"Mr. Kristol"

Dani Rodrik has been waiting for this chance:

Mr Kristol, you get a C in economics, by Dani Rodrik: There! I said it, and I feel better already.  I have waited a really long time to do this, and ... Bill Kristol finally gave me an opportunity with his column in today's New York Times. ...

[H]e was my dreaded instructor long ago in two of the classes that I took as a Harvard undergraduate. He was a doctoral student at the time in the Government Department (no relation to the HKS)...  The first course was Harvey Mansfield's political theory course (for which Kristol served as teaching fellow), and the second was a sophomore tutorial (a required course for government concentrators). 

In each course, we had to write short papers once every couple of weeks. I can say that my performance on these papers, which Kristol graded, was fairly consistent.  The essay on Machiavelli? Here is a C-.  The essay on the Federalist Papers?  Here is a C.  John Stuart Mill?  Well, how about, yes you guessed it, another C.  You can say that Kristol did his best to discourage me from pursuing a career in political science...

I remember well the very first time I saw  him.  It was the first meeting of the discussion session in Mansfield's course...  He walked into the classroom and his first words were: "Hello, my name is Mr. Kristol."  To underscore the point that he was that, and not Bill or any other friendly appellations by which we students may have chosen to address him, he went to the board and wrote "Mr. Kristol." I may have been a poorly adjusted Turk in my first year in the U.S., but this still struck me as odd. He was certainly the only graduate student I met in my four years as an undergraduate who insisted on being called by his last name.   

Well, Mr. Kristol's column today takes aim at Barack (and Michelle) Obama, and does so quite unfairly in my view.  ...  What caught my attention was this passage:

Michelle Obama, in the course of a stump speech, remarked...: “Life for regular folks has gotten worse over the course of my lifetime, through Republican and Democratic administrations. It hasn’t gotten much better.”

Now in almost every empirical respect, American lives have in fact gotten better over the last quarter-century.

Really? Look at the chart below, which comes from Frank Levy... It shows the median compensation since 1980 of different groups of prime-aged men, alongside productivity. ...

People like me with graduate degrees have done great.  But the median compensation (that includes fringe benefits, by the way) of high school graduate men has declined by about 10 percent since 1980!  Mr. Kristol: that means that for a high-school graduate, the odds that his compensation would have fallen by more than 10% is 50-50.  Note that even college graduates have not seen any income gains since around 2000. ...

What is special about the last quarter century, as Frank Levy makes clear, is that it followed a period when productivity increases were broadly shared by different groups in society. That is no longer the case...

So statistics aside, who do you think has a better sense of what has happened to "regular folk" since 1980? Michelle Obama or Mr. Kristol?

---

Update: Different topic: Dani Rodrik and Arvind Subramanian have an article in the Financial Times arguing that we need to limit the flow of financial capital on international markets:

We must curb international flows of capital, by Dani Rodrik and Arvind Subramanian, Commentary, Financial Times: First large downhill flows of capital – from rich countries to poor countries – led to the Latin American debt crisis of the early 1980s. In the 1990s similar flows begat the Asian financial crisis.

Since 2002 the flows have been uphill, from emerging markets and oil-exporting countries to the developed world, especially the US. But the outcome has not been very different. So, it does not seem to matter how capital flows. That it flows in sufficiently large quantities across borders – the celebrated phenomenon of financial globalisation – seems to spell trouble.

Causes and consequences vary, depending on which way capital flows...

Some would claim that the problem in all these instances was not liquidity but lax regulation... But ... risk-taking behaviour of financial intermediaries cannot be regulated perfectly, [so] we need to find ways of reducing the volume of transactions. ...

But how is such a levelling-off of flows to be achieved? ... Two concrete actions – one for each source of liquidity – suggest themselves.

First, some variant of petrol tax in the main oil-importing countries (including the US, China and India) is essential to cut demand and reduce ... the current account surpluses of oil exporters. ... Even though undervaluation is a potent instrument for promoting growth in low-income countries in general, at this juncture self-interest on both sides calls for an orderly unwinding of current account imbalances. ...

Measures needed for when capital flows downhill are likely to take a different form. ... Deposit requirements on capital inflows and financial transaction taxes are some of the tools available. We need an enlarged menu of such options. Unfortunately, capital controls are such a bugaboo that the International Monetary Fund, to its discredit, has done little work on capital-account management techniques.

But will not such interference with capital flows reduce the benefits of financial globalisation? Even leaving financial crises aside, those benefits are hard to find.

Financial globalisation has not generated increased investment or higher growth in emerging markets. ... Nor has financial globalisation led to better smoothing of consumption or reduced volatility. If you want to make an evidence-based case for financial globalisation today, you are forced to resort to indirect and speculative arguments.

It is time for a new model of financial globalisation, one that recognises that more is not necessarily better. ... Depending on context, the appropriate role of policy will be as often to stem the tide of capital flows as to encourage them. Policymakers who view their challenges exclusively from the latter perspective will get it badly wrong.

I'll just note Frederic Mishkin's comments on this topic.

Comments

[anne]

Dani Rodrik is being wildly polite, which is not in the least my inclination. Was that before or after Harvey Mansfield had learned to become a "man," I wonder?

[maynardGkeynes]

Since Kristol has such an affable persona on TV, I wondered what the hew and cry was all about when it was announced that he would be Op - Ed at the NYT. After reading this mean spirited and basically inane column focused on the candidate's WIFE, I now understand. Send him back to cable land with all the other intellectual giants, such as O'Reilly.

[anne]

Here is the antagonistic approach that will be used in several guises:

http://www.nytimes.com/2008/02/25/opinion/25kristol.html

February 25, 2008

It’s All About Him
By WILLIAM KRISTOL

Obama likes to say, “we are the change that we seek” and “we are the ones we’ve been waiting for.” Obama’s rhetorical skill makes his candidacy appear almost collective rather than individual. That’s a democratic courtesy on his part, and one flattering to his followers. But the effectual truth of what Obama is saying is that he is the one we’ve been waiting for.

Barack Obama is an awfully talented politician. But could the American people, by November, decide that for all his impressive qualities, Obama tends too much toward the preening self-regard of Bill Clinton, the patronizing elitism of Al Gore and the haughty liberalism of John Kerry?

It’s fitting that the alternative to Obama will be John McCain. He makes no grand claim to fix our souls. He doesn’t think he’s the one everyone has been waiting for. He’s more proud of his country than of himself. And his patriotism has consisted of deeds more challenging than “speaking out on issues.”

[Petter]

I don't think Rodrik has such a strong case for a "C".

Kristol: "Now in almost every empirical respect, American lives have in fact gotten better over the last quarter-century."

We all know where he is coming from, conservatives don't care too much about distibutions that we create among outselves in a realtive sense and at a given point in time. Is that new?

This old debate will never be resolved. I think what Kristol means is that for a given person x nr of years ago over all income classes, he or she will probably be better off in real terms. So even if the median share is smaller for some, the growth of the median compensates for that.

So, the critique is really that BK has a conservative look on this, not that he is so bad at economics.

[pgl]

Kristol was an instructor at Harvard? Dani survived two courses with him and still turned out OK? Good for Dani but who at Harvard hired Kristol?

[howard]

Peter, no, i don't think that's what kristol is trying to say.

what he's trying to say is that the hedonic adjustment means that even if your income hasn't improved, now you've got cable! and a computer! and an ipod! and your car lasts longer!

it's not a completely fatuous argument, but it's a largely fatuous argument, so i think a "c" is still appropriate.

[TigerPaw]

Well depends on how you perceive Kristol's job. If you think he's trying to educate people in economics in an even-handed manner, fair enough, time for C or worse. However, that's not what his job is of course. He's there to spread confusion, push the rightist point of view, and generally deny anything is wrong. His fellow travellers will be giving him an A.

The NYT should still be ashamed for offering a soapbox to him. There's more than enough propaganda outlets on the right side of the field. No need to offer up yet another one.

[Petter]

Howard, OK, what you say is that new and pretty expensive technology is available for those considered to be worse off with less choice over resource allocation than others. Now, one can treat it as non-relevant or not.

I am not familiar to your grading system, a C maybe isn't so bad? I can concur with some lack of intellectual integrity, since he doesn't mention income shares. Still, from the other side of the aisle, there seems to be an obsession with shares.

[anne]

There are writers I do not read unless expressly referred to for a purpose, and Bill Kristol I do not read. But, the essay is brilliantly mean carefully turning Biblical imagery against Barack Obama. The economics of the matter is of no concern at all to Kristol, nor will the readers for whom the essay is meant care a fig about the economics. This is an article about a supposedly perverse appeal for soul saving or what passes for the writers perverse sense, as the New York Times editors made clear in announcing the essay on the Internet.

This is a dangerous essay, that flies wholly beyond the criticism of the economics.

[anne]

Here is the editor's portrayal:

http://www.nytimes.com/2008/02/25/opinion/25kristol.html

It’s All About Him
By WILLIAM KRISTOL

Can our broken souls be fixed by voting for Barack Obama?

[anne]

"We must curb international flows of capital," and the we are who? Global mothers are going to tax China's petrol (English they are) till the cows come home. Chinese farmers can hardly wait (not for the cows but for the tax). What is always clear is that food and energy prices are never high enough but must be made higher.

I have to think how to properly parody this the new anti-socialism socialism for the wealthy, the very wealthy.

[anne]

Keeping with the theme we could crucify Chinese farmers on a cross of carbon (not to mention the same sort of Americans who are rejoicing Biblically in having had heating fuel assistance cut through the era of compassionless conservatism. We can pray for warming, fast.

[anne]

http://www.cbpp.org/2-20-08bud.htm

The President's budget, by the way, calls for a 22% cut in low-income fuel assistance. That should teach them low-income-ers to eat fuel. There's our sort of carbon-tax (be friendly, very friendly to Venezuelans).

[Mark N.]

Do Dani Rodriks numbers take into consideration technological advance and improved product quality? A high speed computer today with an internet connection is cheaper than a 386, 52kb ram computer with no internet connection was in 1990. I-Pods didn't exist, etc. Greater selection of products and improved product quality at a lower price -> higher living standards.

[Mark Thoma]

The adjustment is less than perfect, but CPI data do attempt to control for differences in the quality of goods over time. The market basket is also adjusted to reflect new products and the retirement of old ones. While it is true that a wider variety brings more utility (most of the time), because of the fall in real income the choice set is smaller for many households.

[anne]

Mark Thoma:

"While it is true that a wider variety brings more utility (most of the time), because of the fall in real income the choice set is smaller for many households."

Now, that is important.

[Jim Harrison]

There is no objective way of determining whether or not people are better off now than thirty years ago any more than there is a scientific answer to the question "what's the best color?" It does matter, however, that many people have their reasons for thinking they aren't as well off, including the apparently accurate perception that they are much more vulnerable to risk as a result of ever increasing economic inequality.

[chris]

Kristol, a Neocon offspring of two Neocon parents, has a history of stupid and wrong statements about all sorts of things. Just his wild statements about Iraq when he was pushing for war should be enough to destroy his reputation alone. Why would anyone expect him to be more sensible about the economy? By the way, I would hope that these people who cry "anti-Semitism" whenever their views and affiliations are challenged would find attacks like this on Obama's wife characterized as "racism" which they probably are.

[Mikko]

Now there's one thing that bugs me about using the graph in the text above.

Has the proportion of people with (only) high school graduation decreased in the past 25 years? Has the number of college degrees been increasing from below (and potentially decreasing from the higher layers of income bracket).

If education is, as some economists consider possible, more about signalling your worth and ability than about the skills it brings, you would get that kind of a graph even if the income gains were widely shared.

So the real question (in my opinion) is whether the income gains have been shared between different income groups (e.g. quintiles).

For those who need explanations: Assume that in 1982, 20% of people only had high school degree. They would have an income distribution. Zoom 25 years forward and assume that from that 20% the kind of people who tended to make more than the group average tended to get college degrees. Even assuming that the income of the rest of the high school graduates rose, their average and median would go down.

And at the same time, even if there was no increase in the proportion of graduates, the increased number of college degree people coming to the bottom income area of the college degree distribution would drag the average and median down.

So the graph isn't the proof you were looking for. Some other statistics might be.

As a final note, I support Obama, so don't take this as a political attack. I just like to have statistics read well rather than used for purposes they don't suit, even when doing so would benefit me.

[pgl]

Mikko: "Has the proportion of people with (only) high school graduation decreased in the past 25 years? Has the number of college degrees been increasing from below (and potentially decreasing from the higher layers of income bracket)."

Some AB reader attacked Dani's evidence arguing just this premise. Others have come back and suggested that the change does not undermine what Dani said.

[anne]

http://delong.typepad.com/sdj/2008/02/dani-rodrik-doe.html

February 25, 2008

Dani Rodrik Doesn't Think Much of "Mr. Kristol"
By Brad DeLong;

Dani Rodrik has been waiting a long time--decades, in fact--to give William Kristol a grade:

"Mr Kristol, you get a C in economics!"

I think that Dani is being really generous: a C is a real gift here.

Most interesting, perhaps, is Dani's report of William Kristol's teaching methodology, which appears to have involved giving lots of unmotivated Cs to a man who is the finest political economist of my generation. It is an interesting method--but I would classify it not as a way of teaching but as an exercise in Herrschaft...

[Cyrille]

Mikko: the median male wage (all groups included) declined onver 25 years. The median household income improved slightly, purely because there are more women at work now.

So it's not been pretty if you were in the lower half. Which should be an answer to Petter too. The median did NOT improve, contrary to your premises. The average did, because the top 0.1% did so fantastically well.

[Mikko]

Cyrille: I did not claim that things improved. I just noted that he should have used another kind of statistics in his piece; median income, the lowest quintile would have been much better. And as you point out, the median has not improved.

pgl: It does not undermine what Dani said. It just does not support his thesis at all. Not without further information that was not included. That's why median and quintiles of percentiles of income should have been used instead of this.

As far as I know, Dani _is_ right in what he is saying. He's just using statistics in a manner which rightly would have flunked him in graduate school. :)

[anne]

I suggest learning to read:

"People like me with graduate degrees have done great. But the median compensation (that includes fringe benefits, by the way) of high school graduate men has declined by about 10 percent since 1980! Mr. Kristol: that means that for a high-school graduate, the odds that his compensation would have fallen by more than 10% is 50-50. Note that even college graduates have not seen any income gains since around 2000."

This is really quite stunning when economic growth and productivity growth are considered.

[Cyrille]

Mikko: I know you did not say that things improved. Petter did.

[anne]

Bill Kristol could care less about the economics, but only about deceiving on the economics and immediately changing the subject and taking refuge in the patriotism of scoundrels. The focus of the column is the perverse portrayal of Barack Obama thinking himself and presenting himself our "savior" while necessarily being a false savior. This is an intensely mean column, which is typical.

[anne]

Simply think about what Dani Rodrik and Michelle Obama are so clearly pointing out, that in 25 years of economic and productivity growth regular folks are not decisively better-off than they were, and to be more blunt about this the problem has been compassionless conservbatism, the problem has been Republicanism, a Republicanism that care nothing for the health of 3.8 million needy children when the cost of the children's health is a few destructive and self-destructive weeks in Iraq.

These 25 years of conservatism have finally brought us to the insane immorality of Iraq rather than health care protection for needy children. I am not impressed.

[Peter Schaeffer]

Dani Rodrik and Frank Levy should hang their head in shame. How dare they point out that wages for high school graduates have declined since 1980 (and even more since 1973)? This is just right-wing anti-Open Border propaganda. Even if they didn't mean for their ideas to be used by immigration restrictionists, they have contributed to their cause.

Next you know these reactionaries (or fellow travelers) will be denying that we have a shortage of unskilled labor or than importing unskilled labor is less than an unmitigated blessing.

[spencer]

Part of the argument about wages is that as individuals mature they get raises and promotions and earn higher incomes. The right argues that because of this average real income is not measuring the same people and is therefore biases down. But that is a phony argument. The average wage included everyone in 1975 and everyone in 2005 so it is measuring a sample of 20 years olds, thirty year olds ... and 60 year olds each time so it is measuring the same people.

Actually, because of the baby-boom bulge moving through the demographic bulge the actual data works against the right-wing argument. In the 1970s the baby boomers were in their 20s and earning a 20-somethings wage. Now, the baby boomers are in their 50s and earning a 50-somethings wage.
I calculated that over the last 30 years the bulge of baby boomers moving from being 20 something to being 50 something should have added almost two percentage points to the increase in real average hourly earnings over this period. Since it has not happened, the right wing argument that you are not measuring the same people in 1980 and 2005
means that the situation is worse then the actual average hourly earnings data shows.

[anne]

Spencer:

"Actually, because of the baby-boom bulge moving through the demographic bulge the actual data works against the right-wing argument. In the 1970s the baby boomers were in their 20s and earning a 20-somethings wage. Now, the baby boomers are in their 50s and earning a 50-somethings wage."

Cleverly done.

[James Killus]

Echoing what I said on a different comment thread, Kristol is a fifth-rate mind attracted to a third-rate ideology. I will note that he seems to be a legacy adherent, which makes his fifth-rate mind a matter of personal aspiration and achievement.