In Which I Fall Down on the Job...
A correspondent writes, asking where is my quarterly post reminding the internet that Donald Luskin--National Review's contribution to the grand coordinated right-wing Paul Krugman-trashing enterprise ably reported by Nicholas Confessore--more often than not simply doesn't know what he is talking about.
Now it is true that the right-wing campaign has collapsed--even its two original leaders, Mickey Kaus and Andrew Sullivan, now admit that Paul Krugman's batting average since he started at the New York Times has been above 90%. But Luskin is still out there: now he is trashing Alan Blinder in a piece that could not have been written in good faith if Luskin had actually read Blinder's stuff on outsourcing/offshoring.
You do have to wonder just what National Review thought and thinks it is doing by sponsoring Luskin. The overall effect is loony. After all, we have seen Luskin's ignorance of what a real exchange rate is, his claim that David Brooks is both 100% correct and is a traitor to his party for saying that the Bush administration routinely lies, his denial that the yield on a bond is an interest rate, his accusation that Gretchen Morgenstern is a plagiarist, his claim that the Bushies--Armitage, Libby, Rove, Cheney, Fleischer, and company--could never have revealed the identity of CIA undercover operative Valerie Plame because that would mean that they were guilty of something tantamount to high treason, his claim that George Soros would try to crash the market on October 31, 2004 to elect Democrats, his being off by a factor of five in calculating the liabilities of the Social Security system, his erroneous claims that faster productivity growth doesn't help the Social Security system--you get the picture. Is National Review deliberately trying to further damage the intellectual reputation of all its contributors?
But I can't do it.
I don't have the heart to surf on over to Luskin's web site and point out stupid errors, and egregious tendentious deliberate misinterpretations.
It's just too depressing.
I can, however, grab two truly unbelievable--but, alas! not atypical--examples of Donald Luskin's work from my weblog archives:
For my first example, let's recall Luskins demonstration that he cannot calculate a real exchange rate [1]:
Back in late 1982, the young Larry Summers and Paul Krugman--working for Marty Feldstein in the Reagan administration--wrote a memo in which they warned of the (very real) danger that large budget deficits and a falling dollar might reignite domestic inflation:
As the figure above, which plots the real exchange rate--the real value of the dollar--shows, they were right: the dollar was then overvalued (and was about to become much more overvalued in the next two years before returning to equilibrium). Luskin, trying to trash them, presented this graph:
and wrote:
The chart... shows the real exchange rate of the US dollar for a decade before the 1982 memo, and then through the end of the Reagan presidency. It did drift slightly lower for the first couple of years after the memo. But then it took off to new highs -- nothing resembling anything like a "return to approximately their historical levels."
It is clear that one thing wrong with Luskin's graph is that it is upside down--the dollar falls in value from early 1985 on, it doesn't rise. The dollar doesn't "take off to new highs" after 1985--as anybody with any knowledge of the historical configuation of asset prices would know. But it is also clear that there are other things wrong with it: the real exchange rate in 1989 was within 15 percent of its value in 1973, not different by a factor of four.
We still do not know how Luskin generated this graph.
For my second example, there is Luskin's single-handed denial of the existence of the entire intellectual discipline of statistics:
The Times and the Journal cite many authoritative-sounding studies [of income inequality].... But to get an accurate picture... you'd have to track hundreds of millions of individuals.... [N]one of this is reliable... the Panel Study of Income Dynamics... tracks only 8,000 families out of a U.S. population of 295 million individuals.
The whole purpose of the science of statistics is to tell us that this is simply not true. As long as you can take a random sample of your population, you can find out an enormous amount about the population from a relatively small number of observations. You can find out what proportion of rich people had poor paretns, or what proportion of twenty year olds think they will graduate from college, or pretty much any other average proportion that you want.
Now the "random sample" part of this is very important. But if your sample is random--if the fact that the yes-no pattern of observations so far makes it no more (or less) likely that you next observation will be a "yes"--then the law of large numbers tells us that the sample average you compute will converge to the true population average at a frighteningly rapid speed.
The standard demonstration of this is to repeatedly flip a coin and count the excess proportion of heads over tails. We know that--with a coin flipped and caught in the air by a human being at least--the population average taking all coins that have ever been flipped of the excess proportion of heads is zero. How many observations do we have to take--how many coin flips--before the sample average converges to this population average of 0% excess heads?
Let's see. Here's one run of 1,000 "flips" from Excel's internal random number generator:
Here are ten more:
Impressive, no?
Try some yourself.
You could have a population of 295 million flipped coins. Yet you don't need to look at "hundreds of millions" of them to determine what is going on. Looking at 1,000 will do.
This is the principal insight of the science of statistics. it is an important insight. It is a powerful insight. It is also not an obvious insight--that's what makes it powerful and important.
Yet because statistical studies sometimes produce results ideologically inconvenient for the Republican Party, Donald Luskin either feels he has to pretend that this insight doesn't exist, or is so stupid that he doesn't understand the first thing about the Law of Large Numbers.
That's really sad.
[1] Daniel Davies affects to feel sympathy for Luskin:
It is precisely this [same] mental block which led to my being forbidden by colleagues from ever mentioning exchange rates in public meetings. Oddly enough, clients tended to complain about the fees when the team's "technical expert" was seemingly unable to distinguish between division and multiplication :-)...
