Department of "Huh"?
Paul Krugman on the Irrelevance of Median Housing Prices

Three From Daniel Gross...

He points out that the labor market continues to be weak:

Daniel Gross: January 01, 2006 - January 07, 2006 Archives : WEAK LABOR, CONT'D: The economy may be growing nicely, but people who rely on wages for their income aren't doing particularly well. That's why Wal-Mart's same-store sales are growing far more slowly than the economy at large. Meanwhile, the Federal Reserve in December said the inflation data was benign and the climate was good for corporate profits, in part because "subdued gains in compensation and strong growth in productivity were holding down business costs."

He notes that the world is not flat at all--especially not in India:

Daniel Gross: January 01, 2006 - January 07, 2006 Archives : NOT SO FLAT: John Larkin reports in the Wall Street Journal that the Tom Friedman's India-techies-taking-over-the-world scenario may have to wait a few years--at least until students begin to wear shoes to business meetings:

MUMBAI -- India, despite its reputation as a bottomless well of back-office talent ready to scoop up American jobs, is having an increasingly difficult time finding qualified workers to fuel its booming services sector. The cross-sector crunch is especially worrisome in the technology industry, where wages are rising 15% a year as call centers and software firms throw money at the increasingly shallow pool of youngsters who can hit the ground running. Consulting firm McKinsey & Co. says India's information-technology industry could face a deficit of 500,000 workers as soon as 2010, undermining its attractiveness as an investment destination.

Even if companies continue to find the talent they need in the near term, the rising wage bill is a troublesome long-term trend for India's competitive prospects... Russia... compete with India for high-end outsourced work such as software design and solutions... the Philippines -- where English is widely spoken -- to better compete for call-center business. "There are huge numbers of fresh [university] graduates who are just not hirable," says Anand Saraf.... At the heart of India's dilemma lies the subcontinent's antiquated higher-education system... state colleges... controlled by local politicians who arrange for the necessary licenses and get a cut of revenue... emphasis is on making money rather than on academics.... Mr. Saraf[:] "I've even had to tell [new hires] they can't wear slippers to business meetings"...

He falls into shrill unholy madness after reading Greg Mankiw in the Wall Street Journal, and runs through the night on all fours ululating his shrill screeds beneath the dead gaze of the cold lifeless moon:

Daniel Gross: January 01, 2006 - January 07, 2006 Archives : NEW YEAR'S RESOLUTIONS: N. Gregory Mankiw, back in Cambridge, seems to have discovered his capacity to speak truth to power--which he must have buried somewhere in Harvard Yard before moving to Washington to serve as Chairman of the Council of Economic Advisers. Today, on the Wall Street Journal editorial page, he offers seven New Year's Resolutions to economic policy makers--of which he was one.... It would have been nice if Mankiw had the fortitude to speak these obvious, eternal truths when he was actually in a position to influence policy. But did he shout from the rooftops that the fiscal course established by the president and the Republican Congress would lead either to massive benefits or massive tax increases? And he did say which choice he favored? Did he -- publicly or privately -- urge that all federal subsidies for farmers of corn, wheat, cotton, soybeans and rice, who are concentrated in Republican-dominated states, be repealed? Did he -- publicly or privately -- call for an increase in higher gasoline taxes and a carbon tax to combat global warning? Um, lets see, so far as I can tell, no, no, no, and no.

A far more interesting piece would have been a first-person account of: (1) how Mankiw tried to bring up these eternal, obvious truths and was repeatedly shot down or ignored; or (2) why he didn't bother to try to bring up these eternal, obvious truths. Here it is, three days into the new year, and he's already got me violating one of my own resolutions: to stop screaming and pulling my hair out when I read the Wall Street Journal editorial page.

I'm inclined to cut Greg Mankiw a good deal more slack than Dan Gross is. To be an effective "inside" player--to have your arguments taken seriously in the Roosevelt Room--you have to be part of the team. Which means that, when you lose, you go out there in public and make as good a case for the president's policies as you can without allowing your advocacy to inflict more than flesh wounds to your long-run reputation. What's a flesh wound? That's a judgment call--think of the Black Knight in "Monty Python and the Holy Grail."

I have no doubt that Greg made as strong a case within the Bush administration's councils for his seven points of advice that he felt that he could without losing all effectiveness. I would like to know why he appears to have had so little impact on policy--I haven't heard analogues of the stories about Glenn Hubbard stopping major acts of idiocy...

Comments