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May 2011

Stupidest and Most Dishonest Man Alive of All Time: Noam Chomsky

Noam Chomsky cites with approval:

Chomsky's More Detailed Response to the News of bin Laden's Murder: The highly regarded British barrister Geoffrey Robertson... attributes the murder [of Bin Laden] to “America’s obsessive belief in capital punishment—alone among advanced nations--[which] is reflected in its rejoicing at the manner of bin Laden’s demise.”

And Chomsky continues in his very next sentence:

For example, Nation columnist Eric Alterman writes that “The killing of Osama bin Laden was a just and necessary undertaking.”

Let's look at the start of the Nation column Chomsky quotes:

Bin Gotten: The killing of Osama bin Laden was a just and necessary undertaking; just because he had the blood of thousands of innocents on his hands, and necessary because his continued escape from justice was an inspiration to others to try to follow in his footsteps. But it should not be occasion for joy. The Talmud tells the story of angels dancing and singing as the waters of the Red Sea close over the heads of the Egyptian troops after the Israelites have safely crossed over, only to be rebuked by their God: “How dare you dance and sing as my children drown in the sea?”

Eric Alterman is not an example of an obsessive belief in capital punishment, or of rejoicing at the manner of Osama bin Laden's demise.

Noam Chomsky knows full well--he did read the rest of Alterman's opening paragraph before snipping the narrow piece he wanted--that Eric Alterman is not an example of obsessive belief in capital punishment and is not an example of rejoicing at the manner of bin Laden's demise.



No Bush, No Alarming Accumulation of Government Debt

Economist s View Bush Tax Cuts Wars Major Drivers of Projected Government Debt

Mark Thoma comments:

Economist's View: Bush Tax Cuts, Wars Major Drivers of Projected Government Debt: The CBPP looks at the source of the public debt (previous charts have examined the source of deficits, i.e. the deficit or surplus in a given year, this looks at the debt which is the accumulation of all past deficits and surpluses). As this notes, "simply letting the Bush tax cuts expire on schedule ... would stabilize the debt-to-GDP ratio for the next decade." We are on the verge of trading tax cuts for the wealthy and spending on wars for large cuts to social programs (the budget hole the recession caused is helping to fuel the calls for austerity). Maybe that's what we want, maybe not (and likely not if the polls are correct), but we ought to at least be more aware than we seem to be that this is the trade we are making:

What’s Driving Projected Debt?, CBPP: As we’ve noted, my colleagues Kathy Ruffing and Jim Horney have updated CBPP’s analysis showing that the economic downturn, President Bush’s tax cuts, and the wars in Afghanistan and Iraq explain virtually the entire federal budget deficit over the next ten years.  So, what about the public debt, which is basically the sum of annual budget deficits, minus annual surpluses, over the nation’s entire history?

The complementary chart, below, shows that the Bush-era tax cuts and the Iraq and Afghanistan wars — including their associated interest costs — account for almost half of the projected public debt in 2019 (measured as a share of the economy) if we continue current policies.

Altogether, the economic downturn, the measures enacted to combat it (including the 2009 Recovery Act), and the financial rescue legislation play a smaller role in the projected debt increase over the next decade.  Public debt due to all other factors fell from over 30 percent of GDP in 2001 to 20 percent of GDP in 2019. We focus here on debt held by the public, which reflects funds that the federal government borrows in credit markets to finance deficits and other cash needs.  That’s the proper measure on which to focus because it’s what really affects the economy.  We compare it to GDP because stabilizing the debt-to-GDP ratio is a key test of fiscal sustainability. As Kathy and Jim note, simply letting the Bush tax cuts expire on schedule (or paying for any portions that policymakers decide to extend) would stabilize the debt-to-GDP ratio for the next decade.   While we’d have to do much more to keep the debt stable over the longer run, that would be a huge accomplishment.

Yes, the Overwhelming Bulk of Our Excess Unemployment Is the Result of Slack Aggregate Demand

Mike Konczal:

What Can the Distribution of Unemployed Job Matches, by Duration, Tell us About the Long-Term Unemployed?: The Bureau of Labor Statistics just released some data that I had spent the last year coveting like it was my neighbor’s ass.... [L]et’s recap some structural unemployment developments. First, the BLS dramatically overstated the number of job openings throughout 2010, leading policy makers and economic commentators to discuss structural unemployment with a much better job market in mind than ever actually existed in reality. Second, data regarding a decrease in mobility turned out to have major flaws, leading to a wave of research finding little impact, and perhaps even a positive relationship, between the housing bubble and mobility. The amount of people underwater correlates much better with de-leveraging than it does with less mobility. Third, education or gender job dynamics are not sufficient conditions for explaining our jobs crisis. And fourth, our back-of-the-blog estimates based on the Beveridge Curve give an increase in structural unemployment of about 1%; really sophisticated estimates also give an estimated increase of at most 1%.  Lots of room for more action....

There’s another argument we haven’t addressed... that goes like this: the unemployed have bifurcated, split into a normal-ish labor force of short-term unemployed and then a large group of long-term unemployed. The economy put a lot of people into unemployment during 2008 and 2009, and they’ve never been reabsorbed into employment.

In this argument, there’s something uniquely, economically bad about the long-term unemployed.  Their marginal productivity is near zero, which is why they were fired during the Recession in the first place and why employers won’t hire them now. Hysteresis has set in, which means that being detached from the labor force for as long as they have been makes it less likely that they can be re-employed.  They may even be bad Americans. To whatever extent monetary and fiscal policy can help with generic, short-term unemployment, it certainly can’t help this problem of the long-term unemployed.  There’s a reason they were fired in the first place....

This data helps us understand the distribution of successful job matches across the duration of unemployment, which will separate out short-term versus long-term unemployment.  Are firms more likely to hire those who have only been unemployed a short period of time and less likely to hire the long-term unemployed, or are they more willing to hire the long-term unemployed?...

[J]obs are much more likely to be matched to the long-term unemployed and less likely to be matched to the short-term unemployed relative to their historical averages.... Is the issue that the labor market for those recently unemployed has become so tight – that people are finding jobs very quickly – that employers are then turning to the long-term unemployed?... The difficultly of finding a job has increase for all duration groups, particularly the short-term unemployed more so than the long-term unemployed, and has stayed that way post-Great Recession. It’s very tough out there for the large number of long-term unemployed.  But the idea that they are ultimately unemployable doesn’t jump out at us from this data....

[ T]his is making me think we don’t need job retraining, mobility support, or other magic tricks to help the long-term unemployed as a matter of necessity; we should be focused on first exhausting the simple mechanism of creating more jobs through a mix of monetary and fiscal policy.

Republicans Lie All the Time, About Everything: Peter Wallison Edition

Mike Konczal asks:

Is there a fact-checker at the American Spectator?

No. There never was. There never will be. It's not something they care about.

Mike goes on:

I only ask because they published the following from [Peter] Wallison....

After the majority’s report was published, many people lamented that it was not possible to achieve a bipartisan agreement even on the facts….This information, which highlighted the role of government policy in fostering the creation of these low-quality mortgages, raised important questions about whether the mortgage meltdown would have been so destructive if those government policies had not existed. Any objective investigation of the causes of the financial crisis would have looked carefully at Pinto’s research, exposed it to the members of the Commission, taken Pinto’s testimony, and tested the accuracy of his research. But the Commission took none of these steps. Pinto’s memos were never made available to the other members of the FCIC, or even to the commissioners who were members of the subcommittee charged with considering the role of housing policy in the financial crisis.

As an aside, forget bipartisanship – the Wallison dissent... the other three Republicans on the FCIC walked away from it.  Keith Hennessey, Bill Thomas and Douglas Holtz-Eakin all voted in favor of removing the phrases “Wall Street” and “shadow banking” and the words “interconnection” and “deregulation” from the final FCIC report. They don’t strike me as the types of people who are going to clutch their pearls and faint at the suggestion that if they fudge some numbers... and steer some Wall Street friendliness to the GOP. And yet all three put maximum distance between themselves and Wallison’s dissent....

Let’s count the lies [from Wallison]:

1. The FCIC did look carefully at Pinto’s research; 2. The FCIC did question Pinto at length and accept all his submissions; 3. The FCIC did test the accuracy of Pinto’s research, and 4. Pinto’s research was made available to all members of the FCIC. 5. The FCIC considered and debunked Pinto’s claims, and detailed the process in its report, on page 219 and elsewhere.

In a nutshell, Pinto claimed that there were about 27 million subprime and Alt-A loans, something close to half the national total. he also claimed that about 12 million of those high risk loans were held by Fannie and Freddie. He came up with these numbers by using definitions of “subprime and “Alt-A” that were unique to Pinto alone. The FCIC uncovered a glaring disconnect between actual delinquency rates and Pinto’s categorizations.... “High risk” loans held by the GSEs had serious delinquency rates that had only 1/4 the delinquency rates of subprime loans... the GSEs’ “high risk” loans had a serious delinquency rate that was below the 6.3% national average at the time...

Isn't This What We Designed Corporations to Do?

Dan Kuehn points us to DARPA:

Facts & other stubborn things: The Defense Advanced Research Projects Agency (DARPA) has initiated a study to inspire the first steps in the next era of space exploration—a journey between the stars. Neither the vagaries of the modern fiscal cycle, nor net-present-value calculations over reasonably foreseeable futures, have lent themselves to the kinds of century-long patronage and persistence needed to definitively transform mankind into a space-faring species.... We are seeking ideas for an organization, business model and approach appropriate for a self-sustaining investment vehicle. The respondent must focus on flexible yet robust mechanisms by which an endowment can be created and sustained, wholly devoid of government subsidy or control, and by which worthwhile undertakings—in the sciences, engineering, humanities, or the arts—may be awarded in pursuit of the vision of interstellar flight...

I kinda think this problem has already been solved: all you need to do is draw the corporate charter to insulate the corporation's decisions from speculative short-termism, and you are there.

Paul Krugman: A Weaker Dollar Is in America's Interest

In my view, Krugman is right:

Paul Krugman: Making Things in America: I don’t want to suggest that everything is wonderful about U.S. manufacturing. So far, the job gains are modest, and many new manufacturing jobs don’t offer good pay or benefits. The manufacturing revival isn’t going to make health reform unnecessary or obviate the need for a strong social safety net. Still, better to have those jobs than none at all. Which brings me to those right-wing critics.

First, what’s driving the turnaround in our manufacturing trade? The main answer is that the U.S. dollar has fallen against other currencies, helping give U.S.-based manufacturing a cost advantage. A weaker dollar, it turns out, was just what U.S. industry needed. Yet the Federal Reserve finds itself under intense pressure from the right to make the dollar stronger, not weaker. A few months ago, Paul Ryan, the chairman of the House Budget Committee, berated Ben Bernanke for failing to tighten monetary policy, declaring: “There is nothing more insidious that a country can do to its citizens than debase its currency.” If Mr. Bernanke had given in to that kind of pressure, manufacturing would have continued its relentless decline.

And then there’s the matter of the auto industry, which probably would have imploded if President Obama hadn’t stepped in to rescue General Motors and Chrysler. For those companies would almost surely have gone into liquidation, closing all their factories. And this liquidation would have undermined the rest of America’s auto industry, as essential suppliers went under, too. Hundreds of thousands of jobs were at stake. Yet Mr. Obama was fiercely denounced for taking action. One Republican congressman declared the auto rescue part of the administration’s “war on capitalism.” Another insisted that when government gets involved in a company, “the disaster that follows is predictable.” Not so much, it turns out.

So while we still have a deeply troubled economy, one piece of good news is that Americans are, once again, starting to actually make things. And we’re doing that thanks, in large part, to the fact that the Fed and the Obama administration ignored very bad advice from right-wingers — ideologues who still, in the face of all the evidence, claim to know something about creating prosperity.

Matt Rognlie: Goals of Monetary Policy


Is there any reason to target headline inflation? : Jim Bullard, President of the St. Louis Fed... his speech falters on a foundational issue that he barely even addresses: why should the headline CPI be a goal at all? He takes for granted that headline CPI should be the medium-term target of monetary policy, and that targeting the core is just a (flawed) short-term approach for achieving it.... Admittedly, targeting the headline CPI may be the traditional goal of monetary policy. But it’s not clear why that tradition is valid, or whether there is any cogent rationale for caring about this particular price index.... Let’s think about why we might want to stabilize inflation in the first place... the direct cost of inflation... [i] inflation widens the gap between the yield on bonds (the nominal interest rate) and the yield on money (usually zero), leading consumers to hold an inefficiently low amount of money... the practical relevance of the Friedman Rule is surely minimal.... [ii] In most New Keynesian models, the cost of inflation arises from price stickiness.... But of course, the reason that food and energy prices were excluded from the core CPI in the first place is that they are not sticky—in fact, they change all the time, and they’re extremely volatile. If you’re concerned about price dispersion, you absolutely do not want to target the full headline CPI. [iii]Interaction with capital gains taxes. This may be the most serious cost of inflation.... In short, looking at the direct costs of inflation, I see little to support Bullard’s contention that headline CPI should be our target of choice.

Next there’s the fact that stabilizing inflation is a way to achieve macroeconomic stabilization in general. But as I discussed in a previous post, there is no reason why any form of the CPI should be appropriate for this.... It’s very hard for me to see how food and energy prices provided much useful information to the Fed in late 2008 and early 2009—it was easy enough to see equity prices and inflation expectations collapsing. In fact, during the first half of 2008, increases in energy prices arguably misled the Fed into holding back on interest rate cuts when it should have been more aggressive. The decision to keep the federal funds rate at 2% until October was in retrospect a very, very serious mistake, and headline inflation was one of the culprits.

Finally, one of the most commonly cited reasons for stabilizing inflation is the importance of nominal contracts... you want the meaning of “one dollar” to be predictable over time.... But how should we stabilize the meaning of a dollar—with respect to wages or consumption? As I’ve discussed before, there isn’t any answer that’s obvious from first principles... in the real world... you really, really want to be able to pay your debts, and your ability to pay those debts is closely related to your nominal income.... If an oil shock comes along and raises the cost of consumption by 3%—while barely increasing wages at all—it isn’t prudent to try and push all other prices (and therefore wages) 3% below trend to make up the difference.

All in all, I can’t see why Bullard is so confident that the headline CPI is more important than the core.... [Core] is still an improvement, and it wouldn’t have kicked us off track in the catastrophic summer of 2008.

Yale Bans DKE From Using Yale Resources for Five Years

But Inside Higher Ed says that it is for a "chant deemed to be sexually harassing"? Inside Higher Ed badly needs to grow a pair.

On Yale's part, however, this is very nice to see--and in striking contrast to the hand-wringing about how free speech rights kept the university from doing anything about AutoAdmit.

Membership in a university should carry with it duties as well as privileges--and perhaps the best thing a university can teach a 20-year old male is that you have a duty not to act like a complete jackass:

Quick Takes: Yale Fraternity Punished for Chant Deemed to be Sexually Harassing - Inside Higher Ed: For violating Yale’s undergraduate regulations on “harassment, coercion or intimidation” and “imperiling the integrity and values of the university community,” the campus chapter of Delta Kappa Epsilon is prohibited for five years from “conducting any fraternity activities on campus,” including recruiting, and from using Yale bulletin boards or e-mail to communicate with students. The sanctions also “severely limit its use of the Yale name in connection with the DKE organization.” The committee that issued the sanctions, which is charged with enforcing the undergraduate regulations, also formally recommended that the national fraternity organization suspend the chapter for five years. Some students face additional punishments, but those are confidential under Yale and federal privacy laws. Yale College Dean Mary Miller said it is unusual to announce the committee's findings, but because the incident made a huge stir on the campus and attracted national attention, she sent a statement to all students and faculty of the college. The university itself is under federal investigation after a student complaint under Title IX of the Education Amendments of 1972, which prohibits discrimination on the basis of sex, alleged a sexually hostile climate on campus.

Captain Henry Denham Liveblogs World War II: May 20, 1941

Henry Denham, British Naval Attache, Stockholm, to Admiralty:

Most immediate. Kattegat today 20th May. [Swedish military sources report that at 15:00 two large warships escorted by three destroyers, five escort craft, ten or twelve aircraft passed Marstrand, course north-west 2058/20th May 1941. B-3 repeat B-3.

The Pieces of the Affordable Care Act

It's funny. When I talk to people playing for Team Republican, they are all more likely than not to be in favor of each of the pieces of the Affordable Care Act:

  • Making it more difficult for Congress to bust the budget and overrule CMS's attempts to improve quality of care and reduce costs? Yep.

  • Take more control over Medicare payments to doctors away from specialists? Yep.

  • Fund the useful computerization of medical records? Yep.

  • Try once again to support a business model by which you make money by providing people with good, cheap health care? Yep.

  • Tax employer-provided high-cost health insurance plans? Yep.

  • Level the playing field so that small businesses and individuals can see and choose the health insurance options that those with large-organization benefits departments have? Yep.

Yet, somehow--because they are playing for Team Republican--none of them can admit today that they like more than half of it, and that it is a good thing.

Makes you wonder how the world would be different if Mitt Romney had had the cojones in September 2009 to say that Obama had adopted his--Republican--health care plan, that he approved of it, and that the takeaway message was that Obama was a smart enough person to realize that the Republicans like him had the right approach on health care.

I have the feeling that in that world a lot of people playing for Team Republican who are right now very sad as they see the gulf between themselves and technocratic reality growing wider and wider would be somewhat happier...

Felix Salmon Treats Bill Keller the Way He Used to Treat Ben Stein

It's cruel. It's unusual. And--now as then--it is justified:

Felix Salmon: Bill Keller’s blind spots: Bill Keller, who proposes that Twitter makes you stupid and says that allowing a 13-year-old onto Facebook is like passing her a pipe of crystal meth, has responded to my last post about him in an email to Steve Myers:

Felix Salmon simply doesn’t know what he’s talking about. The Times takes care of its family — including our drivers, fixers and translators. We do not discuss the details of compensation (for anyone, including staff correspondents) but we fulfill our obligation to employees, including local hires, who are hurt or killed in the line of duty, and to their families in the case of death. (Yes, this includes Mohamed Shaglouf.)

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The Democratic Wing of the Democratic Party's Plan for Dealing with the Long-Run Deficit Is Called the Affordable Care Act

It is a pretty good plan. As I have said, I would prefer to swing right--mandatory universal catastrophic plus mandatory MSAs plus free preventive--or left to single payer. But RomneyCare plus sensible Medicare spending cuts and quality improvements plus a tax on high-cost health-insurance plans plus yet another attempt to create a world in which providing cheap, good medical care is a way to make money--that isn't a bad plan. And it is infinitely better than the Ryan non-plan or any of the other non-plans out there from the various deficit arsonists wearing their firechief hats.

Greg Sargent watches Nancy Pelosi explain it:

Nancy Pelosi: `We have a plan. It’s called Medicare.’: “It is a flag we’ve planted that we will protect and defend. We have a plan. It’s called Medicare.” That’s from Nancy Pelosi, who called me from Wisconsin, where she’s holding events today defending Medicare in Paul Ryan’s back yard. On the call, Pelosi laid out a message on Medicare she hopes Dems will use for — well, forever....

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What Kind of Future Does Journalism Have?

Felix Salmon points us at David Plotz, who writes:

Worrying about aggregators: David Plotz: That’s one of the things that I think about when I’m talking to young journalists, is that so many of them are going to go into jobs that are not reporting jobs, or even editing jobs—they are aggregation jobs. That’s a worry...

And Felix comments:

Plotz does go on to say, quite rightly, that “there’s been just a massive proliferation of new journalistic content.” Kirchner’s dystopia of a world with “nothing left to link to” has never been more distant. But at the same time, Plotz seems to agree with Kirchner that if you’re linking and summarizing, you’re not producing original content, and the rise of such activity is worrying.... The biggest thing that’s missing in the journalistic establishment is people who are good at finding all that great material, and collating it, curating it, adding value to it, linking to it, presenting it to their readers.... [R]eading is to writing as listening is to talking — and someone who talks without listening is both a boor and a bore. If you can’t read, I don’t want you in my newsroom.... So I’m not worried in the slightest by the rise of aggregation jobs, and of people devoting their days to linking and summarizing. That’s a crucial journalistic skill and service, it’s what readers want, and there aren’t nearly enough people who are good at it. It’s certainly much more useful than being the 35th reporter in a press conference, writing down whatever the Important Person up front is saying, or being part of some media scrum trying to get a quote out of Dominique Strauss-Kahn’s lawyer...

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Department of "Huh?!": Republican "Historic" Spending Cut' Bill Increased Spending By $3 Billion | TPMDC

Brian Buetler at TPM:

OOPS! Historic 'Spending Cut' Bill Increased Spending By $3 Billion: Republicans stormed Capitol Hill in January vowing to slash discretionary spending by $100 billion right off the bat. In their pledge to America, they promised that, "[w]ith common-sense exceptions for seniors, veterans, and our troops, we will roll back government spending to pre-stimulus, pre-bailout levels, saving us at least $100 billion in the first year alone." As time went on, it became clear that they wouldn't get the whole loaf, and the key question became: How many billions of dollars in spending would Democrats agree to cut, without risking massive Republican defections, and, perhaps, a protracted government shutdown?

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The Non-Violent Palestinian Resistance

M.S. of the Economist:

Israel and Palestine: Here comes your non-violent resistance | The Economist: FOR many years now, we've heard American commentators bemoan the violence of the Palestinian national movement. If only Palestinians had learned the lessons of Gandhi and Martin Luther King, we hear, they'd have had their state long ago. Surely no Israeli government would have violently suppressed a non-violent Palestinian movement of national liberation seeking only the universally recognised right of self-determination. Palestinian commentators and organisers, including Fadi Elsalameen and Moustafa Barghouthi, have spent the last couple of years pointing out that these complaints resolutely ignore the actual and growing Palestinian non-violent resistance movement. For that matter, they elide the fact that the first intifada, which broke out in 1987, was initially as close to non-violent as could be reasonably expected. For the most part, it consisted of general strikes and protest marches. In addition, there was a fair amount of kids throwing rocks, as well as the continuing threat of low-level terrorism, mainly from organisations based abroad; the Israelis conflated the autochthonous protest movement with the terrorism and responded brutally, and the intifada quickly lost its non-violent character. That's not that different from what has happened over the past couple of months in Libya; it shows that it's very hard to keep a non-violent movement non-violent when the government you're demonstrating against subjects you to gunfire for a sustained period of time.

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Glenn Fleischman on Dropbox


Internet security: Keys to the cloud castle | The Economist: CONSIDER the purchase of a home in two adjacent gated communities. Both have houses with truly impregnable locks. In one community, whenever you need to enter your house, you visit the management office and show your driving licence. A guard walks you to your home, and lets you in using the master key that opens every door lock in the community. You can stay inside indefinitely. If an employee misuses the key to wander into homes or, heaven forfend, a thief gets his hands on it, all bets are off—the households' sanctity has been compromised.

In another community, the management requires that you privately choose your own lock and corresponding key, which you hang on to and use to enter your abode at will. But if you lose the key, or any copies you have made, you can never re-enter. It will remain a sealed edifice until the universe's heat death. Which would you choose? The latter offers extreme privacy but with an unthinkable penalty for carelessness. The former is convenient there is the risk of the key falling into the wrong hands.

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Livebogging World War II: May 19, 1941


Wikipedia, the free encyclopedia: In the early hours of 19 May 1941, Bismarck and Prinz Eugen left Gotenhafen and proceeded through the Baltic Sea and out towards the Atlantic. Unbeknownst to Lütjens, the British had intercepted enough intelligence to suggest that a German naval operation might occur in the area, and had already sent light cruisers HMS Norfolk and Suffolk to monitor the strait...

Simple Deficit Reduction Arithmetic: A Comment on Kash Mansori

Mark Thoma sends us to Kash Mansouri:

I think things are actually much worse than Kash states. If recessions cast a shadow of s--that is, if a fraction s of an austerity-induced output decline turns into a permanent reduction in potential output--and with a multiplier of m and a marginal tax rate of t, $1 of spending cuts this year lowers future annual tax collections by tms.

And with an interest rate of r, $1 of spending cuts lowers the future annual debt service burden by r - rmt.

This means that the burden of the debt rises if you cut spending at the margin this year if:

mt > r/(r + s)

With mt roughly equal to 0.5 and r currently less than 2%, this means that if even 1/50 of the austerity-induced decline in current output flows through to reduce the economy's productive potential, that austerity today worsens the debt burden.

This is an unusual result: it applies only to a country with a substantial fiscal multiplier that can fund its debt at very low interest rates. But we are a country with a substantial fiscal multiplier that can fund it's debt at very low interest rates...

Felix Salmon Is Shrill: Yes, It Is Yet Another Down-and-Out-on-$250K-a-Year Article

I am told that the Fiscal Times regards Karen Hube's Down-and-Out-on-$250K-a-Year article as a great success, even though it has halved my chances of paying attention to the Fiscal Times.

Felix Salmon explains why they are wrong--for one thing, Karen Hube appears to have no idea of what "in the red" means: Hube’s article comes up with a hypothetical two-earner family — Mr and Mrs Jones — who between them earn $250,000 a year, and who “end up in the red” at the end of the year. How do they do this? Well, for one thing, they put $41,000 a year into savings; they also pay $9,069 per year on out-of-pocket medical expenses and going to the dentist. And check out those two cars, which add up to as much as $16,277 per year between them. Are these normal and reasonable expenses for the average family of four? Of course not: the average family of four earns roughly that much money ($66,346) in a year pre-tax — and then, first and foremost, has to buy or rent a house of some description. In any case, the Jones’s lifestyle ($19,000 a year for daycare and after-school activities; $1,571 a year for the dog) is hardly that of a “down and out” family....

Sorkin and Hube completely miss the point about marginal tax rates, which is that they’re marginal. If the tax bracket over $250,000 a year were raised to 99% tomorrow, the effect on the Jones family would be zero: no one’s suggesting raising federal income taxes on the Joneses by a penny. And in fact Hube’s analysis shows that federal income taxes are a very small part of the total Jones tax burden. Let’s say that they both got 15% raises, so that their household income rose to $287,500. And let’s say that the tax rate on income over $250,000 a year is raised to 39.6% from the current 33%. Right now, the Jones family pays somewhere between $29,909 and $34,317 in federal income taxes, depending on where they live. Let’s split the difference and call it $32,113. That’s just 12.8% of their total income. With their pay rise, they’d pay an extra $[2,475 as a result of the rate hike.]... The thing which really annoys me about all these pieces is that they seem to be based on the idea that a sensible fiscal policy would only raise taxes on people who are so rich that they never need to worry about money. Which of course is ridiculous...

Why Oh Why Can't We Have a Better Press Corps? Yes, Another Bill Keller of the New York Times Edition

Carlos Slim to the white courtesy phone, please: if you want a chance of getting any of your investment out alive, you need to make some changes...

Dylan Matthews watches today's Bill Keller dirigible explosion, and comments: "Of all social maladies people want to pin on the Internet, "people not knowing enough things" is probably the least plausible I've heard floated."


You can be an expert if you try: For the most part, Bill Keller's latest column reads like a typical entry in the "the Internet's making us stupid!" genre, but this seems like an odd problem for him to single out....

Until the 15th century, people were taught to remember vast quantities of information. Feats of memory that would today qualify you as a freak — the ability to recite entire books — were not unheard of. Then along came the Mark Zuckerberg of his day, Johannes Gutenberg.... The capacity to remember prodigiously still exists... but for most of us it stays parked in the garage...

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What Good Is an Internet That Cannot Produce a Picture of Newt Gingrich Pursued by Cocktail-Quaffing Sheep with Automatic Weapons?

In my view, none whatsoever...

Newt Gingrich Press Secretary Rick Tyler says: Leave Newt Gingrich ALOOOONNEEE!!:

“The literati sent out their minions to do their bidding,” Tyler wrote. “Washington cannot tolerate threats from outsiders who might disrupt their comfortable world. The firefight started when the cowardly sensed weakness. They fired timidly at first, then the sheep not wanting to be dropped from the establishment’s cocktail party invite list unloaded their entire clip, firing without taking aim their distortions and falsehoods. Now they are left exposed by their bylines and handles. But surely they had killed him off. This is the way it always worked. A lesser person could not have survived the first few minutes of the onslaught. But out of the billowing smoke and dust of tweets and trivia emerged Gingrich, once again ready to lead those who won’t be intimated by the political elite and are ready to take on the challenges America faces.

Liveblogging World War II: May 18, 1941

Harold L. Ickes' Definition Of An American:

I want to ask a few simple questions. And then I shall answer them.

What has happened to our vaunted idealism? Why have some of us been behaving like scared chickens? Where id the million-throated democratic voice of America?

For years it has been dinned into us that we are a weak nation; that we are an inefficient people; that we are simple-minded. For years we have been told that we are beaten, decayed, and that no part of the world belongs to us any more.

Some amongst us have fallen for this carefully pickled tripe. Some amongst us have fallen for this calculated poison. Some amongst us have begun to preach that the “wave of the future” has passed over us and left us a wet, dead fish.

What constitutes an American? Not color nor race nor religion. Not the pedigree of his family nor the place of his birth. Not the coincidence of his citizenship. Not his social status nor his bank account. Not his trade nor his profession. An American is one who loves justice and believes in the dignity of man. An American is one who will fight for his freedom and that of his neighbor. An American is one who will sacrifice prosperity, ease and security in order that he and his children may retain the rights of free men. An American is one in whose heart is engraved the immortal second sentence of the Declaration of Independence.

Americans have always known how to fight for their rights and their way of life. Americans are not afraid to fight. They fight joyously in a just cause.

We Americans know that freedom, like peace, is indivisible. We cannot retain our liberty if three-fourths of the world is enslaved. Brutality, injustice and slavery, if practiced as dictators would have them, universally and systematically, in the long run would destroy us as surely as a fire raging in our nearby neighbor’s house would burn ours if we didn’t help to put out his.

If we are to retain our freedom, we must do everything within our power to aid Britain. We must also do everything to restore to the conquered peoples their freedom. This means the Germans too.

Such a program, if you stop to think, is selfishness on our part. It is the sort of enlightened selfishness that makes the wheels of history go around. It is the sort of enlightened selfishness that wins victories.

If You Don't Want People Saying That You Are Planning to End Medicare as We Know It, Don't Plan to End Medicare as We Know It!

It really is that simple...

Paul Krugman

What's In A Name? - Urk. Politico:

DCCC will be out today with a brutal (and misleading) slogan, “VOTE REPUBLICAN – END MEDICARE”

It’s not misleading! I know that serious people are supposed to be shocked, shocked at the Democrats calling the Ryan plan a plan to dismantle Medicare — but that’s just what it is. If you replace a system that actually pays seniors’ medical bills with an entirely different system, one that gives seniors vouchers that won’t be enough to buy adequate insurance, you’ve ended Medicare. Calling the new program “Medicare” doesn’t change that fact.

Felix Salmon Has Another Ben Stein Watch, DSK Edition

Felix Salmon:

Ben Stein Watch, DSK edition | Felix Salmon: Without further ado, the top ten lines from Ben Stein’s article on Dominique Strauss-Kahn:

  1. If he is such a womanizer and violent guy with women, why didn’t he ever get charged until now?
  2. This is a case about the hatred of the have-nots for the haves, and that’s what it’s all about.
  3. So far, he’s innocent, and he’s being treated shamefully. If he’s found guilty, there will be plenty of time to criticize him.
  4. Can anyone tell me any economists who have been convicted of violent sex crimes?
  5. Maybe Mr. Strauss-Kahn is guilty but if so, he is one of a kind, and criminals are not usually one of a kind.
  6. He is one of the most recognizable people on the planet. Did he really have to be put in Riker’s Island?
  7. A man pays $3,000 a night for a hotel room? He’s got to be guilty of something. Bring out the guillotine.
  8. Was Riker’s Island really the place to put him on the allegations of one human being? Hadn’t he earned slightly better treatment than that?
  9. Can anyone tell me of any heads of nonprofit international economic entities who have ever been charged and convicted of violent sexual crimes?
  10. People accuse other people of crimes all of the time. What do we know about the complainant besides that she is a hotel maid?

The Republican Party Needs to Give Itself a Nice Cold Douche... Joseph Schumpeter would say, and repeat until the Ron Pauls and Newt Gingriches have been washed out.

Matthew Yglesias:

Yglesias » Newt Gingrich Proposes Reviving “Poll Tests” Of The Sort Outlawed In The Civil Rights Era: Ta-Nehisi Coates heard the dog whistle loud in clear in Newt Gingrich’s proclamation last night that Barack Obama is “the most successful food stamp president in modern American history.” But the speech also featured a straightforward call for the revival of the kind of techniques that were used to prevent African-Americans (and many poor whites as well) from voting in the Jim Crow South:

Continue reading "The Republican Party Needs to Give Itself a Nice Cold Douche..." »

Market Goods vs. Opportunity Rights

The Economist:

Higher-education bubble: Blowing up grad school: I do observe that the American people (like most other peoples in advanced countries) apparently believe that it is wrong for an adequately intelligent, industrious person to be unable to go to college because they can't afford it. Similarly, the American people (like most other peoples in advanced countries) apparently believe that it is wrong for anyone to be unable to receive basic or critical medical care because they can't afford it. At the same time, the American people don't like centralised government-financed and -run institutions. And so instead of European-style government-run universal health insurance, we have the Rube Goldberg machine that is the American public-private health-insurance system. And instead of the largely government-run nearly-free university systems you have in Europe, we have the government-guaranteed student loan system that has delivered a generation of American students into indentured servitude.

Continue reading "Market Goods vs. Opportunity Rights" »

Tuesday Wednesday Addams Quotes

Tuesday Addams:

Wednesday: I don't want to be in the pageant.

Gary: Don't you want to help me realize my vision?

Wednesday: Your work is puerile and under-dramatized. You lack any sense of structure, character and the Aristotelian unities.

Google and the Term Structure Once Again...


The argument that Google is making a mistake in borrowing now when the yield spread between short-term and long-term interest rates is high goes more-or-less like this:

  1. The long-term interest rate is the average of expected future short-term interest rates, plus a (nearly constant) term premium.

  2. When long-term interest rates are unusually far above short-term rates, it is a sign that investors are unusually and irrationally pessimistic about the likely course of short-term rates.

  3. As time passes, investors will learn that they were irrationally pessimistic--and so long-term interest rates will fall.

  4. Thus it is better to wait and borrow long in the future rather than to borrow long now.

  5. Conversely, it is more profitable to lend long now than it will be in the future after investors have learned and so corrected their irrational pessimism.

I just don't see it. I just don't see the possible future in which investors conclude that they are--right now--unduly and irrationally pessimistic about the course of interest rates in the future.

This time, though, it looks as though it really is different...

Gleise 581d Here We Come!

There is a little problem of gravity--it looks to be 50% more than earth normal.

But, ladies and gentlemen, start your terraformers:

AGI News: The first planet almost inhabitable with liquid water has been discovered 20 light years from Earth and astronomers believe it is almost as inhabitable as earth. The planet is called Gliese 581d and orbits around a red dwarf star.

Gliese appears to be a lucky planet situated on the edge of the so-called 'Goldilocks zone' or Green Belt of space where conditions favour the presence of life.... [T]his planet has a mass six times that of Earth and is double its size...

Paul Ryan Really Snookered Alice Rivlin (and a Lot of Others)

He was supposed to be the sensible technocratic Republican negotiator on the budget. No more. Paul Krugman narrates the dirigible explosion:

Do Do That Voodoo: Paul Ryan gave his big speech... and demonstrated, in case you were wondering, that there’s no there there (and there never was). Remember how everyone declared that Ryan was a serious person, truly willing to face up to our deficit problem? Well, now he’s out there denouncing the way “the budget debate has degenerated into a game of green-eyeshade arithmetic” — in other words, enough with all these numbers. And his answer to the deficit now is that we have to grow our way out.

There’s a name for that: voodoo economics....

Low taxes are the secret to growth, nobody ever solved a deficit problem by raising taxes (Clinton, anyone?). He even denounced austerity. The only original things he had to say, if you can call them that, involved health care costs and monetary policy. On health care costs, he declared that “Our plan is to give seniors the power to deny business to inefficient providers.” Remember, what the plan actually does is hand out vouchers whose value will fall well short of the cost of coverage. So how much power do those Americans who can’t afford decent health insurance have right now in their dealings with providers?...

And then there’s the claim that hard money is the key to growth. Milton Friedman turned over in his grave.

Basically, again, what we’re getting here is standard right-wing voodoo. Ryan turns out to be an empty suit, parroting the usual line. What’s remarkable is that for a year or so this empty suit was hailed — by self-proclaimed centrists as well as the right — as a brilliant, brave champion of fiscal responsibility.

Adolf Hitler Liveblogs World War II: May 17, 1941

From Adolf Hitler:

Führer Directive 29:

(1) The aim of German operations in the south-east, which was to drive the English from the Balkans and to widen the base for German air operations in the Eastern Mediterranean, has been achieved, and will be further improved by completion of 'Undertaking Mercury'. The defence of Greek territory will in future, with the exceptions mentioned below, be an Italian responsibility. Therefore German authorities must not intervene in general matters relating to the defence anc1. administration of the country. They will, in particular, refuse any Greek requests for mediation. For the delivery of supplies, an agreement is to be made with the Italian Armed Forces concerning supply routes and their protection.

(2) The following apply to the German Armed Forces:

Army: The only forces remaining in Greece will be those which are indispensable for the supply of 'Undertaking Mercury' (and which will be closely concentrated locally) and one division in Salonika (see paragraph 3) which will also be responsible for the security of Lemnos and for any other islands which may need to be occupied. However, until the conclusion of 'Undertaking Mercury' areas required as jumping-off points for German troops, including the islands designated for this purpose, must remain in German hands. All forces not required according to these instructions will be withdrawn as soon as possible. The Italian High Command will be notified that arrangements for a quick hand-over in Greece are to be made with Commander-in-Chief 12th Army. The latter will then transfer his headquarters to Salonika as 'Commander-in-Chief of German troops in the Balkans' as soon as the situation ('Undertaking Mercury') allows.

Air Force: X Air Corps, even after moving into Greece, will prosecute the war in the air independently under orders from Commander-in-Chief Air Force to whom it is directly subordinate. For the defence of the Balkan area it will co-operate with Commander-in-Chief 12th Army (Commander of German Troops in the Balkans) and for the war in North Africa with the Africa Corps. Orders concerning territorial matters which need co-ordinated ruling for the Balkan area will be given by Commander-in-Chief 12th Army to X Army Corps also. Ground organisations in Greece and the islands will be at the disposal of Commander-in-Chief Air Force for the prosecution of the air war in the Eastern Mediterranean. Airfields and installations which are not required will be handed over to the Italian forces.

After the occupation of Crete the defence of the island will be the responsibility of Commander-in-Chief Air Force (Airborne Corps) who will decide upon the moment at which these forces can be relieved. I reserve to myself the right to issue orders in this respect and for the future occupation of the island.

Navy: Apart from Salonika, the port of Athens and the coastal strip between the two ports, in so far as this is necessary for traffic along the coast, will remain in the hands of the German Navy. Commander-in-Chief Navy will make the necessary arrangements for this with the Italians. The defence of the coast of Crete will also be the responsibility of the Navy, if the island continues to be occupied by German troops. In territorial questions the same rules apply as to X Air Corps.

On the North Aegean coast the Bulgarian coastal defences must continue to be under firm German influence. Admiral South-east will be responsible for operations and the movement of shipping in the Aegean, under orders from Commander-in-Chief Navy, and employing the Italian naval forces placed at his disposal. In other matters, Admiral South-east will co-operate with the Italian authorities as required.

(3) For all military measures in the Salonika area the German Armed Forces have sole responsibility. The exact delimitation of this area will be a matter for proposals from the High Command of the Army (Commander-in-Chief of German troops in the Balkans).

(4) The administration of Greek territory occupied by German troops will be carried out by the High Command of the Army in agreement with the Plenipotentiary of the German Reich in Greece. As far as possible use will be made of the Greek administration and German military authorities will refrain from interference.

(5) In order that he may carry out the urgent economic duties assigned to him, the 'Military Commander Serbia' will be provided by the High Command of the Army with all necessary facilities and with the troops which he requires for security purposes, so that he may accomplish his task independently.

(6) I expect to be informed by Commanders-in-Chief about the measures which they propose to take on the basis of this directive and on agreements reached with the Italians.


Department of "Huh?!"

Greg Mankiw thinks that Google is likely making a mistake by borrowing long now because long-term U.S. interest rates are probably coming down--and it will be cheaper to borrow later:

Greg Mankiw's Blog: Google Plays the Yield Curve: Google is sitting on $37 billion in cash, but nonetheless decided to sell $3 billion worth of bonds.  Why?  To take advantage of low interest rates.... Does this make sense for Google?... [T]here is reason to be skeptical.... The yield spread is now high by historical standards.  The empirical literature on the expectations theory of the term structure (in which I have sometimes played) suggests that this is a good time to borrow short and lend long--the opposite of what Google is doing...

It is certainly true that most of the time when the yield spread is high the way to bet is that long-term bond rates are coming down and long-term bond prices are going up.

But somehow I can't see U.S. nominal interest rates falling much lower than they are now...

Ghost Rider Bond Market Vigilantes in the Sky...

Paul Krugman:

The Invisible Attack Intensifies: Those wily invisible bond vigilantes are at it again: as part of their cunning plan, they have driven the 10-year bond rate down to 3.11 percent. As it happens, the Wall Street Journal has now been warning about the attack of the bond vigilantes for almost exactly three years.


Continue reading "Ghost Rider Bond Market Vigilantes in the Sky..." »

Alan Simpson Has Driven Kevin Drum Shrill


Alan Simpson, Social Security Illiterate | Mother Jones: Is it true that life expectancies have gone up dramatically since 1940, when Social Security first went into effect? Sort of. In 1940, lots of children still died young.... But childhood mortality doesn't affect Social Security one way or the other.... What we care about is the people paying into the system... and how long they live after they retire. So how much longer do retirees live these days? Answer: For men, life expectancy at age 65 has gone up from 78 to 83. Since retirement age has gone up from 65 to 67, this means that over the past 60 years the expected payout period has increased by about three years. Hilariously, though, Social Security scold Alan Simpson simply has no clue about this. Ryan Grim asked him about it recently:

HuffPost suggested to Simpson during a telephone interview that his claim about life expectancy was misleading because his data include people who died in childhood of diseases that are now largely preventable....According to the Social Security Administration's actuaries, women who lived to 65 in 1940 had a life expectancy of 79.7 years and men were expected to live 77.7 years.

"If that is the case — and I don’t think it is — then that means they put in peanuts," said Simpson. Simpson speculated that the data presented to him by HuffPost had been furnished by "the Catfood Commission people" — a reference to progressive critics of the deficit commission who gave the president's panel that label.

Told that the data came directly from the Social Security Administration, Simpson continued to insist it was inaccurate.... Simpson is a guy who's taken very seriously on Social Security issues inside the Beltway.... And yet, as he makes clear later in the interview, he simply had no idea any of this was true. No idea. And he doesn't believe it, even though this stuff is Social Security 101....

The plain fact is that Social Security is only modestly underfunded and can be fixed with a basket of quite moderate changes over the next 30 years or so. Anyone who understands the numbers knows this. People like Alan Simpson don't. But guess who gets the most press coverage?

Bruce Bartlett: How to Start Dealing with Our Long-Term Medicare Cost Problem

Start by reducing Medicare payments to doctors to put the program on a sustainable trajectory.


The Real Social Security and Medicare Problem (and a Doable Fix): What really matters for the viability of both Social Security and Medicare is their aggregate costs relative to the economy’s ability to pay them. In this regard, it is best to look at spending as a share of the gross domestic product, especially in the long run.... Social Security... spending rising from 4.8 percent of gross domestic product to 6.2 percent by 2035, an increase of 1.4 percentage points.... [T]he long term Social Security deficit is 1.2 percent of G.D.P., or 3.6 percent of taxable payrolls.... Turning to Medicare.... Part A pays for hospital visits and is financed by the Medicare portion of the payroll tax, which is 2.9 percent... this portion of Medicare has virtually no long-term unfunded liability.... Part B, which pays for doctors’ visits.... It has no trust fund.... Finally, there is Medicare Part D, which George W. Bush and Congressional Republicans rammed into law in 2003. Even though Medicare’s finances were rapidly deteriorating, they provided no additional funding for Part D.... The unfunded cost of this program is estimated at $16.1 trillion, or 1.1 percent of G.D.P. in perpetuity. Thus we see that Social Security and Medicare are underfunded relative to promised benefits by $56.4 trillion or 3.8 percent of G.D.P. per year forever....

Continue reading "Bruce Bartlett: How to Start Dealing with Our Long-Term Medicare Cost Problem" »

Distrusted Aggregators Department...

One of the major problems for those of you playing for Team Republican (a problem but not so big a problem for those of you playing for Team Democrat, and not a problem at all for those of us who really want to be playing on Team Technocratic Sanity) is that there are a lot of people on your team who will eagerly burn your reputation for trustworthy analysis in order to advance their objectives.

That is why you should only blog about stuff that you know, and have read, and can evaluate, and have evaluated.

They don't call it The Net of a Million Lies for no reason, after all...


Noahpinion: Did the stimulus really destroy a million private-sector jobs?: This week, Greg Mankiw links us to a paper by Timothy Conley of Western Ontario and Bill Dupor of Ohio State University.

Indeed he does. Mankiw:

Greg Mankiw's Blog: Evaluating ARRA: im Conley and Bill Dupor have a new paper on the American Recovery and Reinvestment Act (that is, the Obama stimulus bill).  Their empirical findings:

Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.

That's all he says.

Continue reading "Distrusted Aggregators Department..." »

Yes, Rep. Paul Ryan Lies. What Else Is New?

Austin Frakt seems a little surprised:

Ryan’s rebuttal: In Chicago this afternoon, Rep. Paul Ryan will rebut critics of his plan for Medicare, endorsed by the House GOP in April. According to NRO, his prepared remarks will include this:

Our plan is to give seniors the power to deny business to inefficient providers. Their plan is to give government the power to deny care to seniors.

“Our plan” here is the House Republicans’ one to convert Medicare into a premium support program. “Their plan” is anything Obama and the Democrats have offered or passed, like the Affordable Care Act. There are two things odd about these sentences. First, the Republican plan has nothing to say about providers, like hospitals or physicians. It’s a plan for insurance reform... not... provider organization or payment reform. Second, the ACA has nothing in it to deny care to seniors. In fact, Medicare is not permitted to do anything of the sort.

So, this segment of the speech seems like a rebuttal, but not of the arguments that have been offered against Rep. Ryan’s plan and not in support of what that plan actually is.

Douglas K. Smith Asks Me to Assign Him Some Readings...

He writes:

Doug Smith: Shock Therapy For Economics, Part 1: Now, in the spirit of helping orthodox economics move beyond culturally induced ignorance, let’s pose some exam questions regarding what DeLong found so shocking. We’ll do this by looking at each shocking element; and, then, for extra credit, ask some ‘dog that didn’t bark’ as well as curricular and epistemological questions. There’s no intention here of attacking DeLong personally. But these exam questions are specifically and clearly directed at him as well as other mainstream economists. Yes, tenured professors are more comfortable giving exams than submitting to them. Well, that’s one of the many things that must change if economics and economists are to emerge from this crisis with anything more than warmed-over excuses and rationalizations...

I recommend that Mr. Smith read my What Have We Unlearned from Our Great Recession? and Battered and Beaten. I think that will cover it.

The Tax Foundation Piece that Told the Truth About the Wall Street Journal, and That Tax Foundation President Scott Hodge Took Down

Safari 2

Courtesy of Brendan Nyhan, who writes:

The disappearing Tax Foundation blog post - Brendan Nyhan: Last week, Washington Post fact checker Glenn Kessler praised a Tax Foundation post about a misleading Wall Street Journal editorial graphic: "Excellent Tax Foundation take down of misleading WSJ editorial chart. Bravo fact checking!" Given my many previous critiques of bogus WSJ graphics, I was shocked to discover that a conservative group best known for its misleading "Tax Freedom Day" events had aggressively debunked the Journal's pro-tax cut agitprop:

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Scott Hodge of the Tax Foundation Censors Himself

The Tax Foundation

A remarkable display.

If you have been relying on the Tax Foundation as a source of information, it is time to stop.

Mark Thoma has the story:

Economist's View: "The Disappearing Tax Foundation Blog Post": I recently noted a post from The Tax Foundation accusing the Wall Street Journal editorial page of of "a textbook example of how to lie with statistics."

Bruce Bartlett points to a Tax Foundation article that accuses the WSJ's editorial page of "a textbook example of how to lie with statistics.": The Wall Street Journal's Misleading Income Chart. When the Tax Foundation questions someone's reliability, you know a line has been crossed.

Brendan Nyhan notes today that the Tax Foundation post has been taken down:

Continue reading "Scott Hodge of the Tax Foundation Censors Himself" »

Is the Economy Doing Well or Badly?

Karl Smith:

Aggregate Demand in Real Life: [P]eople in general and managers in particular think of the market climate in terms of rates of change. Business is doing well if business is doing better. Business is doing poorly if business is doing worse. This is irrespective of where they are compared to some baseline. For example, you hear all up down the supply chain that hospitality is “doing well." If you look at sales growth you see it right smack at you....

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No, the IMF Does Not Need Another European Head

Wolfgang Munchau is fast out of the gate:

The IMF needs another European head: This is not the most fashionable argument one could make so soon after the events in New York at the weekend. But let me say it flat out: I believe the case for a European successor to Dominique Strauss-Kahn is overwhelming. To be clear: I am not supporting the principle that the managing director of the International Monetary Fund should, by default, be a European. On the contrary, I believe the job should always go the most capable candidate. I just believe that considering the IMF’s current priorities, one should not be so quick to rule out a European candidate at this point...

But he has no European candidate. He names only one name, Christine Lagarde--and with all due respect, certainly I would rather have either Armenio Fraga or Larry Summers.

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