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July 2007

The Craven Fecklessness of Fred Hiatt Drives Joshua Micah Marshall Is Unusually Shrill!!

Joshua Micah Marshall watches as the Washington Post's Fred Hiatt cravenly and fecklessly tries to save his job:

Talking Points Memo: As Bad As Bush: (ed.note: This is a post I was working on a few days ago but had set aside. But with attention fixing again today on the Post's editorial page's egregious record of distortions on Iraq, I thought I'd pull it out of Movable Type oblivion.)

The Iraq fiasco provides few opportunities for mirth. But one is watching Fred Hiatt, czar of the Washington Post editorial page, try to kick up enough dust to wriggle out of his own position on the war.

A necessary preliminary to this discussion is to realize that there is probably no editorial page in the United States that has advocated more influentially on behalf of the Iraq catastrophe at every stage of the unfolding disaster -- from the Iraq Liberation Act, the the WMD and al Qaeda bamboozlement, to the lauching of the war, to the longstanding denial of what was happening on the ground to the continuing refusal to brook any real change of course in policy. Other papers have been more hawkish certainly. But because of its location in the nation's capital and even more because of its reputation as a non-conservative paper, the Post's fatuous and frequently mendacious editorializing has without a doubt had a greater role in pushing the public debate into the war camp than any other editorial page in the nation.

Which brings us to the unsigned editorial that ran in the paper on Saturday, July 21st. According to the editorial, there's [the] existence [of a] consensus in favor of a major change of course in Iraq. And all that is holding it up is the Democrats' insistence on polarizing the debate for political gain. According the Post, most senators from both parties, the Baker-Hamilton commissioners and even the president are all part of the same broad consensus.

A large majority of senators from both parties favor a shift in the U.S. mission that would involve substantially reducing the number of American forces over the next year or so and rededicating those remaining to training the Iraqi army, protecting Iraq's borders and fighting al-Qaeda. President Bush and his senior aides and generals also support this broad strategy, which was formulated by the bipartisan Baker-Hamilton commission. Mr. Bush recently said that "it's a position I'd like to see us in"...

The problem is [that] "Senate Majority Leader Harry M. Reid (Nev.) [seeks] to deny rather than nourish a bipartisan agreement." And this is so dangerous because we need to be discussing now what we do after September when we learn that the president 'new way forward' has failed.

The country will desperately need a strategy for Iraq that can count on broad bipartisan support, one aimed at carrying the U.S. mission through the end of the Bush administration and beyond. There are serious issues still to resolve, such as whether a drawdown should begin this fall or next year, how closely it should be tied to Iraqi progress, how fast it can proceed and how the remaining forces should be deployed...

Here we get down to the stem of a whole world turned inside out. 'Serious issues still to resolve' -- like when to leave, whether to condition leaving on things getting better, how fast to leave and how many should stay and what we should have them do. I would say that covers quite a bit of the debate, doesn't it? Indeed, that's the entire debate, which is to say there's little consensus on anything.

The Iraq debate now turns on two related questions: 1) the importance of Iraq to US national security and 2) whether we want to leave and will so long as various conditions in Iraq are met or whether we've decided that it is in our interests to leave and will begin to do so now without waiting for conditions to be met. All of the different permutations of the debate can be explained in terms of different answers to those two questions.

So what you have in the Post's editorial is Mr. Hiatt's desire to take a nominal and meaningless agreement -- that everyone would like to have most US troops withdrawn from Iraq -- and stretch it so thin that it can cover most members of the senate, the president and even the Baker-Hamilton report that the president dumped in the trash last winter. Meanwhile the key questions that are the meat [of the] debate become points of detail that the members of the grand consensus still need to hash out if malefactors won't keep on cynically injecting politics into the proceedings.

It is truly the world we are living in through the looking glass. And I think the reason for this outlandish contortion is not hard to see. Hiatt and the Post editorial crew can see the writing on the wall and the direction which public opinion is inevitably taking us. But they want to twist and distort and most of all stretch the terms of the debate so far as to appear to come out on the winning side even as they never actually change their position which has been a consistent and bullheaded advocacy of the position the entire country is now abandoning. So when troops come out of Iraq -- due to the votes of the evil polarizers -- Hiatt can say, yes, that was our position and it would have come sooner if Harry Reid would have just butted out of things. Until then, it's full speed ahead with the surge.

Academic Journals and Referees

Tyler Cowen blogs this:

Marginal Revolution: Economic Inquiry has a new policy: R. Preston McAfee (a great choice) is the new editor, and he writes in a mass email today:

More insidious, in my view, is the gradual morphing of the referees from evaluators to anonymous co-authors. Referees request increasingly extensive revisions. Usually these represent improvements, but the process takes a lot of time and effort, and the end result is often worse owing to its committee-design.... The system is broken. Consequently, Economic Inquiry is starting an experiment. In this experiment, an author can submit under a 'no revisions' policy. This policy means exactly what it says: if you submit under no revisions, I (or the co-editor) will either accept or reject. What will not happen is a request for a revision....

Robert Waldmann Wants to Deny Robert Samuelson His Free Speech Rights!

He writes, apropos of Robert Samuelson of the Washington Post:

Robert's Stochastic thoughts: Robert Samuelson wrote a very very bad op-ed which contained a claim which interested Matthew Yglesias: "eliminate tax subsidies (mainly the mortgage interest rate deduction) for housing, which push Americans toward ever-bigger homes. (Note: If you move to a home 25 percent larger and then increase energy efficiency 25 percent, you don't save energy.)"

[Matthew] Yglesias notes that 0.75*1.25 is less than one, and suggests a remedial arithmetic course.

I am willing to go further and make a personal sacrifice. I have a mustache. I am willing to support an unconstitutional law that no person who had a mustache on July 26 2007 can ever write an op-ed ever again (damn that would ban Matt too. Cut it off before it's too late).

Dana Milbank Is a National Treasure

He is approaching the Fafblog zone--the only zone from which one can properly cover the George W. Bush administration:

Dana Milbank: With Senate and Gonzales, Familiarity Breeds Contempt: White House officials are vying to be the first person held in "contempt of Congress" for refusing to cooperate with probes of the Bush administration. Turns out the contempt is mutual. After four hours of questioning Attorney General Alberto Gonzales yesterday, the Senate Judiciary Committee didn't even require a vote to establish beyond a reasonable doubt that Congress is in contempt of Gonzales.

Consider some of the invective directed at the attorney general as he sat hunched and grim at the witness table:

The department is dysfunctional. . . . Every week a new issue arises. . . . That is just decimating, Mr. Attorney General. . . . The list goes on and on. . . . Is your department functioning? . . . What credibility is left for you? . . . Do you expect us to believe that? . . . Your credibility has been breached to the point of being actionable.

And that was just from the top Republican on the committee, Arlen Specter (Pa.). Democrats had to scramble to keep up with the ranking member's contempt.

I don't trust you, announced Chairman Pat Leahy (D-Vt.), who paused, while swearing in the witness, to emphasize "nothing but the truth" -- as if lecturing a child.

You just constantly change the story, seemingly to fit your needs to wiggle out of being caught, added Chuck Schumer (D-N.Y.).

You, sir, are in fact the problem," submitted Sheldon Whitehouse (D-R.I.).

But the scandal-ridden Gonzales has the support of the only person who matters -- President Bush -- and that allowed him to be as contemptuous as he was contemptible. To Leahy: "I think you've misunderstood my response." To Specter: "I'm not going to answer this question." To Dick Durbin (D-Ill.): "I'm not going to get in a public discussion here."... Why would Gonzales wish to stay in the job? "That's a very good question," the witness acknowledged.

The Gonzales Justice Department's problems have mushroomed since the initial accusations that he fired U.S. attorneys to stymie the prosecutions of Republican lawmakers. Then came admissions that the Justice Department had improperly politicized the hiring of prosecutors. Recent testimony points to witness tampering and false testimony by Gonzales and his top lieutenants. Gonzales was even discovered to have staged a late-night raid on the hospital bed of his predecessor. And now he's accused of mishandling the USA Patriot Act, the death penalty and a major drug case.

As he fielded complaints yesterday, Gonzales had no briefing book before him; this made sense, because he had no answers for the senators' questions....

Gonzales spread his contempt widely. When Herb Kohl (D-Wis.) asked about closing the Guantanamo Bay prison, Gonzales wisecracked: "I guess we could turn them loose, senator." When Whitehouse asked about FBI Director Robert Mueller, Gonzales shot back acidly: "I'm not Director Mueller." He even shut down Orrin Hatch (R-Utah), the one remotely friendly questioner, with a quick "I can't recall." The attorney general's ignorance was equally broad and bipartisan. "I don't know," he said when Dianne Feinstein (D-Calif.) asked about suspicious changes made recently to voter-fraud prosecutions. "I can't answer," he told Jeff Sessions (R-Ala.) when asked about the department's handling of voting-rights cases. "That's a good question," he said when Whitehouse inquired why Gonzales granted Vice President Cheney's office access to criminal investigations. "I did not review this case," he said when Specter asked about a Justice Department settlement over OxyContin abuse...

Impeach Alberto Gonzales. Impeach Richard Cheney. Impeach George W. Bush for the High Crime of breaching his oath to take care that the laws be faithfully executed. Do it now.

More on the Kaiping Mines: Jonathan Spence's Asides, and Albert Feuerwerker's Review of Ellsworth Carlson

China specialists see and can almost touch an alternative history in which late-nineteenth century China managed to match the political and economic achievements of Meiji Japan, and in which China stood up economically, politically, and organizationally at the same pace of the Japan that won its short victorious war against Russia in 1905, negotiated as an equal with Britain and the U.S. over warship construction in 1921, and was perhaps the eighth industrial power in the world by 1929. In his In Search of Modern China, for example, Jonathan Spence praises the nineteenth century:

Confucian statesmen whose skill, integrity, and tenacity helped suppress the rebellions... showed how imaginatively the Chinese could respond to new challenges... managed to develop new structures to handle foreign relations and collect customs dues, to build modern ships and weapons, and to start teaching international law and the rudiments of modern science.... It was true that there remained complex problems... rural militarization... local autonomy over taxation... landlord abuses... bureaucratic corruption... bellicose foreign powers.... But with forceful imperial leadership and a resolute Grand Council, it appeared that the Qing Dynasty might regain some of its former strength...

And Spence laments that:

forceful leadership was not forthcoming... the empress dowager Cixi... coregent for her son Tongzhi from 1861-73... coregent for her nephew Guangxu from 1875-89.... [A]bsolute political authority... while Guangxu [was imprisoned in the palace]... on her orders from 1898-1908.... Cixi had clashed badly in 1869 with Prince Gong.... Zeng Guofan died in 1872... Wenxiang died in 1876... Zuo Zongtang remained preoccupied with the pacification of the Muslims in [Xinjiang].... The grand councilors... worthy... with distinguished careers... lacked the skill or initiative to direct China on a new course. Although self-strengthening programs continued to be implemented... a disproportionate number of them were initiated by one man, Li Hongzhang... governor-general of Hebei... commissioner of trade for the northern ports...

Li Hongzhang's achievements were indeed impressive: the 1872 China Merchant Steamship Navigation Company, the 1877 Kaiping coals mines, in 1878 cotton mills in Shanghai, the Tianjin arsenal, the telegraph between Tianjin and Peking, a seven-mile railroad to ship from Kaiping to the river and then downriver to Tianjin, and so forth. What was not undertaken by Li Hongzhang appears likely to have been undertaken by Zhang Zhidong, eighteen years governor-general of Hunan-Hubei: the railroad from Hankou to Beijing, the Han-Ye-Ping heavy industrial complex, and so forth. But what impresses me most is how little even the most active, energetic, and skillful of statesmen could accomplish in the prevailing institutional and political climate--how those attempting to modernize China in the late nineteenth century were trying to roll boulders uphill.

And so I find it interesting to note:

Albert Feuerwerker, Review of Ellsworth Carlson (1957), The Kaiping Mines 1877-1912 (Cambridge: Harvard University Press), in the 1959 Journal of Asian Studies: Professor Carlson's monograph is a welcome addition to the all too sparse literature on the problem of China's economic development. His subject, China's first modern coal-mining enterprise, is a particularly good one for the study of the format in which Western-style enterprises were introduced into China at the end of the Ch'ing dynasty. Thus the discussion of the characteristics of the system of "official supervision and merchant management" (kuan-tu shang-pan) in Chapter 2, while necessarily brief, is to the point and illuminating.

The Kaiping Mines, like a good many others of China's first modern industries, were inaugurated under the aegis of the Chihli governor-general, Li Hung-chang. The enterprise formed a part of Li's satrapy, and probably owed its origin to a desire to furnish bunker coal and return cargo from Tientsin for the steamers of the China Merchants' Steam Navigation Company, which Li also controlled. Its first manager, T'ang Ching-hsing (Tong King-sing), was also until 1884 an official of the shipping company. Under T'ang's direction, capital was raised from Chinese sources including the C.M.S.N Co., and digging begun: production averaged approximately 250,000 tons annually in the early 1890's. But under Chang Yen-mao, who headed the company from 1892 to 1900, heavy borrowing in order to expand production gradually brought Kaiping under the control of its foreign creditors--interestingly enough, a process in which Herbert Hoover, then a young mining engineer, played an important role. Carlson describes these developments in detail and concludes with an account of Chinese efforts to recover the mines, which resulted in the formation of the Sino-British Kailan Mining Administration in 1912.

Despite its pioneering achievements, Kaiping faltered in the face of two obstacles which it confronted in common with other kuan-tu shang-pan enterprises in the late nineteenth century. The first was the lack of sufficient capital and the inability to raise more from domestic sources. The second was the unpropitious political environment into which it was born. Little aid could be expected from the tottering Manchu regime either in the form of financial assistance to compensate for the reluctance of private investors, or protection from foreign encroachment such as eventuated in British domination of this enterprise. While Carlson does not explicitly make the comparison, the contrast with the history of early industrial efforts in Meiji Japan is a striking one, and invites us to examine more closely the bases of the widely differing experiences of China and Japan in the process of economic modernization.

This is not business history, strictly speaking, although some attention is given to the technical achievements of the Kaiping Mines. It is unfortunate that the available source materials did not permit the author to examine Kaiping more closely as a business enterprise per se. But this is not a shortcoming peculiar to Carlson's study alone; it is a problem that everyone dealing with China's economic history faces.

links for 2007-07-26

Herbert Hoover in China: A Story I Had Never Heard Before

Now to figure out how much of it is true:

China Matters: Herbert Hoover: Made in China: China Matters jumps into the wayback machine, sets the controls for Tianjin 1900—-the Boxer Rebellion--and revisits one of the great political coverups in 20th century US political history: Herbert Hoover’s suppression of his pivotal and deplorable role in the alienation of China’s Kaiping Coal Mines from Chinese ownership.... To the general public, Hoover is a punchline in jokes about the Great Depression. But for serious students of Hoover, the emphasis has always been on taking the moral measure of the financier and humanitarian who achieved remarkable wealth, power, and worldwide recognition long before he ascended to the Presidency. Was he a ruthless, unscrupulous profiteer or a misunderstood apostle of rational business administration, economic efficiency, and benevolent progressivism?

Remarkably, the best documented and most accurate picture of Hoover can be found at the beginning of his career, in China, in the case of the alienation of the vast Kaiping Coal Mines from Chinese control. Thanks to a notorious court case-—and Hoover’s determined attempts to obscure and distort revelations that reflected badly upon him-—we can form a relatively unambiguous judgment of the man and his methods. The story, briefly, is this:

Herbert Hoover came to China in 1899, a young man of 24, with a reputation earned in the Australian gold fields as a shrewd, capable, and energetic mine manager—-and as an ambitious, Machiavellian manipulator who had schemed unsuccessfully to supplant his boss. He was sent to China by the London mine management firm of Bewick, Moreing & Company, to expand a relationship it had developed with the Kaiping Coal Mines and their manager, Chang Yan-mao. Kaiping was one of the crown jewels of Li Hung-chang’s self-strengthening movement. Located above an immense coal reserve near the present-day city of Tangshan, the mines had flourished under the administration and financial management of Tang Ting-shu, an able comprador, and were producing almost 500,000 tons per annum by the turn of the century.

However, the general manager position passed to an apparently less capable individual: Manchu bannerman and court insider Chang Yan-mao, who was unable to introduce needed capital for the mine from either domestic private or government sources....[After] 1895... Chang began an awkward flirtation with Bewick, Moreing to gain capital and some measure of security for the enterprise.... Hoover was dispatched to China in furtherance of this strategy.... [T]he Boxer Rebellion in 1900. Chang Yan-mao and Hoover were both in Tianjin during the siege.... Russian troops occupied the Kaiping fields, creating anxiety in Chang’s mind that the mines might be confiscated without compensation as a war reparation.

Chang decided that the enterprise had to be placed under the protection of a benign foreign power, namely Great Britain... Bewick, Moreing & Co.... would ensure that the interests of the existing stockholders and, not least of all, Chang Yan-mao himself, would be protected. Therefore, Chang hurriedly deeded over the entire enterprise to Hoover as trustee, contingent that the enterprise be recapitalized with an additional 1,000,000 pounds and reconstituted as a joint Sino-British enterprise.

If the story ended here, Hoover would have probably received a well-earned attaboy from history for realizing this once-in-a-lifetime opportunity so perspicaciously and resolutely.... The agreement that Hoover took to London defined him as trustee for a Kaiping enterprise whose assets and ownership should be converted directly into the new Sino-British company. This left no provision for “promotional fees”, the distribution of shares without compensation to middlemen such as the Bewick, Moreing partners, their friends, and associates in return for their efforts in midwifing the new corporation.

Hoover was thereupon sent back to obtain a revised agreement which listed Hoover as the agent of Bewick, Moreing lead principal C.A. Moreing, thereby freeing Hoover from sole and explicit duty as trustee to protect the interests of Kaiping, and allowing the transaction to be structured to include benefits for Moreing and other promoters. To obtain Chang’s agreement to this significant revision, Hoover concluded a side agreement with Chang defining the new company as a joint Sino-British enterprise with equal say in management, a China board and a London board. Again, this could be regarded as an understandable, if awkward measure to ensure that Bewick, Moreing (or at least its partners) received the incentive and reward necessary for lining up the financing for this new venture.

However, Hoover spent the next seven months in China... placing his people in key positions inside the enterprise and... consolidating foreign control of Kaiping in violation of the agreement. The fatal piece of overreach by Bewick, Moreing, however, was its disregard of the requirement that the enterprise be recapitalized.... Bewick, Moreing did not arrange any significant new equity for Kaiping. Instead, it burdened the new enterprise with new debt, in the form of 500,000 pounds of debentures bearing 6% interest. By 1902, widespread dissatisfaction among the original shareholders of Kaiping (who now included many foreigners) was reported.

Then... in November 1902, local Chinese managers raised the dragon flag... to honor the empress dowager’s birthday... foreign management... took down the Chinese flag.... This incident concentrated the baleful attention of Yuan Shih-kai, the major power not only in North China but in the empire by virtue of his command of the Beiyang Army and his position as commissioner for Chihli and Jehol.... Chang Yan-mao had tardily and incompletely memorialized the throne on the deal, the details of which, when they became known to Yuan Shih-kai, incensed him. Yuan demanded that Chang recover the properties for the empire. Remarkably, the throne accepted that the case be argued in the British courts.

The case went to trial in London in 1905 and apparently caused quite a sensation.... The trial revealed that the reconstitution of the company had left it gutted. Only 375,000 shares remained in the hands of the original shareholders. Most if not all of the balance of 625,000 shares had been distributed without compensation as promotional fees or as bonuses for the buyers of the new debentures.... The corporation, instead of being recapitalized, was encumbered with new debt. Little if any of the money from the debenture issue had actually reached Kaiping. On top of this, Hoover’s activities in violation of the joint management agreement he had concluded were fully aired, including some indiscreet remarks denigrating the China board.

Bewick, Moreing lost the case and was subjected to some pointed words from the bench. Hoover, both as partner in Bewick, Moreing and as the individual executing the skullduggery firsthand, was undeniably culpable.... Although the judge felt there were clear grounds for pursuing a criminal case against the individuals involved, in a piece of good news for Bewick, Moreing and Hoover, the Chinese government apparently had had enough of Western litigation....

For Hoover and Bewick, Moreing, the deleterious effects of the Kaiping debacle were minimal. Hoover left China, aged 27, as a partner in Bewick, Moreing, purportedly already wealthy, with a pocketful of Kaiping shares, and his career launched as a global financier involved in virtually every resource industry from tin to gold to petroleum. During the First World War he burnished his image as a benevolent, progressive, and supremely capable and honest captain of industry by orchestrating Belgian relief and the postwar food program....

When he entered political life, he employed sophisticated public relations efforts to achieve favorable coverage in the press. When he learned that anti-Hoover books were in preparation, Hoover did not limit himself to outraged rebuttals. He unleashed the FBI to perform background checks on the authors. His secretary, Lewis Strauss (later the spearhead in efforts to revoke Robert Oppenheimer’s security clearance) organized a burglary of one author’s office.... [Hoover's] agent went to England to secure all copies of the trial transcript to deny its contents to his enemies (at least one copy survives, in the library at Oxford). He concocted a story in which he himself was the protector of Chang Yanmao and Kaiping appearing in the case as a neutral witness, while in truth he had been instrumental in efforts to sideline Chang and the Chinese management, and had provided information useful to the prosecution only under cross-examination....

Last but not least, a campaign of denigration was launched against the spate of anti-Hoover books published in the early 1930s, which included The Rise of Herbert Hoover by Walter Liggett and The Strange Career of Mr. Hoover by John Hamill. These books are significant for how much they got right in the Kaiping case.... The case itself was mindnumbingly complex... addressed commercial matters and corporate obligations more than individual liability, [and] did not provide an easily identifiable "smoking gun"....

I came across The Rise of Herbert Hoover, by pioneering muckraker Walter Liggett, in a New England inn, courtesy of an interior decorator who bought used books by the case in order to give the lobby the look of a cozy library.... [Ellsworth] Carlson’s Harvard monograph, The Kaiping Mines (1877-1912), describes the events in detail, unravels the twisted financial machinations as much as possible, and concludes that “the greed and bad faith of Moreing and his associates in 1901 and 1902 [were] indisputable”. Nash... was recruited by the Herbert Hoover Presidential Library.... In a four-page footnote(pp. 656-9) in his “The Life of Herbert Hoover: The Engineer 1874-1914, Nash details Hoover’s efforts to secure all copies of the trial transcript and elicit testimonials.... Nash remarks that:

Hoover’s later explanations of his conduct in China often diverged from the account provided by the trial transcript and by documents entered in evidence at the trial.... Hoover’s role... was scarcely a peripheral or ‘accidental’ one.... As a key participant in the 1900-1901 transfer negotiations, his conduct was under severe scrutiny at the trial.... Nor did Hoover’s testimony really win the case for Chang Yen-mao.... Hoover’s later defenses also contained significant omissions.... In the 1920s... [t]he effort to block [Hoover's presidential] aspirations by ‘exposing’ his past is a largely untold story that came to involve some prominent members of both political parties. Under the circumstances it is not surprising that Hoover and his associates devised a defense that fit the requirements of political survival...

To the library!

Empirical Evidence of Multiple Equilibria in International Finance

Brad Setser is amazed by the Brazilians he sees:

RGE - Two things I never expected to see: 1. The spread (over Treasuries) on Brazil’s dollar bonds is now 120 bp. I remember when... 2. Brazil added close to $25b to its reserves in a single quarter ($23.7b if you want to be precise). Reserves rose from a tad over $85b to just under $110b. Back during Brazil's most recent crisis, it often had -- after netting out IMF borrowing -- less than $20b in the bank. At the end of 2004, a little more than than two years ago, Brazil only had $27.5b or so net of its IMF loan.

The IMF’s total commitment to Brazil back in 2002 chalked in at a bit over $30b. It was considered huge at the time. And it wasn’t all disbursed in a quarter either. The biggest quarterly disbursement was “only” $6.3b. Yet without the IMF loan, Brazil would have almost certainly defaulted on its external debt. The big “China” surge in commodity prices wouldn’t have come along quickly enough to save Brazil from default.

A country that needed a huge credit line from the IMF to avoid default five years ago now borrows in US dollars for only a bit more than the US Treasury. Talk about multiple equilibria....

Brazil used to have far more dollar debt than dollar reserves, and, to top it off, Brazil’s central bank sold a lot of insurance against further falls in the real when the real was under pressure. The government was effectively short dollars and long real -- its balance sheet deteriorated when the real fell. Now Brazil's government is long dollars. It borrows from the world in real to buy dollar reserves...

The carry trade, you know. It hasn’t gone away. Who doesn’t want to borrow yen to buy real?... There is nothing like getting a 12% or so spread (see Truman's slide 15) lending to a country that doesn’t need the money. Brazil, remember, runs a current account surplus. It doesn’t need to borrow Japan’s savings...

I would say that this scares me. Brazil's central bank doesn't need to borrow Japan's savings, and it really doesn't need to borrow Japan's savings to invest them in dollar-denominated U.S.-located debt. The longer the Brazilian government tries to keep the real from appreciating, et cetera. I don't see how the world's central banks being so far long dollar-denominated debt can end without tears.

Dani Rodrik Thinks About Teaching

Dani Rodrik writes:

Dani Rodrik's weblog: If it is July, it must be time to think about teaching...: This gives me occasion to meditate about the nature of teaching economics in a public policy school. There is a standard mold for teaching economics to undergraduates and to doctoral students.... But how do you teach international trade and trade policy to a group of students who will be policy makers and professionals in the real world--who are too sophisticated and well informed to treat as undergraduates, but for whom the typical doctoral course is useless because it covers the research frontier and not the tools for thinking about policy?...

[I]t is a question that still baffles me.... [T]he students who take my course have invested in heavy duty economics for a whole year.... My hope is to train them beyond simply being able to understand what is in the WSJ, FT, or The Economist. They need to be able to evaluate critically what is in the policy-relevant academic literature and think creatively about policy options in light of that literature.

This is a lot more difficult than it may appear. The last few times I have tried to do this, I found myself teaching too much of a conventional doctoral economics type course.... Students (rightly) complained.... So this time around... I am organizing the syllabus around policy issues.... [T]he relevant headings become "why do countries trade what they do," and "does it matter?" Globalization strategies, China, WTO, and regional trade agreements get their own sections.... [T]he challenge is to teach an issues-oriented course while avoiding superficiality.... I do not know if I will pull it off. Check back at the end of the Fall term...

Well, it looks like Economics 113, "American Economic History," has just been added to my fall teaching plate. And I haven't even begun to think about how to teach it this time.

Immigrants and Unskilled Workers: Complements or Substitutes?

Ezra Klein writes:

Ezra Klein: The Minimum Wage vs. Immigration: Giovanni Peri, who's actually conducted some of the research showing immigration has low wage suppression effects, explains his results this way:

On first thought, it might seem that the simple economics of supply and demand would answer the question: What is the effect of immigrants on wages? Immigrants increase the supply of labor. Hence, they should decrease the wages of native workers, reduce their employment opportunities, or push them to other states. The question, however, is more subtle than this, because all workers are not the same: They differ by education, skills, and occupation and perform jobs and productive tasks different from and complementary....

In nontechnical terms, the wages of native workers could increase because the increased supply of migrants is likely to put native workers in jobs where they perform supervisory, managerial, training, and in general interactive and coordinating tasks, which makes them more productive. Moreover, the presence of new workers also implies higher demand for consumption, so that immigration might simply increase total production and demand without depressing wages...

Giovanni's arguments do seem to make sense of the data from immigrant-rich California. My guess is that complement and substitute effects more-or-less cancel each other out, but it's only a guess.

Matthew Yglesias Gives Jim Rutenberg and Mark Mazetti a Free Pass

I'm sorry: no. There are no more free passes given out to journamalists: none:

Matthew Yglesias: Al-Qaeda in Iraq: If you assume that people are reading the entire article rather than just scanning the headlines and reading a few graphs, then Jim Ruttenberg and Mark Mazzetti have an excellent piece about the administration's claims about Al-Qaeda in Iraq's relationship to the terrorist group that attacked us on 9/11 and how those claims significantly distort our best understanding of the issue. On the other hand, a person who just read the headline and then got bored after four or five grafs is going to walk away having missed all the excellent analysis.

I don't blame the reporters for this, as such. They've taken the relevant facts and properly assembled them into inverted pyramid format -- and that's their job. But canny politicians have just gotten way too good at manipulating the media's conventions. There needs to be a way of writing this kind of story such that the incentives actually work against making these kind of misleading claims...

I do blame reporters for this, as such. It is there job to inform their readers: not to mislead them.

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

Paul Krugman Was Smart in September 2002

Paul Krugman wrote, five years ago:

Stocks and Bombs: Larry Kudlow published a column in The Washington Times with the headline "Taking Back the Market — by Force." In it he argued for an invasion of Iraq to boost the Dow. Pretty amazing stuff, though not as amazing as a July column in The New York Post by John Podhoretz, whose headline read "October Surprise, Please," followed by the injunction "Go On, Mr. President: Wag the Dog." In general it's a bad omen when advocates of a policy claim that it will solve problems unrelated to its original purpose. The shifting rationale for the Bush tax cut — it's about giving back the surplus; no, it's a demand stimulus; no, it's a supply-side policy — should have warned us that this was an obsession in search of a justification.

The shifting rationale for war with Iraq — Saddam Hussein was behind Sept. 11 and the anthrax attacks; no, but he's on the verge of developing nuclear weapons; no, but he's a really evil man (which he is) — has a similar feel. The idea that war would actually be good for the economy seems like just one more step in this progression...

Carbon Blogging: "In That Case, We Have No Time to Lose. Plant [the Trees] This Afternoon!" (Why Oh Why Can't We Have a Better Press Corps?/Robert J. Samuelson Is a Bad Person/Washington Post Edition)

Mark Thoma does an evil deed by telling me that somebody should take note of Robert Samuelson. And he's right: somebody should. But why does it have to be me?

First, some history: The last time we tried to put a "Pigou tax" on carbon emissions--back in 1993 with the Gore BTU tax proposal--Robert Samuelson opposed it: "Congress," he said, "should... deliver a firm message: We won't pass this [energy] tax... [without] more spending cuts. This would give Congress more time to evaluate the energy tax and put more pressure on the White House to cut spending.... Congress... [should not] be stampeded."

Remember that: Robert Samuelson did not want Congress to be "stampeded" into including a carbon tax in the 1993 reconciliation bill.

Economists believe that things work well when the incentives individuals face--the good or ill that their actions cause for themselves--match up to the good or ill of the impact that their actions have on society as a whole. Thus our liking for energy taxes as the best way to start controlling global warming: individuals don't feel the harm that their greenhouse gas emissions do to other people via their effect on the climate, but a tax on carbon makes them feel that harm in their pocketbook and so matches up individual incentives with social outcomes. That's what the Gore BTU tax proposal was trying to do.

There are in general two ways that you can match private incentives with social outcomes. The first is to take individuals' preferences over material goods as given, and use taxes and subsidies to raise the prices of goods that have negative and lower the prices of goods that have positive "externalities," as economists call them. The second is to try to shift individuals' preferences: appeal to altruism, or to the moral sense, or to the mirror neurons to get people to feel good about doing deeds that have positive externalities, and rearrange social markers of status and approval to shift people's preferences over goods without changing their material characteristics or prices. Economists generally prefer to work on the tax-and-subsidy side rather than on the preferences side, out of a disciplinary commitment to the idea that cash-on-the-barrelhead is strong and pats-on-the-back are weak. But we do what we can: if we cannot pass a BTU tax, telling people who fund carbon offsets or drive fuel-efficient cars that they are good, responsible, moral people is a perfectly orthodox and constructive thing to do.

But somehow Robert Samuelson doesn't think so today. Attempts to work on the preferences side by saying "good for you!" to Prius drivers get him really, really angry:

Robert J. Samuelson: Prius Politics: My younger son calls the Toyota Prius a "hippie car."... [L]ike hippies, [Prius drivers] are making a loud lifestyle statement: We're saving the planet; what are you doing?... Prius politics is... showing off, not curbing greenhouse gas emissions. Politicians pander to "green" constituents who want to feel good....

California Gov. Arnold Schwarzenegger is the champ of Prius politics, having declared that his state will cut greenhouse emissions to 1990 levels by 2020.... However, the policies to reach these goals haven't yet been formulated; that task has been left to the California Air Resources Board. Many mandates wouldn't take effect until 2012, presumably after Schwarzenegger has left office. As for the 2050 goal, it's like his movies: make-believe. Barring big technological breakthroughs, the chances of reaching it are zero.

But it's respectable make-believe. Schwarzenegger made the covers of Time and Newsweek. The press laps this up; "green" is the new "yellow journalism."... Even if California achieved its 2020 goal (dubious) and the United States followed (more dubious), population and economic growth elsewhere would overwhelm any emission cuts. In 2050, global population is expected to hit 9.4 billion....

[H]ere's what Congress should do... gradually increase fuel economy standards for new vehicles... raise the gasoline tax over the same period by $1 to $2 a gallon... eliminate tax subsidies... for housing.... But practical politicians won't enact these policies, except perhaps for higher fuel economy standards. They'd be too unpopular.

Prius politics promises to conquer global warming without public displeasure.... Deep reductions in emissions... might someday occur if both plug-in hybrid vehicles and underground storage of carbon dioxide from coal-fired power plants become commercially viable.... Prius politics is a delusional exercise in public relations that... [is] not helping the environment [and] might hurt the economy.

In my view, Robert Samuelson is a bad person: when a carbon tax was on the agenda and we had a real window of opportunity, he fought it; now when the only things on the agenda are preference-shaping tools that I regard as very weak compared to a carbon tax, he's against them as well on the grounds that "hippie... Prius politics is... showing off" and that a carbon tax would be good. A little intellectual three-card-monte here, doncha think?

Let me contrast Robert Samuelson's sneering at the "hippies" who want to take the weak "Prius politics" steps at fighting global warming we can take now with one of the favorite stories of somebody I once knew--somebody whose place on the ideological spectrum was the same as Robert Samuelson, but who I think was a good person--the late Lloyd Bentsen, who liked to tell this story and claimed he'd gotten it from John F. Kennedy when they were freshmen in the House of Representatives together:

If you travel through Lorraine, between Neufchateau, Toul, Epinal, and Nancy you find the Chateau de Thorey-Lyautey, retirement home of the French Marshal Louis Hubert Gonzalve Lyautey. Around 1930 the nearly eighty year-old Marshal had a conversation with his landscaper:

Lyautey asked his landscaper if he would on the next day start planting a row of oaks to line the road up to the chateau.

"But Mon Marechal," said the gardener, looking at the aged Lyautey. "The trees will take more than fifty years to grow."

"Oh," said the Marshal. "In that case, we have no time to lose. Plant them this afternoon!"

Notes: Here's the tape from 1993:

Robert Samuelson, Washington Post: March 25, 1993: The Clinton... BTU tax would increase the price of oil by $3.50 a barrel, or about 18 percent of today's price. A ton of coal would increase $5.60, a 26 percent jump. A thousand cubic feet of natural gas would rise about 13 percent.... Yes, it would depress oil imports - but not by much.... Likewise, the tax wouldn't reduce pollution or greenhouse gases because it doesn't cut overall energy use. Economic and population growth will raise energy consumption an estimated 15 percent in the 1990s; the tax might shave the total by 2 percent, says the administration.... The CBO has estimated how big a tax would be required to stabilize emissions of carbon dioxide, the main greenhouse gas and a byproduct of fossil fuels. Compared with the Clinton proposal, the overall tax would have to be twice as high and the tax on coal three times as high....

Clinton... is simply trying to stampede his program through Congress. He envisions a one-time spasm of deficit reduction. By fall, all the political dirty work would be done. This means... accepting a Clinton package that has too many taxes and too few spending cuts....

Congress should separate the energy tax from the Clinton package and deliver a firm message: We won't pass this tax - or its equivalent - until you propose more spending cuts. This would give Congress more time to evaluate the energy tax and put more pressure on the White House to cut spending. Unfortunately, Congress shows no interest in asserting itself. It prefers to be stampeded.

As Robert Samuelson knew back then--and as we all know now--there were no Republican votes for deficit reduction in 1993, no matter what program Clinton proposed. The Republican leadership had decided that they were going to make Clinton's presidency a failure, and would oppose the 1993 budget no matter how many spending cuts were included. Additional spending cuts would have lost left-wing Democratic votes for the reconciliation package. As it was, the reconciliation bill passed by a single vote in each of the houses. Thus a call for Congress to refuse to be "stampeded" was a call for no budget reconciliation bill at all, and thus a call for no increases in taxes--not even on carbon.

Peter Orszag and Company on SCHIP and PAYGO

Peter Orszag of the Congressional Budget Office weighs in:

Yesterday, CBO released a letter to Senator Baucus on the number of uninsured children who are eligible for Medicaid or SCHIP. Some empirical studies have found that there are between 5 million and 6 million such children. In contrast to those studies, a recent estimate suggests a much smaller number, 1.1 million children, lack health insurance but are eligible for Medicaid or SCHIP. The CBO letter notes:

In summary, CBO regards the estimates of between 5 million and 6 million children who are uninsured and eligible for Medicaid or SCHIP as more appropriate for considering policies aimed at enrolling more eligible children in those programs...

This morning, CBO testified before the House Budget Committee on PAYGO issues. My testimony... made the following points:

  • The Budget Enforcement Act's PAYGO requirement, as well as the law’s discretionary spending limits, helped to enforce multiyear fiscal goals and prevent fiscal deterioration. When the budgetary situation and policy priorities changed, however, the PAYGO requirement and discretionary spending caps were often superseded or ignored.

  • Although PAYGO may help to prevent a deterioration in the fiscal picture, it only applies to new policy changes rather than the effects of existing policy. Consequently, PAYGO by itself does not address the nation’s long-term fiscal imbalance, which is driven mostly by growth in the cost of health care.

  • Any PAYGO system requires a set of scoring rules, concepts, and baseline requirements. One key question is whether a statutory PAYGO requirement should apply to both mandatory spending and revenue legislation. If the primary objective of a PAYGO requirement is to avoid deterioration in the fiscaloutlook, no differential treatment between mandatory spending and revenue changes would seem to be warranted. Including changes in revenue legislation within the PAYGO requirement, however, might impede other policy objectives. (A related issue involves the treatment of expiring spending and revenue provisions. The existing approach generally ensures that the cost of extending a temporary policy past its initial expiration manifests itself either when the policy is initially adopted or when it is extended. That objective is crucial to the integrity of the process but can be achieved in a variety of ways.)

  • Both the House and the Senate already have nonstatutory PAYGO rules in place. Those rules generally are enforced against individual bills or amendments as they are considered. A different approach to PAYGO could provide a mechanism for enforcing overall budget totals at the end of the Congressional session. A statutory PAYGO requirement could establish additional enforcement mechanisms, like sequestration, that cannot be embodied in House or Senate rules...

Lance Knobel on the Wall Street Journal versus the Financial Times

Lance Knobel says that the Wall Street Journal is--for now--irreplaceable:

The Wall Street Journal versus the Financial Times: I’d like to think Trevor Butterworth is correct when he writes:

The general feeling seems to be that over the past five years the Bancrofts have allowed the Journal to spiral into inconsequentiality, while the FT has poured its resources into much more aggressive and insightful coverage of finance. Whether or not that is qualitatively or quantitatively true, I cannot say; but the perception is that the FT is covering bonds, the subprime fiasco in an authoritative, news-breaking way that the WSJ and other papers are not. And such a perception is its own bull market on Wall Street for the FT — and for Murdoch taking over the Journal to restore its competitive edge.

Now it’s conceivable that in the relatively narrow confines of the internationally focused higher reaches of Wall Street, the FT is gaining the upper hand. On quality and breadth of international coverage, it certainly should. But I think Butterworth’s larger assertion is wildly off the mark. The Financial Times has a US circulation around 135,000 and a total global circulation of about 430,000. In the US, The Wall Street Journal has a daily circulation of 2 million. USA Today is only narrowly bigger. Now a lot of the WSJ’s circulation is to accounting partners in Omaha and bankers in Tucson. But I suspect its 20:1 national advantage over the FT is largely reflected on Wall Street as well.

The US would be a very different country if the FT could truly become a circulation powerhouse. It would mean that many people understand that the rest of the world matters, that nuanced analysis of difficult phenomena can be helpful, that columnists can write on complex subjects without sloganeering or dumbing down and many other things. That day isn’t around the corner.

The truth is that if you want to keep up with business and financial news in the US – and prefer to get your news in paper form in the morning – there is still no substitute for the WSJ (with the constant caveat to avoid the op-ed pages like the plague). The FT has, to my mind sensibly, largely given up being authoritative in its US business and financial coverage. The key stories are there, of course, but it long ago realized that with a comparatively minuscule staff in a vast economy that it had to pick its stories carefully. The WSJ does a poor job compared to the FT of covering the rest of the world, but it knocks spots off the pink ‘un for coverage of its home country.

Regulating Hedge Funds

A piece from last January that I wanted to remember to file:

No Consensus On Regulating Hedge Funds: By Kara Scannell, Joellen Perry, and Alistair Macdonald: European officials are pushing for more disclosure of hedge-fund portfolios or a ratings system like that for corporate debt. German officials, using their chairmanship of the Group of Eight leading nations this year, are particularly aggressive. But U.S. and British officials are taking a more hands-off approach, advocating additional study and, at least in the U.S., focusing on making sure hedge funds take money only from the wealthy and sophisticated rather than on changing hedge-fund behavior to minimize risks to the global financial system....

There is a nagging worry among many regulators and central banks that hedge funds may pose a significant risk to the global financial system and could precipitate or exacerbate a monetary crisis. They have expressed a desire for a borderless solution.... Today, hedge funds are mainly regulated indirectly through the rules governing the banks and brokerage houses that they trade with and borrow from. In the United Kingdom, hedge-fund managers are required to register with the Financial Services Authority, making them subject to random inspections and examinations....

SEC Chairman Christopher Cox testified in July that "to the maximum extent possible, our actions should be nonintrusive." Timothy Geithner, president of the New York Federal Reserve, has said that it is important to monitor hedge funds but that it isn't desirable to regulate them for now. In Continental Europe, skepticism of hedge funds is greater....

In the U.S. lawmakers have turned their attention away from how funds invest toward who is investing in the funds as a way to protect vulnerable investors. Members of Congress have said they are concerned with pension investments in hedge funds, and the SEC last month proposed a rule that would limit the number of individual investors who qualify to invest in hedge funds by raising the minimum threshold of investment acumen they must meet.

There is the "guard against hedge fund-created systematic risk" point, which is a valid one. There is also the "protect vulnerable investors" point, which seems strangely misdirected: regulating hedge funds ranks perhaps 50th on the liast of steps one ought to take to protect vulnerable investors.

Ezra Klein: Health Insurance Matters

A nice point:

Ezra Klein: Insurance Matters: One of the common objections to universal coverage is that insurance coverage doesn't actually improve health outcomes all that much. This objection, unsurprisingly, is generally made by people with health coverage. It's also not very true.

More evidence for the importance of health coverage comes from a study in The New England Journal of Medicine this month, which tracks what happens when the previously uninsured become eligible for Medicare. It turns out that they -- surprise! -- need a whole lot more care than their demographically similar, but previously insured, brethren!

They have conditions that need to be treated and managed, exhibit higher rates of hospitalization and doctor's visits, and generally cost a whole bunch more money than those who've been availing themselves of the health care system for years. As the NEJM dryly concludes, "The costs of expanding health insurance coverage for uninsured adults before they reach the age of 65 years may be partially offset by subsequent reductions in health care use and spending for these adults after the age of 65." Add in what they cost the system in catastrophic health incidents before they become eligible for Medicare, and it begins to look like keeping the uninsured population uninsured is a much better deal for the insurers than it is for taxpayers, hospitals, or just about anyone else.

Ezra Klein Is Naive About Brooks and Income Inequality

He is still outraged by David Brooks:

Ezra Klein: And One Last on Brooks: Before the day ends. A smart and handsome correspondent e-mails:

Three more points that I think you should make.

(1) The modest real wage increase last year wasn't the start of a trend - it was a blip because gas prices fell. When they popped up again this year, real wages fell again, visible in your first chart.

(2) Notice that the gains in total income for the bottom fifth were much less than the gains in earnings, mainly because of reduced benefits. Part of the story here is that welfare reform forced a lot of mothers into the work force. That increases earnings, but it means that the earning increase is quite misleading as a measure of how people were doing. It's also true that the Clinton boom allowed some people to get off welfare and into work, but again just looking at earnings is a deliberately misleading way to look at things.

(3) The result that very high incomes are predominantly on Wall Street is interesting. But since when is "It's not CEOs paying 35 percent taxes, it's hedge fund managers paying 15 percent - less than secretaries!" an ANTI-populist observation?

Agreed. I want to emphasize, again, that this article is dishonest and misleading, in effect if not intent. I'm perfectly willing to believe some rightwing Heritage type impressed a perfectly well-intentioned David Brooks with these points at a party, but either way, the resulting article served to deceive readers of the New York Times op-ed page as to the state of the economy.

This strikes me as a rather big deal.

The honchos of the New York Times don't think this is a big deal. You see, in their minds Brooks is not there to inform people but to "balance" Paul Krugman. He performs that task admirably.

Jim Henley Is Disappointed

I never bought a copy. I should have bought just one:

Rack Ruined § Unqualified Offerings: The Weekly World News, tabloidiest of tabloids, will cease to publish. They ran my favorite-ever headline many years ago:


That editor earned her pay and more. I’ll miss seeing the News at the checkout counter, but that’s creative destruction for you. It couldn’t compete in terms of sensationalism or production values with the Weekly Standard.

Hillary Rodham Clinton Loses the Matthew Yglesias Primary

Hillary Rodham Clinton attacks Barack Obama / Clinton, Obama trade barbs in Quad-City Times interviews: The controversy springs from a question at the YouTube debate asking whether Obama would be willing to meet, without precondition, with the leaders of Iran, Syria, Venezuela, Cuba and North Korea. Obama, an Illinois senator, said he would and called it a break with the Bush administration's diplomatic policies.

Clinton, in the debate, said she would pursue vigorous diplomacy but she wouldn’t make such a promise without knowing the other countries’ intent. “I don’t want to be used for propaganda purposes,” she said. In a telephone interview today, the New York senator went further. Of Obama’s comment, she said: “I thought that was irresponsible and frankly naive.”

Her campaign later circulated a memo to reporters saying it was a “mistake” to commit to presidential-level meetings without precondition "with some of the world's worst dictators" and portrayed her remarks as showing her depth of experience...

In so doing, she loses the Matthew Yglesias primary. He says:

Matthew Yglesias: [This is] unfair and also reflective of a pretty weird and wrongheaded underlying worldview... this... notion that the US can be mortally wounded by perfidious leaders having their photos taken with important American politicians, or that engaging in high-level diplomacy with a country is a reward we offer for good behavior rather than a standard method of relating to the world...

I don't think this was a terribly smart thing for HRC to do.

The Minimum Wage: Looking Across the Washington-Idaho State Line

Jared Bernstein pointed this out to me six months ago:

For $7.93 an Hour, It's Worth A Trip Across the State Line By TIMOTHY EGAN: Just eight miles separate this town on the Washington side of the state border from Post Falls on the Idaho side. But the towns are nearly $3 an hour apart in the required minimum wage. Washington pays the highest in the nation, just under $8 an hour, and Idaho has among the lowest, matching 21 states that have not raised the hourly wage beyond the federal minimum of $5.15.

Nearly a decade ago, when voters in Washington approved a measure that would give the state's lowest-paid workers a raise nearly every year, many business leaders predicted that small towns on this side of the state line would suffer. But instead of shriveling up, small-business owners in Washington say they have prospered far beyond their expectations. In fact, as a significant increase in the national minimum wage heads toward law, businesses here at the dividing line between two economies -- a real-life laboratory for the debate -- have found that raising prices to compensate for higher wages does not necessarily lead to losses in jobs and profits. Idaho teenagers cross the state line to work in fast-food restaurants in Washington, where the minimum wage is 54 percent higher. That has forced businesses in Idaho to raise their wages to compete.

Business owners say they have had to increase prices somewhat to keep up. But both states are among the nation's leaders in the growth of jobs and personal income, suggesting that an increase in the minimum wage has not hurt the overall economy. ''We're paying the highest wage we've ever had to pay, and our business is still up more than 11 percent over last year,'' said Tom Singleton, who manages a Papa Murphy's takeout pizza store here, with 13 employees. His store is flooded with job applicants from Idaho, Mr. Singleton said. Like other business managers in Washington, he said he had less turnover because the jobs paid more.

By contrast, an Idaho restaurant owner, Rob Elder, said he paid more than the minimum wage because he could not find anyone to work for the Idaho minimum at his Post Falls restaurant, the Hot Rod Cafe. ''At $5.15 an hour, I get zero applicants -- or maybe a guy with one leg who wouldn't pass a drug test and wouldn't show up on Saturday night because he wants to get drunk with his buddies,'' Mr. Elder said...

Why Oh Why Can't We Have a Better Press Corps? (David Brooks of the New York Times Edition)

I don't know why some New York Times editor didn't call David Brooks after reading the third paragraph of his column this morning and tell him that this was too stupid to print:

A Reality-Based Econom: If you’ve paid attention to the presidential campaign, you’ve heard the neopopulist story line. C.E.O.’s are seeing their incomes skyrocket while the middle class gets squeezed. The tides of globalization work against average Americans while most of the benefits go to the top 1 percent.

This story is not entirely wrong, but it is incredibly simple-minded. To believe it, you have to suppress a whole string of complicating facts.

The first complicating fact is that after a lag, average wages are rising sharply. Real average wages rose by 2 percent in 2006, the second fastest rise in 30 years...

Helloooo? Anybody in there? If you want to talk about the middle class, you talk about medians rather than averages because averages include--and give high weight to--what is going on at the top of the income distribution.

In fact, Dan Gross--who supposedly is going to surface at Newsweek any moment now--had an anticipatory rebuttal to the likes of David Brooks a few months ago:

Daniel Gross: December 24, 2006 - December 30, 2006 Archives: If Goldman, Sachs CEO Lloyd Blankfein gets a $54 million bonus, and 53,999,999 other workers get nothing, then on average, 54 million people have received a $1 bonus. In reality, however, only one person has more money in his pocket. Crudely speaking, that's what has been happening in the U.S. economy. The Journal's editorial page would like us to think otherwise. Some key snippets:

Over the past year, the real average wage for non-supervisory employees has risen 2.8%. That equates to about a $1,200 increase in purchasing power for the typical household this year. Last year, real median household income was also up 1.1% after inflation. This rise in take-home pay helps to explain how Americans have had the disposable income this Christmas shopping season to pay $600 for Play Station 3 computer games and $150 for the Kid-Tough Digital Camera for three-year-olds.

Got that? Average real wages rose 2.8 percent over the past year, while real median household income, which more accurately captures the experience of typical Americans, rose 1.1 percent...

The post-Judy Miller New York Times doesn't have the credibility to survive putting things like David Brooks on the American economy on its editorial page.

links for 2007-07-24

Hoisted from the Archives: CJR Daily on the Journamalism of Mike Allen

An oldie. Long, long ago, CJR Daily wrote:

CJR Daily: Archives: "Yesterday, Matthew Yglesias wrote on his blog about a panel discussion he participated in with Washington Post reporter Mike Allen. Yglesias, according to his account, said that journalists often try to act as 'neutral arbiters' between opposing parties, and Allen took issue with that characterization, arguing that, as Yglesias puts it, 'news writers are trying to present both sides' points-of-view ... [but] they're trying to present these points-of-view in such a way so that a discerning reader can tell who's right based on reading the story.'

While there's no doubt that Allen is a crack reporter, we found his comment a little alarming. His argument, as conveyed by Yglesias, seems to be that journalists churn out 'he said/she said' journalism for the edification of their dumber readers, but include little clues in their stories so that smarter readers -- or, um, more 'discerning' ones -- know the truth. In other words, there's a code to break when one reads the Post, or at least reads Mike Allen in the Post, and you better hope you're smart enough to crack it and get to the real story.

If Allen is right -- and what's disturbing is that we think he is, at least to some degree -- journalists have become so intimidated by media bias warriors that they're now making a conscious decision to only hint at the conclusions their reporting leads them to, instead of explicitly stating them. Of course, according to Brent Bozell of the Media Research Center and his brethren, even those hints reflect left-wing bias. And sometimes they do. But more often, they represent efforts by boxed-in reporters to level with readers. Critics like Bozell seem to want false equivalence to reign supreme -- they want reporters to treat bullshitters the same as credible voices. To us, that's the greater threat to journalism -- not the media bias that right-wing partisans think they detect everywhere from the Post to the Dogpatch Weekly Trumpet.

Here's hoping journalists soon start pushing back, and perhaps even find a more direct outlet for the truth than mere clues. A good news story can mean different things to different people, but none of us should have to search it for hidden messages directed to an elite few.

The Permanent Disgrace of the National Journal: Stuart Taylor, Jr.

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

That the National Journal did not fire Stuart Taylor, Jr., after he denounced our NATO allies

already in an overwrought tizzy about the supposed mistreatment of the 158 detainees at Guantanamo Bay...

is to its permanent shame. That the National Journal and the Atlantic continue to employ him today is to their deep and permanent disgrace. Here is Taylor defending Alberto Gonzales:

OPENING ARGUMENT: Are The Democrats Serious? (7/23/2007): [B]oth sides deserve to lose the brewing battle over congressional Democrats' subpoenas for information about White House deliberations on the firings of nine U.S. attorneys.... The congressional Democrats deserve to lose because they have... no serious proposal to... anything else -- besides beat their chests in righteous rage -- that shows a genuine need for whatever information they might obtain....

I am not accusing Gonzales of impeachable offenses. Have his multiple misleading and sometimes false statements to Congress been deliberate lies? Or mere manifestations of the cloddish inability to play big-league ball...? Darned if I know.... [H]e seems less a Nixonian villain than a nice man in the wrong job....

There is no criminal investigation into the firings... no very strong legislative purpose behind the subpoenas. So the House and Senate Judiciary committees have so far failed to show that the information sought is "critical" to their functions, as required by a leading Appeals Court decision.... The administration has already provided thousands of documents and dozens of hours of testimony from Gonzales and other Justice Department officials, while offering to allow informal, unsworn, untranscribed interviews of Bolten, Miers and Taylor....

The courts are well aware that whenever Congress is controlled by political adversaries of the president, it will be tempted to abuse its "oversight" powers to make political hay and -- in the process -- distract the subpoenaed officials from doing their jobs, even to the point of paralysis....

Given all this, unless congressional Democrats show more seriousness they seem unlikely to accomplish anything more than embarrassing an administration that already (at least in the case of Gonzales) seems beyond embarrassment.

Honest Conservative Watch

Jim Fallows proposes three names:

James Fallows: [At] Cato.... John Mueller, of Ohio State. (His influential 2004 essay, "A False Sense of Insecurity," is here in a large PDF file.) And, oddly enough, AEI, which apparently harbors an actual conservative among its neo-cons and "surge" enthusiasts. This is Veronique de Rugy.... A recent entry in the honor roll: James Jay Carafano, a West Point graduate who works at Heritage. His new essay, concerning the potential terrorist threat from small airplanes, is the first I've seen that both acknowledges there is some threat and proposes reasonable, proportionate steps to deal with it...

Condoleezza Who?

Joel Brinkley:

Condoleezza Who? -- The ITT List: A few months ago, she decided to write an opinion piece about Lebanon. She enlisted John Chambers, chief executive officer of Cisco Systems as a co-author, and they wrote about public/private partnerships and how they might be of use in rebuilding Lebanon after last summer’s war. No one would publish it.

Think about that. Every one of the major newspapers approached refused to publish an essay by the secretary of state. Price Floyd, who was the State Department’s director of media affairs until recently, recalls that it was sent to the Wall Street Journal, the New York Times and perhaps other papers before the department finally tried a foreign publication, the Financial Times of London, which also turned it down...

Jon Chait: Half of American Conservatives Are Barking Mad

A nice piece from Jonathan Chait:

What if they held a war of ideas and nobody came?: These days, of course... conservatives are beset by panic and gloom. You'd think this would, at minimum, give us a small respite from boasts about the right's victory in the War of Ideas. But no.... The new line... is that conservatives are more intellectually serious because they're having deep debates over first principles, while liberals enforce stultifying conformity.... Presumably Iraq, where the right's ideology has collapsed most disastrously, should be a delicate point for conservative intellectual triumphalists. Instead, it's their favorite example. "Democrats today," complains Berkowitz, "are nearly united in the belief that the invasion has been a fiasco and that we must withdraw promptly." Meanwhile, conservatives are fiercely divided. Ergo, the right is "wrestl[ing] with the consequences of change more fully than progressives."...

[I]t's certainly true that conservatives today are more divided than liberals about whether the Iraq war has been a fiasco.... Conservatives see their split on this proposition as evidence of intellectual acuity. I see it as evidence that roughly half of all conservatives are barking mad. On last year's National Review cruise, as Johann Hari reported in these pages, Norman Podhoretz called the war "an amazing success" and insisted that "it couldn't have gone better."... Maybe it's the blind Bush hatred talking, but I'm not terribly embarrassed that liberals are united in rejecting this notion.

What explains the right's insufferable need to declare philosophical victory at all times?... [T]he natural insecurity that comes with being conservative in a scholarly milieu. If I were an academic or a writer who made his living defending a party that routinely wins elections by appealing to rabid anti-intellectualism, I'd be a little defensive, too. But... conservatism is more of an ideological movement than liberalism.... Like communists, conservatives have a tendency to believe that every question can be answered by referencing theory. Berkowitz, for instance, describes the conservative debate over the war as one of pure philosophical abstractions: Defenders of the invasion, he writes, believe in "planting the seeds of liberty and democracy in the Muslim Middle East." Whether or not the war actually has accomplished these ends is not an issue of much interest...

I would put it more strongly: half of all conservatives are barking mad, and the rest believed until very recently that they had to pretend to be barking mad or be ostracized.

Hoisted from Comments: The Protean Nature of English

Hoisted from Comments: Andres complains: Besides agreeing with most of what is said above, I have to confess that the English language never ceases to frustrate me. Just when I think I have mastered its infinite nuances, along comes a phrase like "jumping the shark" that leaves me in complete confusion.

Compared to the solid certainties of the Romance languages (in which obscure metaphors are generally confined to poetry), English is altogether inscrutable; practically every minute a phrase is born that bears little resemblance to anything that has previously appeared and is therefore fully suited to fool or confuse its readers...

It's a requirement that you have a certain deep pop cultural literacy to understand the metaphors. It is a barrier to entry--a way of giving a certain class a leg up in authority.

After the Next Nuclear Fire...

In the early 1980s the U.S. NSA--or perhaps it was the Defense Department--loved to play games with Russian air defense. They would send probe planes in from the Pacific to fly over Siberia. And they would watch and listen: Where were the gaps in Russian sensor coverage? How far could U.S. planes penetrate before being spotted? What were Russian command-and-control procedures to intercept intruders? And so on, and so forth.

Then, one night, September 1, 1983, the pilot of Korean Air Lines Flight 007 to Seoul mispunched his destination coordinates into his autopilot, and sent his plane west of its proper course, over Siberia, where Russian fighters--confident that they had finally caught one of the American spyplane intruders napping--blew it and its hundreds of civilian passengers out of the sky. With some glee the Reagan administration claimed that the Russians had deliberately shot down a civilian airliner because they were barbarians and terrorists and wanted the world to know that they were barbarians and terrorists by handing the Reagan administration a propaganda victory. The Russians counterclaimed that the CIA had deliberately misprogrammed the autopilot of KAL 007 and monkeyed with its transponder in order to trick the Russians into shooting down a civilian airliner. What had actually happened was a mistake: radar operators, majors, colonels, and generals seeing what they expected to see--a U.S. spyplane intruding into Russian air space and, for once, not being alert enough to scoot out to sea before the defending fighters arrived.

In the late 1980s, the U.S. sent its warships into the Persian Gulf to protect Saudi and Kuwaiti tankers against Iranian attack. Saudi and Kuwaiti oil earned dollars that paid for Saddam Hussein's Iraq to fight its bloody war against Khomeini's Iran in what the carter and Reagan administrations approved of and encouraged as appropriate payback for the outrage against international law and diplomatic practice committed by Khomeini and company's seizure of hostages from the diplomats at the American embassy in Tehran. This time it was the turn of the Americans--the sailors on the "robo-cruiser" Vincennes--to shoot down a fully-loaded civilian airliner, Iran Air Flight 655 on its regularly-scheduled run in its regularly-scheduled flight path at its regularly-scheduled time across the Persian Gulf from Bandar Abbas to Dubai. Once again what happened was a mistake: sailors seeing an airliner flying straight and level as a hostile bomber dropping in altitude and preparing to fire its missiles. The records of the Vincennes’ instruments show no signals that would suggest a bomber was detected, while they do record detecting a civilian IFF signal.

Boys who don't think too fast and aren't too smart at processing information playing with deadly toys. Testosterone-poisoned devil-apes using not rocks and fists to demonstrate some bizarre concept of reproductive fitness but using buttons and missiles instead. And, increasingly, testosterone-crazed devil apes playing with nuclear weapons.

We are highly likely to lose a city to nuclear fire over the next half-century. Some not-too-smart major will see what he expects to see, or some god-maddened colonel will think he has received a holy command, or some ignorant general will believe that the logic of deterrence is failing but that the situation can be rescued if he strikes first. Tehran or Delhi or Islamabad or Pyongyang or Tel Aviv or Paris or London or Moscow or Beijing or Washington or some other city will become a sea of radioactive glass. With luck we will only lose one city, because the people ruled by the guilty government and military will immediately rise up and tear their politicians, bureaucrats, and commanders limb-from-limb before sending all possible aid to the wounded and the dying. But don't count on it. We are likely to lose more than one city. As Bill Clinton is supposed to have said: if North Korea were to use a nuclear weapon against the United States, an hour later there won't be a North Korea.

Perhaps there won't be a use of nuclear weapons in the next half century. Every human household has the potential to use deadly force against its immediate neighbors, yet very few disputes over dog waste or storm runoff escalate to murder. Can't countries, like people, all just get along (for the most part, that is)? There is a problem, however: leaders of countries are not average people: imagine a neighborhood of Ariel Sharons living next to the Saddam Husseins living next to the as-Sabah family living next to the Assad compound, with the Mubarrak and Hashemite families across the street wishing that they lived in a very different neighborhood.

Let's look on the bright side: the aftermath of the first post-Nagasaki use of nuclear weapons to kill humans will be a moment of maximum political plasticity: a moment when swift global action in the heat of the moment can create institutions to govern the world. What then should be done? If we argue and debate in the aftermath of nuclear fire, we will lose a unique opportunity to shape events so that there will be no second post-Nagasaki use of nuclear weapons. We should have our arguments and debates now, so that we will know what to do when the moment strikes.

I propose the following plan for the aftermath of the horror: That non-great powers be bribed to abandon their nuclear weapons--they are a source of danger rather than an aid to defense. That great powers put their nuclear weapons under the joint control of their own militaries and of the United Nations Strategic Forces--with each of the two having the technical means to disarm and prevent use. That the great powers return us to the system of international relations toward which George H. W. Bush was working in 1989-1993: that the command and blessing of the United Nations Security Council be the only justification for any form of cross-border military adventure, and that the Secretary General raise, maintain, and deploy sufficient deadly armed force to make that principle stick.

But, I believe, it is much less important that we adopt this plan than that we have a plan for what we will do in the aftermath of a human city's next meeting with the siblings of Fat Man and Little Boy. What should that plan be?

Meanwhile, Brian Beutler Is Unhappy with Robert Pear (Why Oh Why Can't We Have a Better Press Corps? New York Times Edition)

Brian writes, about Robert Pear's article on SCHIP:

Brian Beutler: Policy reporting, a how to guide:

Step 1: Have a high tolerance for boredom.

Step 2: Obtain remedial knowledge of specific policy landscape.

Step 3: Know how to write a paragraph like this one:

House Democrats hope to portray the [SCHIP] issue as a fight pitting the interests of children and older Americans against tobacco and insurance companies. The White House says the Democratic proposals would distort the original intent of the children’s program, cause a big increase in federal spending and adversely affect older Americans who are happy with the extra benefits they receive from private health plans.

What mustn't be written explicitly (both in this case and more generally) is that the weight of all evidence and argument suggests strongly that the Democrats portray the issue basically correctly while Republicans are completely full of s---.

THE STUPIDITY!! IT BURNS!! (Why Oh Why Can't We Have a Better Press Corps? Washington Post Edition)

Yes, today is David Broder's day to "shine":

David Broder, August 31, 2006:

David S. Broder - The Democrats' Dysfunctional Calendar: Well, the Democrats have gone and messed it up again.... [T]he Democratic National Committee in its wisdom... further muddled the calendar... for choosing the 2008 presidential nominee.... What [the Democrats] mean is that Iowa and New Hampshire, which have led the nominating process since 1976, are overwhelmingly white -- and notably short of the African American and Latino voters on whom Democrats depend in the general election....

This Democratic version of affirmative action leaves a lot to be desired.... [G]ays vote Democratic; shouldn't the states that are home to San Francisco and Key West be allowed to vote early? And if Jewish contributors keep the party solvent, shouldn't New York be up there with the other pacesetters?... [M]adness is what the Democrats have wrought.... What was lost in all this was any sense of public deliberation about the choice of the next president.... What is most needed is time -- and a place -- for [candidates] to be carefully examined.

Historically, New Hampshire has fulfilled that responsibility. Voters there -- in both parties and especially among the numerous independents who also vote in the primary -- take their role seriously. They turn up at town meetings and they ask probing questions. So do the interviewers at local papers and broadcast stations. So do high school students. New Hampshire voters don't need -- or particularly want -- guidance....

[T]he country will be forced to witness the huge field of candidates flashing by in perpetual motion during the December holidays and the frantic first weeks of January, not standing still anywhere long enough to be measured for the job they are trying to win.

Thanks a lot, Democrats.

David Broder, July 23, 2007:

David S. Broder - Urban America's Moment: The Democratic presidential race has developed a different and welcome dynamic -- a sharp competition among the leading candidates to become champions of urban America. With a batch of big-state primaries looming on Feb. 5... Hillary Rodham Clinton, Barack Obama and John Edwards are focusing on problems of poverty and programs to help blighted neighborhoods. Such problems are... far larger in California, Illinois, Missouri, New Jersey and New York -- all of which vote on Feb. 5. That is one reason urban issues have come to the fore....

It has been a long time since the mayors of the country and their constituents received this kind of attention. The Department of Housing and Urban Development has been a forgotten backwater for a decade.... [I]t is welcome news that leading Democratic presidential candidates are treating the cities seriously. Urban America presents a complex picture....

What counts most, though, are not the specific items [the candidates] are offering but the awareness they show of the constituency and the problems -- and the commitment to make urban America a serious part of the governing agenda.

The cities have been waiting a long time for such attention.

And, of course, today's column wouldn't be complete without including the standard swipes at Clinton and Gore:

> Bill Clinton... had little feel for big-city government when he came to Washington.... [H]e had a dynamic first-term HUD secretary in former San Antonio mayor Henry Cisneros. [But i]n his second term, he let Vice President Al Gore and HUD Secretary Andrew Cuomo turn the agency mainly into an instrument for Gore's 2000 campaign...

Yes, It's the Washington Post Once Again...

Dean Baker spoils my day by telling me to go read David Broder.

David Broder is physically incapable of ever telling it straight:

Governors Call On Congress to Widen Insurance for Poor - Bush has made the State Children's Health Insurance Program, known as SCHIP, the center of his campaign against "excessive" domestic spending. His budget allocates only $5 billion in additional money for the program in the next five years -- a sum that supporters of the program say is too small to cover even the 6.6 million children who are currently receiving help...

As Dean points out, it's not just "supporters": it's also the Congressional Budget Office--the high priests of nonpartisan reality-based budgeting, in this case Noelia Duchovny, Lyle Nelson, and Carol Frost. This isn't the "he said, she said" issue that David Broder makes it out to be:

P. 14: By CBO’s estimates, maintaining the states’ current programs under SCHIP would require funding of $39 billion for the 2007–2012 period and $98 billion over the 2007–2017 period—-increases of $14 billion and $48 billion, respectively, over the baseline spending levels. Those estimates account for projected increases in health spending per enrollee and the number of enrollees but assume no changes in the design and operation of the states’ programs-—for example, no changes in eligibility rules, benefit packages, or outreach activities...

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

Jim Hamilton on Energy use in Japan

The key, he thinks, is making public transportation faster than the automobile:

Econbrowser: Energy use in Japan: I was in Japan a week ago, giving lectures at some of the universities in Tokyo and the Bank of Japan. I couldn't help but be struck by how differently energy is used in Tokyo compared with southern California. Since 1999, total petroleum consumption has declined by 1% per year in Japan, while in the U.S. it has increased by 0.8% per year. Part of the reason is that their economy has been growing at a slower rate (1.6% per year in Japan versus 2.7% per year in the U.S.). But part also is explained by different energy-use habits.

Practically no one I spoke with would even consider driving to work-- everyone takes the subways and trains, and gets to the station by bus, bicycle, or on foot. It's not because gas is particularly more expensive. I often saw regular gasoline selling for 136 yen per liter (about $4.20 per gallon) in the outskirts of Tokyo, not much more than the $3.50/gallon that we paid here in San Diego at the height this spring. People complained that parking is expensive. A typical price I saw was 2000 yen (or $16.30) to park your car for the day. Moreover, you could not count on the lot having space when you arrived, and employers don't provide parking for their workers.

But the most important explanation seemed to be that you'll get to work faster on the train than you would in your car. I never had to wait more than a few minutes to catch a train (and I took several every day), whereas sitting in a traffic jam was almost a sure thing if you tried to drive on any of the major roads. Years ago, Tokyo made a decision that the transportation infrastructure in which to invest was rail rather than parking and roads.

As China ponders which model to follow, I know what my advice for them would be...

California 50% Shakespeare Theatre: Mafeking Night Blogging

"Whence comest thou?" "From going to and fro upon the earth, and walking up and down on it":

George Bernard Shaw, Man and Superman, Act III: LUCIFER: Have you walked up and down upon the earth lately? I have; and I have examined Man’s wonderful inventions. And I tell you that in the arts of life man invents nothing; but in the arts of death he outdoes Nature herself, and produces by chemistry and machinery all the slaughter of plague, pestilence, and famine.

The peasant I tempt to-day eats and drinks what was eaten and drunk by the peasants of ten thousand years ago; and the house he lives in has not altered as much in a thousand centuries as the fashion of a lady’s bonnet in a score of weeks. But when he goes out to slay, he carries a marvel of mechanism that lets loose at the touch of his finger all the hidden molecular energies, and leaves the javelin, the arrow, the blowpipe of his fathers far behind. In the arts of peace Man is a bungler. I have seen his cotton factories and the like, with machinery that a greedy dog could have invented if it had wanted money instead of food. I know his clumsy typewriters and bungling locomotives and tedious bicycles: they are toys compared to the Maxim gun, the submarine torpedo boat.

There is nothing in Man’s industrial machinery but his greed and sloth: his heart is in his weapons. This marvellous force of Life of which you boast is a force of Death: Man measures his strength by his destructiveness....

Nowadays the chronicles describe battles. In a battle two bodies of men shoot at one another with bullets and explosive shells until one body runs away, when the others chase the fugitives on horseback and cut them to pieces as they fly. And this, the chronicle concludes, shews the greatness and majesty of empires, and the littleness of the vanquished. Over such battles the people run about the streets yelling with delight, and egg their Government on to spend hundreds of millions of money in the slaughter, whilst the strongest Ministers dare not spend an extra penny in the pound against the poverty and pestilence through which they themselves daily walk....

[T]he inner need that has nerved Life to the effort of organising itself into the human being is not the need for higher life but for a more efficient engine of destruction. The plague, the famine, the earthquake, the tempest were too spasmodic in their action; the tiger and crocodile were too easily satiated and not cruel enough: something more constantly, more ruthlessly, more ingeniously destructive was needed; and that something was Man, the inventor of the rack, the stake, the gallows, the electric chair; of sword and gun and poison gas: above all, of justice, duty, patriotism, and all the other isms by which even those who are clever enough to be humanely disposed are persuaded to become the most destructive of all the destroyers...

When I last read Shaw's Man and Superman a generation ago--Michael Froomkin was reading a play a day in those times, and I was struggling to keep up--I did not register Shaw's denunciation of the Boer War at all. This time, however, these lines that he gave to the Devil struck the hardest.

Oceania-Has-Always-Been-at-War-with-Eurasia! Pete Seeger Blogging

Oh dear. I love Pete Seeger. But Cato Vice President David Boaz does not, has Pete Seeger in his sights, and assigns him to the Guenter Grass brigade:

Comment is free: Stalin's songbird: The New Yorker has another of its affectionate profiles... the folk singer Pete Seeger.... Somehow, though, they didn't quite find room to detail Seeger's long habit of following the Stalinist line.... Seeger tells Wilkinson that when he was at Harvard during the late 1930s he was trying to "stop Hitler" and he became disgusted with a professor who counselled appeasement. Maybe so. But after the Hitler-Stalin pact, he and his group the Almanac Singers put out an album titled "Songs of John Doe".... [W]ithin months Hitler invaded the Soviet Union. The album was pulled from the market.... The Almanac Singers quickly produced a new album, "Dear Mr President", that took a different view...

After the 1939 Nazi-Soviet pact, but before the June 22, 1941 Nazi invasion of Russia:

Sunday Worker May 18, 1941: "SONGS FOR JOHN DOE" RECORDED

The ballads of a people are the songs of its working folk. Wherever people have toiled and struggled, ballads have been sung to commemorate their toil and battle.

The Songs for John Doe (Almanac Record Co., three 10-inch discs, $2) are the music of America's fight against the raging imperialist war. Remarkably sung by the Almanac Singers, an excellent group of young balladeers, these seven songs tell of the issue by issue campaign waged by the peace forces of our nation in the past year. Some of them are old tunes for many years, some are new, created by the singers themselves. All of them are authentic American ballads packing a real punch.

In "The Strange Death of John Doe", first side of the album, the Almanac Singers have produced a tragic fragment that will be sung for many a year to come. Told, as are all songs, in simple people's language, this ballad has as bitter an impact as any in the whole literature of people's songs.

Also included in the album are "Billy Boy" and "Liza Jane", both with a new set of words. The others are the Ballad of October 16, Plow Under, C for Conscription and Washington Breakdown. Some are light and savagely ridicule the rulers of America - Plow Under and Washington Breakdown - others speak of the problems of our people faced with the threat to drag them into war and all bluntly rip away the false whiskers with which the warmongers seek to disguise themselves.

The album is very suitable for performance before large bodies of people - peace rallies, union meetings and other gatherings. Simple songs of peace, they should be brought into every town and hamlet of this country, Everyone who would fight this war should consider this group of ballads a 'must.'

Songs of John Doe: Washington Breakdown:

Franklin D., listen to me,
You ain't a-gonna send me 'cross the sea,
'Cross the sea, 'cross the sea, You ain't a-gonna send me 'cross the sea.
You may say it's for defense,
But that kinda talk that I'm against.
I'm against, I'm against,
That kinda talk ain't got no sense.

Lafayette, we are here, we're gonna stay right over here...

Marcantonio is the best, but I wouldn't give a nickel for all the rest...

J. P. Morgan's big and plump, eighty-four inches around the rump...

Wendell Wilkie and Franklin D., seems to me they both agree,
Both agreed, both agreed,
Both agree on killin' me.

Songs of John Doe: Plow Under:

Remember when the AAA
Killed a million hogs a day?
Instead of hogs, it's men today -
Plow the fourth one under!
Plow under, plow under,
Plow under every fourth American boy!...


Now the politicians rant,
"A boy's no better than a cotton plant;"
But we are here to say you can't
Plow the fourth one under!

Ronald D. Cohen & Dave Samuelson, liner notes for "Songs for Political Action," Bear Family Records BCD 15720 JL, 1996, pp. 77-78:

Songs for John Doe (The Almanac Singers) : In early March 1941 a group was organized to finance and produce the Almanacs' first record album, "Songs for John Doe." Among its members were veteran record producer John Hammond, Earl Robinson and Keynote label owner Eric Bernay (nee Bernstein). The principals invited potential investors to a Sunday, March 19 Almanac performance at Peter Lyons' home north of Washington Square.

"We want you to come and hear the songs, give your suggestions, and contribute toward underwriting the albums," a letter explained. "Those who join us in pledging money will receive a corresponding number of albums which may be distributed to the cause of peace, and in the cause of a new music which has arisen out of the people." The event raised $300 -- a considerable sum for those days.

The day before the session, Seeger approached Josh White about joining them. Not only could White enhance the trio's music, but he would bring a welcome racial diversity as well. According to Lampell, Sam Gary, the Carolinians' bass singer, also joined the session. Six masters ["'C' For Conscription" & "Washington Breakdown" were recorded as one take] were recorded in a two or three hour session in a small Central Park West studio in late March or early April 1941....

Bernay released the album in May 1941. Fearing political repercussions, he was reluctant to release it on Keynote, so "Songs for John Doe" appeared on the "Almanac" label. On June 22, 1941, Hitler's armies invaded the Soviet Union. With the non-agression pact broken, pacifism was out of the question. Bernay quickly pulled "Songs for John Doe" and Paul Robeson's Spring Song from distribution and reportedly destroyed the remaining inventory...

CEOs, Hedge Fund Partners, and Peak Income Inequality

Tyler Cowen says he has wanted to read this paper for quite a while:

Marginal Revolution: I've been waiting for a paper like this: Steve Kaplan and Joshua Rauh write:

We consider how much of the top end of the income distribution can be attributed to four sectors -- top executives of non-financial firms (Main Street); financial service sector employees from investment banks, hedge funds, private equity funds, and mutual funds (Wall Street); corporate lawyers; and professional athletes and celebrities.  Non-financial public company CEOs and top executives do not represent more than 6.5% of any of the top AGI brackets (the top 0.1%, 0.01%, 0.001%, and 0.0001%).  Individuals in the Wall Street category comprise at least as high a percentage of the top AGI brackets as non-financial executives of public companies.  While the representation of top executives in the top AGI brackets has increased from 1994 to 2004, the representation of Wall Street has likely increased even more.  While the groups we study represent a substantial portion of the top income groups, they miss a large number of high-earning individuals.  We conclude by considering how our results inform different explanations for the increased skewness at the top end of the distribution.  We argue the evidence is most consistent with theories of superstars, skill biased technological change, greater scale and their interaction.

How about this bit from the text?:

...the top 25 hedge fund managers combined appear to have earned more than all 500 S&P 500 CEOs combined (both realized and estimated).

This is important too:

...we do not find that the top brackets are dominated by CEOs and top executives who arguably have the greatest influence over their own pay.  In fact, on an ex ante basis, we find that the representation of CEOs and top executives in the top brackets has remained constant since 1994.  Our evidence, therefore, suggests that poor corporate governance or managerial power over shareholders cannot be more than a small part of the picture of increasing income inequality, even at the very upper end of the distribution.  We also discuss the claim that CEOs and top executives are not paid for performance relative to other groups.  Contrary to this claim, we find that realized CEO pay is highly related to firm industry-adjusted stock performance.  Our evidence also is hard to reconcile with the arguments in Piketty and Saez (2006a) and Levy and Temin (2007) that the increase in pay at the top is driven by the recent removal of social norms regarding pay inequality.  Levy and Temin (2007) emphasize the importance of Federal government policies towards unions, income taxation and the minimum wage.  While top executive pay has increased, so has the pay of other groups, particularly Wall Street groups, who are and have been less subject to disclosure and social norms over a long period of time.  In addition, the compensation arrangements at hedge funds, VC funds, and PE funds have not changed much, if at all, in the last twenty-five or thirty years (see Sahlman (1990) and Metrick and Yasuda (2007)).  Furthermore, it is not clear how greater unionization would have suppressed the pay of those on Wall Street.  In other words, there is no evidence of a change in social norms on Wall Street.  What has changed is the amount of money managed and the concomitant amount of pay.

There is a great deal of analysis and information (though to me, not many surprises) in this important paper.  The authors also find no link between higher pay and the relation of a sector to international trade...

The Laffer Curve: Peter Orszag and Company Speak

Mark Thoma directs us to where the nonpartisan high priests of reality-based budgeting speak about tax cuts and revenues:

Economist's View: About that Laffer curve:

CBO: Tax Cuts’ Impact Has Faded, WSJ Washington Wire: The stimulative effect of Bush’s tax cuts has worn off and the supply-side benefits are “small,” the Congressional Budget Office says. At the request of House Budget Committee [member] John Spratt (D., S.C.), the CBO analyzed the impact on the economy other than through the direct impact on tax revenues of the Economic Growth and Taxpayer Relief Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA).

In a letter to Spratt released Friday, CBO director Peter Orszag said, “The short-term effects of EGTRRA and JGTRRA in stimulating aggregate demand in the economy have largely dissipated by now, and the supply-side effects of those policies are uncertain but are probably small.”

Some of the tax cuts’ provisions “increased incentives for people to work and save (which can increase growth), but other provisions had no effect on incentives. In addition, the two tax laws increased the budget deficit, and doing so tends to reduce economic growth over the medium and long term. At this point in time (several years after enactment), once those various factors have been taken into account, the overall impact of the tax legislation on the economy is likely to be modest,” Orszag wrote.

Orszag concluded that the tax cuts’ indirect impact on economic growth, investment and saving and could affect this year’s budget deficit anywhere from an increase of $3 billion to a reduction of $14 billion, depending on the assumptions used. That is separate from the direct boost to the deficit through lost revenue and the added interest on borrowing to cover the gap of $211 billion.

It currently expects this year’s deficit to be between $150 billion and $200 billion, implying that without the tax cuts, the budget would probably be in surplus this year.

links for 2007-07-22

Jim Fallows Recommends Chuck Ferguson's Movie, "No End in Sight: The American Occupation of Iraq"

James Fallows recommends Charles H. Ferguson's movie: "No End in Sight: The American Occupation of Iraq":

I found Ferguson's High St@kes, No Prisoners to be an excellent and thoughtful book.

Fallows writes:

James Fallows: Next week Charles Ferguson's documentary No End in Sight opens in DC and New York, followed in August by "select other cities." It is worth making time to see this film.... [M]any people will be tempted, as I was, to pause the trailer 16 seconds in, to stare in shock at how George W. Bush looked before this war began. That clip, from his 2003 State of the Union address on the eve of war, shows a man who could be the carefree young nephew of our current haggard president....

[The film] covers almost exactly the same terrain, including many of the same sources and anecdotes, as did my book Blind Into Baghdad. But rarely have I seen a clearer demonstration of how much more powerful the combination of pictures, sound, music, real-people-talking, etc can be than words on a page...

Ezra Klein on Video, and Health Care too

He thinks things are looking up for that vast fifty-effective-word-a-minute wasteland of an information channel that is modern TV:

Ezra Klein: Logic, Media, Incentives, And Me: I sort of enjoy the double challenge of being questioned on television: You both need to make your point, but also frame your answer in such a way that it retroactively makes the question sensical. That's the real trick.

Increasingly, though, the incentives are changing. Assume that the incentive for going on television is to raise your profile (which is about 75 percent correct). If I went on television five years ago, a large part of my incentive would be to make the host like me. After all, these appearances pass in an instant, and most of you would never see the program. So if I want to reach the maximum number of people with my arguments and do the most to increase my visibility, I want to keep coming back.

Now, however, with YouTube and GoogleVideo and online archiving, a single, contentious appearance can be seen on the internet a million times. Everyone, after all, has seen Stewart berate Tucker Carlson on Crossfire, but very few of us had actually tuned in that day. Similarly, my segment on the Kudlow show, replayed on the internet a few thousand times, did much more for my reputation among the audience relevant to my success than have my more friendly, but bland, appearances on other shows.

Making sense often requires you to be disruptive, and not long ago, being disruptive was probably a bad idea. Now it's a good one. And since the channels are wising up and putting their videos online with advertising before them, they also want widespread online dissemination of appearances, and so their incentives are increasingly aligned with mine. Does this mean more folks will be making sense? Not necessarily. But it means their might be more room for sense-making.

Here's the video:

Ezra Klein on health care

Sources of Lifetime Inequality

Mark Thoma directs us to:

Sources of Lifetime Inequality: This NBER Working Paper by Mark Huggett, Gustavo Ventura, and Amir Yaron assesses the relative importance luck and initial conditions in explaining inequality, and asks which type of initial condition, human capital, learning ability, or financial wealth best explains later dispersion in individual earnings. The paper finds that 60% or more of the variation across individuals is due to initial conditions rather than shocks that hit agents during their lifetimes (i.e. good or bad luck), and that among the initial conditions, variation in human capital is the most important factor.

As noted in the conclusions, because the evaluation of initial conditions is conducted at age 20, "pushing back the age at which lifetime inequality is evaluated will raise the issue of the importance of one's family more directly than is pursued here. The importance of one's family and one's environment up to age 20 is not modeled in our work..." But however that turns out, an implication of this work is that we need to do all that we can to ensure that disadvantaged children, all children, are able to build up the human capital they will need to be competitive at age 20 and beyond:

Mark Huggett, Gustavo Ventura, and Amir Yaron (2007), "Sources of Lifetime Inequality" (Cambridge: NBER WP 13224)

We find that as of a real-life age of 20 differences in initial conditions are more important than are shocks received over the remaining lifetime as a source of variation in realized lifetime utility, lifetime earnings and lifetime wealth.[4] We find that between 62 to 73 percent of the variation in lifetime utility and between 60 to 71 percent of the variation in lifetime earnings is due to variation in initial conditions.... Among initial conditions, we find that, as of age 20, variation in initial human capital is substantially more important than variation in either learning ability or initial wealth for how an agent fares in life.... [A] one standard deviation increase in initial wealth increases expected lifetime wealth by 3 to 4 percent. In contrast, a one standard deviation increase in learning ability or initial human capital increases expected lifetime wealth by 9 to 10 percent and 30 to 34 percent, respectively...

Our analysis of lifetime inequality is based upon a parsimonious model. Thus, it is easy to think of initial differences or shocks that are not captured by the model...

General Petraeus Has to Decide Who He Works For

Brian Buetler sends us to Paul Krugman:

Brian Beutler: Left hook: Paul Krugman hits David Brooks and somehow stays narrowly within the bounds of what I imagine is his contractual obligation to politesse: "In a coordinated public relations offensive, the White House is using reliably friendly pundits — amazingly, they still exist — to put out the word that President Bush is as upbeat and confident as ever. It might even be true."

He also makes the I think important point that David Petraeus is hardly the principle-driven master of our military that he's given blind credit for being:

I don’t know why the op-ed article that General Petraeus published in The Washington Post on Sept. 26, 2004, hasn’t gotten more attention. After all, it puts to rest any notion that the general stands above politics: I don’t think it’s standard practice for serving military officers to publish opinion pieces that are strikingly helpful to an incumbent, six weeks before a national election.

In the article, General Petraeus told us that “Iraqi leaders are stepping forward, leading their country and their security forces courageously.” And those security forces were doing just fine: their leaders “are displaying courage and resilience” and “momentum has gathered in recent months.”

In other words, General Petraeus, without saying anything falsifiable, conveyed the totally misleading impression, highly convenient for his political masters, that victory was just around the corner. And the best guess has to be that he’ll do the same thing three years later.

I'm not actually certain I agree with this conclusion. It seems to me that Petraeus has at least one or two reasons to testify to things that are highly inconvenient to his political masters in the fall. But this certainly makes a strong case that its absurd to think there's any reason to wait even that long to put a better plan in motion.

Mitt Romney Jumps the Shark

Why does anybody think this guy would make a good president?

Rick Perlstein writes:

Blinded by science | Campaign for America's Future: Fascinating quote from Mitt Romney in rural New Hampshire:

Senator Obama is wrong if he thinks science-based sex education has any place in kindergarten. We should be working to clean up the filthy waters our kids are swimming in.

He's referring to a quote from Obama: "'But it's the right thing to do, to provide age-appropriate sex education, science-based sex education in schools.'" But note how Romney is careful to repeat the phrase "science-based." I suspect he's seeing political advantage in fact that Barack frames science as an inherently a good thing. It lets him, Romney, move pandering to conservatives to the next, and most horrifying, level: framing science as inherently a bad thing.

Not claiming "sound science" as the alternative to "junk science"-—the previous stage of the big con. Just "science."

As in: science = bad.

That's where they're heading now. Scopes Monkey Trial territory.

This is jumping the shark in a serious way...