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July 2006

Worth Reading, 20060718

Worth reading, July 18, 2006:

The Horse's Mouth: TIMES CORRECTS FALSE HILLARY STORY. As you know by now, the Times erroneously reported that Hillary "chastised Democrats" for "wasting time" when in fact she was talking about the GOP-controlled Congress. Many of us squawked and screamed. And it looks like it worked. The Times has now posted this editor's note: "An article published on the Web site of The New York Times on Sunday reported on a speech by Senator Hillary Rodham Clinton in Rogers, Ark. The headline and article said that Mrs. Clinton had criticized Democrats on Saturday for "wasting time" by dealing with issues that helped Republicans turn out voters rather than finding consensus on mainstream subjects. The opening sentence of the article and the headline were based on a misinterpretation of a passage in her speech in which she first referred to the Democrats' agenda in the Senate and then went on to criticize the actions of the Republican majority in Congress. She was referring to the Republican-led Congress -- not Democrats -- when she said: "So we do other things, we do things that are controversial, we do things that try to inflame their base so that they can turn people out and vote for their candidates. I think we are wasting time, we are wasting lives, we need to get back to making America work again, in a bipartisan, nonpartisan way." The article used only the phrase "wasting time," not the full quotation."

Daily Kos: Through the Looking Glass: Can the American army rein in the Shiite militias and the Shia Iraqi forces? The very same Iraqi forces that we trained to stand up so we could stand down? Well, now that those forces have stood up, in a manner of speaking, we can't stand down. Iraq is in complete chaos and the Bush administration has no plan. And now we've reached the point where the Sunni seek support from the United States against the American trained and installed Shia forces? We are through the looking glass...

In an About-Face, Sunnis Want U.S. to Remain in Iraq - New York Times: By EDWARD WONG and DEXTER FILKINS: As sectarian violence soars, many Sunni Arab political and religious leaders once staunchly opposed to the American presence here are now saying they need American troops to protect them from the rampages of Shiite militias and Shiite-run government forces. The pleas from the Sunni Arab leaders have been growing in intensity since an eruption of sectarian bloodletting in February, but they have reached a new pitch in recent days as Shiite militiamen have brazenly shot dead groups of Sunni civilians in broad daylight in Baghdad and other mixed areas of central Iraq...

Backreaction: Neutrinos for Beginners: When I started my position at the University of Arizona, Keith suggested an interesting work about neutrinos to me. I didn't know very much about neutrino physics at this time (okay, I didn't know anything at all). However, I could immediately relate to these elusive particles with small masses that interact only weakly, and which have caused not little physicists to scratch their head. During the following year, I learned a lot about neutrinos. Here, I'd like to give you a short and very basic introduction of what turned out to be a very fascinating and lively field of theoretical as well as experimental physics...

Daniel Gross: July 16, 2006 - July 22, 2006 Archives: GREAT MOMENTS IN CREDULITY: From an article by Michael Abramowitz and Chuck Babington in yesterday's Washington Post.... It's amazing to me that two reporters could print that quote from Milburn, even with the two paragraphs that follow. Why? To say that discretionary spending has been kept in check in the Bush years is, lets see, how should I put this, an appalling lie!...

TAPPED: CHUTZPAH. Hartford Courant columnist Kevin Rennie thinks he's picked up on Joe Lieberman's coming message: Heads I win, tails I make you lose. Rennie writes that "[t]he theme of a Saturday conclave of Greater Hartford Democratic town committee chairs was that if Lieberman loses the primary he will hurt all other Democratic candidates by running as an independent in November. The message was clear: help him now or your favorites suffer in November." So vote Lieb, or the Democratic Party gets it!... Lieberman, after all, need not run as an independent. If he loses the primary, he could bow to the will of the voters and simply slink off into a world of corporate boards and speaking engagements. Man has known worse fates.... What's remarkable, though, is that so little attention is paid by Lieberman's supporters to the import of his decision: It is Lieberman, not Lamont, who will create the three-way race. It is Lieberman, not Lamont, who is choosing to render this a Republican pick-up opportunity. It is Lieberman, not Lamont, who has decided his personal ambitions outweigh the Democratic Party's prospects...

The Corner on National Review Online: Hezbollah's Casualties, The Cynical View [Jonah Goldberg]: I should have mentioned this in the original post. But several readers have raised the other possibility that some of the "civilians" are in fact members of Hezbollah and the Western press takes casualty reports at face value. Maybe. It's not like we haven't see that before. Still, most of these casualties must in fact be civilians — the refugee caravan for example — and Israel has not denied as much...

Stockblog: Market Votes No on Recession: What today's 200 point Dow rally makes obvious is that the market is far more afraid of Ben and his Greenspanian minions overshooting than it is of inflation. So we rally huge on the slightest increase in perception that the Fed may be done soon. We've heard it all before. The bond kings been calling for the Fed to pause and even begin lowering rates back into last year...

Stockblg: Most Ignorant Question Ever Asked: I like to watch our Fed Chairmen report to our elected officials, not for the economic information derived from it, but for laughs. Senator Richard Shelby says, "Historically, energy prices have been excluded from the measure of what you call core prices in the consumer price index. If there is a sustained increase in energy prices, would it be more appropriate for policy makers to rely upon an inflation measure, which includes the energy costs. In other words, does the exclusion of energy prices from the definition of core prices pose any problems for our economists trying to understand the health of our economy at the present time?" OH MY GOD!!! Watching our elected officials try and talk about economics, even the very most basic, is better than anything the Comedy channel puts out. He couldn't possibly have come up with a more idiotic and economically ignorant question to ask. There's no way I could take such a question with a straight face. I'd be like, "Who in the hell elected you and why are you a chairman of anything. You're a freakin' moron." An inflation measure including energy prices? It's called the CPI, aka the headline inflation number that hits the front page newspapers across the country and world. If you put energy prices (and food) back into core, then you've got just the original CPI that we took energy and food prices out of in the first place. The purpose of the core CPI is not to measure overall inflation. That's the purpose of the CPI. The use of the core CPI is to isolate out other prices and see what's happening to them. In recent years it has been to determine how higher energy prices are impacting the prices of other goods...

Michael Walzer: There cannot be any direct attacks on civilian targets (even if the enemy doesn't believe in the existence of civilians), and this principle is a major constraint also on attacks on the economic infrastructure. Writing about the first Iraq war, in 1991, I argued that the U.S. decision to attack "communication and transportation systems, electric power grids, government buildings of every sort, water pumping stations and purification plants" was wrong. "Selected infrastructural targets are easy enough to justify: bridges over which supplies are carried to the army in the field provide an obvious example. But power and water ... are very much like food: they are necessary to the survival and everyday activity of soldiers, but they are equally necessary to everyone else. An attack here is an attack on civilian society. ... [I]t is the military effects, if any, that are 'collateral.'" That was and is a general argument; it clearly applies to the Israeli attacks on power stations in Gaza and Lebanon...

ThinkProgress: Defending Bush's Veto, Rove Grossly Distorts Stem Cell Science: Today, Bush is expected to veto a bill that would expand federal funding for embryonic stem cell research.... Last week, Karl Rove... told the Denver Post that "recent studies" show researchers "have far more promise from adult stem cells than from embryonic stem cells." The Chicago Tribune contacted a dozen top stem cell experts about Rove's claim. They all said it was inaccurate. So who wrote the "studies" that Rove was referring to? White House spokesman Ken Lisaius on Tuesday could not provide the name of a stem cell researcher who shares Rove's views on the superior promise of adult stem cells...

The Horse's Mouth: EDITORIALS GIVING A FREE PASS TO KILLING OF CIVILIANS. Don't miss the latest installment of Greg Mitchell's indispensible column in Editor and Publisher. In it, he comes right out and says that the country's editorial boards have been woefully remiss in condemning Israel's killing of civilians in Lebanon: "While it's not surprising that nearly every editorial page in the U.S. has offered support for Israel's right to retaliate against Hamas and Hezbollah, it's a disgrace that few have expressed outrage, or at least condemnation, over the extent of death and destruction in and around Beirut -- and the attacks on the country's infrastructure, which harms most citizens of that country. Hundreds of civilians have been killed in Lebanon, dozens of bridges and part of Beirut's airport destroyed, power stations and ports short-circuited. Latest reports put the number of refugees at half a million, with thousands of Americans waiting for evacuation..."

WSJ.com - Rambus to Restate Results To Fix Options Accounting: Rambus Inc. said it plans to restate financial statements dating back to 2003 and incur "significant" costs to correct errors related to its stock-option accounting. Shares of Rambus plunged on the news. The Los Altos, Calif., maker of memory chip technology joins about a dozen companies that are working on restatements because of errant accounting for their option grants to top executives and other employees. Federal authorities are also investigating more than 50 companies to determine whether options were illegally backdated or otherwise manipulated. Rambus said its audit committee has determined additional stock-based compensation expenses should have been recorded with respect to certain grants and recognized over the vesting period of the options. The company said the committee considers the amount of the additional expenses to be "material," although it hasn't yet completed its work and reached final conclusions...

The Big Picture: Bernanke & the Markets: Let's cut Ben Bernanke a break: the present situation wasn't of his making; he merely inherited a bad economic set up. Slowing growth, rising inflation, high energy costs, a real estate dependent economy, and the longstanding problem of excess liquidity -- none of these rest at the feet of the present Fed Chair. In reality, they are the result of what Tim Iacono charitably describes as The Mess That Greenspan Made.

Uncertain Principles: Excellent Teaching Advice by Chad Orzel: I'd be remiss in my academic-blogging duties if I failed to point out this Inside Higher Ed piece on teaching core courses. Like many articles published in academic magazines, it's aimed directly at English composition, but the main points can be extended to intro classes in other disciplines. In particular: "10. Don't compare students' attitudes to your own. A colleague of mine who taught business at a private university constantly made scathing comments about his students' seeming lack of effort. "I can't believe you guys don't know this stuff!" he would shout at them. Time and time again, he referred to his own college days -- how he went above and beyond what was expected by his professor, excelled in his subject, and earned stellar grades. The dean finally called him into his office and confronted him, saying, "These students are not you. You majored in this subject; of course you were interested in it. They are taking this as a requirement. Lighten up." As my colleague sat there speechless, the dean continued, "And anyway, don't you ever remember taking courses you didn't like? Try to think back to when you were 20." This is not to say that we can't expect students to achieve the goals we set out for them. But it helps to recognize that there are sometimes years -- or even decades of difference in context and values between us and our students."


Dana Milbank vs. Helen Thomas

AltHippo, in "A Lawn Gnome of Journalism Comes Up Defensive," is unhappy with Dana Milbank, who writes:

A Giant of Journalism Comes Up Short: Helen Thomas's new treatise, "Watchdogs of Democracy?" is really two books in one.... The second is a rather unpleasant rehashing of the liberal criticism of the press's performance before the Iraq war.... It is an effort unworthy of a woman who, whatever her late husband was, truly is a journalistic icon.

"Nothing is more troubling to me than the obsequious press during the run-up to the invasion of Iraq," she tells us, citing pulled punches at news conferences. "Critics are still wondering why White House reporters were so quiescent at President Bush's March 6, 2003, news conference, which was scripted and in which he made it eminently clear that the United States was going to war.... White House reporters became a laughingstock before the viewing public, who wondered about all the 'softballs' being pitched to the president at such a momentous time."

Really? Let's review some of the "softballs" that were tossed that night:

  • "If all these nations... have access to the same intelligence information, why is it that they are reluctant to think that the threat is so real, so imminent that we need to move to the brink of war now?"
  • "I wonder why you think so many people around the world take a different view of the threat that Saddam Hussein poses than you and your allies?"
  • "How would you answer your critics who say that they think this is somehow personal? As Senator Kennedy put it... your fixation with Saddam Hussein is making the world a more dangerous place."
  • "What went wrong that so many governments and people around the world now not only disagree with you very strongly, but see the U.S. under your leadership as an arrogant power?"
  • "There are a lot of people in this country... who still wonder why blood has to be shed if he hasn't attacked us."
  • "Do you ever worry... that this could lead to more terrorism, more anti-American sentiment, more instability in the Middle East?"
  • "What can you say tonight, sir, to the sons and the daughters of the Americans who served in Vietnam to assure them that you will not lead this country down a similar path in Iraq?"

This is quiescent and obsequious?...

Milbank's editing makes it hard to see what the seven questions he picks (out of twenty-seven) really are.

The first question he cites has a second part, which turns it from judgement-of-intelligence question into a diplomatic-strategy-at-the-UN question--Milbank quotes the windup, but doesn't quote the softball delivery.

The second question is a hardball one--but Bush doesn't answer it, and there is no follow-up. The one thing the White House press corps doesn't do is for one reporter to say, "But you did not answer my colleague's question."

The third question also has a second half that Milbank does not quote, and that turns it from a hardball into a softball that asks Bush to outline "worst-case scenarios," which Bush answers by saying that he takes his responsibility to protect America seriously.

Question four is once again a legitimate hardball question. And Bush doesn't answer it. And there is no follow-up asking for a real answer.

Question five is a place where Milbank's ellipsis has changed the meaning of the question. As AltHippo writes, "the context... indicates that the questioner believes that those 'who still wonder why blood has to be shed if he hasn’t attacked us' are misinformed. That’s a completely different meaning than the excerpt [implies]."

Questions six and seven seem to me to be entirely reasonable ones--and they get answers, false answers we now know, but answers.

So of Milbank's seven examples of the White House press corps not being "quiescent and obsequious," we have three softballs, two dodged questions because the press corps won't help each other, and two real questions that get answered.

And, of course, there are the twenty questions Milbank doesn't pick, including:

Can any military operation be considered a success if the United States does not capture Saddam Hussein, as you once said, "Dead or alive?"

[H]ow is your faith guiding you? And what should you tell America? Well, what should America do collectively as you instructed before 9/11? Should it be pray? Because you are saying, "Let's continue the war on terror."

I score this for Helen Thomas. The press corps is quiescent and obsequious--even though individual members of it do not want to be. The press corps is quiescent and obsequious for four reasons. First, many of its members are quiescent and obsequious. Second, all of its members are perennially underbriefed. Third, its members don't back each other up. Nobody says: "You didn't answer my colleague's question." Fourth, its members are, by and large, lousy questioners: they ask multi-part questions with one hardball and two softball components, and so the president gets to pick and choose which part he will answer.

How much of what is wrong with the White House press corps could be fixed if they routinely backed up the previous questioner and limited themselves to one-part question? I'm not sure. Less than if they were properly briefed. But it couldn't hurt. And the way it played out on March 6, 2003 was very different than a casual reader would gather from the seven questions excerpted by Dana Milbank.


Let's roll the tape: all questions, unedited, on March 6, 2003, from http://www.cnn.com/2003/US/03/06/bush.speech.transcript/, with the phrases picked out by Milbank in italics:

Let me see if I can further -- if you could further define what you just called this important moment we're in. Since you made it clear just now that you don't think that Saddam has disarmed and we have a quarter million troops in the Persian Gulf and now that you've called on the world to be ready to use force as a last resort, are we just days away from the point at which you decide whether or not we go to war? And what harm would it do to give Saddam a final ultimatum, a two- or three-day deadline to disarm or face force?

Thank you. Another hot spot is North Korea. If North Korea restarts their plutonium plant, will that change your thinking about how to handle this crisis? Or are you resigned to North Korea becoming a nuclear power?

Mr. President, you and your top advisers, notably Secretary of State Powell, have repeatedly said that we have shared with our allies all of the current, up-to-date intelligence information that proves the imminence of the threat we face from Saddam Hussein and that they have been sharing their intelligence as well. If all of these nations, all of them our normal allies, have access to the same intelligence information, why is it that they are reluctant to think that the threat is so real, so imminent that we need to move to the brink of war now? And in relation to that, today, the British foreign minister, Jack Straw, suggested at the U.N. that it might be time to look at amending the resolution perhaps with an eye toward a timetable, like that proposed by the Canadians some two weeks ago, that would set a firm deadline to give Saddam Hussein a little bit of time to come clean. And also, obviously, that would give you a little bit of a chance to build more support with any members of the Security Council. Is that something that the governments should be pursuing at the U.N. right now?

Thank you, Mr. President. Sir, if you haven't already made the choice to go to war, can you tell us what you are waiting to hear or see before you do make that decision? And if I may, during a recent demonstration many of the protesters suggested that the U.S. was a threat to peace, which prompted you to wonder out loud why they didn't see Saddam Hussein as a threat to peace. I wonder why you think so many people around the world take a different view of the threat that Saddam Hussein poses than you and your allies?

Thank you, Mr. President. Sir, how would you answer your critics who say that they think is somehow personal? As Senator Kennedy put it tonight, he said your fixation with Saddam Hussein is making the world a more dangerous place. And as you prepare the American people for the possibility of military conflict, could you share with us any of the scenarios your advisers have shared with you about worst-case scenarios, in terms of the potential cost of American lives, the potential cost to the American economy and the potential risks of retaliatory terrorist strikes here at home?

The potential crisis in terms of... for the economy, terrorism.

Thank you, sir. May I follow up on (a previous) question? In the past several weeks your policy on Iraq has generated opposition from the governments of France, Russia, China, Germany, Turkey, the Arab League and many other countries, opened a rift at NATO and at the U.N. and drawn millions of ordinary citizens around the world into the streets into anti-war protests. May I ask what went wrong that so many governments and peoples around the world now not only disagree with you very strongly, but see the U.S. under your leadership as an arrogant power?

Mr. President, good evening. If you order war, can any military operation be considered a success if the United States does not capture Saddam Hussein, as you once said, "Dead or alive?"

Is success contingent upon capturing or killing Saddam Hussein in your mind?

Mr. President, to a lot of people it seems that war is probably inevitable, because many people doubt -- most people I would guess -- that Saddam Hussein will ever do what we are demanding that he do, which is disarm. And if war is inevitable, there are a lot of people in this country -- as much as half by polling standards -- who agree that he should be disarmed, who listen to you say that you have the evidence, but who feel they haven't seen it, and who still wonder why blood has to be shed if he hasn't attacked us.

Thank you, Mr. President. As you said, the Security Council faces a vote next week on a resolution implicitly authorizing an attack on Iraq. Will you call for a vote on that resolution, even if you aren't sure you have the votes?

Mr. President, are you worried that the United States might be viewed as defiant of the United Nations if you went ahead with military action without specific and explicit authorization from the U.N.?

Thank you, Mr. President. Even though our military can certainly prevail without a northern front, isn't Turkey making it at least slightly more challenging for us, and therefore at least slightly more likely that American lives will be lost? And if they don't reverse course, would you stop backing their entry into the European Union?

Mr. President, as the nation is at odds over war, with many organizations like the Congressional Black Caucus pushing for continued diplomacy through the U.N., how is your faith guiding you? And what should you tell America? Well, what should America do collectively as you instructed before 9/11? Should it be pray? Because you are saying, "Let's continue the war on terror."

As you know, not everyone shares your optimistic vision of how this might play out. Do you ever worry, maybe in the wee, small hours, that you might be wrong and they might be right in thinking that this could lead to more terrorism, more anti-American sentiment, more instability in the Middle East?

Mr. President, if you decide to go ahead with military action, there are inspectors on the ground in Baghdad. Will you give them time to leave the country, or the humanitarian workers on the ground, or the journalists? Will you be able to do that and still mount an effective attack on Iraq?

Mr. President, good evening. Sir, you've talked a lot about trusting the American people when it comes to making decisions about their own lives, about how to spend their own money. When it comes to the financial costs of the war, sir, it would seem that the administration surely has costed out various scenarios. If that's the case, why not present some of them to the American people so they know what to expect, sir?

If I can follow on (a previous) question on North Korea, do you believe it is essential for the security of the United States and its allies that North Korea be prevented from developing nuclear weapons? And are you in any way growing frustrated with the pace of the diplomacy there?

Thank you, sir. Mr. President, millions of Americans can recall a time when leaders from both parties set this country on a mission of regime change in Vietnam. Fifty-thousand Americans died. The regime is still there in Hanoi and it hasn't harmed or threatened a single American in 30 years since the war ended. What can you say tonight, sir, to the sons and the daughters of the Americans who served in Vietnam to assure them that you will not lead this country down a similar path in Iraq?

Thank you, Mr. President. In the coming days, the American people are going to hear a lot of debate about this British proposal of a possible deadline being added to the resolution or not. And I know you don't want to tip your hand; this is a great diplomatic moment. But from the administration's perspective and your own perspective, can you share for the American public what you view as the pros and cons associated with that proposal?


Why Oh Why Can't We Have a Better Press Corps?

CJR Daily really does not need to have Felix Gillette writing for it. He says:

CJR Daily: Where's the Thief? The 'Options Scandal' is a Dud: Remember that era long ago when the term "options" wasn't yet a dirty word? Yeah, neither do we. These days, you can hardly pick up a business section without seeing a provocative headline using some combination of the words "options" and "scandal."... In recent weeks, this supposed national corporate stock options scandal has started to remind us of nothing less than the Duke lacrosse scandal -- perhaps because in both cases the swarm of accusatory press coverage swirling around the developing story seems to have rapidly outpaced any actual proof of criminal wrongdoing.

The current hubbub can be traced to an academic paper that a Norwegian economist in Iowa published last year in a seemingly obscure journal called Management Science. In the study, "On the Timing of CEO Stock Option Awards," Erik Lie, a finance professor at the University of Iowa, examined how and when various companies awarded stock option grants to their executives between 1992 and 2002. "Stock options are generally granted with a fixed exercise price equal to the stock price on the award date," Lie wrote in the paper's introduction. "If executives can influence the timing of a grant, they might therefore time it to occur (i) after an anticipated future stock price decrease, (ii) after a recent price decrease... or (iii) before an anticipated stock price increase. In any of these cases, self-serving behavior by executives should manifest itself in stock price decreases before stock option grants and/or stock price increases afterward."...

From there, the would-be scandal gained momentum this past March, when the Wall Street Journal picked up on Lie's research and published a story entitled, "The Perfect Payday," which would prove to be the first of an ever-expanding series of articles about options backdating. "The Journal's analysis of grant dates and stock movements suggests the problem may be broader," reported the Journal. "It identified several companies with wildly improbable option-grant patterns. While this doesn't prove chicanery, it shows something very odd: Year after year, some companies' top executives received options on unusually propitious dates." Over the past several months, short of actually proving chicanery, the Journal has suggested the possibility of chicanery at a long list of companies. For readers who like their schadenfreude catalogued, the Journal has even published a handy Options Scorecard, listing some 50 or so companies and noting which ones are currently being investigated by the SEC, the justice department, and so on.

But having your books looked over by the SEC no more makes you guilty of corporate malfeasance than having your block patrolled by a beat cop makes you guilty of kicking the tar out of your neighbor. With more than two-thirds of all SEC investigations resulting in clean bills of health, we humbly submit that the nation's greatest business paper should impose some minimum quota on its a priori insinuations of guilt. Indeed, the vast majority of companies on the Journal's most-wanted list haven't been found guilty of anything -- a fact that the editors of the Journal's series themselves admit (albeit in a roundabout manner). "Granting an option at a price below the current market value, while not illegal in itself, could result in false disclosure," reported the Journal.

This is kind of like saying: buying alcohol at the store, while not illegal in itself, could result in drunk driving. What would happen if a powerful paper in a close-knit community published the names of everyone in town who had recently bought alcohol as part of a larger story about a widening drunk driving scandal? Chances are, other people in the community would soon start wagging their tongues and pointing their fingers at the people on the list -- which is exactly what has happened to the companies fingered by the Journal...

No. It's not like that at all.

The key phrase is "could result in false disclosure." A company that issues an in-the-money option has always needed to account for the option as employee compensation. A company that backdates an in-the-money option to make it look like an out-of-the-money option has falsified its income statement--done, on a much smaller scale, what WorldCom did in claiming high profits by classifying operating expenses as investments in capacity.

CJR has limited credibility. It doesn't need to have Felix Gillette burning it this way.

Reclassify Felix Gillette as UNRELIABLE. Reclassify CJR Daily as LACKING QUALITY CONTROL.


Why Oh Why Can't We Have a Better Press Corps?

The New York Times lies again--this time in its "corrections" department:

Corrections - New York Times: A front-page article on Sunday about the re-election campaign of Senator Joseph I. Lieberman misstated the position he took on the nomination of Judge Samuel A. Alito Jr. to the Supreme Court in some copies. Mr. Lieberman opposed a filibuster against Judge Alito's nomination, but did not support the nomination itself.

When the Senate is divided as the Senate is now, to oppose a filibuster is to support the nomination. The two right ways to describe Lieberman's position on Alito are "Lieberman wanted Alito to be confirmed" and "Lieberman wanted Alito to be confirmed, and also wanted to pretend that he opposed Alito."

We're not dumb--or at least not as dumb as the New York Times wants us to think.


A Little Bit of Bad Inflation News...

Good news on the core PPI: up only 0.2%

Wholesale Prices Jump in June - New York Times: By JEREMY W. PETERS: Published: July 18, 2006: The Labor Department said today that the producer price index rose 0.5 percent in June, following a 0.2 percent increase in May. The consensus forecast among economists had been for a 0.3 percent increase in June. A separate calculation of producer prices excluding the food and energy categories, which are subject to volatile monthly swings, showed more modest increases. That figure, known as the core index, rose 0.2 percent in June, in line with economists' expectations; it rose 0.3 percent in May....

There were conflicting signals in today's Labor Department report, leaving analysts to differ over how severe the inflationary pressure now is. "Wholesale price inflation continues at a pace that makes the Federal Reserve uneasy, even as economic growth slows," said Peter Morici, a professor at the University of Maryland School of Business. "Today's producer-price data indicate that another interest rate hike is likely, even if it poses considerable risks to growth." Noting that much of the increase in June related to higher food costs, Kenneth Beauchemin, an economist with Global Insight, said, "Given that these price movements are the consequence of bad luck on the supply side, and not fundamental inflationary pressures, the Fed will be satisfied with the downward move in the core rate."

Nobody has told Jeremy Peters that he needs to look at the market's reaction to the news:

AP Wire | 07/18/2006 | Treasurys down after inflation update: Yields on three-month Treasury bills rose 5.13 percent as the discount rose 0.05 percentage point to 5.00 percent.

More traders with more money took this news as a sign that the Federal Reserve will be more worried about inflation and more likely to raise interest rates. That would have been, perhaps, the most useful thing Jeremy Peters could tell his readers about the PPI number.


Jason Furman on the Cost of Tax Cuts

Jason Furman takes a step back:

Do Revenue Surprises Tell Us Much about The Cost of Tax Cuts?, 7/18/06: by Jason Furman: The best answer to the question posed by the title of this paper is probably “no,” revenue surprises do not tell us much about the cost of tax cuts. The reason is that revenues are extremely volatile and move up and down in response to a variety of factors that have nothing to do with tax policy. Indeed, the impacts on revenue levels that the most optimistic dynamic-scoring models predict are trivial in comparison to the unexpected swings in revenue levels that regularly occur for other reasons, whether taxes are cut, raised, or left unchanged.

Another key point about drawing lessons based on revenue surprises is that if one wanted to use revenue surprises — i.e., how actual revenue levels differ from predicted revenue levels — in order to draw conclusions about the dynamic effects of tax cuts, one would need to use data on revenue levels for more than just a single year or a couple of years. Data for just one or two years often are quite ambiguous and can tell conflicting stories.... [T]his analysis uses every annual forecast made by CBO since January 1981, in order to assess what revenue surprises can tell us about the costs of tax cuts. The story that these data tell is an intriguing one: on average, revenues have fallen below expectations in the years that have followed tax cuts, which, if anything, might indicate that tax cuts have had overall negative economic effects that produced larger-than-expected revenue losses. In addition, revenues have tended to exceed expectations in years following tax increases, which might suggest that tax increases have strengthened the economy, resulting in even larger revenue gains....

[I]f one believes that revenue surprises do tell an important story and seeks to use them, it ought to be noted that the revenue surprises over the past quarter century lead to the opposite conclusion from that which tax-cut supporters propound. To come up with data that appear to support their rosy conclusions about tax cuts generating powerful economic effects, tax-cut proponents have been citing data on actual revenue levels from only one or two years, as well as particular revenue forecasts from one or two carefully selected years, rather than using revenue levels and revenue forecasts for all recent years and letting the chips fall where they may....

An examination of how CBO’s revenue forecasts have compared with actual revenue levels since 1981 yields some interesting results. First, the CBO estimates are essentially unbiased.... Second, the average forecast error in these 24 estimates — the average amount by which CBO either overestimated or underestimated the following year’s revenue level, regardless of whether the error was an overestimate or underestimate — is very large... the equivalent of more than $150 billion in 2006.... Third, the overestimates and underestimates have tended to follow certain patterns. The period that followed the 1990 and 1993 tax increases... [saw] revenues came in an average of 0.1 percent higher than forecast.[6] In contrast, revenue levels generally were disappointing in the Reagan years and under the current administration — i.e., in years following tax cuts — falling an average of 4.0 percent below projections....

[T]o the degree that dynamic-scoring analyses by economists do differ modestly from conventional cost estimates of tax legislation, even the “sign” of this difference is ambiguous. Research tends to find that if reductions in income taxes are not paid for, the resulting increase in the national debt will hurt the economy more over the long term than the tax cuts otherwise will help it, so that the net long-term effect of the tax cuts on the economy is likely to be negative. Conversely, estimates of the long-term economic effects of tax increases generally produce results consistent with the conclusion that income tax-increases can improve long-term economic growth if the savings from the revenue-raising measures are used to reduce the debt.


The Political Philosophy of Karl Schmitt

John Holbo writes:

John Holbo: here is what Schmitt actually says.... "[I]t would be senseless to wage war for purely religious, purely moral, purely juristic, or purely economic motives. The friend-and-enemy grouping and therefore also war cannot be derived from these specific antitheses of human endeavor. A war need be neither something religious or something morally good nor something lucrative. War today is in all likelihood none of these...."

[Karl Schmitt's] argument is...: since the economic reality does not support war, but it is clear that the possibility of war remains real, therefore the friend-enemy distinction must be fundamental. I have to admit it: that makes a dismal sort of sense to me. And reading the newspaper doesn't make it make less sense, I'm sad to say. I also agree with [John] Quiggin that Schmitt seems weirdly insulated from these facts, even though he more or less lays them out himself. He complains about one sinister, crazy thing -- going to war for profit -- but seems placidly untroubled by the sinister craziness of going to war even though its not profitable, just because you are locked in a friend/enemy thing...

What Holbo fails to grasp, I think, is that to Schmitt harming, enslaving, and killing your enemies is the entire point of human existence. It is not "sinister craziness," it is jolly good fun. Karl Schmitt is a KathederGenghisKhan:

  • It is not sufficient that I succeed--all others must fail.
  • The Greatest Happiness is to scatter your enemy and drive him before you. To see his cities reduced to ashes. To see those who love him shrouded and in tears. And to gather to your bosom his wives and daughters.

Brain 2.0

Anderson has to consult his external brain pack to figure out whether he has previously discussed Alan Furst's Dark Star:

Thus Blogged Anderson.: Dark Star: Google suggests that I've not mentioned Furst before. Dark Star is apparently considered by many to be his best: pre-WW2 espionage with emphasis on the Soviet side. Best for its rendering of the political atmosphere of the times--but a good espionage read, too...


Teh Funny!--But Not Really. Sick, Rather

Neither the Onion nor Fafblog! can compete with the New Republic:

Michael B. Oren: To prevent a regional conflagration, Israel should attack Syria...

And:

Jonathan Chait: Israel retaliated by attacking the parts of Lebanon's infrastructure that could be used to spirit the kidnapped soldiers out of the country, and followed it up by trying to destroy Hezbollah's artillery. In so doing they made every effort to minimize civilian casualties...


Where Are the Heirs of Walter Lippman?

Where are the heirs of Walter Lippman? Disconnected and incomplete thoughts... PARTIAL DRAFT ONLY...

George W. Bush on Tuesday said:

Some in Washington say we had to choose between cutting taxes and cutting the deficit. You might remember those debates. You endured that rhetoric hour after hour on the floor of the Senate and the House. Today's numbers show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring. That's what's happened...

And the media fell into line, writing "he said, she said" stories--Bush says revenue is up because of the tax cuts, Democrats say not so. Here are six examples:

Stephen Dinan: THE WASHINGTON TIMES: This week's lower deficit figure has been a shot in the arm for tax cutters in Congress and has reignited the debate over supply-side economics and whether President Bush's 2001 and 2003 tax cuts helped or hurt the federal budget. "Supply-side economics are alive and well," said Rep. Jeb Hensarling, Texas Republican and the budget point man for House conservatives, who added that tax cuts are the only explanation for the declining deficit. "Spending's not down; spending has increased every single budget. What happened is we're awash in tax revenue because supply-side economics is alive and well"...

Richard Wolf: USATODAY: Led by President Bush, Republicans touted the $296 billion deficit estimate for the fiscal year ending Sept. 30 as evidence that five years of tax cuts have worked. They said the tax cuts fueled economic growth, which raised corporate profits and individuals' wages. "Today is a good day for the American taxpayer," Bush said at a White House ceremony to tout the new forecast. "Tax relief is working, the economy is growing, revenues are up, the deficit is down." Democrats noted the new estimate isn't much below the 2005 deficit of $318 billion. They said the original estimate was too high, allowing Republicans to boast about the lower number four months before mid-term elections, when control of Congress is at stake...

Christopher Swann and Krishna Guha: FT: The improvement in government finances will strengthen the administration's efforts to secure a permanent extension of the tax cuts passed in President George W. Bush's first term in office. Mr Bush yesterday said the bumper receipts were proof "the tax cuts we passed work."... Chris Edwards, head of fiscal studies at the Cato Institute, a libertarian think-tank, said: "Soaring US economic growth and surging tax revenues have put sceptics of the Bush tax cuts on the defensive." However, critics argued that there was little evidence that the tax cuts had produced any supply side response, and said the deficit remained large for the fifth year of an economic expansion...

Paul Blustein: Washington Post: The Bush administration on Tuesday lowered its estimate of this year's federal budget deficit by 30 percent, to $296 billion.The new figure prompted the White House to claim vindication for its tax cuts, and Democrats to issue new denunciations of the nation's fiscal problems.... [T]ax revenue... is "much better than we had projected, and it's helping us cut the budget deficit," President Bush said in a White House ceremony to release the report, which is usually a low-key midsummer event. "Tax relief is working. The economy's growing. Revenues are up. The deficit is down"...

Jeremy Peters: New York Times: Surprisingly high tax revenues will help the federal government reduce its budget deficit faster than planned, President Bush said today, as his administration delivered its annual mid-year review to Congress.... The projected deficit decline helps Mr. Bush make a case that the tax cuts his administration pushed through Congress in 2001 and 2003 should be made permanent.... Mr. Bush said the latest budget figures were evidence that his administration's program of tax cuts was behind the country's prosperity. "Together, these tax cuts left nearly $1.1 trillion in the hands of American workers and families and small business owners," he said. "They used this money to help fuel an economic resurgence"...

Joel Haveman: Los Angeles Times: President Bush on Tuesday delivered what he called "some good news for the American taxpayer" -- a budget update that shows the deficit for this fiscal year, which ends Sept. 30, shrinking from the $423 billion forecast five months ago to $296 billion now.Bush's budget office said faster-than-expected increases in tax revenue accounted for $115 billion of the improvement. "The tax cuts we passed worked," Bush told a White House audience of aides and Republican members of Congress. The president said the tax cuts generated unexpected economic activity and consequent tax revenue. Most Democrats were unimpressed...

Andrew Taylor: The Boston Globe: President Bush touted new deficit figures yesterday indicating considerable improvement upon earlier administration predictions, saying they show the wisdom of his tax cuts. Bush himself announced the figures -- a task that for the most part has been left to lower-ranking officials in the past.... Bush said the improvement is due to tax cuts he pushed in 2001 and 2003 and his clampdown on domestic agencies funded by Congress. "These tax cuts left nearly $1.1 trillion in the hands of American workers and families and small-business owners. And they used this money to help fuel an economic resurgence that's now in its 18th quarter," he said. "Economic growth fueled by tax relief has sent our tax revenues soaring"...

Only two news organizations got the real story--David Wessel of the Wall Street Journal NEWS PAGES:

David Wessel: WSJ NEWS PAGES Washington Wire: Do Tax Cuts Pay for Themselves?: Not if you read the fine print in the new White House midsession review of budget trends. "While difficult to estimate precisely," Treasury long-run analyses of the effects of President Bush's tax cut would "ultimately" raise total national output of goods and services by 0.7%.

So is that enough to pay for the tax cuts, even after allowing them to work their economic magic over the next 10 years? The Center for Budget Policies and Priorities, a Washington think tank and advocacy group that is distinctly unfriendly to Bush fiscal policies, says it isn't. "A 0.7 percent increase in the economic output that the Congressional Budget Office has projected for 2016 would represent an additional $146 billion [in gross domestic product]," it says. "If new revenues equaled as much as 20% of the additional output, the increase in revenues resulting from making the tax cuts permanent (assuming Treasury's best-case assumptions) would be $29 billion."

That's a lot of money. But how does it compare to the size of the president's tax cuts? The congressional Joint Committee on Taxation, using conventional analyses, says making the president's tax cuts permanent would reduce federal revenues in 2016 by $314 billion. That is more than 10 times what the Treasury analysis suggests tax cuts would generate by prompting more hours of work, more savings and investment and more efficient use of resources...

And the London Economist:

And the money comes pouring in | Economist.com : Mr Bush's tax policy may have played a modest role in boosting a temporary revenue surge. But that is very different from suggesting, as the White House does, that tax cuts were the main cause or that they permanently pay for themselves. Most serious economists have long laughed at the idea that Mr Bush's tax cuts raise revenue. Now, it seems, the president's own boffins agree. Deep in the Mid-Session Review is a claim that the Bush tax cuts could eventually raise the level of GDP by 0.7%, a relatively modest effect, and one that itself depends on the tax cuts being financed by lower spending...

New York University economist Jason Furman ventured out into the media storm and found:

It's been a surreal day. I was just on Fox News debating whether the deficit is higher or lower this year because of the tax cuts.

The official [administration] scoring shows the tax cuts added $200 billion to the deficit this year (not counting the higher debt service on the tax cuts in previous years). The academic "dynamic scoring" debate is whether the tax cuts raised this year's deficit by $180 billion (if they contributed to growth) or $210 billion (if they reduced growth).

And the Fox News debate is in outer space.

Jason went on to note:

Fortunately the [Bush] administration [Treasury staff] is on our side. They estimate that the tax cuts add AS MUCH AS 0.7 percent to national income over the long run. That's consistent with paying for AS MUCH AS 10 percent of themselves. And that's with their unrealistic financing assumptions...

Brendan Nyhan comments:

Brendan Nyhan: Bush vs. his economists III: [E]ven Bush's own economists don't believe this nonsense. Does that sound familiar? It should.... [T]he 2003 Economic Report of the President "directly contradicts a number of public statements by the President and other administration officials on two key economic issues: the effects of tax cuts on revenue and the relationship between budget deficits and interest rates." Then, in May 2003... "President Bush is again being contradicted by [his Council of Economic Advisers] and his nominee for chairman of the council, N. Gregory Mankiw, on the date a recession began in 2001, the revenue effects of tax cuts and the number of jobs that would be created by his tax cut package." We know the White House dislikes experts and shuns membership in the reality-based community. But to make a claim about a new report that your experts contradict in the report is chutzpah indeed...

To which Jay Rosen appends another comment:

Brendan: I certainly agree that to "make a claim about a new report that your experts contradict in the report is chutzpah indeed," but I think you have to see it as "strategy indeed." You're studying politics--study this! It's a new kind of political strategy based on the insight that if you do make a claim like that, and you don't have to back off because the forces do not exist to make you, then you have, in a way, demonstrated your Administration's power "over" reality, and you can roll over other realities, other people, that way. What if this method Bush has is a basic tool of governing? I think it is.... This is combined with another strange fact about the Bush White House. It is organized to make sure that a lot of "contrary" information never reaches Bush, which is the way he wants it...

And journalists wishing to be anonymous email in:

I haven't seen Wessel's column yet on dynamic scoring but it does look very well done (and characteristically so). I would point out, though, that he is performing a different function from those of us who have to churn out a decent news story... us ink-stained wretches...

The story has to have its principal slot reserved for what the president says. Wessel's chain of reasoning is much too opaque for my readers (or my editors) to understand. As much as you want me too, I cannot lead with: "Once again the president lied about the estimated effects of his economic policies"...

No argument with the [substantive] points.... I suggested to my editors yesterday that I ought to do a more analytical piece for today's paper, but they needed a hard-news story to lead the business front. It's tough...

The net result of the administration announcement as filtered through the mass media is yet another defeat for the country. It's a defeat for the country--and an especially big defeat for my reality-based Republican friends--each time a reader scans the front page and thinks "maybe tax relief is working: maybe the deficit is falling because of the Bush tax cuts." It's a defeat for the country each time an administration staffer thinks "experience shows that if we highball our estimates of the deficit in January, we can get a lot of favorable press in July." The chances of a sane, sensible fiscal policy go down, and the chances of some long-run fiscal crisis that will be terribly damaging to the American economy go up.


Let's back up. Democracy was born in classical Athens--a population of 200,000 of whom 30,000 were the adult male citizens who, when they had nothing better to do, assembled in the afternoon as the Assembly of Athens. They listened to speeches made by prominent orator-politicians (some of them bribed by the King of Macedon), and voted on the issues of the day. On Monday they would vote to put all adult male inhabitants of Mytilene to the death. On Tuesday, after a panicked round of borrowing, bribing, and begging by the ambassadors from Mytilene, they would be persuaded to revoke Monday's decree--even though the war-galley carrying Monday's orders to the fleet in the eastern Aegean had already left. On Wednesday, they would vote to put the advocates of Monday's law on trial for the crime of convincing the Assembly to pass a bad law. Politics by sound-bite. Rule by those who had nothing better to do with their time that afternoon than hang out at the Assembly eating shishkabab, gossiping with their friends, listening with one ear to the orator-politicians, and voting on critical issues.

It was with this historical memory of classical Athenian democracy as background that Alexander Hamilton could tell the American constitutional convention that the best-organized system of government the world had ever seen was that of... eighteenth century Britain. Britain had a popular government, for in the last resort the elected House of Commons had decisive power. But Britain had all these institutional mechanisms--restrictions on the franchise, principle of representation, independent judges, king, ministerial responsibility, control of ministers via impeachment and attainder, lords spiritual, lords temporal, et cetera--that were designed to filter and process popular wishes into good policies. And in Philadelphia in 1787 Hamilton, Madison, and company reworked the British system into a republican pattern that they thought of as a distinct improvement over the government they had just overthrown.

Time passed. The world changed. Mass political parties, mass communications, nationwide presidential campaigns, popular election of senators--a whole bunch of things happened that moved American politics away from the eighteenth-century Westminister model and back toward the Athenian model. And in response Walter Lippman and his peers decided that the proper balance could be maintained by the construction of a sacred and holy profession that would make the public opinion piper to whom politicians danced in this age of mass communications into an informed, sober, rational judgment about important issues rather than into gossiping-and-shishkabob-eating offhand judgments. This sacred and holy profession? Objective journalism, as we have known it for the twentieth century. Walter Lippman himself. Edward R. Murrow broadcasting from London about Churchill and the Nazi bombing. William L. Shirer broadcasting from Berlin about Hitler. Walter Cronkhite. William Greider on the Reagan economic policy team and its tax cuts. Woodward and Bernstein on Richard Nixon and Watergate.

Now it seems that the press corps cannot fulfill this function. Americans do not need to have their government covered not as an arena for celebrity gossip (the stars of Hollywood photograph much better and have much more interesting personal lives). Americans do not need to have their government covered Teddy White "Making of the President"-style as a sporting contest with winners and losers, great shots an flubs (the World Cup is a much better sporting spectacle). Americans need to have their government covered as if the government were their common agent doing important thing that affect their lives. Suppose your mother owned a Florida condo that she rented out during the spring and summer. And suppose your siblings asked you how the agent she hired to rent out the condo was doing. How you would report to them--that's how the press should report on government. In the case of Judd Gregg, the proper report is analogous to, "Well, he's worked really hard and he's said he's saved a lot on maintenance, but actually the savings are really small." In the case of George Bush, the proper report is, "Well, he said that cutting the rent would mean that we'd get more money because we'd be able to rent the condo more weeks, but it turns out he's completely disconnected from reality."

But that's not a task that it seems that our daily newspaper press can carry out. Reporters describe themselves as under pressure to do "hard news" rather than "analytical" pieces, and "hard news" seems to mean a "he said, she said" story which opens "the President said X" and goes on to say "experts differ" leaving readers with absolutely no clue and no way to judge whether the guys whom we hired last election to do the public-finance equivalent of the family-finance job of managing our mother's Florida rental property are in fact doing a good job.

Note that my examples are budget examples. I'm one of the budget people. But I have peers in other issue areas. They see the same deficiencies. Whether they are bombs-and-bullets people, striped-pants-diplomacy people, welfare-and-social-policy people, science-and-technology-policy people--they all see the same patterns.

And it is not clear to me whether things were ever any better--they seemed better to me in the 1970s and 1980s (but not the 1990s), but maybe I was just young and naive. After all, even Walter Lippman had his anti-particle: Walter Winchell. And for every I.F. Stone trying to tell truth about power (and occasionally falling victim to crazed conspiracy theorists) and every Jack Anderson, there were fifty reporters willing to do the bidding of a certain junior senator from Wisconsin.

So where are the true heirs of Walter Lippman? And how do we build and organize institutions to give them the prominence and influence they deserve in order to make our Public Opinion much better than that of the Ekklesia of Athens?

Here are a couple of modest steps. Should the Democrats retake congress in November--should a Democrat be elected president in November 2008--no reporter should be allowed to write anything about Democratic economic policy proposals without checking and digesting (a) the Financial Times, (b) the news pages of the Wall Street Journal, (c) the Economist, and (d) the comments of a trusted list of Republican weblogs. If I artificially restrict myself to four (sorry guys), they would be:

In any event, reporters (and economists) also need to read, memorize, and religiously follow Susan Rasky's and my Dutch-uncle advice:

MORE TO COME SOMEDAY...


Leo Strauss Gives a Cheer for Right-Wing Principles: Fascist, Authoritarian, Imperial

Over at Balkinization, Scott Horton translates a letter from Leo Strauss to Karl Loewith:

Balkinization: Paris, May 19, 1933

Dear Mr. Löwith,

On your behalf I have in the meantime made the necessary overture to Groethuysen, who is in London. Besides this I had occasion to speak with Van Sickle, the head of the Rockefeller Foundation, and informed him about you, your situation, your work and your interests. He made a note of your name, so I am sure he will remember it when he comes across it in Fehling’s letter.

As concerns me, I will receive the second year. Berlin recommended me, and that was decisive. I will also spend my second year in Paris, and I will attempt in this time to undertake something that will make my further work possible. Clearly I have major “competition”: the entire German-Jewish intellectual proletariat is assembled here. It’s terrible - I’d rather just run back to Germany.

But here’s the catch. Of course I can’t opt for just any other country - one doesn’t choose a homeland and, above all, a mother tongue, and in any event I will never be able to write other than in German, even if I must write in another language. On the other hand, I see no acceptable possibility of living under the swastika, i.e., under a symbol that says nothing more to me than: you and your ilk, you are physei subhumans and therefore justly pariahs. There is in this case just one solution. We must repeat: we, “men of science,” - as our predecessors in the Arab Middle Ages called themselves - non habemus locum manentem, sed quaerimus... And, what concerns this matter: the fact that the new right-wing Germany does not tolerate us says nothing against the principles of the right. To the contrary: only from the principles of the right, that is from fascist, authoritarian and imperial principles, is it possible with seemliness, that is, without resort to the ludicrous and despicable appeal to the droits imprescriptibles de l’homme to protest against the shabby abomination. I am reading Caesar’s Commentaries with deep understanding, and I think of Virgil’s Tu regere imperio... parcere subjectis et debellare superbos. There is no reason to crawl to the cross, neither to the cross of liberalism, as long as somewhere in the world there is a glimmer of the spark of the Roman thought. And even then: rather than any cross, I’ll take the ghetto.

I do not therefore fear the fate of the émigré - at most secundum carnem:(8) the hunger or similar deprivations. - In a sense our sort are always “emigrants”; and what concerns the rest, the fear of bitterness, which is certainly very great, and in this sense I think of Klein, who in every sense has always been an emigrant, living proof for the fact that it is not unconquerable.

Dixi, et animam meam salvavi.

Live well! My heartiest greetings to you and your wife

Leo Strauss

My wife sends her thanks for your greetings, and reciprocates heartily.

Published Source: Leo Strauss, Gesammelte Schriften, Bd. 3: Hobbes’ politische Wissenschaft und zugehörige Schriften, Briefe (Heinrich Meier, ed.), Metzler Verlag 2001, pp. 624-25.


Horton writes:

In the last several months, the New York Times has run four pieces defending Leo Strauss from his critics. By comparison, the Times has run no pieces in which Strauss is actually criticized, which suggests an odd editorial posture. Indeed, the Times seems to have mounted a veritable campaign for the defense of the beleaguered Leo Strauss, which seems strange considering that he has been dead for over thirty years. These pieces are remarkably consistent. For one, each turns the very serious criticism of Strauss and his relationship with the American Neoconservative movement into a point of ridicule. The criticism is grossly distorted and key elements are misstated. For another, they present Strauss as a “liberal democrat,” not in a domestic political context, but rather as a defender of the tradition of liberal democracy we associate with Locke, Hume and J.S. Mill...

Put simply, Strauss takes firm target at the core values of liberal democracy, and particularly the American variant. Before his arrival in America, Strauss was blunt in these criticisms. After his arrival, he adopted a far more circumspect approach. After all, he was in America and writing in English, and his own philosophy would demand that he flatter or indulge national prejudices and write as if he believed in them. Like his mentor, Ernst Cassirer, Strauss had concluded by the mid-thirties that Europe, and even Britain, was simply unsafe. Only America, with its formidable resources and protected by expansive oceans from its potential adversaries, offered the prospect of safe haven...

Both the Rothstein review and the Smith book attempt to present Strauss as a person right at home with the land to which he emigrated and its Enlightenment tradition. This is extremely doubtful. But it is an act of serious deception to present Strauss as “democracy’s best friend” (to quote the last, a review essay by Edward Rothstein published on July 10, in turn quoting Steven Smith’s new book, Reading Leo Strauss: Politics, Philosophy, Judaism) without at least making clear the deep-boring criticism that Strauss directs at American democracy...

One thing consistent among these defenses of Strauss is either a remarkable ignorance of Strauss, the intellectual milieu from which he came, his life and his thinking, or conscious dissembling about them. Strauss is a fascinating figure, well worth reading today. His scholarship had a strong focus on a handful of texts from classical antiquity – principally Greeks such as Plato, Xenophon and Thucydides. This approach seems quaint to Americans, but for those who emerged from the academic milieu of the German-speaking world in the first decades of the twentieth century (think of novels such as Heinrich Mann’s Professor Unrat [The Blue Angel] or Hermann Hesse’s Unterm Rad [Beneath the Wheel]) it is actually typical. Strauss contemporaries like Karl Jaspers and Hannah Arendt had a focus on many of the same texts, though they do not adopt Strauss’ at times quite eccentric interpretations...

I am convinced that this is a very candid statement of Strauss’ politics at the time he wrote it, a reading signaled by his confessional closing. Indeed, anyone who carefully reads Strauss’ book on Hobbes (Hobbes’ politische Wissenschaft in ihrer Genesis, 1936, but largely complete in 1933; translated in English as The Political Philosophy of Hobbes: Its Basis and Its Genesis) or his dissertation, written on the anti-Enlightenment writer Friedrich Heinrich Jacobi, would suspect these sentiments...

It seems almost impossible to imagine a German-Jewish refugee in France, a man who describes his religious upbringing as “Conservative, if not Orthodox” actually embracing the political philosophy of his persecutors. On the other hand, we should be cautious about projecting postwar sensibilities back into the thirties. Strauss was a Middle European intellectual living in a period where liberalism looked exhausted and unable to function, and many of his contemporaries, and indeed many of Strauss’ mentors, were engaging with fascist thought. Specifically, we should consider that the two contemporary thinkers who appear to have exerted the greatest influence on Strauss at this time – Heidegger and Schmitt – were each entering into a dalliance with fascism. In their respective Faustian pacts, one emerged as the rector magnificus of one of Germany’s most famous universities, while the other (indeed, the week of this letter) became a Prussian State Councillor and key legal advisor to the Reich-Chancellor. This situation no doubt contributed to Strauss’ inability to make a clean break...

Nevertheless, the Löwith letter is profoundly revealing of the nature of Leo Strauss’ conservatism. It places his conservatism outside of the Anglo-American tradition that links to figures like Locke, Hume and Burke. Instead, it springs from a traditional Continental European variant which is deeply rooted in religion and in the notion of a benevolent (though sometimes not particularly benevolent) authoritarian leader legitimized by religion. I note that Andrew Sullivan, in his forthcoming book, The Conservative Soul, takes a different view, putting Strauss in the tradition of conservatism of doubt. Andrew’s book is a significant accomplishment, and his dissection of trends in conservative thought in the last generation is little short of dazzling. However, I disagree with him about Strauss, and am particularly confident of my conclusions as to the young Strauss...

Steven B. Smith's book, and Edward Rothstein's and Jonathan Alter's New York Times reviews of it, are either extraordinary examples of failure to do intllectual due diligence, or are Straussian intellectual moves: of course Leo Strauss was not a thinker in the Lockeian tradition, but it is good to say that he was such, for it is good for the "gentlemen" to believe that he was such.

The New York Times has recently published one snarky take on Leo Strauss. Jason de Parle's:

An A-to-Z Book Of Conservatism Now Weighs In - The Archive - The New York Times: The longest entry belongs to ''Straussianism,'' a school of political theory founded by a professor at the University of Chicago, Leo Strauss, that emphasizes classical texts. Embraced by some leading proponents of the Iraq war, Straussianism is often regarded by those beyond its fold as opaque mumbo jumbo, a reputation that five pages of explanation may not dispel...


Open Mike Lunch

George W. Bush's open mike lunch:

Adam Boulton Weblog: Bush & Blair Raw & Uncut: 17 July 2006: A fascinating conversation between Tony Blair and George Bush has been caught by the microphones at the G8, when the two men didn't think they were being overheard. It tells us a lot about the relationship between the two men, about the US-UK special relationship and the two men's views on the Middle East. Here's a transcript as best as we can make out.

Bush: Yo Blair How are you doing?
Blair: I'm just...
Bush: You're leaving?
Blair: No, no, no not yet. On this trade thingy...[inaudible]
Bush: yeah I told that to the man
Blair: Are you planning to say that here or not?
Bush: If you want me to
Blair: Well, it's just that if the discussion arises...
Bush: I just want some movement.
Blair: Yeah
Bush: Yesterday we didn't see much movement
Blair: No, no, it may be that it's not, it maybe that it's impossible
Bush: I am prepared to say it
Blair: But it's just I think what we need to be an opposition
Bush: Who is introducing the trade
Blair: Angela
Bush: Tell her to call 'em
Blair: Yes
Bush: Tell her to put him on them on the spot. Thanks for [inaudible] it's awfully thoughtful of you
Blair: It's a pleasure
Bush: I know you picked it out yourself
Blair: Oh, absolutely, in fact [inaudble]
Bush: What about Kofi [inaudible] his attitude to ceasefire and everything else ... happens
Blair: Yeah, no I think the [inaudible] is really difficult. We can't stop this unless you get this international business agreed.
Bush: Yeah
Blair: I don't know what you guys have talked about but as I say I am perfectly happy to try and see what the lie of the land is but you need that done quickly because otherwise it will spiral
Bush: I think Condi is going to go pretty soon.
Blair: But that's that's that's all that matters. But if you, you see it will take some time to get that together
Bush: Yeah, yeah
Blair: But at least it gives people...
Bush: It's a process, I agree. I told her your offer to...
Blair: Well...it's only if I mean... you know. If she's got a..., or if she needs the ground prepared as it were... Because obviously if she goes out, she's got to succeed, if it were, whereas I can go out and just talk
Bush: You see, the ... thing is what they need to do is to get Syria, to get Hezbollah to stop doing this shit and it's over
Blair: [inaudible]
Bush: [inadubile]
Blair: Syria
Bush: Why?
Blair: Because I think this is all part of the same thing
Bush: Yeah.
Blair: What does he think? He thinks if Lebanon turns out fine, if we get a solution in Israel and Palestine, Iraq goes in the right way...
Bush: Yeah, yeah, he is sweet
Blair: He is honey. And that's what the whole thing is about. It's the same with Iraq
Bush: I felt like telling Kofi to call, to get on the phone to Bashad [Bashir Assad]and make something happen
Blair: Yeah
Bush: [inaudible]
Blair:
Bush: We are not blaming the Lebanese government
Blair: Is this...?

(at this point Blair taps the microphone in front of him and the sound is cut.)Thanks to Adam Cottam, Julia Alasheyeva, James Rubin and Barnay Green for help compiling this.

And the Carpetbagger Report notes:

Bush's open-mike problem: The video -- AP has the CNN clip, though I suspect there are others -- is worth watching. Blair appears anxious to explain the Middle East to Bush, while the president is slouching and talking with his mouth full. Regardless, I can't help but notice that the president often comes across as an unsophisticated simpleton in public, with embarrassing malapropisms and difficulties in answering unscripted questions, but incidents like this one at the G8 luncheon suggest Bush is even less impressive in private...


Worth Reading: 20060717

Worth reading, July 17, 2006

normblog: The crisis in the Middle East (updated): If you're looking for any wisdom from me on this, I have none to offer. Here are some reading links to pieces I've found interesting and/or informative...

Thus Blogged Anderson.: Dark Star: Google suggests that I've not mentioned Furst before. Dark Star is apparently considered by many to be his best: pre-WW2 espionage with emphasis on the Soviet side. Best for its rendering of the political atmosphere of the times--but a good espionage read, too...

Nieman Watchdog > Commentary > Twelve things journalists need to remember to be good economic reporters

Discourse.net: Enron's Special Purpose Entities: My pet gripe in the whole accounting simplification debate is how business and the accounting industry citie Enron as evidence that we need less detailed rules. They argue that detailed rules provide a roadmap for technical compliance that violates the spirit of the rules. In contrast, simple rules could not be gamed. In fact, Enron demonstrates the need for detailed rules...

Ron Suskind: Articles: Why Are These Men Laughing? "Why Are These Men Laughing" contained a series of critiques of the Bush administration from an ex-White House official, John DiIlulio. DiIluio, whose thoughts were sent to the author in a polished, elegantly constructed seven-page memo, was the first ranking administration official to publicly criticize his boss. According to DiIulio, the political team at the White House was making every policy decision, ignoring the advice of experts. New York Times columnist Paul Krugman, commening on this article, said it was now clear that the Bush White House had "no interest in the substance of policy, caring only about political payoffs." Shortly after the article appeared in Esquire, the White House went on the offensive, forcing DiIulio to apologize for his assessments that drew a comparison to Stalinist Russia in the Washington Post..

The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neill

Ron Suskind: Articles: Without a Doubt Author Note: Published two weeks before the 2004 election, "Without a Doubt" profiled a president driven by religious certitude. Instead of grappling with the nuance of complicated policy issues, this president often relies on a black-and-white view of the world in which disputes can be cast as good vs. evil. This article was also the first to report that Bush would attempt to make changes to Social Security, a fact his campaign strenuously denied but was soon proved true. The article also coined the term "reality based community," which has since entered the political lexicon...

The One Percent Doctrine

Brendan Nyhan: Bush to Putin: "Just wait" on Iraq democracy: Doesn't Bush's statement deserve some attention? Under Michael Kinsley's classic definition, a gaffe is when a politician tells the truth. In this case, Bush has said what he thinks is the truth -- Iraq is progressing toward full-blown democracy -- at a time when the reality-based community sees the country as rapidly sliding toward civil war. Given this comment and others like it, I think it's increasingly clear that Ron Suskind is the most important journalist in America. He's consistently done the best work on the Bush administration's faith-based approach to public policy...

HOTSOUP.com: HOTSOUP will create a new community of influence among those in government, politics, business and entertainment who make the decisions and those who want to impact them. It will bring the inside world out and the outside world in, and create a richer dialogue and stronger connections among all of these Opinion Drivers...

Fafblog! the whole worlds only source for Fafblog.: George W. Bush has to take this case to the highester court in the land: the court of George W. Bush. It's a tough bench alright, but Bush can win this one as long as he exercises his constitutional right to ignore the Constitution. The legal technicalities are pretty complicated but Giblets believes it involves filing a writ of neener neener according to the precedent of I Can't Hear You v. I'm Not Listening. Only then can the forces of freedom protect America from the hordes of Democrofascists that would menace her with their savage civil liberties!...

Balkinization: Sunday, July 16, 2006 The Letter Scott Horton: Was Leo Strauss democracy's best friend? In a letter written at the time of his emigration, Strauss describes his political principles - Fascist, Authoritarian, Imperialist...

Robert's Stochastic thoughts: Not Seeing the Forest for the Trees. Brad DeLong asks where is my post on the arrest of two high ranking officers of SISMI (Italian military intelligence think CIA with no restiction on domestic spying) I can explain. I know nothing nothing. For one thing we are moving to a new house. For another said new house does not have a telephone or electricity yet hampering my internet access. Thus I am now in Sardinia which involves going on a car ferry with a TV tuned by the crew. If you think that Italians are going to watch the news when they can watch a world cup semi final in which Italy beat Germany, then your grasp of Italian politics is hopelessly weak.... Believe me, "Milanese magistrates investigate SISMI" is a shocker like "Brad DeLong does not plan to vote for Richard Cheney in 2008." It never crossed my mind that the news would be worth a blog post.... In a totally unscientific poll 5 Italian adults stared at me as if I was crazy when I asked them if they were suprised that SISMI officers were breaking Italian law in cooperation with CIA agents. It's like asking someone if they have ever heard of the theory that the earth is round...

Thomas P.M. Barnett :: Weblog: Tom: Angell or not?: Curzon of Coming Anarchy discusses Norman Angell. It caught my eye because Tom is sometimes accused of being Angell in the sense of 'optimistically predicts an end to great power war because of globalization, but tragically wrong'. Tom says the difference is that now we have nukes, which have ended great power war. So Tom says he's Angell, with NUKES! Tom says globalism plus nukes ends great power war. I think this is one of the places where he and the Coming Anarchists (and their patron saint, Robert Kaplan) are in fundamental disagreement...

Paul Kedrosky's Infectious Greed: Option Backdating: Tech is the Worst Offender: A new paper by Eric Lie and Randall Herron on stock option backdating is going to get lots of attention. Among other things, it says that almost 30% of companies have used backdated options. I was particularly fond of the following table showing the worst backdating offenders stratified along various dimensions -- and tech is well out in front...


Musings on Newspaper Credibility

Frendo Muses on newspaper "credibility":

Frendo: Print Media Legitimacy: The argument that... in the printed media world, the existence of a printing press (or more broadly, the capital required to publish) establishes some level of legitimacy... is directly contradicted.... Entertainment magazines have high capital expenditures, but little credibility.... In fact, I would go one step further and argue that the New York Times has very little credibility. Economic journalism is pitiful. Brad Delong tends to attribute that fact to an unwise commitment to some nebulous concept of "objectivity." While I agree with that point, I don't want to downplay the role of ignorance. Journalists are not economists (nor are they scientists, doctors, or politicians). Thus, any journalist writing about these subjects is basically just producing a he said/she said column. Journalists have no independent expertise to verify the veracity of competing claims, and, as Delong points out, it is often termed unobjective to do so...

I find this inadequate. The Financial Times has no problem finding very good reporters to cover economics, finance, law, science, medicine, or politics. Something else is going on here.


Option Backdating

This form of garden-variety financial fraud appears surprisingly common:

Paul Kedrosky's Infectious Greed: Option Backdating: Tech is the Worst Offender: A new paper by Eric Lie and Randall Herron on stock option backdating is going to get lots of attention. Among other things, it says that almost 30% of companies have used backdated options. I was particularly fond of the following table showing the worst backdating offenders stratified along various dimensions -- and tech is well out in front...


Stupidest Man Alive II

Yep. David Broder:

For Bush, A World Of Worry: Bush is largely blameless for all these troubles.... But the same cannot be said of the final and largest trouble spot:

  • Iraq -- This country was transformed by Bush's war of choice, and it is increasingly doubtful that the change is for the better. Instead of the tyranny and brutality of Saddam Hussein, Iraqis are facing the daily carnage and bloodshed of an undeclared civil war between Shiite and Sunni militias.

The fragile new government in Baghdad, on which the United States has pinned all its hopes, so far seems incapable of restoring order or guaranteeing its citizens a modest level of personal safety. The United States is becoming more and more a helpless bystander, not willing or able to impose its will on an occupied country.

More than anything else in the world, this deteriorating situation in Iraq must worry the man on Air Force One. If he has any smart ideas about how to resolve it, they are a well-kept secret.

David Broder is alone in seeing signs that the "deteriorating situation in Iraq" worries "the man on Air Force One." Everybody else knows that "the man on Air Force One" holds up Iraq as a model. He talks of:

Iraq, where there’s a free press and free religion. And I told [Putin] that a lot of people in our country would hope that Russia will do the same thing...

And after Putin pointed out that Iraq today hardly looks like a model, Bush said:

Just wait...

This is not "worry" on Bush's part.

For claiming that it is David Broder entrenches his claim to be the Stupidest Man Alive.


Stupidest Man Alive: David Broder

I'm unilaterally taking the Stupidest Man Alive crown away from John Derbyshire and giving it to David Broder and the whole Washington Post for Broder's claim that George W. Bush is "largely blameless" in the creation of these seven problems that Broder lists:

For Bush, A World Of Worry: By David S. Broder Thursday, July 13, 2006; A23.... Taking them in ascending order of difficulty, the trouble spots look like this:

  • Canada -- Our northern neighbor has a new prime minister, Stephen Harper, a friend of the United States who went home empty-handed last week from his first visit to Washington because George Bush had to turn down his request to suspend the new requirement that travelers between the two countries carry passports. It was a rebuff that will make cooperation on other issues harder.

  • Mexico -- The apparent winner of this month's presidential election, Felipe Calderón, in his first comments decried talk of building more barriers between Mexico and the United States to curb illegal immigration -- the very step that Republicans in Congress are pressing Bush to take as the basis for any legislation they will approve. Given the closeness of his apparent victory over leftist Andrés Manuel López Obrador, Calderón probably has to play to the nationalist-populist sentiments that almost prevailed -- making any concessions to the United States more politically perilous.

  • Geneva -- The main players in the Doha round of World Trade Organization talks have reached an impasse, frustrating Bush's hopes for a deal that would lower barriers to international commerce and cap his drive to expand America's markets. The stumbling block of agriculture subsidies and tariffs aligned countries from India to France against us, dashing hopes for a breakthrough.

  • Iran -- The silence from Tehran about the offer from the United States and Europe -- of major benefits in return for a suspension of its nuclear program -- extended to six weeks, and no one knows whether it is a stall or, as Iranian diplomats suggested this week, genuine indecision. But it is surely a frustration for Bush, who made a major concession in saying the United States was ready to negotiate.

  • The Middle East -- Open warfare has broken out again between the Israelis and the Palestinians and, now, the Lebanese. This is an old story but a heartbreaking one for the people involved and for the United States.

  • East Asia -- Presumably, China holds the key to the challenge from North Korea with its missile tests and nuclear weapons program. But Beijing is threatening to veto the U.S.-supported sanctions resolution introduced by Japan in the United Nations, and China seems reluctant to apply its full leverage against its neighbor. The foot-dragging is understandable when you remember that both countries have communist regimes and that China does not want to trigger an exodus of refugees facing starvation. But it's more frustration for Bush.

  • Russia -- Bush's pal and G-8 host Vladimir Putin has stuck his finger in the president's eye by openly mocking Bush's professed commitment to democracy. Putin is taking Russia back to the bad old days at breakneck speed, clamping down on the press and television, limiting and harassing independent organizations, centralizing power in the Kremlin, and trying to undermine liberal regimes in neighboring countries. His behavior makes Bush look hypocritical for continuing his friendship.

Broder claims:

Bush is largely blameless for all these troubles. The nations involved have made their own choices for their own reasons...

Stupidest Man Alive. How does he remember not to put his shoes on his ears in the morning?


More Cops, Less Crime

Alex Tabarrok writes:

Marginal Revolution: More Police, Less Crime: Crime in Washington DC falls significantly during high terror-alert periods when the police double up on shifts much as they do during a crime emergency. More generally, when one combines estimates of police effectiveness that come from myself and Klick, Steve Levitt, Bill Evans and Emily Owens and others with data on the costs of hiring police, it's clear that police are a bargain. We could double the number of police in the United States and the costs of crime would fall by substantially more than the cost of police. (Reallocating police and prison space from drug users to violent criminals would also help.)


Another Reason It's Good to Read the NEWS PAGES of the Wall Street Journal

Mark Thoma directs us to Greg Ip and Deborah Solomon of the Wall Street Jounal, who dig a little and find that Bush's claims that revenue is higher than anticipated because growth is higher than anticipated have even less contact with reality than I had imagined. To say that things are "working" because real wage growth is surprisingly low is a stretch, even for the Bushies:

Economist's View: Income Redistribution and Tax Revenue: Greg Ip and Deborah Solomon look at the recent increase in tax revenues and note that while tax revenues and output both exceeded projections, the amount that output growth exceeded projections was small. This implies the unexpected increase in tax revenue is largely a compositional effect rather than a consequence of higher than expected economic growth:

As Bigger Piece of Economic Pie Shifts To Wealthiest, U.S. Deficit Heads Downward, by Greg Ip and Deborah Solomon: In announcing a big drop in its estimate of this year's federal budget deficit, the Bush administration was quick to credit itself. "Tax cuts worked to generate economic growth, and economic growth is now working to raise revenues," White House budget director Rob Portman said.... But this explanation falls short. While tax revenue is growing far faster than the Bush administration forecast in its budget projections in February, the nation's economy isn't. What has changed isn't the size of the economy, but how the economic pie is divided. The share of national income going to corporations and the wealthiest individuals, already large, has expanded....

U.S. tax revenue for fiscal 2006... is expected to be... $115 billion... higher, than the administration projected in February.... But total economic output... adjusting for inflation, it is projected to be just 0.1% larger.... So, the tax windfall is another piece of evidence that income inequality in the U.S. continues to grow, which in turn may explain why the average American still gives President Bush low marks on the economy despite its overall strength....

Rudolph Penner, a senior fellow at the Urban Institute, a Washington think tank, and a CBO director picked by Republicans in the 1980s, says a supply-side effect "doesn't come close to explaining the revenue surge."... He notes the administration itself puts the tax cuts' maximum supply-side boost at just 0.7% of GDP, stretched over many years...


On Vox: Morning Coffee Videocast: Bosses Move to America

View Brad DeLong’s Blog

One of the interesting things going on in the world economy today is how the bosses are moving to America--and to a few places in America: Manhattan, Greenwich, Palo Alto, Boston. Globalization was supposed to allow economic activity to be located anywhere in the world. Instead, it looks as though the highest-value activities are starting to cluster: to be neare finance, near dense social networks of rich people, near trend-setting customers.

» Read more on Vox


On Vox: Morning Coffee Videocast: Bosses Move to America

View Brad DeLong’s Blog

One of the interesting things going on in the world economy today is how the bosses are moving to America--and to a few places in America: Manhattan, Greenwich, Palo Alto, Boston. Globalization was supposed to allow economic activity to be located anywhere in the world. Instead, it looks as though the highest-value activities are starting to cluster: to be neare finance, near dense social networks of rich people, near trend-setting customers.

» Read more on Vox


A Free Book for a College Professor: Jerome Feldman (2006), "From Molecule to Metaphor: A Neural Theory of Language" (Cambridge: MIT Press: 0262062534).

Filia: What's this in your mailbox?

Pater: It appears to be a book.

Filia: What book?

Pater: It appears to be Jerome Feldman (2006), From Molecule to Metaphor: A Neural Theory of Language (Cambridge: MIT Press: 0262062534).

Filia: Why did you buy this book?

Pater: I didn't. They just sent it to me.

Filia: Why?

Pater: In the hope that I'll read it, and talk about it, and write about it, and influence people to buy it, and then they'll sell more copies.

Filia: But you are probably not going to do that.

Pater: I might.

Filia: And they're out the $30 cost of the book by sending it to you.

Pater: Actually, they are out more like $4. It costs a lot to create a book and set up the print run, but it probably costs only $4 extra to print 3001 copies of an academic press book rather than 3000 copies.

Filia: Still, how many such books do you get sent?

Pater: About one a day.

Filia: At an average retail price of?

Pater: About $40 a book. But I would have bought very, very, very few of them at that price.

Filia: If I were the Internal Revenue Service, I would say $40 a book x 1 book a day x 300 days a year = $12,000 of unreported income.

Pater: I would say that's a gross overestimate of the value of this fringe benefit, and why aren't you going after frequent flyer miles first?

Filia: And how many of them do you read?

Pater: I open them all.

Filia: And how many of them do you read?

Pater: I skim about half.

Filia: And how many of them do you read?

Pater: I read about a quarter.

Filia: Isn't that a horrible waste? All these books printed up and never read?

Pater: I give them away.

Filia: Is this a smart thing for a publisher to do?

Pater: Figure a $30 gap between the sale price of an extra book and marginal cost, each free book sent out has to generate only 1/10 of an extra full-price book in order to be a good idea from the publisher's point of view.

Filia: But what if a book the publisher sends out winds up in the hands of somebody who would otherwise have bought one?

Pater: From the publisher's perspective, that would be bad.

Filia: You read about a quarter of the free books people send you.

Pater: Yep.

Filia: But you read all the books you buy and pay for.

Pater: I try to.

Filia: And when a book arrives, you have no clue until you look at the invoice whether this is a book you ordered--and have forgotten you ordered it--or a free book the pubisher is sending to you.

Pater: I'm embarrassed to admit that's so.

Filia: The publisher is missing a chance. They should send you the book with an invoice saying $40 due. Then you'll think you ordered the book, you'll pay them $40 per book, and you'll read the books because you'll think you ordered it.

Pater: That strategy would probably work--for a while.

Filia: Are you going to read this one?

Pater: Yes.

Filia: Why?

Pater: It's on a fascinating topic, it's by a Berkeley professor, and it has a blurb on the back by somebody--V.S. Ramachandran--in whose lab Adrian Hon of PerplexCity worked for a summer.

Filia: Is that a good way to choose what to read?

Pater: It's a human way. We're semi-pack animals. Social networks are everything.


Jerome Feldman (2006), From Molecule to Metaphor: A Neural Theory of Language (Cambridge: MIT Press: 0262062534).

In From Molecule to Metaphor, Jerome Feldman proposes a theory of language and thought that treats language not as an abstract symbol system but as a human biological ability that can be studied as a function of the brain, as vision and motor control are studied. This theory, he writes, is a "bridging theory" that works from extensive knowledge at two ends of a causal chain to explicate the links between. Although the cognitive sciences are revealing much about how our brains produce language and thought, we do not yet know exactly how words are understood or have any methodology for finding out. Feldman develops his theory in computer simulations--formal models that suggest ways that language and thought may be realized in the brain. Combining key findings and theories from biology, computer science, linguistics, and psychology, Feldman synthesizes a theory by exhibiting programs that demonstrate the required behavior while remaining consistent with the findings from all disciplines. After presenting the essential results on language, learning, neural computation, the biology of neurons and neural circuits, and the mind/brain, Feldman introduces specific demonstrations and formal models of such topics as how children learn their first words, words for abstract and metaphorical concepts, understanding stories, and grammar (including "hot-button" issues surrounding the innateness of human grammar). With this accessible, comprehensive book Feldman offers readers who want to understand how our brains create thought and language a theory of language that is intuitively plausible and also consistent with existing scientific data at all levels.


Incomplete and Partial Thoughts on Greg Mankiw's Updated "Lazear vs Krugman"

Greg Mankiw quotes my claim that the Piketty-Saez data are hard to interpret as the result of a general rise in the economy's skill and education premium driven by skill-favoring technological change:

Greg Mankiw's Blog: Lazear vs Krugman: Update 2: Brad DeLong tries to explain what Paul might have been thinking:

DeLong: The big rise in inequality in the U.S. since 1980 has been overwhelmingly concentrated among the top 1% of income earners.... It's hard to attribute this pattern to a rise in the premium salary earned by the well-educated by virtue of the skills their formal education taught them. Such a rise in the education premium would produce a much smoother rise in relative incomes among the whole top tenth of the income distribution...

And he comments:

I am not convinced that the conclusion follows from the facts presented. I would guess that the top 1 percent of income earners (those [household tax units] earning more than $276,945) are disproportionately very well educated--doctors, lawyers, MBAs, etc. So the rise in the income of the top 1 percent could well represent in large part a higher education premium.

What might well be true is that the returns to education have become increasingly non-linear: The most educated are now getting a bigger return from a marginal year of education than those with moderate amounts of education. In other word, two years getting an MBA from Harvard Business School may increase a person's income more in percentage terms than does two years getting an Associate Degree from Mass Bay Community College. My understanding from my labor economist friends is that some evidence favors this hypothesis of increasing nonlinearity...

I don't think this works particularly well. Yes, if you confront a computer with a strongly nonlinear increase in inequality and ask it to explain it by increases in skills and the values of skills of those at the top, it will spit back that there is evidence of nonlinearity. But so much? The top 0.1% in the United States has gone from 2.3% of income in 1980--23 times average--to 7.6% today--76 times average. The next 0.9% has gone from 6.3 times average to 9.2 times average. And the next 4% has gone from 3.2 to 3.7 times average. Just what have been the changes in technology over the past twenty-five years that have made the skills of the 130,000 households in the top 0.1% so much more highly-valued vis-a-vis the skills of Mr. and Ms. 95th percentile? We are awarding 550,000 advanced degrees a year in this country. The overwhelming majority of them must be gaining little or nothing in relative-income terms vis-a-vis their predecessors of 1980--and those 15,000 a year or so who will someday join the top 1% have seen their relative incomes triple. Continuity: just what is it that the top 13,000 have learned that the other 537,000 have not that is so valuable?

Mankiw also comments, I think more promisingly:

To some extent, the returns to human capital are random (as is true of physical capital). Getting an MBA gives you a shot at being CEO, but it is not a guarantee. This may be part of the Lemieux finding that higher levels of education are associated with higher residual variance. And perhaps it can reconcile the differing perspectives of Krugman and Lazear...

The implicit model, I think, is that when you get an advanced degree--or perhaps when you get an advanced degree from a good school--you not only get skills, but you also get a lottery ticket. Either because of dumb luck or because of the interaction of talent with formal education and technology or because of the interaction of the willingness to work like a dog beyond all reasonable measure with formal education and technology, the lucky or talented or workaholic today can, thanks to revolutions in computer and communications technology, leverage their symbolic-analyst skills over a much larger base of routine manufacturing, marketing, and distribution workers than they could have a generation ago. In this model, we have become much more of a "winner take all" economy than we used to be. Much more income is distributed in the form of winner-take-all tournaments than used to be the case.

My first reaction is that this is possible, but unproven. My second reaction depends on whether victory in the winner-take-all tournaments is due to luck, talent, or industriousness. If it is luck or talent, the 60% of me that is a social democrat thinks that this is grossly unfair, and that we should think very seriously about powerful public policies that will level the distribution of income.

Then the 20% of me that is a libertarian breaks its chains, comes running out of the cave, hits the social democrat on the head with a brick, grabs the microphone and rants: "Do you really trust the American government to manage a major downward redistribution of wealth without doing immense harm? And who would you rather have deciding how Bill Gates's $100 billion and Warren Buffett's $40 billion will be spent--Karl Rove or Bill Gates and the staff of the Bill and Melinda Gates Foundation?"

Now let's return the libertarian to its cave. There, there, everything will be all right. See? Just inside? Catalaxy. Zero government. Private order. A free society of associated autonomous producers...

Where was I?

Oh yes, in the event that it is neither luck nor talent, but instead industriousness, things become harder to evaluate. Organizations adopt winner-take-all compensation policies because they see a benefit, and the benefit is that they get a lot more people than there are big prizes to work very hard. These non-tournament winners are probably irrational--overestimate their chances of winning the tournament--and are thus exploited by the rest of society: putting in MorganChase hours and doing MorganChase-quality work without getting MorganChase pay scales. Jim Mirrlees has argued that such a society--in which those with a high marginal product were forced to work like dogs and had a relatively low utilitarian happiness--could well be optimal on utilitarian grounds.

We should think, and think hard, about all these issues. But I don't think that it's useful to characterize this mechanism for increasing inequality as "a rise in the premium paid to the skills acquired through education." I'm not sure what to call it, but it is something very different.


UPDATE: And Paul Krugman emails:

First, the question of which dates to look at depends on the question you're trying to answer. If you're asking why the public doesn't feel good about the economic growth since 2003 - which was, after all, what my "Left Behind" column was about - pointing out that inequality fell between 2000 and 2003 is irrelevant; everyone felt lousy about the economy during those years. The point is to explain why most people don't feel better about performance since 2003 - and rising inequality since then is the explanation.

Second, the data aren't encouraging about the long-term trend. The slump in top income shares after 2000 gave us reason to hope that the extreme income concentration at the end of the 90s was an artifact of the bubble, and would not return. But 2004 data already show a return almost to 2000 levels of inequality, and other indicators suggest that the trend has continued since then. Gilded Age II, here we come.

Third, both Greg and Eddie Lazear have asserted not just that rising inequality is partly due to an increased skill premium, which is true, but that it's mainly due to skill, which is false. I don't see why this distinction is so hard to understand. The median income of college grads is up since 1980, but only modestly, around 1 percent per year; the big gains are for people at the 99th percentile and beyond.


Fafblog! Save Us!

Fafblog! is the only news source that deals with the Bush administration on an appropriate level:

Fafblog! the whole worlds only source for Fafblog.: George W. Bush has to take this case to the highester court in the land: the court of George W. Bush. It's a tough bench alright, but Bush can win this one as long as he exercises his constitutional right to ignore the Constitution. The legal technicalities are pretty complicated but Giblets believes it involves filing a writ of neener neener according to the precedent of I Can't Hear You v. I'm Not Listening. Only then can the forces of freedom protect America from the hordes of Democrofascists that would menace her with their savage civil liberties!


Lies from Colin Powell

Lies from Colin Powell:

Staying Powell: Yeah, [the reaction to my U.N. speech] hurt. Let me point out that the same intelligence I provided that's subject to so much controversy--that's the same intelligence that the Senate and House used four months earlier to vote for a resolution. It's the same information the President thought was accurate after his director of intelligence told him it was a slam dunk. And it was the same kind of intelligence that President Clinton used to bomb Iraq in 1998.... So when it turned out that part of that information was wrong, the spotlight was on me. And I'm disappointed. I'm sorry it happened and wish those who knew better had spoken up at the time. But there isn't anything else I can say about it. When people ask me, "Is this a blot on your record?" Yeah, okay, fine, it's a blot on my record. But do you want me to walk around saying I have a blot on my record every day? I have a blot on my record. There it is. It's there for everybody to see forever.... You know it wasn't right away that I discovered this stuff was wrong. We sent 1,400 people to look for the stuff that we were sure was there. So the only part that kind of annoys me is "Well, did you lie? Or were you misleading?" No, I didn't lie, and I wasn't misleading. If I was lying and knew what the truth was, which has to be the basis of a lie—you know the truth—we wouldn't have sent 1,400 people wandering around Iraq looking for the stuff. They didn't find it. So the intelligence was wrong. And that's all you can really say about it. Yeah, it comes up almost every day...

But that's not what happened, is it? Powell and his chief-of-staff Wilkerson knew very well that what they were presenting to the U.N. was "anything but an intelligence document," didn't they? It's now accident that Wilkerson calls his role in preparing the Feb. 14, 2003 U.N. speech "the lowest point of my life":

Wonkette: Colin Powell's former chief of staff, Col. Lawrence Wilkerson, interviewed for the upcoming CNN documentary "Dead Wrong--Inside and Intelligence Meltdown," tersely characterizes his role in the preparations for his boss's historic Feb. 14, 2003 UN speech making the case for invading Iraq and unseating Saddam Hussein. "It was," Wilkerson says, "the lowest point of my life." The unsourced materials the administration gave to Powell to present were, Wilkerson recalls, "were anything but an intelligence document"; rather, they were "sort of a Chinese menu from which you could pick and choose"...


The Pattern of Growth in Income Inequality

Greg Mankiw notes:

Greg Mankiw's Blog: Lazear vs Krugman: NY Times columnist Paul Krugman yesterday:

There's a persistent myth, perpetuated by economists who should know better -- like Edward Lazear, the chairman of the president's Council of Economic Advisers -- that rising inequality in the United States is mainly a matter of a rising gap between those with a lot of education and those without...

And he questions why economist Paul Krugman, a high-ranking candidate for this year's Nobel Prize, writes this.

The reason, I think, is contained in this graph:

Piketty and Saez: Income Shares of Top 1%, Next 4%, and Next 5% in the U.S., 1913-2004

from Thomas Piketty and Emmanuel Saez (2006), The Evolution of Top Incomes: A Historical and International Perspective (Cambridge: NBER Working Paper No. 11955, January 2006).

The big rise in inequality in the U.S. since 1980 has been overwhelmingly concentrated among the top 1% of income earners: their share has risen from 8% in 1980 to 16% in 2004. By contrast, the share of the next 4% of income earners has only risen from 13% to 15%, and the share of the next 5% of income earners has stuck at 12%. The top 1% have gone from 8 to 16 times average income, the next 4% have gone from 3.2 to 3.7 times average income, and the next 5% have been stuck at 3 times average income.

It's hard to attribute this pattern to a rise in the premium salary earned by the well-educated by virtue of the skills their formal education taught them. Such a rise in the education premium would produce a much smoother rise in relative incomes among the whole top tenth of the income distribution. The cross-percentile pattern doesn't fit.

It is especially hard because most theories of the rising education premium attribute it to skill-biased technological change generated by the high-tech computer industrial revolution. But the high-tech boom's effects on overall productivity became large only in the second half of the 1990s, well after the biggest increases in inequality. The timing doesn't fit either.

Something else is going on.

If the New York Times were smarter, it would give Paul Krugman 2000 words every two weeks, rather than confining him to the straightjacket of 700 words twice a week, so that he could explain background issues like this more adequately...


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Why Oh Why Are We Ruled by This Moron?

Unbelievable. Greg Djerejian cannot believe this. Neither can I. Impeach George W. Bush. Impeach him now:

The Belgravia Dispatch: Putin To Bush: Thanks, But No Thanks: Well, this is just priceless:

During a joint news conference Saturday in St. Petersburg, Bush said he raised concerns about democracy in Russia during a frank discussion with the Russian leader. "I talked about my desire to promote institutional change in parts of the world, like Iraq where there's a free press and free religion, and I told him that a lot of people in our country would hope that Russia would do the same," Bush said. To that, Putin replied, "We certainly would not want to have the same kind of democracy that they have in Iraq, quite honestly."

[Transcript:

BUSH: I talked about my desire to promote institutional change in parts of the world, like Iraq, where there’s a free press and free religion. And I told him that a lot of people in our country would hope that Russia will do the same thing. I fully understand, however, that there will be a Russian-style democracy.

PUTIN: We certainly would not want to have same kind of democracy as they have in Iraq, quite honestly.

BUSH: Just wait.]

Djerejian:

This beats Putin's crack about Cheney's unsuccessful hunting shot, methinks. The fact that the President, even as Baghdad descends into ferocious sectarian conflict, would dare to describe Iraq as a model for anything just now (let alone religious freedom!) is flabbergasting (as in stupefying, jaw-dropping, certifiable, just staggering). Or Neroian, even, you might say. Perhaps he's getting all his news from fellow rapturists like my blog pal Hugh Hewitt, or something, but someone really needs to give POTUS a little reality check. But what Wise Men can mount the urgently needed intervention? There are so few left, and POTUS still appears to take Don Rumsfeld and Dick Cheney's word at face value. Crazy times, eh?

Duncan Black adds:

While it's funny, we also have to accept the fact that either Bush is a little bit insane or that the people around him have really just stopped bothering to brief him on anything important. Either way, like his BFF Joe Lieberman, he's lost the plot. He's paved Iraq with streets of gold and turned it into paradise, and nothing can shake him of that fact. The administration is no longer taking responsibility for providing any serious leadership on world affairs, with Bush addressing questions about serious issues with pig jokes.

Meanwhile the smart set in Washington still imagines that there must be some recipe for success, that we can just let several more Friedmans pass in order to ease their consciences.

A little bit insane, Duncan?


Rumsfeld-Loving Joe Lieberman

Duncan Black writes:

Eschaton: One thing I never want to hear again is about what a noble and ethical man Joe Lieberman is.

And directs us to an old story pointed to by Ned Lamont's website:

FOXNews.com - Democrats Call for Rumsfeld to Resign - Politics | Republican Party | Democratic Party | Political Spectrum: Some Democrats are calling for Defense Secretary Donald Rumsfeld (search) to resign amid controversy surrounding pictures depicting U.S. military personnel abusing Iraqi prisoners outside of Baghdad. But others say the demand for pink slips is merely politics in an election year when Democrats are hoping to oust President Bush.

"The Congress will politicize this, will spend too much time investigating it," Sen. Joe Lieberman, D-Conn., told Fox News. "This has been a setback for our cause."...

"The Pentagon (that) Secretary Rumsfeld oversees has become an island of unaccountability, ignoring the Geneva Conventions, our allies and common sense," House Democratic leader Nancy Pelosi of California said Thursday....

"It's the way it was handled," Kerry said on a campaign stop in California. "The lack of information to the Congress, the lack of information to the country, not managing it, not dealing with it, recognizing it as an issue."

Rep. Charles Rangel, D-N.Y., said Congress should impeach Rumsfeld if he declines to resign and the president refuses to fire him. The New York Times seconded those demands with a Friday editorial headlined, "Donald Rumsfeld Should Go."...

Lieberman told Fox News that the calls for Rumsfeld's ouster are a distraction from the larger picture. "We're in the middle of a war — you wouldn't want to have the secretary of defense change unless there's really good reason for it and I don't see any good reason at this time," Lieberman said....

Pelosi's and others' calls for a resignation are "a sign that opportunism always seeks an occasion in Washington," [Newt Gingrich] said. "There's zero reason for Donald Rumsfeld to resign and every reason for the president and Donald Rumsfeld to tell the truth," Gingrich said. "It's just politics in a presidential election"...

Joe Lieberman: Rumsfeld-lover.

Meanwhile, over at the New York Times, reporter Mark Leibovich whines that it is unfair that Lieberman's Senate Democratic colleagues won't back him as an independent if he loses the Democratic primary, calling their failure to do so "a peculiar brand of stigma":

Lieberman Hopes His Fate Isn't Sealed With a Kiss - New York Times: Mr. Lieberman has also encountered a peculiar brand of stigma from his Democratic colleagues in the Senate.... Several of them say they will support their “good friend” in the primary. But only a smattering say they will support Mr. Lieberman no matter what happens Aug. 8. The rest have either avoided the question... or vowed to support the primary winner, even if it is Mr. Lamont, whom most of them have never met.... People close to Mr. Lieberman say he has been wounded by the conditional devotion he has received from most of his Democratic colleagues in the Senate...

Neither Leibovich nor Lieberman seem to understand what a "political party" is, or what a "primary election" is.

And over at the Horse's Mouth, Greg Sargent is further bemused by Leibovich and Lieberman:

The Horse's Mouth: TIMES AND LIEBERMAN CAMP BASH BLOGS IN TANDEM. The New York Times has just posted a long piece on Joe Lieberman and his efforts to rid himself of the travails he's caused for himself with his embrace, literal and otherwise, of President Bush. Reporter Mark Leibovich brings a great deal of sympathy... lets the Lieberman camp indulge in a bit of ritualistic blog-bashing without offering anyone the chance to rebut it....

Mr. Lieberman... appears taken aback by the ferocity of the onslaught, particularly from liberal blogs. To Mr. Lieberman's camp, the bloggers embody what his longtime friend Lanny Davis calls "the demonizing, hating, virulent, character-assassinating left of the Democratic Party." Mr. Lieberman began, "Some of the vituperations, some of the extremity of the language and anger," before his voice trailed off. He paused for a second and started again: "They're describing a person who is not me."... "He's being subjected to the hate machine like Bill Clinton and George Bush have," said Mr. Davis.... "Joe Lieberman has never been subjected to this before."

There's plenty to dig into in this piece -- among them Lieberman's strained efforts to make light of his embrace of Bush. For my part, I find it surprising that not a single column inch was devoted to allowing anyone to rebut the Lieberman camp's broad-brush attacks on the liberal blogosphere.... [B]asic journalistic fairness should have required the reporter to get a rebuttal.

The piece also gives too little space to the substantive case against Lieberman, quoting just one single Lieberman opponent on the record who's made to sound a touch unhinged...


Why Oh Why Can't We Have a Better Press Corps?

Who are the heirs of Walter Lippman? Glenn Greenwald writes:

Unclaimed Territory - by Glenn Greenwald: The NYT, WP and Time all report the Specter bill as the opposite of what it is: The moderate-to-conservative Editorial Page of The Washington Post today appears to directly criticize the Post's own news article from yesterday, by Charles Babington and Peter Baker, which ludicrously reported that the Specter bill constituted a "concession" and a "clear retreat" by the Bush administration. The Post's Op-Ed points out [that it]... "isn't a compromise, except quite dramatically on the senator's part. Mr. Specter's bill began as a flawed but well-intentioned effort to get the program in front of the courts, but it has been turned into a green light for domestic spying. It must not pass.... This bill is not a compromise but a full-fledged capitulation on the part of the legislative branch to executive claims of power...."

It wasn't just the [news pages of the] Post which fundamentally misled its readers about this bill. So, too, did Eric Lichtblau in his article in The New York Times.... But in the department of factually false stories, both the NYT and the Post were completely outdone by this indescribably ridiculous Time Magazine article....

By contrast, conservative bloggers and liberal bloggers alike immediately recognized that the Specter bill is a complete capitulation to the Bush administration.... And yet journalists who write for the nation's most influential newspapers and magazines reported the bill as being the opposite of what it really is.... I'm not one of those who believe that blogs have replaced or can replace major journalistic outlets for the gathering of news.... But when it comes to understanding, analyzing and interpreting political and world events, there is very little competition, in my view, between the blogosphere and traditional media outlets.... [I]f I read only blogs but no established media outlets for news analysis, I feel I would be missing nothing. But if I read only established media outlets but no blogs, I would feel that I was operating in the dark.

A reader of this blog sent an e-mail yesterday to the Post's Charles Babington pointing out the grossly misleading nature of his article, and Babington petulantly replied as follows:

From: Chuck Babington xxxxxxxx@washpost.com
To: XXXXXX xxxxxxx@mac.com
Date: Fri Jul 14, 2006 10:48:26 AM CDT
Subject: Re: Message via washingtonpost.com: Specter Bill

I read the bill. Can you cite a single inaccuracy? Here's my guess: You read neither the bill nor the entire story.

That's how Babington -- after writing a story which conveyed the opposite of reality -- responded to a reader who complained. He condescendingly accused the reader of not having read the bill and/or the article. I was going to e-mail Babington today to highlight for him the patent inaccuracies in his article, but his own newspaper's Editorial Page today already did so.

Our democracy relies upon the media to inform Americans as to what their Government is doing, most particularly to inform them of inaccuracies in claims made by political officials. When, instead, journalists are manipulated by self-interested politicians into conveying fantasy and propaganda rather than reality ("the White House makes major compromises on eavesdropping!"), the damage to our democracy's ability to have meaningful public debates really is immeasurable.


Cognitive Disabilities in Investment

People have brains designed by evolution to figure out whether it's safe to leap to the next branch and when the fruit is ripe. They don't have brains designed to make long-run investment decisions:

[SELECTION RISK](http://www.capitalspectator.com/archives/2006/07/selection_risk.html): The age of self-managed retirement funds can be imagined as a wonderful world, one in which enlightened citizens invest their assets wisely over time so as to live out their golden years in comfort and style. Or so one could theorize. In practice, it may turn out to be something less. How much less depends on any number of factors, starting with the particular skills of the individual.

Alas, those skills, such as they are, may fall short of the minimum required to produce even modest results. Indeed, a new academic study throws more than a little skepticism on the notion that the masses are up to the challenge of managing their 401(k)s as a long-term proposition. The evidence for holding this pessimistic outlook comes from a testing of the most-basic of investing skills: picking the best S&P 500 index fund from a list of four choices, i.e., the fund with the lowest cost.

As tasks in financial decisions go, this one is arguably the easiest. There is, after all, just one factor for selecting the best portfolio: expense ratios. Since S&P 500 index funds are commodities in the true sense of the word, the only differentiating factor is one of price. A simpler methodology for picking mutual funds could hardly be imagined. As such, one could reason that if there's any hope of advancing one's investment station in life, success would reveal itself by investors mastering this important, but ridiculously easy investment hurdle.

Unfortunately, the participants in the study inspire anything but confidence as individuals continue to take control of their retirement assets. Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds, a paper authored by professors from Yale, Harvard and the Wharton School, asks Wharton MBA and Harvard College students to allocate an imaginary pot of $10,000 across four S&P 500 index funds with varying expense ratios and commissions of more than a little significance. In the first experiment, the only related literature the students are given to make an informed decision is the prospectus for each fund. The result? To quote the study authors, "Over 95% of control group subjects fail to minimize fees." In other words, only 5% made the correct decision of choosing the lowest-cost index fund.

In a second test, the students are asked to choose from the same index mutual funds but this time they're given the associated prospectus and a one-page summary that highlights the expense ratios of the four index funds. The results are slightly better, but barely. A still-high 80% of the students still failed to pick the lowest-cost index fund.

But wait--it gets worse. This time, students are handed a prospectus for each fund and a summary sheet that shows each index fund's annualized performance since inception. The professors throw a small curve ball to the students here, if only to test the complexity of life in the real world. That is, the performance summaries represent different time periods. No apples-to-apples comparisons here. But in fact, it's all a trick question. "Because each fund’s inception date differs," the professors write, "this information should be ignored when predicting across-fund variation in future fund returns. In fact, we construct our fund menu so that annualized returns since inception are positively correlated with fees; chasing past returns since inception lowers expected future returns. Nevertheless, this is what our subjects do."

The disturbing result shows that simply by showing investors higher performance numbers--even when those numbers are clearly irrelevant to the choice at hand--the investors make decisions based largely, if not exclusively on those immaterial numbers.

What makes these dismal results all the more frightening is the fact that the test subjects are educated people--most are MBA students at Wharton, among the most prestigious of business schools. The rest are college students at Harvard, a university that requires no introduction. "Our MBA subjects report an average combined SAT score of 1453, which is at the 98th percentile nationally, and our college subjects reported an average score of 1499, which is at the 99th percentile," the professors report.

Suffice to say, the students in question are better educated and therefore better equipped (in theory, at least) to make investment decisions compared with the general population. Why, then, do these students fail so miserably? And while we're asking questions, let's ponder the reality that the general population faces far more complicated investment issues (asset allocation, rebalancing, etc.) in managing real money.

If nothing else, this study underscores the fact that there are more than a few pitfalls in the democratization of finance. Fortunately, there's an easy solution: secure informed counsel on matters of investment strategy. But that introduces another challenge: picking competent advisors. Getting rich, it seems, is just as tough as it's always been.


Memo to Self: Worthwhile Morning Coffee Videocasts

Memo to self: Here are six videocasts that I think do their job effectively:

Morning Coffee Videocast: Why Social Security Is a Good Thing

Morning Coffee Videocast: Feckless Republican Leaders on the Budget Deficit:

Morning Coffee Videocast: The Estate Tax Once Again

Morning Coffee Videocast: PAYGO

Morning Coffee Videocast: A Primer on the Federal Reserve

Morning Coffee Videocast: Supply Side Follies


New Data on Income Inequality

Greg Mankiw sees a little bit of good news in the latest income distribution data: after rising astonishingly rapidly from 1986 to 2000, income inequality in 2004 was no worse than in 2000:

Greg Mankiw's Blog: New Data on Income Inequality: In today's NY Times, Paul Krugman calls attention to the update of the Piketty-Saez data on income inequality, although Paul describes the data differently than I would.Here is what I see: After rising substantially from 1986 to 2000, income inequality is essentially the same in 2004 (the most recent year of data) as it was in 2000.

I hope he's right, and that the trend of rising inequality has stopped--it is a very disturbing phenomenon, and further rises would be very worrisome indeed. But I can't be as optimistic as he is. He sees an essentially flat trend from 2000-2004. I see numbers for 1999 and 2000 that may have been transitorily boosted by high salaries paid during the dot-com bubble, and then a decreased in inequality from 2000-2002--a decrease that is then reversed in 2003-2004, which carries us up to bubble levels.

So my hope that we might not see 1999 and 2000 levels of income inequality again appears to have been vain.


Rick Weiss of the Washington Post, What Are You Doing?

Rick Weiss writes that documenting "significant misstatements" by Republican thugs is "incendiary":

Clash Over Stem Cell Research Heats Up: Yesterday, in one of the more incendiary volleys, the journal Science published a letter by three researchers documenting apparently significant misstatements made by [David Prentice] a leader in the movement to block the [stem cell] bill.

Shouldn't Rick Weiss be in a different line of work?

And why the weasel word "apparently"?

Why oh why can't we have a better press corps?


The letter to the journal focused on David A. Prentice, a scientist with the conservative Family Research Council. Prentice has been an adviser to Sen. Sam Brownback (R-Kan.) -- a leader in the charge to maintain tight restrictions on the research -- and an "expert source" often cited by opponents of embryonic stem cell research.

Prentice has repeatedly claimed that adult stem cells, which can be retrieved harmlessly from adults, have at least as much medical potential as embryonic cells. He often carries a binder filled with references to scientific papers that he says prove the value of adult stem cells as treatments for at least 65 diseases.

In the letter to Science, however, three researchers went through Prentice's footnoted documentation and concluded that most of his examples are wrong.

"Prentice not only misrepresents existing adult stem cell treatments but also frequently distorts the nature and content of the references he cites," wrote Shane Smith of the Children's Neurobiological Solutions Foundation in Santa Barbara, Calif.; William B. Neaves of the Stowers Institute for Medical Research in Kansas City, Mo.; and Steven Teitelbaum of Washington University in St. Louis.

For example, they wrote, a study cited by Prentice as evidence that adult stem cells can help patients with testicular cancer is in fact a study that evaluates methods of isolating adult stem cells.

Similarly, a published report that Prentice cites as evidence that adult stem cells can help patients with non-Hodgkin's lymphoma does not address the medical value of those cells but rather describes the best way to isolate cells from lymphoma patients and grow them in laboratory dishes, the letter said.

And Prentice's reference to the usefulness of adult stem cells for patients with Sandhoff disease -- a rare nerve disorder -- is "a layperson's statement in a newspaper article," the scientists reported.

All told, the scientists concluded, there are only nine diseases that have been proved to respond to treatment with adult stem cells.

"By promoting the falsehood that adult stem cell treatments are already in general use for 65 diseases and injuries, Prentice and those who repeat his claims mislead laypeople and cruelly deceive patients," the scientists wrote.

Prentice, in a brief voice message left for a reporter as he embarked on a trip yesterday, said, "I appreciate them pointing out some of the things . . . that need to be changed and updated." But he accused the letter writers of "mental gymnastics" by focusing narrowly on proven therapies, as opposed to the large number of diseases for which the value of adult stem cells is now being tested.


"If You Really Want to Know What's Going on, I Recommend Sticking to the Blogs"

Wow. Orin Kerr says it: "If you really want to know what is going on, I recommend sticking to the blogs."

The Volokh Conspiracy - - FISA, the NSA, and the Specter Bill: In the last 24 hours, there have been some important developments concerning legislation to address the NSA domestic surveillance program. The White House and Senator Specter have agreed to a bill, although the MSM is doing a pretty bad job (at least so far) of reporting what is actually in it. If you really want to know what is going on, I recommend sticking to the blogs. I have posted a few things at my solo blog, including this recent post: The Specter Bill's Major Shift in Constitutional Authority to Conduct Monitoring. Balkinization has several very critical posts, including Jack's post Specter Gives Up The Game -- The Sham NSA Bill and Marty's The Specter Monstrosity. Over at Prawfsblawg, Steve Vladeck has a post entitled The Specter Bill, the TSP, and the FISA Court: Some Thoughts.

This is, I think, a watershed--we have climbed the mountain, and are now coming down on the reality-based side. It's not the best world, this world in which, as Matthew Yglesias put it:

The Social Security Debate Once Again: The New York Times just managed to completely misrepresent the Sununu plan. It's really just a more intense version of the Bush plan.... Still a bad ide... but not orders of magnitude more lunatic as Richard Stevenson described it. It would be nice to get accurate information from the newspapers and not need to rely on the blogosphere to find solid reporting.

But this is the world in which we live in: respected weblogs run by intelligent commentators with good track records and strong senses of honor are our best information sources these days.


A Short Guide to Dynamic Scoring

Jason Furman writes:

http://www.cbpp.org/7-12-06bud2.pdf A SHORT GUIDE TO DYNAMIC SCORING: In recent years, official scorekeepers and academic researchers have devoted increased attention to the macroeconomic effects of tax cuts. The Administration also included a short “dynamic analysis” in this year’s Mid-Session Review of the budget. The results of much of this work indicate that tax cuts can have positive or negative effects on the economy, with the “sign” of the effects depending on... whether and how the tax cuts are paid for.

The Congressional Budget Office, the Joint Committee on Taxation (JCT), and academic researchers have all have found that tax cuts that are not accompanied by offsetting revenue increases or spending reductions — and are financed by borrowing instead — can harm the economy over the long term. The research, including the administration’s own analysis, also indicates that even if tax cuts are paid for, the economic benefits generally are relatively modest, with any increased revenues that result from stronger economic growth offsetting only a small fraction of what conventional cost estimates indicate the tax cuts will cost...


When the Terrorists Won

When the terrorists won. Nathan Newman argues that we should think much more highly of Ulysses S. Grant as president, because he tried.

NathanNewman.org: Ulysses Grant: Our Greatest President?... [W]e should think more about the true founding of a nation with the Civil War where all men were to be "truly created equal" and the President who worked to make it so. No not Lincoln-- who didn't live to finish the job--but the General, Ulysses Grant, who won the Civil War and went on to be the President who would oversee the ratification of the 15th Amendment and enactment of the civil rights enforcement laws that -- after the interregnum of disuse under Jim Crow -- to this day are a backbone of civil rights in this nation....

If Grant is not more respected, it is because the fight for racial justice and Reconstruction that he oversaw has been so rawly defamed over our history to the point of almost being forgotten. As W.E.B. DuBois wrote "[n]ot a single great leader of the nation during the Civil War and Reconstruction has escaped attack and libel." But Grant's accomplishments should be remembered.... Even as Grant was being elected in 1868, he faced Klan-based racial terrorism fighting to manipulate the vote throughout the South. The first result was the 15th Amendment to protect the right to vote but as importantly was the creation under Grant of the Department of Justice in 1871 and a series of "Enforcement Acts" to eliminate Klan violence. The language was sweeping in its defense of black voting rights.... Grant used his new authority to crack down on Klan terrorism in nine South Carolina counties in 1871 and essentially destroyed the Klan there and then throughout the South....

Unfortunately, his successors abandoned those commitments.... So what went wrong and why isn't Grant more honored. Basically, both his policies and reputation were murdered by Klan violence supported by the United States Supreme Court.... [I]n 1873 there was a new surge of racist violence and this time the courts blocked the Grant administration from enforcing the new civil rights laws. Racist violence ran wild as the courts blocked prosecution of the ringleaders. The key legal case was based on an incident in Colfax, Louisiana where more than a hundred people defending black voting rights were murdered by a white mob, yet the prosecution against the leaders were thrown out by lower courts and the Supreme Court in 1875's Cruikshank v. US would affirm that decision, saying that the federal government lacked any power to prosecute private individuals for racial crimes against other individuals. According to that Court, the 14th Amendment "adds nothing to the rights of one citizen as against another."... Reconstruction governments were driven from office throughout the South. Violence destroyed the Republican Party in Mississippi.... In 1876, Confederate General Matthew Butler led a white mob to murder an opposing black militia defending the South Carolina government -- and was then elected to the United States Senate by the new, "redeemed" legislature...


The Further Derangement of the U.S. Income Distribution

Paul Krugman writes:

Left Behind Economics - New York Times: I'd like to say that there's a real dialogue taking place about the state of the U.S. economy, but the discussion leaves a lot to be desired. In general, the conversation sounds like this:

Bush supporter: "Why doesn't President Bush get credit for a great economy? I blame liberal media bias."

Informed economist: "But it's not a great economy for most Americans. Many families are actually losing ground, and only a very few affluent people are doing really well."

Bush supporter: "Why doesn't President Bush get credit for a great economy? I blame liberal media bias."

To a large extent, this dialogue of the deaf reflects Upton Sinclair's principle: it's difficult to get a man to understand something when his salary depends on his not understanding it. But there's also an element of genuine incredulity. Many observers, even if they acknowledge the growing concentration of income in the hands of the few, find it hard to believe that this concentration could be proceeding so rapidly as to deny most Americans any gains from economic growth.

Yet newly available data show that that's exactly what happened in 2004.... Unfortunately, data on the distribution of income arrive with a substantial lag; the full story of what happened in 2004 has only just become available.... Here's what happened in 2004. The U.S. economy grew 4.2 percent, a very good number. Yet last August the Census Bureau reported that real median family income -- the purchasing power of the typical family -- actually fell. Meanwhile, poverty increased, as did the number of Americans without health insurance. So where did the growth go?

The answer comes from the economists Thomas Piketty and Emmanuel Saez... in 2004 the real income of the richest 1 percent of Americans surged by almost 12.5 percent. Meanwhile, the average real income of the bottom 99 percent of the population rose only 1.5 percent. In other words, a relative handful of people received most of the benefits of growth.... Even people at the 95th percentile of the income distribution -- that is, people richer than 19 out of 20 Americans -- gained only modestly. The big increases went only to people who were already in the economic stratosphere.... [T]he real earnings of the typical college graduate actually fell in 2004. In short, it's a great economy if you're a high-level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport....

[D]on't expect this administration or this Congress to do anything to limit the growing concentration of income. Sometimes I even feel sorry for these people and their apologists, who are prevented from acknowledging that inequality is a problem by both their political philosophy and their dependence on financial support from the wealthy. That leaves them no choice but to keep insisting that ordinary Americans -- who have, in fact, been bypassed by economic growth -- just don't understand how well they're doing.


Colin Powell

Colin Powell:

The Blog | Arianna Huffington: In between panels, I ran into Colin Powell and asked him if we are ever going to get out of Iraq. "We are," he told me, "but we're not going to leave behind anything we like because we are in the middle of a civil war." Powell and Jack Murtha both talking about civil war in Iraq -- shouldn't that be headline news?...


"Accuracy"

A note:

The Blog | Arianna Huffington: As I was making the rounds of these media panels, there was one constant: at some point someone in the audience or on a panel would, without fail, raise the old canard about the supposed inaccuracy of the blogosphere. "We still need a place," some plaintive soul would inevitably say, "where we can go that we can count on for its accuracy."


What Is in the Specter Bill?

Orin Kerr reports:

OrinKerr.com: The Specter Bill's Major Shift in Constitutional Authority to Conduct Monitoring: I have read the Specter bill.... Section 9... is a "clarification" only if you assume the correctness of the President's more controversial claims to Article II authority. If you accept the more traditional understanding of the separation-of-powers... in... Hamdan v. Rumsfeld... this "clarification" is actually a major reorientation of the role of Congress in foreign intelligence monitoring away from the 1978 framework of FISA.

The key language is the new Section 801 of FISA:

Nothing in this Act [FISA] shall be construed to limit the constitutional authority of the President to collect intelligence with respect to foreign powers and agents of foreign powers.

That strikes me as a pretty major change, given that the purpose of FISA in 1978 was to attempt to regulate that authority.... Similarly, the bill would amend Congress's current command that the Wiretap Act and FISA must provide the exclusive means of conducting monitoring.... Maybe I'm missing something, but my sense is that it largely tracks the David Addington/John Yoo approach to Article II; that is, it would have Congress back away from the claims to authority that Congress made in 1978 that the Administration has suggested it believes are unconstitutional because they infringe on the Commander-in-Chief power.

Congress can certainly do this, of course: Congress passed FISA, and it can repeal or water it down as well. And of course different people will have diffferent views on whether this is a good idea. But it does seem like this is a major shift in approach, and one that is probably more important in the long run than whether the NSA domestic surveillance progam is submitted to the FISA court for review.


Why Oh Why We Can't Have a Better Press Corps:

You know, I don't think there will be a Washington Post in twenty years. Too often what's true in the Post isn't news, and what's new in the Post isn't true:

Eschaton: The Media Is The Problem: Greenwald:

The reporters who write on these matters literally don't understand the issues they are reporting, even though the issues are not all that complicated. Notwithstanding the fact that [Specter's] this bill expressly removes all limits on the President's eavesdropping powers -- and returns the state of the law regarding presidential eavesdropping to the pre-FISA era, when there were no limits on presidential eavesdropping of any kind -- Charles Babington and Peter Baker told their readers in The Washington Post -- in an article hilariously entitled: "Bush Compromises On Spying Program" -- that "the deal represented a clear retreat by Bush" and that "the accord is a reversal of Bush's position that he would not submit his program to court review."

Anyone with a basic understanding of what FISA was and of the conflicts in play could read the Specter bill and see that the last thing it does is entail "compromises" on the part of the White House. Nobody who knows how to read could read that bill and think that. At this point, I believe they don't even read the bill. It's hard to see how they could read the bill and then write that article. Instead, it seems that they just call their standard sources on each side, go with the White House-Specter assessment that this is some grand "compromise" on the ground that it is a joint view of both warring sides, and then throw in a cursory ACLU quote somewhere at the end just to be able to say that they included some opposing views.

But the reporters who are writing about this - and I mean the ones writing in the pages of our country's most important newspapers - don't actually have any idea what they're talking about.

Babington is the same reporter who falsely told his readers on the front page of the Post in March that the Republican "compromise" bill from the Senate Intelligence Committee (offered in lieu of an actual investigation into the NSA program) entailed substantial Congressional oversight of the program, even though a quick reading of the actual bill would have revealed that it entailed no such oversight. Representatives from Sen. DeWine and Snowe's office apparently told him what great oversight their bill provided and so he printed as fact what he was told.

After bloggers pointed out this error, the Post, several days later, was forced to issue a correction (appended to the top of the original article). But the same thing that happened there is happening here - Republican Senators and White House representatives with a vested interest in how the story gets reported characterize the bill in a certain way, and then lazy, uninformed reporters like Babington uncritically regurgitate that version as fact in the newspaper.

As Matthew Yglesias said somewhere, those who want information will continue to get theirs from well-established webloggers with a good track record and a sense of honor, like http://balkin.blogspot.com/ and http://www.orinkerr.com/. The Post's management had better put some scientists to work testing how to make their product a more effective birdcage liner, because that's the only comparative advantage they have left.


Worth Reading 20060714

Worth reading, July 14, 2006:

alicublog: "Finally saw Brokeback Mountain.... Early on, I was convinced Brokeback's slow pace was a device to keep us from busting out laughing at the sharp deviation from traditional form -- you know, two cowboys bond on the open range, then, presto, ass-fucking. But like most slow-paced movies, Brokeback is very concerned with and serious about time. Ennis and Jack's early days are a cherished memory, so of course they are made long enough to stay in the mind through the rest of the film.... [F]or (I think) straight viewers at least, the gay angle actually illuminates rather than limits the love story, because the taboo on their love is so ingrained in us that we don't need to have it explained in artificial "two houses, both alike in dignity" terms -- terms we know are a writer's invention, and which our minds will automatically try to get around throughout the story, devising alternate, happier endings. Not that we won't root for Ennis and Jack -- of course we will -- but nobody goes into a love story between two men in 1963 rural America with any hope that things will work out..."

Environmental Economics: Doesn't it take longer than a day for oil to become gas?: "Doesn't it take longer than a day for oil to become gas? Oil jumped to $78 per barrel yesterday. My wife paid $3.30 for gas this morning. I'm pretty sure it takes more than 48 hours for Middle East oil to become Columbus, OH gas. So what's going on? In short, expectations matter. Prices are expected to go up in the future, so prices jump today. Is this greedy suppliers taking advantage? No just rationality at work..."

Armchair Generalist: Casual Fridays: "The Dog Whisperer starring Cesar Millan.... Cesar sees himself as a dog psychologist.... It's our American culture to treat our pets as children, but the dogs are thinking like pack animals and will take advantage of our failure to appreciate that. Not that we're not supposed to love and care for our pets as companion animals, but at the root, they still have animal instincts. Number one issue with most of the owners - they're not walking the dog enough, or not walking the dog with 'a calm, assertive manner'.... I've stopped using the 25-foot extendable leash in favor of a shorter leash that puts my dog right next to me when we walk.... New feature - Cesar's starting a blog! It's going to be inundated with comments..."

Ben Muse: Economic modeling and trade negotiations

Eschaton: "WHEEEEEEEEE: Bush approval at 36 in both AP and Fox polls. I'll leave it to the smart guys at the Note to explain how popular he is..."

Lawyers, Guns and Money: Mickey Kaus is a %%$%@ Moron, Part LXXIV: "Mickey Kaus is a %%$%@ Moron, Part LXXIV: Yes, I realize this is an unhealthy obsession. Mickey has responded: 'Numerous readers email to note Plano's very Republican voting record--Collins County, of which it's a part, went 71% for Bush in 2004, for example. It's certainly a Bush bastion. It's less clear to me that it's a "conservative" bastion if by that you mean social conservative (gay marriage, school prayer, abortion, etc.). Nor does it seem to be a "pickup" truck, chewin' tobacco bastion in the classic sense. More of a Bobo Boomburg....' Shorter Mickey: If we redefine conservative to mean what I want it to mean, then Plano is kind of not conservative. What an idiot. Conservatives should loathe Mickey even more then I do; for Mickey, it appears, conservatives are ignorant hicks who've never heard of sushi, shop every day down at the Wal*Mart, and who all drive aging pickup trucks with 'I Hate Queers' bumper stickers on the back..."

The Horse's Mouth: "MEDIA BADLY BOTCHES REPORTING ON BUSH-SPECTER WIRETAPPING BILL..."

Greg Mankiw's Blog: The Tradeoff Between Breadth and Depth: "My broad interests (short attention span) help to explain my diverse (incoherent) body of work.... breadth has its costs.... I sometimes fear that because I work in so many different areas, each line of work is more superficial than it otherwise would be.... I am always certain that whatever topic I am working on at that moment, someone else has spent many more hours thinking about it than I have. There is something to be said for devoting a lifetime to mastering a single subject. But it won’t be my lifetime. I just don't have the temperament for it..."

Think Progress: "Oil surged to record highs above $78 a barrel on Friday as intensifying violence in the Middle East raised concerns of possible supply disruptions..."

Big Bang Theory In Ruins: By E. J. Dionne Jr.: The most intellectually honest case for the war in Iraq was... that the Middle East was a mess. A nest of authoritarian regimes bred opposition movements rebelling against the conditions under which too many people lived and energized by a radical Islamist ideology. The situation's hopelessness argued for a hard shove from the United States to create a new dynamic. Installing a democratic government in Iraq would force a new dawn. Newly empowered Muslim democrats would reform their societies, negotiate peace with Israel and get on with the business of building prosperous, middle-class societies. It was a beautiful dream, and even when the administration was asserting things that turned out not to be true, it held the dream out there for all to contemplate.... But when the Big Bang happened, the wreckage left behind took the form of reduced American influence, American armed forces stretched to their limit and a Middle East more dangerously unstable than it was at the beginning of 2003. Whether one ascribes these troubles to the flawed implementation of the Big Bang Theory or to the theory itself, what matters now is how to limit and, if possible, undo some of the damage..."


Leon Trotsky on Kantian-Priestly and Vegetarian-Quaker Prattle

When $DEITY made Lev Bronstein, she broke the mold:

Jeff Weintraub: "Kantian-priestly and vegetarian-Quaker prattle" (Trotsky): The blogger Dialectical Confusions usefully reminds us of a brilliantly expressive polemical passage from Trotsky... [his] revolutionary ethic of absolute responsibility.... Even if one happens to disagree with this kind of position (which I do), a morally and intellectually serious defense of it has the advantage of bringing out its fundamental premises and implications. --Jeff Weintraub

Dialectical Confusions Monday, July 3, 2006 Kantian-priestly and vegetarian-Quaker prattle: "As for us, we were never concerned with the Kantian-priestly and vegetarian-Quaker prattle about the 'sacredness of human life.' We were revolutionaries in opposition, and have remained revolutionaries in power. To make the individual sacred we must destroy the social order which crucifies him. And this problem can only be solved by blood and iron."

Me, I'm going to line up alongside John Maynard Keynes, and endorse Keynes's view of Trotsky:

Review of Trotsky On England (Where is Britain Going?), by John Maynard Keynes. From John Maynard Keynes (1933), Essays in Biography (London: Harcourt, Brace).

A CONTEMPORARY reviewing this book says: "He stammers out platitudes in the voice of a phonograph with a scratched record." I should guess that Trotsky dictated it. In its English dress it emerges in a turbid stream with a hectoring gurgle which is characteristic of modern revolutionary literature translated from the Russian. Its dogmatic tone about our affairs, where even the author's flashes of insight are clouded by his inevitable ignorance of what he is talking about, cannot commend it to an English reader. Yet there is a certain style about Trotsky. A personality is visible through the distorting medium. And it is not all platitudes.

The book is, first of all, an attack on the official leaders of the British Labour Party because of their "religiosity", and because they believe that it is useful to prepare for Socialism without preparing for Revolution at the same time. Trotsky sees, what is probably true, that our Labour Party is the direct offspring of the Radical Non-conformists and the philanthropic bourgeois, without a tinge atheism, blood, and revolution. Emotionally and intellectually, therefore, he finds them intensely unsympathetic. A short anthology will exhibit his state of mind:

The doctrine of the leaders of the Labour Party is a kind of amalgam of Conservatism and Liberalism partially adapted to the needs of trade unions ... The Liberal and semi-liberal leaders of the Labour Party still think that the social revolution is the mournful privilege of the European Continent.

"In the realm of feeling and conscience," MacDonald begins, "in the realm of spirit, Socialism forms the religion of service to the people." In those words is immediately betrayed the benevolent bourgeois, the left Liberal, who "serves" the people, coming to them from one side, or more truly from above. Such an approach has its roots entirely in the dim past, when the radical intelligentsia went to live in the working-class districts of London in order to carry on cultural and educational work.

Together with theological literature, Fabianism is perhaps the most useless, and in any case the most boring form of verbal creation ... The cheaply optimistic Victorian epoch, when it seemed that to-morrow would be a little better than to-day, and the day after to-morrow still better than to-morrow, found its most finished expression in the Webbs, Snowden, MacDonald and other Fabians ... These bombastic authorities, pedants, arrogant and ranting poltroons, systematically poison the Labour Movement, befog the consciousness of the proletariat, and paralyse its will ... The Fabians, the I.L.P.ers, the Conservative bureaucrats of the trade unions represent at the moment the most counter-revolutionary force in Great Britain, and perhaps of all the world's development ... Fabianism, MacDonaldism, Pacifism, is the chief rallying-point of British imperialism and of the European, if not the world, bourgeoisie. At any cost, these self-satisfied pedants, these gabbling eclectics, these sentimental careerists, these upstart liveried lackeys of the bourgeoisie, must be shown in their natural form to the workers. To reveal them as they are will mean their hopeless discrediting.

Well, that is how the gentlemen who so much alarm Mr. Winston Churchill strike the real article. And we must hope that the real article, having got it off his chest, feels better. How few words need changing, let the reader note, to permit the attribution of my anthology to the philo-fisticuffs of the Right. And the reason for this similarity is evident. Trotsky is concerned in these passages with an attitude towards public affairs, not with ultimate aims. He is just exhibiting the temper of the band of brigand-statesmen to whom Action means War, and who are irritated to fury by the atmosphere of sweet reasonableness, of charity, tolerance, and mercy in which, though the wind whistles in the East or in the South, Mr. Baldwin and Lord Oxford and Mr. MacDonald smoke the pipe of peace. "They smoke Peace where there should be no Peace," Fascists and Bolshevists cry in a chorus, "canting, imbecile emblems of decay, senility, and death, the antithesis of Life and the Life-Force which exist only in the spirit of merciless struggle." If only it was so easy! If only one could accomplish by roaring, whether roaring like a lion or like any sucking dove!

The roaring occupies the first half of Trotsky's book. The second half, which affords a summary exposition of his political philosophy, deserves a closer attention.

First proposition. The historical process necessitates the change-over to Socialism if civilisation is to be preserved. "Without a transfer to Socialism all our culture is threatened with decay and decomposition."

Second proposition. It is unthinkable that this change-over can come about by peaceful argument and voluntary surrender. Except in response to force, the possessing classes will surrender nothing. The strike is already a resort to force. "The class struggle is a continual sequence of open or masked forces, which are regulated in more or less degree by the State, which in turn represents the organised apparatus of force of the stronger of the antagonists, in other words, the ruling class." The hypothesis that the Labour Party will come into power by constitutional methods and will then "proceed to the business so cautiously, so tactfully, so intelligently, that the bourgeoisie will not feel any need for active opposition," is "facetious" though this "is indeed the very rock-bottom hope of MacDonald and company."

Third proposition. Even if, sooner or later, the Labour Party achieve power by constitutional methods, the reactionary parties will at once Proceed to force. The possessing classes will do lip-service to parliamentary methods so long as they are in control of the parliamentary machine, but if they are dislodged, then, Trotsky maintains, it is absurd to suppose that they will prove squeamish about a resort to force on their side. Suppose, he says, that a Labour majority in Parliament were to decide in the most legal fashion to confiscate the land without compensation, to put a heavy tax on capital, and to abolish the Crown and the House of Lords, "there cannot be the least doubt that the possessing classes will not submit without a struggle, the more so as all the police, judiciary, and military apparatus is entirely in their hands." Moreover, they control the banks and the whole system of social credit and the machinery of transport and trade, so that the daily food of London, including that of the Labour Government itself, depends on the great capitalist combines. It is obvious, Trotsky argues, that these terrific means of pressure "will be brought into action with frantic violence in order to dam the activity of the Labour Government, to paralyse its exertions, to frighten it, to effect cleavages in its parliamentary majority, and, finally, to cause a financial panic; provision difficulties, and lock-outs." To suppose, indeed, that the destiny of Society is going to be determined by whether Labour achieves a parliamentary majority and not by the actual balance of material forces at the moment is an "enslavement to the fetishism of parliamentary arithmetic."

Fourth proposition. In view of all this, whilst it may be good strategy to aim also at constitutional power, it is silly not to organise on the basis that material force will be the determining factor in the end.

In the revolutionary struggle only the greatest determination is of avail to strike the arms out of the hands of reaction to limit the period of civil war, and to lessen the number of its victims. If this course be not taken it is better not to take to arms at all. If arms are not resorted to, it is impossible to organise a general strike; if the general strike is renounced, there can be no thought of any serious struggle.

Granted his assumptions, much of Trotsky's argument is, I think, unanswerable. Nothing can be sillier than to play at revolution if that is what he means. But what are his assumptions? He assumes that the moral and intellectual problems of the transformation of Society have been already solved--that a plan exists, and that nothing remains except to put it into operation. He assumes further that Society is divided into two parts the proletariat who are converted to the plan, and the rest who for purely selfish reasons oppose it. He does not understand that no plan could win until it had first convinced many people, and that, if there really were a plan, it would draw support from many different quarters. He is so much occupied with means that he forgets to tell us what it is all for. If we pressed him, I suppose he would mention Marx. And there we will leave him with an echo of his own words "together with theological literature, perhaps the most useless, and in any case the most boring form of verbal creation."

Trotsky's book must confirm us in our conviction of the uselessness, the empty-headedness of Force at the present stage of human affairs. Force would settle nothing no more in the Class War than in the Wars of Nations or in the Wars of Religion. An understanding of the historical process, to which Trotsky is so fond of appealing, declares not for, but against, Force at this juncture of things. We lack more than usual a coherent scheme of progress, a tangible ideal. All the political parties alike have their origins in past ideas and not in new ideas and none more conspicuously so than the Marxists. It is not necessary to debate the subtleties of what justifies a man in promoting his gospel by force; for no one has a gospel. The next move is with the head, and fists must wait.

March 1926.