Mendacious Wacko of the Right Nominated as Undersecretary--DeLong Smackdown Watch
Is TAF Really that Big a Deal?

Mendacious Wacko of the Right Named Undersecretary Designate

Matthew Yglesias writes:

Jim Glassman, America's New Salesman: One point people have tried to make over the past few years is that the Bush administration needs to stop thinking of public diplomacy as simply a need to put a better sales pitch on the same American policies. Our pitch is actually fine and people understand what we're saying -- they just don't like it.

Relatedly, someone told me earlier today that Jim "Dow 36,000" Glassman was replacing Karen Hughes. I laughed at this pretty funny out-of-left-field joke. Obviously, the same George W. Bush who thinks public diplomacy is just about salesmanship wouldn't give the job to one of the least credible salespeople on the planet. Funny stuff. And imaginative! But no, this is really happening.

Time to hoist from the archives!

http://www.j-bradford-delong.net/movable_type/2005_archives/000025.html [Kevin Hassett and James Glassman,] the authors of Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market, pretend, once again, that their book did not say what it said:

TCS: Tech Central Station - DOW 36,000: Five years ago, economist Kevin Hassett and I wrote a book called Dow 36,000.* Maybe you have heard of it. The book made the bestseller lists and won accolades from, among others, the current chairman of the president's Council of Economic Advisors. For some, however, the book became an object of derision because -- just in case you haven't noticed -- the Dow hasn't actually risen to 36,000 yet.... Dow 36,000 was not a prognostication. Sure, the Dow will hit 36,000 and probably, eventually, 360,000. But I don't know exactly when, and I don't believe investing is a game of forecasting what's going to happen tomorrow or next year...

However, those of us unlucky enough to own Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market can go to our bookshelves, pull it down, and read that "the Dow should rise to 36000 immediately"--i.e., in October, 1999. But Hassett and Glassman say, they are going to be cautious and conservative. They are not going to forecast that the Dow will rise to 36000 tomorrow, but instead they "believe the rise will take some time, perhaps three to five years..." (p. 18).

However, they acknowledge that they might be wrong: the rise might come much quicker. As they go on to say later on the book, the fact that Glassman and Hassett "conservatively" don't expect the rise of the Dow to 36000 to occur for three to five years--i.e., until 2002 or 2004--does not mean that investors should delay. Investors should "seize the opportunity now [i.e., in 1999] to profit from the rise in the Dow to 36000 (p. 125)."

On pages 18 and 19 of the book they go so far as to sneer at one of their American Enterprise Institute colleagues--someone who told them back in 1998 what Glassman is saying now. For when one AEI colleague heard their title, he gave a cynical laugh and said, "As long as you don't say when [the Dow will reach 36000], I suppose it is all right." Glassman and Hassett's response was: "we aren't laughing. The case is compelling.... 36000 is a fair value for the Dow today... stocks should rise to such heights very quickly. As you read on, you will... learn to invest in ways that take advantage of a remarkable time in financial history..."

Glassman's investment advice today is good. He is right when he writes that "stocks are a far better place than bonds and cash to put the vast majority of your money for the long run." But his flat-out claim that this "was the unequivocal message of [Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market]" is flat-out false. That "stocks are a far better place than bonds and cash to put the vast majority of your money for the long run" was the unequivocal message of Jeremy Siegel's Stocks for the Long-Term. Glassman and Hassett may wish that they had written the book that Seigel wrote, but they didn't.

Moreover, we haven't even gotten into the fact that Glassman and Hassett got their math wrong. As the Economist's Clive Crook told them in May 1998, the 36000 number was "wrong, plain wrong.... Your reasons for believing that the Dow should be at 36,000 are wrong in the same way that it's wrong to say two plus two equals five.... Using your own method, provided only that you put the right variable into the formula, the market is about fairly valued."

Note how they don't dare mention the subtitle of their own book--it would make the falsity of the claim that "Dow 36000 was not a prognostication" too obvious.


It would be an elementary point to say that somebody who cannot tell the truth about his own book shouldn't be held out as the public face of American diplomacy by any administration. But this point eludes Condi Rice and the rest of the Bushies.


UPDATE: In fact, this point eludes the usually-reliable James Fallows, who after writing:

James K. Glassman: face of America: I have known and liked Jim Glassman for a very, very long time.... He is a lively, funny, and creative guy, and there are lots of jobs for which I would happily sign him up.

But as the head of America's public-diplomacy efforts?... America's idea is still powerful and attractive, and America still has the opportunity to present a compelling and authentic face to the world.... I have met... many true-blue patriotic Americans who have spent their careers learning how... America could best engage [foreign countries]. Jim Glassman, despite being a great guy, is not one of these...

Reverses field:

Further on JK Glassman and public diplomacy: This hasn't happened in a while, but after taking a few hours to to think it over, I've changed my mind.... The idea of America, in its authentic version, should be attractive and inspiring to people around the world.... If the world doesn't feel that way right now, it's largely though not entirely our own fault.... I'm still exasperated at the damage done to my country's reputation and name, and I have very low expectations of what Karen Hughes's successor... will be able to accomplish... the current president and vice president will still be in office. But it is possible that the verve, energy, and ingenuity Jim Glassman has shown through his career could be just the traits the person in that situation needs... let's see what he can do in this next year.

I'm going to be cynical, and note that Fallows did not follow the advice of Dow 36000--did not say "let's see what [Glassman] can do"--did not borrow as much as he could and invest everything in the stock market in October 1999 to take advantage of the "coming rise of the stock market" to Dow 36000 that Glassman was saying would happen in 3 to 5 years. Risks worth running with America's global diplomatic effort are not risks worth running with one's own financial portfolio.

:-)

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