links for 2010-02-28
Literature: Best Sex Scene

Ten Things Worth Reading, Mostly Economics: February 28, 2010

1) Sahil Kapur: Mitt Romney’s health care hypocrisy:

On Real Time With Bill Maher last night, Financial Times editor Chrystia Freeland made the point (I’m not getting this word for word) that Republicans have every right to declare they oppose any kind of comprehensive health care reform and declare they aren’t interested in covering the uninsured. Sure, of course they do. But then Freeland referenced Mitt Romney’s criticisms of Democratic health care reform at CPAC as legitimate and fair. Ahem. There’s just one problem: Governor Romney’s 2006 health care plan for Massachusetts comprised the exact three core components as the current private sector-oriented Democratic bill — insurance regulations, subsidies and an individual mandate. Don’t take my word for it. Here’s the conservative Wall Street Journal editorial board:

In a rational world, the prognosis for ObamaCare would wait on the evidence in Massachusetts, given that the commonwealth’s 2006 program closely resembles what Democrats are trying to do in Washington… The Massachusetts law, which was championed by former GOP Governor Mitt Romney…

And here’s what Romney said on health care at this year’s CPAC:

Congressional Democrats are gearing up to take over the health care system. We need to advance a conservative plan – one based on free choice, personal responsibility, and private medicine; one that doesn’t add massive new federal spending. I like what I proposed in Massachusetts when I was governor. And even though the final bill and its implementation aren’t exactly the way I wanted, the plan is a good model. Today, almost every Massachusetts citizen who had been uninsured now has private, free-market coverage, and we didn’t have to raise taxes or borrow money to make it happen. We may find even better ideas in other states. But let’s make certain that conservative principles are front and center. A big-government takeover of health care is the next thing liberals are going to try, and it’s the last thing America needs.

So the plan he signed into law a few years ago was based on free-market principles. But virtually the same plan now being considered by the other party on a national level is a socialist, government takeover. Interesting.

2) Robert Hall: By How Much Does GDP Rise If the Government Buys More Output?:

During World War II and the Korean War, real GDP grew by about half the increase in government purchases. With allowance for other factors holding back GDP growth during those wars, the multiplier linking government purchases to GDP may be in the range of 0.7 to 1.0, a range generally supported by research based on vector autoregressions that control for other determinants, but higher values are not ruled out. New Keynesian macroeconomic models yield multipliers in that range as well. Neoclassical models produce much lower multipliers, because they predict that consumption falls when government purchases rise. Models that deliver higher multipliers feature a decline in the markup ratio of price over cost when output rises, and an elastic response of employment to increased demand. These characteristics are complementary to another Keynesian feature, the linkage of consumption to current income. The GDP multiplier is higher—perhaps around 1.7—when the nominal interest rate is at its lower bound of zero.

3) John Quiggin: Invulnerable zombies: the Efficient Markets Hypothesis — Crooked Timber:

The ultimate zombie is one that is completely invulnerable. Neither special bullets nor hammer blows nor even decapitation can finally lay this undead being to rest. But dramatic logic requires that a zombie invulnerable to external threats must be subject to a subtle, but ultimately terminal, flaw that ends in its own destruction.... This set of observations from Scott Sumner in a blog post aptly titled ‘Defending the indefensible’ at least recognises the difficulties of the position

But why is Fama’s theory now in such disrepute?  Because in the past ten years the world economy has seen two very important bubble-like patterns, indeed arguably the only two such market cycles in the US during my lifetime with macro significance. And they were both predicted by lots of experts because they violated popular theories of fundamentals.... People think they have made accurate predictions because an upswing is always EVENTUALLY followed by a downturn. Then add in the fact that The Economist really did make accurate predictions in two of the most important events in modern history. Do you think it will be possible to convince them that they just got lucky? About as likely as a husband convincing an already suspicious wife that he is innocent after twice being caught in bed with two separate women. So I feel sorry for Fama.  He’s probably right, but I don’t see how he could ever convince anyone in this environment....

As a well known blogger would say, ‘Indeed’. Looking at the evidence of the two gigantic bubbles of the last decade, it’s hard to see how Sumner maintains his own faith, and he never really gives an explanation, except to say that it’s easy to misperceive bubbles. As far as macroeconomics is concerned, the experience of the Great Depression and of the current Global Financial Crisis (which as Sumner implies, really began with the 2001 recessions) is pretty strong evidence that neoliberalism is not the right policy, at least not for all occasions and not in the forms that prevailed in the 1920s or the 1990s. But the ultimate response to this invulnerable zombie must be the same as Popper on Freudian psychology. If the Great Depression, the dotcom boom and bust and the current Global Financial Crisis are all consistent with the efficient markets hypothesis, the hypothesis can’t tell us much of interest about anything. At most, it says that even when markets are way out of line with economic reality, it is hard to exploit this fact to make a profit.... [We] already knew that...

4) Ed Hugh: Too Soon To Cry “Victory” On Latvia?:

Latvia’s great economic fall may be coming to an end, but as I explained in this post here, that is not the same thing at all as resuming growth. To get back to growth Latvia’s internal devaluation needs to be driven hard enough and deep enough to generate a sufficient export surplus to drive headline economic growth at a sufficient speed to start creating jobs again. This is not about a fiscal adjustment, it never was, and it is little consolation for Latvia to be compared with Greece and told that they are doing just that little bit better. Cry Victory we are told, and unlease the jobs of war. Would that things were as easy done as said!

5) Andrew Samwick: Have Republicans Forgotten the Purpose of a Political Party?:

Why are the Republicans not using their elected offices to advance policies that serve their own supporters? Their main voting constituency is middle class (or higher) white families in the suburbs, particularly the husbands and fathers in that constituency.  They don't face the raft of problems that others do in our society.  But one big problem that they do face is that something beyond their control happens to someone in their family.  Medical catastrophes have to rank high on that list -- they certainly do for me.  If a member of my family were to be afflicted with an expensive medical condition, then I am financialy viable only for as long as I stay insured with my current employer.  Put simply, there are gaps in private insurance markets that leave such families exposed.  This is plain to see and should be the focus of Republican efforts on health care reform...

6) GRAPH OF THE DAY: The Senate:


The Senate is holding a hearing today where several current and former Blackwater employees will be testifying, but honestly the only way Congress would stop giving Blackwater money is if it started registering black people to vote.

8) BEST NON-ECONOMICS THING I HAVE READ TODAY: Scott Horton: More Investigations for the Torture Lawyers:

I am just back from the Alliance For Justice’s panel discussion on the OPR Report, at which I spoke, at the Washington office of Wilmer Hale. The show-stealer was the presentation by Georgetown professor Michael Frisch, one of the District of Columbia’s leading legal ethics experts and a long-time enforcer for the D.C. Bar Council. Frisch eviscerated both the OPR report and the David Margolis memo. The key ethics inquiry, he argued, was under Rule 1.2(d)—whether Yoo, Bybee, and Bradbury were actually counseling a crime. In this case, the evidence that their advice was designed to facilitate torture is clear-cut, torture is a felony, and multiple players putting a scheme in place to torture is a conspiracy to torture. Yet neither the OPR report nor David Margolis even considered this question, focusing all their energy instead on two weak and rarely enforced provisions of the ethics code dealing with the duty of candor and the duty to exercise independent professional judgment. Frisch also reviewed Margolis’s disingenuous use of D.C. case law in some detail, noting that in one key passage Margolis distorted a case that Frisch managed for the D.C. Bar. Finally, he said that the Justice Department, when presented with evidence of a serious ethics lapse by its officers, had a duty under Rule 8.3 to turn the matter over to the D.C. Bar for action. Not only did it fail to do this, its memos suggest it wasn’t even aware of the obligation. The lesson to draw from this, Frisch suggested, is that the Justice Department has failed to show it is capable of self-regulation.

Frisch is certainly right about this. Indeed, he’s being charitable to the Justice Department. The solution that suggests itself is to abolish OPR and place its mandate in the hands of the Department’s inspector general, who is both autonomous and has demonstrated the competence and energy that the task requires. Eric Holder, however, suggests that everything is just wonderful at DOJ, this best of all possible worlds–even at OPR. The New York Times had a sober editorial today, making some obvious points:

Poor judgment is an absurdly dismissive way to describe giving the green light to policies that have badly soiled America’s reputation and made it less safe. As the dealings outlined in the original report underscore, the lawyers did not offer what most people think of as “legal advice.” Mr. Yoo and Mr. Bybee were not acting as fair-minded analysts of the law but as facilitators of a scheme to evade it. The White House decision to brutalize detainees already had been made. Mr. Yoo and Mr. Bybee provided legal cover.

More to the point, the Times zeroes in on what strikes me as the fishiest part of the whole DOJ ethics escapade: the “disappearance” of John Yoo’s and Patrick Philbin’s emails. Emails at an institution like the Justice Department don’t just “disappear.” Someone deleted them. Moreover, for a deletion to be effective enough to avoid an investigation, extraordinary steps have to be taken. In a criminal investigation (as should have taken place), this would have been an act of criminal obstruction. What’s out there that they don’t want us to see?

9) STUPIDEST THING I HAVE READ TODAY: A twofer... threefer first the oious Washington Post's Marc Thiessen as observed by Jonathan Bernstein: You Couldn't Make This Stuff Up:

The hallmark of Mark Thiessen's defense of torture is that he's oblivious to criticism.  Oh, and either deeply dishonest, deeply stupid, or both:

There’s a standard of torture in civil law,” he said, “which is severe mental pain and suffering. I also have a common-sense definition, which is, "If you’re willing to try it, it’s not torture." Thousands of American soldiers have been willing to undergo waterboarding as part of their resistance training, Mr. Thiessen notes; therefore, it stands to reason that it is not torture.

C'mon, Mark... resistance to what?  Could it be... torture? 

You just know that coming soon is the S&M defense.  I mean, who needs law when we have Mark Thiessen's common sense?  

Second and third, Rich Lowry and Ramesh Ponnuru as observed by Jonathan Bernstein: Read Stuff, You Should:

[W]hat's not worth reading.  Today's item is the Lowry/Ponnuru National Review cover story, "An Exceptional Debate: The Obama Administration’s Assault on American Identity."  The frustrating thing about it is that there are actually some worthwhile points in it; you could see a sensible conservatism emerging from some of the things that these gentlemen believe about America.  Alas, as an essay, it's a mess, and not worth reading.  Instead, turn to Damon Linker's fine take-down.  One thing to add: Lowry & Ponnuru are wrong about Tocqueville, who not only devoted a large portion of his study of Democracy in America to the evils of slavery and the treatment of American Indians, but also was far more ambivalent about the rest of what he saw than they realize.

10) HOISTED FROM THE ARCHIVES: When Microsoft Word Attacks!:

Fontana Labs screams for help:

Unfogged: Section breaks in Word: Does anyone know how to get rid of these? I accidentally inserted one into a document (I wanted to set aside a block of text by using '*,' which autocorrrect irritatingly turned into a break), and my attempts to delete it just made it reproduce. Now my efforts (I highlight the text on either side of a break, then press 'delete') just move them somewhere else. A little whimsical music in the background and we'd have a charming children's movie about the alienation of modern life...

From Vernor Vinge's A Fire Upon the Deep:

And all the newborn [intelligence's] attention turned upon the fleeing [human] vessels. Microbes, but suddenly advanced. How could this happen? A million schedules were suddenly advanced. An orderly flowering was out of the question now, and so there was no more need for the humans left in the Lab. The change was small for all its cosmic significance. For the humans remaining aground, a moment of horror, staring at their displays, realizing that all their fears were true (not realizing how much worse than true). Five second, ten seconds, more change than ten thousand years of a human civilization. A billion trillion constructions, mold curling out of every wall, rebuilding what had been merely superhuman. This was as powerful as a proper flowering, but not quite so finely tuned...

In order to tame Microsoft Word, you need to know that hexapodia is the key insight--no, you need to know:

  1. Control-z undoes whatever abomination Word has just committed.
  2. Copy it into WordPerfect, turn on reveal codes, and fix it in a couple of seconds. As a matter of fact, always work in WP and then save as Word.

The last thing heard from Fontana Labs was:

Oh good Lord. Pasting an apparently clean section of text into a new document produces a row of these dots that wasn't in the original. I cannot believe this is happening...

Before the mighty Becks came to the rescue with:

What you're seeing is not a line of characters or even a drawing object. Rather, it's a border. By default, if you enter three or more hyphens (-), underscores (_), equal signs (=), or asterisks (*) followed by a carriage return, Word automatically gives the current paragraph a thin, thick, double, or dotted bottom border. You must have done this accidentally. To get rid of the line, put the cursor directly above it and select Borders and Shading from the Format menu. Click the None box and click OK. To prevent the automatic insertion of borders, select AutoCorrect Options from the Tools menu, click the AutoFormat As You Type tab, and uncheck Border lines. In Word 97, the menu item is AutoCorrect and the check box is labeled simply Borders...