questions of constitutional interpretation--debate which itself can be filibustered. It will have to do this in a peremptory fashion, ignoring or overruling the Parliamentarian. And it will establish, beyond question, a new precedent... that whatever the Senate rules say... they can be ignored or reversed at any given moment on the whim of the current majority....

Rule XXII is clear about extended debate and cloture requirements, both for changing Senate rules (two-thirds required) and any other action by the Senate, nominations or legislation (60 Senators required).... Senate Rule XXXI... makes clear that there is neither guarantee nor expectation that nominations made by the president get an up-or-down vote.... It reads: “Nominations neither confirmed nor rejected during the session at which they are made shall not be acted upon at any succeeding session without being again made to the Senate by the President; and if the Senate shall adjourn or take a recess for more than thirty days, all nominations pending and not finally acted upon at the time of taking such adjournment or recess shall be returned by the Secretary to the President, and shall not again be considered unless they shall again be made to the Senate by the President.”

By invoking their self-described nuclear option without changing the rules, a Senate majority will effectively erase them.... The precedent set [will be one of] a majority ignoring its own rules to override longstanding practice....

I know that Lugar, Stevens, Cochran, Warner and Domenici know better. (I know that Orrin Hatch (Utah), Bob Bennett (Utah), Lamar Alexander (Tenn.) and Elizabeth Dole (N.C.) know better as well, but they are lost causes.) I also know that any of these five can withstand the heat that would come if they bucked their party leaders on this issue. Pete, remember what you said to me in 1977. Leave the Senate a better place. Please.

Does he wish that he'd been a little... clearer about his judgment of today's Republican leadership last fall, when it might have done some good?

I see that Mark Warshawsky and his people in the Treasury's Office of Economic Policy have put the numbers in their data cards online:

U.S. Treasury - Office Of Economic Policy - Monitoring the U.S. and World Economies: Quarterly Data. Monthly Data.

Carry these around with you at all times and occasionally glance at them, and you'll be amazed at how well-informed about the current state of the economy you will be... well, maybe you will appear.

If you are going to skip lunch because writing up your lecture notes is so fascinating, do *not* then stop off at Trader Joe's for bread, milk, and orange juice on your way home.

$72.83 poorer...

Ogged watches the skies and informs me that my article for Slate is up:

Unfogged: Hey, it's Brad DeLong writing for Slate!

Nice to hear that it's up. It would be *very* nice to have minions who constantly scanned the internets for things of interest to me. Technorati and Google are very nice, but more would be better...

The piece, I think, is quite good and makes a bunch of good points. But I actually don't think it's a plan to kill Social Security--it's floundering around in the hope of gaining traction by proposing something progressive:

Pozen Pill: How Bush's version of "progressive indexing" would kill Social Security. By Brad DeLong. Posted Tuesday, May 3, 2005, at 2:45 PM PT

Will this man kill Social Security?

George W. Bush has come out in favor of a proposal for cutting Social Security benefits called "progressive price indexing."

Or has he? On May 1, White House Chief of Staff Andrew Card appeared on Meet the Press. A proposal by Robert Pozen "... is really not necessarily the president's plan," Card noted. "It's directionally consistent with the president's plan." So what does Pozen say, and where does Bush differ?

As everyone knows, Social Security has a problem: The current level of dedicated Social Security taxes is very unlikely to bring in enough money to fully pay the benefits currently specified by law beyond the middle of this century. Social Security taxes will have to go up, Social Security benefits will have to be cut below currently projected levels, or other tax revenues will have to be earmarked to pay Social Security benefits....

J. Bradford DeLong (2005), "Pozen Pill:

Pozen Pill: "How Bush's Version of 'Progressive Indexing' would kill Social Security," Slate (Tuesday, May 3, 2005) http://slate.msn.com/id/2117948/.

Signs on the wall inform me of all these interesting things going on around me that I never have time to go to:

Wed. 4-5. Prof. Grizzle, "Walking and Running in Bipedal Robots: Theory and Experiments."

But shouldn't somebody named Professor Grizzle be studying quadrupedal, hibernating robots?

Jason Kottke writes:

Extra! Extra! Tiger Headlines Roar! (kottke.org): I'm somewhat disappointed I couldn't find a headline that depicted a battle between Tiger and Microsoft's Longhorn, something like 'Apple's Tiger Slays Microsoft's Grazing Longhorn, Leaving Bloody Entrails Strewn All Over OS Marketplace'. I mean, why even bother if you're not going to go completely over the top? Amateurs.

Jason: we aim to please...

Mark Thoma gives us TIm Duy's thoughts on the Fed:

Economist's View: WSJ: Fed Sees Inflation as Biggest Threat: Tim Duy, a colleague of mine, offers his thoughts.... Before coming to the UO, Tim was an International Economist at Treasury and a Fed Watcher for The G7 Group, a private consulting firm....

Tim says:

On balance, FOMC members want to drop the term 'measured.' They do not want to step up the pace of rate increases. They want instead to have more flexibility about policy. This has always been a problem with the statement - it is often difficult to back off of a critical catch phrase.... The Fed is trying to dissuade investors from concluding that the Q1 growth slowdown is significant enough to dissuade their rate rising campaign. Critics will claim the Fed is ignoring potentially disastrous underlying economic imbalances, and that rising rates threaten to trigger a financial crisis (see DeLong's piece on hard-landings). But the Fed is always behind the curve. I would be surprised to see any shift in the course of policy prior to the Q2 GDP release in July.