Category Archive for: Press [Return to Main]

Thursday, May 08, 2008

A "Misguided Attempt to Appear Unbiased"

Jeff Frankel reacts to Bryan Caplan's op-ed on the gas-tax holiday:

How Far the NYT had to go to Find an Economist to Support the Gas Tax Holiday, by Jeff Frankel: Economists frequently complain that even when 98% of the profession agrees on something (say a free-trade proposition), the media will go to lengths to dig up an economist from the 2% minority in order to balance one from the 98% majority, in its feverish and misguided attempt to appear unbiased and balanced on every issue, even issues that don’t really have two sides. The New York Times op-ed page has outdone itself today by publishing “The 18-cent Solution” by Bryan Caplan. The “callout” heading is “Found: an economist who backs the summer gas-tax holiday.” The impetus, of course, was the question posed to Hillary Clinton by a reporter: can you name a single economist who supports the idea of a summer gas tax holiday?

In this case, the NYT couldn’t find an economist who really takes the minority position on economic grounds, or even on reasonable political economy grounds. ...  Rather Caplan’s argument is a very convoluted political rationalization: (1) the high gas prices engender populist concerns that might lead to bad policies, (2) yes, a gas tax holiday is a bad policy, but (3) one can make a political argument for the gas tax holiday because it is not as bad as some of the other “populist nonsense: price controls, rationing, windfall profits taxes…” that we might get instead. This political argument is quite a stretch as it is, but he then goes on to make it truly absurd by supporting “a pairing of an excess profits tax with a gas tax holiday” on the grounds that it is not as bad as “an excess profits tax all by itself.” Apparently two bad policies is better than none! ...

Bryan Caplan is a perfectly competent economist, with a Ph.D. and a job and everything. ... Why would he spout the nonsense that is in this op-ed? The answer is very clear: it is the way to get into the New York Times. He gleefully admits as much on his blog today: “I’ve finally made the Gray Lady: Today’s New York Times features my op-ed inspired by Sunday’s post, I’ll Shill for Hillary. I hope critics don’t misrepresent me as an economic apostate; I’m not dissenting from the standard analysis… look on the bright side: I’m in the New York Times. Sweet!”

Bryan: A suggestion. You should now write a letter to the New York Times retracting your op-ed on the grounds that you should have known that readers would incorrectly infer that you were supporting the policy on economic grounds. [Arnold, can you help out here?] If you do this, the Club of Economists might let you back in. Plus, you will have gotten your name in the NYT a second time! Sweet!”

Saturday, April 19, 2008

About Those TV Generals...

This is about the "effort to dupe the American public with propaganda dressed as independent military analysis."

Continue reading "About Those TV Generals..." »

Friday, April 18, 2008

An Open Letter to ABC about the Presidential Debate

We the undersigned deplore the conduct of ABC's George Stephanopoulos and Charles Gibson at the Democratic Presidential debate on April 16. The debate was a revolting descent into tabloid journalism and a gross disservice to Americans concerned about the great issues facing the nation and the world. This is not the first Democratic or Republican presidential debate to emphasize gotcha questions over real discussion. However, it is, so far, the worst.

For 53 minutes, we heard no question about public policy from either moderator. ABC seemed less interested in provoking serious discussion than in trying to generate cheap shot sound-bites for later rebroadcast. The questions asked by Mr. Stephanopoulos and Mr. Gibson were a disgrace, and the subsequent attempts to justify them by claiming that they reflect citizens' interest are an insult to the intelligence of those citizens and ABC's viewers. Many thousands of those viewers have already written to ABC to express their outrage.

The moderators' occasional later forays into substance were nearly as bad. Mr. Gibson's claim that the government can raise revenues by cutting capital gains tax is grossly at odds with what taxation experts believe. Both candidates tried, repeatedly, to bring debate back to the real problems faced by ordinary Americans. Neither moderator allowed them to do this.

We're at a crucial moment in our country's history, facing war, a terrorism threat, recession, and a range of big domestic challenges. Large majorities of our fellow Americans tell pollsters they're deeply worried about the country's direction. In such a context, journalists moderating a debate--who are, after all, entrusted with free public airwaves--have a particular responsibility to push and engage the candidates in serious debate about these matters. Tough, probing questions on these issues clearly serve the public interest. Demands that candidates make pledges about a future no one can predict or excessive emphasis on tangential "character" issues do not. This applies to candidates of both parties.

Neither Mr. Gibson nor Mr. Stephanopoulos lived up to these responsibilities. In the words of Tom Shales of the Washington Post, Mr. Gibson and Mr. Stephanopoulos turned in "shoddy, despicable performances." As Greg Mitchell of Editor and Publisher, describes it, the debate was a "travesty." We hope that the public uproar over ABC's miserable showing will encourage a return to serious journalism in debates between the Democratic and Republican nominees this fall. Anything less would be a betrayal of the basic responsibilities that journalists owe to their public.

Spencer Ackerman, The Washington Independent
Thomas Adcock, New York Law Journal
Eric Alterman, City University of New York
Dean Baker, The American Prospect Online
Steven Benen, The Carpetbagger Report
Julie Bergman Sender, Balcony Films
Ari Berman, The Nation
Brian Beutler, The Media Consortium
Michael Bérubé, Crooked Timber, Penn. State University
Joel Bleifuss, In These Times
Sam Boyd, The American Prospect
Will Bunch, Philadelphia Daily News
Lakshmi Chaudry, In These Times
Michael Cohen, The New America Foundation
Lark Corbeil, Public News Service
Brad DeLong, Brad DeLong's Semi-Daily Journal and UC Berkeley
Adam Doster, In These Times
Kevin Drum, The Washington Monthly
Gerald Dworkin, UC Davis
Henry Farrell, Crooked Timber,George Washington University
James Galbraith, University of Texas at Austin
Todd Gitlin, Columbia University, TPM Cafe
Merrill Goozner (formerly Chicago Tribune)
Ilan Goldenberg, The National Security Network
Arthur Goldhammer, Harvard University
Robert Greenwald, Brave New Films
Chris Hayes, The Nation
Don Hazen, Alternet
James Johnson, University of Rochester
Michael Kazin, Georgetown University
Ed Kilgore, The Democratic Strategist
Charlie Kireker, Air America Media
Richard Kim,
The Nation
Ezra Klein, The American Prospect
Mark Kleiman, The Reality Based Community, UCLA
Ralph Luker, Cliopatria
Scott McLemee, Inside Higher Ed
Ari Melber, The Nation
Luke Mitchell, Harper's Magazine
Rick Perlstein, Campaign for America's Future
Katha Pollit, The Nation
Joy-Ann Reid, The South Florida Times
David Roberts, Grist
Thomas Schaller, Columnist, The Baltimore Sun
Adele Stan, The Media Consortium
Jonathan Stein, Mother Jones Magazine
Rinku Sen, ColorLines Magazine
Matthew Shugart, UC San Diego
Matt Steinglass, Deutsche Presse-Agentur
Mark Thoma, The Economist's View
Michael Tomasky, The Guardian
Cenk Uygur, The Young Turks
Tracy Van Slyke, The Media Consortium
J. Harry Wray, DePaul University
Kai Wright, The Root
Matthew Yglesias, The Atlantic Monthly

[Update: In case there is any confusion, I should have made clear that the letter is a group effort.]

Monday, April 14, 2008

"Obama, Bitterness, Meet the Press, and the Old Politics"

Robert Reich has something to say:

Obama, Bitterness, Meet the Press, and the Old Politics, by Robert Reich: I was born in Scranton, Pennsylvania, 61 years ago. My father sold $1.98 cotton blouses to blue-collar women and women whose husbands worked in factories. Years later, I was secretary of labor of the United States, and I tried the best I could – which wasn’t nearly good enough – to help reverse one of the most troublesome trends America has faced: The stagnation of middle-class wages and the expansion of poverty. Male hourly wages began to drop in the early 1970s, adjusted for inflation. The average man in his 30s is earning less than his father did thirty years ago. Yet America is far richer. Where did the money go? To the top.

Are Americans who have been left behind frustrated? Of course. And their frustrations, their anger and, yes, sometimes their bitterness, have been used since then -- by demagogues, by nationalists and xenophobes, by radical conservatives, by political nuts and fanatical fruitcakes – to blame immigrants and foreign traders, to blame blacks and the poor, to blame "liberal elites," to blame anyone and anything.

Rather than counter all this, the American media have wallowed in it. Some, like Fox News and talk radio, have given the haters and blamers their very own megaphones. The rest have merely "reported on" it. Instead of focusing on how to get Americans good jobs again; instead of admitting too many of our schools are failing...; instead of showing why we need a more progressive tax system to finance better schools and access to health care, and green technologies that might create new manufacturing jobs, our national discussion has been mired in the old politics.

Listen to this morning’s “Meet the Press” if you want an example. Tim Russert ... interviewed four political consultants – Carville and Matalin, Bob Schrum, and Michael Murphy. ... And what do Russert and these four consultants talk about? The potential damage to Barack Obama from saying that lots of people in Pennsylvania are bitter that the economy has left them behind; about HRC’s spin on Obama’s words (he’s an “elitist,” she said); and John McCain’s similarly puerile attack.

Does Russert really believe he’s doing the nation a service for this parade of spin doctors talking about potential spins and the spin-offs from the words Obama used to state what everyone knows is true? Or is Russert merely in the business of selling TV airtime for a network that doesn’t give a hoot about its supposed commitment to the public interest but wants to up its ratings by pandering to the nation’s ongoing desire for gladiator entertainment instead of real talk about real problems.

We’re heading into the worst economic crisis in a half century or more. Many of the Americans who have been getting nowhere for decades are in even deeper trouble. Large numbers of people ... are losing their homes and losing their jobs, and the situation is likely to grow worse. ...

Bitter? You ain’t seen nothing yet. And as much as people like Russert, Carville, Matalin, Schrum, and Murphy want to divert our attention from what’s really happening; as much as HRC and McCain seek to make political hay out of choices of words that can be spun cynically by the mindless spinners of the old politics; as much as demagogues on the right and left continue to try to channel the cumulative frustrations of Americans into a politics of resentment – all these attempts will, I hope, prove futile. Eighty percent of Americans know the nation is on the wrong track. The old politics, and the old media that feeds it, are irrelevant now.

The working class has been largely ignored by this administration, save a few tokens when elections are near, and that's what the questions ought to be about. What do each of the candidates plan to do to change the conditions that led to Americans being "more pessimistic about their situation than they have been for more than a quarter century"? How many times has McCain flip-flopped on economic policy? Does he have any plans at all to address these problems (beyond wishful thinking), or will he follow in this administration's footsteps on (the lack of) domestic policy? But no, instead, we get this drivel. The public has not been well served by a press that seems, as I watch CNN, to spend more time picking out their clothes than they do preparing to talk about issues, and they aren't even the worst offenders. I shouldn't be surprised, it happens every four years, but I hoped for better. I'm afraid old politics still works.

What do you think? Is Robert Reich right that economic conditions will nullify old politics and make this election different?

Thursday, March 27, 2008

A "53-Trillion Dollar Asteroid"?

This argues we should leave Social Security benefits alone:

Time to honour America’s debt to the retired, by John Shilling, Commentary, Financial Times: The first American baby boomers have now become eligible to retire and start drawing on Social Security... Many politicians are telling us that the resulting rise in Social Security “entitlement” payments will break the budget, so we have to cut benefits to retired people. But the politicians do not want to mention that the Social Security system has been compiling a huge surplus. Why? Because they have been using that surplus for years to hide the real size of the current federal budget deficit, allowing them to spend more and justify tax cuts for the wealthy. ...

Social Security was initially a pay-as-you-go system – annual payroll taxes of workers covered that year’s payments to retired people. By the early 1980s, however, it was clear that this system was not sustainable. Payments were increasing faster than revenues, and when the baby boomers started retiring and collecting pensions, there would be huge shortfalls. President Ronald Reagan had the prudence to address this problem early enough to make Social Security sustainable. ... Social Security payroll taxes were raised, creating a surplus in the trust fund that would fully cover the future costs of baby-boomer retirement. ...

Baby boomers, and all others who have worked since 1983, paid in more than needed for Social Security retirement payments. They saved and created the trust fund surplus, which now amounts to more than $2,000bn and must be invested in US Treasury bonds. It is projected to reach nearly $3,000bn in 10 years. Then Social Security will stop generating a surplus to subsidise the rest of the budget and will begin redeeming its bonds to help make payments.

Current projections show that the trust fund bonds may be exhausted by about 2041. The trust fund’s full sustainability for at least the next 75 years could be restored easily with minor adjustments...

Politicians understand that, with the Social Security Trust Fund surplus declining, they will no longer be able to borrow from them under the table while announcing fictitiously smaller deficits to justify continued expenditures and tax cuts. And they will have to generate funds from other sources of revenue to redeem the bonds after 2017. Rather than admit too much was borrowed recently, and must now be repaid, they want to reduce Social Security benefits. This puts much of the burden on the middle class, who created most of the surplus that has been used to hide the real size of the deficits.

Fundamentally, the Social Security issue is not one of “entitlements” but of the obligation of our government to honour its debt and not reduce Social Security benefits.

There has been lots written and discussed in the media on Social Security, but not nearly as much on the real problem, rising health care costs.

Maybe one reason people are so confused about about the Social Security funding issue and the degree to which it is a problem is due to imagery like this from supposedly trusted news sources:



The broadcast itself did mention health costs and Medicare, but it would have been difficult to tell from the broadcast, or from Wolf Blitzer's questions and presentation, that the rising cost of health care rather than Social Security is the source of the problems. And the interview with Glenn Beck didn't help at all.

Update: See pgl at Angry Bear who also noticed Beck's claim.

Thursday, January 03, 2008

"Not Remotely the Same as Good at Getting it Right"

Why oh why do I read anything at the NRO and, if I do, why do I ever bother with Jerry Bowyer? He says:

Gas Bags, by Jerry Bowyer, NRO: ...Gas-price hikes will never, ever, ever cut into consumer spending. It’s a mathematical impossibility. Here’s why: Gas prices are a component of consumer spending.

You see, when gas prices climb from $2 a gallon to $3 a gallon, one of the components of retail spending goes up. ...

Sure, if people spend more money on gas, they may very well spend less on soft drinks. But that’s a substitution, not a decrease in overall spending. The spending simply shifts from one retail category to another.

So why don’t we ever hear this? Well, with a few notable exceptions, mainstream TV commentators don’t know the facts, which often are buried in the details. You can’t just read a financial press release from a government organization (or worse yet, the blurb about the press release) and understand what the data are saying. A Larry Kudlow, a Steve Forbes, a Dan Yergin, a John Rutledge, an Art Laffer, a Brian Wesbury — these folks actually read the reports, including the tables in the back. They look at rows of numbers; in the case of a consumer-spending report, they note the row that is devoted to gas stations.

Meanwhile, the ... only numbers they master are the phone numbers of their favorite producers. Good at getting on the air is not remotely the same as good at getting it right.

He is arguing that input costs don't matter, but of course that's wrong. It's just not true that "Gas-price hikes will never, ever, ever cut into consumer spending," see the 1970s for one counterexample. Or do a simple thought experiment. If the price of oil went up to, say, $1,000 a barrel tomorrow, would real GDP stay at its current level, or might you expect a decline in GDP, in the short-run at least? And if GDP falls, then consumer spending will fall along with it.

Maybe the problem is that the people he so admires are simply looking at tables of numbers rather than doing actual econometric investigations solidly grounded in economic theory, something that involves more than, say, two lines drawn on a graph (see the completely uninformative graph he has plotted in this article for his latest along these lines - that graph tells us nothing whatsoever, but Bowyer appears to place great stock in the relationship between the two variables over the last 11 months - it's almost comical to see the graph put forward as serious analysis). Seriously, try doing actual econometric analysis instead of looking at "rows of numbers; in the case of a consumer-spending report, ... the row that is devoted to gas stations." Even when you try to get sophisticated and compare two rows at once, that isn't adequate (hey, both are going up!). Doing so leads to false conclusions like tax cuts pay for themselves because you haven't bothered to consider factors like trend growth in tax receipts (to name just one omitted variable in the typical "analysis").

Anyway, Bowyer - who isn't an economist but plays one at the NRO - should realize that "good at getting an article at the NRO is not remotely the same as good at getting it right," something he has shown time and again.

Update: PGL continues the discussion.

Friday, December 28, 2007

Bill Kristol To Become NY Times Columnist?

Wow. What's up with this?:

Bill Kristol To Become New York Times Columnist, by Danny Shea, Huffington Post: The Huffington Post has learned that, in a move bound to create controversy, the New York Times is set to announce that Bill Kristol will become a weekly columnist in 2008. Kristol, a prominent neo-conservative who recently departed Time magazine in what was reported as a "mutual" decision, has close ties to the White House and is a well-known proponent of the war in Iraq. Kristol also is a regular contributor to Fox News' Special Report with Brit Hume.

Monday, December 17, 2007

"What's the Difference between Bloggers and Illegal Immigrants?"

Andrew Leonard responds to George Borjas:

What's the difference between bloggers and illegal immigrants?, by Andrew Leonard: Of all the bonafide economists who blog regularly, Harvard's George Borjas gets the award for Most Single-minded Focus. Borjas' issue is immigration, especially illegal immigration. If you're looking for academic support for the thesis that immigration depresses the wages of native-born American workers, he's your man. He's also concerned about the cultural impact of Mexican immigrants (legal or illegal) who he thinks are not as likely to assimilate with mainstream America as has every other previous wave of immigrants to the United States. He's very consistent...

But it's hard to know what to make of one recent entry comparing bloggers to illegal immigrants.

Continue reading ""What's the Difference between Bloggers and Illegal Immigrants?"" »

Wednesday, December 12, 2007

"In Your Face" Political Television and Democracy

How well do "in your face" type televised political debates inform viewers about the content and legitimacy of each sides views?:

The effect of 'in your face' political television on democracy, EurekAlert: Television can encourage awareness of political perspectives among Americans, but the incivility and close-up camera angles that characterize much of today’s “in your face” televised political debate also causes audiences to react more emotionally and think of opposing views as less legitimate.

These findings come from a research project conducted by political scientist and communications scholar Diana C. Mutz (University of Pennsylvania) and published in the November issue of the American Political Science Review... The full article is available online.

Conflict is inherent in any democracy, but the legitimacy of democratic systems rests on the extent to which each side in any controversy perceives the opposition as having some reasonable foundation for its position. Mutz’s research investigates two key questions. First, does televised political discourse familiarize viewers with political perspectives they disagree with? Second, if so, do viewers perceive such oppositional views as more legitimate after seeing them hashed out on television?

Continue reading ""In Your Face" Political Television and Democracy" »

Sunday, December 02, 2007

You're Outta Here! (The Don't You Wish It Were True Edition)

And it's

one: Defending Goldman Sachs, by Dean Baker

two: Ben Stein Takes on Goldman and Loses, by Yves Smith

three: Ben Stein Watch: December 2, 2007, by Felix Salmon

strikes you're out... Update: Foul tip? That's nuts, the whole column was one big whiff, but, okay, strike three again...

three: What it takes, by Paul Krugman

With all the strikeouts he's had in the past, Stein ought to be pulled from the game permanently, but I have a feeling he'll be back to whiff another day.

Wednesday, November 07, 2007

Hurts So Good

Kevin Drum on Robert Samuelson's latest column, "Recession's Hidden Virtues":

The Great Depression Really Was Great!...., by Kevin Drum: Robert Samuelson looks on the bright side of the recession that he thinks is coming our way soon:

Recessions also have often-overlooked benefits. They dampen inflation. In weak markets, companies can't easily raise prices or workers' wages.

Stagnant wages are an "often-overlooked benefit" of recessions?

His basic argument seems to come down to recessions that aren't very bad aren't very bad. He even throws out the bad ones to make the point that mild recessions are mild:

[P]opular rhetoric exaggerates the damage. By and large, recessions are problems, not tragedies. Since World War II, there have been 10 of them, or one about every six years. On average, they've lasted 10 months... Disregarding two severe recessions -- those of 1973-75 and 1981-82 -- peak monthly unemployment has averaged 7.1 percent.

It is true that economic fluctuations have been less severe since 1984, but past performance is no guarantee of future results and I am not yet ready to declare that severe economic downturns are a relic of the past (though the same cannot be said for some columnists who still use notions of cost-push inflation arising from union power to explain inflation).

Friday, November 02, 2007

Paul Krugman: Prostates and Prejudices

Will the media call Rudi Giuliani on his repeated use of false claims to support is policy positions?:

Prostates and Prejudices, by Prostates and Prejudices, Commentary, NY Times: “My chance of surviving prostate cancer — and thank God I was cured of it — in the United States? Eighty-two percent,” says Rudy Giuliani in a new radio ad attacking Democratic plans for universal health care. “My chances of surviving prostate cancer in England? Only 44 percent, under socialized medicine.”

It would be a stunning comparison if it were true. But it isn’t. And thereby hangs a tale — one of scare tactics, of the character of a man who would be president and, I’m sorry to say, about what’s wrong with political news coverage. ... Mr. Giuliani’s claim is wrong on multiple levels — bogus numbers wrapped in an invalid comparison embedded in a smear.

Mr. Giuliani got his numbers from a recent article in City Journal, a publication of the conservative Manhattan Institute. The author gave no source for his numbers... And they’re just wrong.

You see, the actual survival rate in Britain is 74.4 percent. That still looks a bit lower than the U.S. rate, but the difference turns out to be mainly a statistical illusion. The ... chance of dying from prostate cancer is about the same in Britain as it is in America. So Mr. Giuliani’s supposed killer statistic about the defects of “socialized medicine” is entirely false...

Anyway, comparisons with Britain have absolutely nothing to do with what the Democrats are proposing. In Britain, doctors are government employees; despite what Mr. Giuliani is suggesting, none of the Democratic candidates have proposed to make American doctors work for the government.

As a fact-check in The Washington Post put it: “The Clinton health care plan” — which is very similar to the Edwards and Obama plans — “has more in common with the Massachusetts plan signed into law by Gov. Mitt Romney than the British National Health system.” Of course, this hasn’t stopped Mr. Romney from making similar smears...

But here’s what I don’t understand: Why isn’t Mr. Giuliani’s behavior here considered not just a case of bad policy analysis but a character issue?

For better or (mostly) for worse, political reporting is dominated by the search for the supposedly revealing incident, in which the candidate ... reveals his true character. And this incident surely seems to fit the bill.

Leave aside the fact that Mr. Giuliani is simply lying about what the Democrats are proposing; after all, Mitt Romney is doing the same thing.

But health care is the pre-eminent domestic issue for the 2008 election. Surely the American people deserve candidates who do their homework on the subject.

Yet what we actually have is the front-runner for the Republican nomination apparently basing his health-care views on something he read somewhere, which he believed without double-checking because it confirmed his prejudices.

By rights, then, Mr. Giuliani’s false claims about prostate cancer — which he has ... continued to repeat, along with some fresh false claims about breast cancer — should be a major political scandal. As far as I can tell, however, they aren’t being treated that way.

To be fair, there has been some news coverage of the prostate affair. But it’s only a tiny fraction of the coverage received by Hillary’s laugh and John Edwards’s haircut.

And much of the coverage seems weirdly diffident. Memo to editors: If a candidate says something completely false, it’s not “in dispute.” It’s not the case that “Democrats say” they’re not advocating British-style socialized medicine; they aren’t.

The fact is that the prostate affair is part of a pattern: Mr. Giuliani has a habit of saying things ... that are demonstrably untrue. And the American people have a right to know that.

It's blatant:

Rudy Campaign To Media: We're Going To Keep Lying About Health Care -- And There's Nothing You Can Do About It, by Greg Sargent: ...The Rudy campaign has now blithely confirmed that they are going to keep on telling this lie [about health care]. ...[C]heck out this little nugget at the end of the piece about Rudy spokesperson Maria Comella's response to all this:

Asked if Mr. Giuliani would continue to repeat the statistic, and if the advertisement would continue to run, Ms. Comella responded by e-mail: "Yes. We will."

Memo to media: Rudy and his campaign think you're a bunch of chumps. ... Maybe it's time to get serious about what this guy is up to. ...

Thursday, November 01, 2007

Swiftboating the Messenger

Michael Tomasky reviews Paul Krugman's book. This is a small part of a much longer review appearing in the New York Review of Books:

The Partisan, by Michael Tomasky, NY Review of Books - Review of Paul Krugman's "The Conscience of a Liberal": ...Many liberals would name Paul Krugman of The New York Times as perhaps the most consistent and courageous—and unapologetic—liberal partisan in American journalism. He has made his perspective on the Bush administration and the contemporary right, and on the need to see politics as a battle, manifestly clear in column after incendiary column. ...

But the pre-Bush Krugman was a quite different person. He was in those days far more prominently an economist than a polemicist... As such, he was not much involved in partisan politics. He was always a liberal, to be sure, and highly critical of supply-side economics. But he also disparaged economists to his left, especially opponents of free trade... In his 1994 book, Peddling Prosperity, Krugman had harsh words for liberal economists such as Robert Reich and Lester Thurow, who advocated selective protection from foreign competition, particularly from countries in which poor workers were harshly exploited. ... If you were a radical economist in those days, or a labor movement intellectual, or a left-leaning social scientist, chances are you weren't a big fan of Paul Krugman. ...

Krugman started writing in the Times on January 2, 2000. He made a point of challenging antiglobalization activists in his very first column. ... During that election year, he regularly and strongly criticized George W. Bush's tax-cut proposal and his opaque statements about Social Security. But he limited his critiques to economic policy and, compared to his Op-Ed-page colleagues, didn't write about politics all that often...

About Bush v. Gore, he had little to say. After Bush took office, he savaged the administration's regressive tax cuts. But it wasn't really until the fall of 2002, as the marketing of the Iraq war began in earnest, that he began broadening his criticism beyond economics to the war and the threats to civil liberties, extending his critique to the larger conservative movement and its modus operandi, and discussing the mainstream press's failure to report what was really going on right in front of their noses. It was around then that Krugman began producing with regularity the kinds of columns that whiz their way around the liberal blogosphere. ...

So Krugman came a bit late to the political trenches—and perhaps a bit reluctantly. Just as Arnold Schoenberg said of himself, when asked by a stranger if he was indeed the controversial composer, that "nobody wanted to be, someone had to be, so I let it be me," so I suspect Krugman might say that virtually no one on the leading Op-Ed pages was saying the things that so obviously needed to be said as the Iraq war approached, so he let it be himself who said them.

And now, after years of twice-weekly deadlines, he appears to have decided that there's no turning back: The Conscience of a Liberal, with its title so clearly aping and answering Barry Goldwater's from forty-seven years ago, represents Krugman's fullest embrace of his polemicist identity. ...

[T]he intensity of his discussion ... suggests something about the ways he has moved, in the last fifteen or so years, from being a center-left scholar to being a liberal polemicist. Those may seem like different identities. But perhaps also there is a consistency at work here. From what I have read of his economic writings, they are not unlike his columns, or his attacks on Reagan and the National Review in his book, in the sense that persuasion of people with very different views is at best of secondary interest to him. What is of interest to him is describing things as he believes they are.

In Washington, this earns one the epithet—as Washington prefers to think of it—"partisan." But too many people who are also granted valuable journalistic space spent the early Bush years in denial about the evidence that was accumulating right before their eyes, whether about official lies, or executive overreach, or rampant class warfare... Mildly deploring some of these excesses while accepting others is what is meant by bipartisanship today, and Krugman is right to have none of it. As a result he has left us a much more accurate record of the Bush years than, say, The Washington Post's David S. Broder, or some of his more celebrated New York Times colleagues...

And he has paid a price for "describing things as he believes they are" and not backing down. Here's Brad DeLong:

I guess it started, I think, with that extremely strange and not-very-analytical Svengali of the Bush Social Security reform plan, Peter Ferrara, ... back in 2001 ... denounced ..the highly irascible Paul Krugman...

That was, I think, the start of a very peculiar meme: a piling-on of critics of Bush--especially of Paul Krugman--whose sole criticism was that he was "shrill." The critique was neither that he was a bad economist, nor that his accusations that the Bush administration was lying about a whole bunch of stuff were incorrect... So if you wanted to attack Krugman, but could not attack him because his analytics were right, and could not attack him because his accusations of Bush administration dishonesty were correct, what can you do? Well, a bunch of right-wingers led, IIRC, by Mickey Kaus and Andrew Sullivan found a way.

Here's Kaus:

"Comparative Advantage" by Nicholas Confessore: "[Krugman] is obviously a very smart guy, basically liberal, with complicated views, who once recognized when his own side was wrong. And at some point he switched and became someone who only sees what's wrong with the other side, in fairly crude terms," says Mickey Kaus. "The Bush tax cut is based on lies. But it's not enough to criticize a policy to say that it's based on lies. You have to say whether it's good or bad for the country."

(Never mind, of course, that Paul always spent a lot of time, space, wordcount, energy, and breath criticizing the substance of Bush's idiot policies. Yes, they were bad for the country--and Paul said why.)

And here's Sullivan: - Daily Dish: I have long found Paul Krugman an insufferably pompous, shrill, Bush-bashing pseudo-populist...

The accusation--the only line of critique--is that Paul "only sees what's wrong with the other side, in fairly crude terms," or--in shorthand--is "shrill."

God alone knows why they thought this line of attack would do anything other than shred their own reputations. God knows why others took up this line of attack. But take off it did, both as a narrowly-focused attempt to degrade the reputation of Paul Krugman, and as a broader attempt to marginalize all who pointed out that the policies of the Bush administration were (a) stupid, and (b) justified by lies, and it took off both among the yahoos of the right and also among the denizens of the center-left.

Why did it take off? I think the reasons were well laid out by Nick Confessore:

"Comparative Advantage" by Nicholas Confessore: On balance, Krugman's record stands up pretty well. On the topics he writes about most often and most angrily--tax cuts, Social Security, and the budget--his record is nearly perfect. "The reason he's gotten under the White House's skin so much," says Robert Shapiro, a former undersecretary of commerce in the Clinton administration, "is that he's right. None of it is rocket science."

So if dismantling the facade of lies around, say, Bush's tax cut is so easy to do--and makes you the most talked-about newspaper writer in the country--why don't any other reporters or columnists do it themselves? Because ... Washington journalists ... usually don't call a spade a spade, unless the lie is small or something personal. When it comes to big policy disagreements, most reporters prefer a he-said, she-said approach--and any policy with a white paper or press release behind it is presumed to be plausible and sincere, no matter how farfetched or deceptive it may be.

Similarly, among pundits of the broad center-left, it's considered gauche to criticize the right too persistently, no matter the merits of one's argument. ...

This seemed to hit the nail on the head: it was (and is) considered impolite to take what the Bush administration said about the rationales for its policies seriously. Consider the Washington Post's Richard Cohen, sneering on September 16, 2004 at those who took Bush's impact on the country seriously:

I was only briefly enamored of George W. Bush... who went to war in Iraq for stated reasons that turned out to be baseless... neoconservative foreign policy agenda in which violence plays too prominent and casual a role.... chilled by assertions of near-royal power... choice of judges, his energy policy, his unilateralism or the manner in which he has intruded religion into politics.... I nevertheless cannot bring myself to hate Bush.... In fact, Bush haters go so far they wind up adding a dash of red to my blue...[1]

In this context, given that criticisms of George W. Bush and the malevolence, mendacity, incompetence and disconnection from reality of him and his administration are--no matter how sound their analytics or how true their factual claims--going to be dismissed by many as impolite and "shrill"...

Somebody needed to say the things Paul Krugman said. But I hear this so much - about the shrillness, about not doing economics anymore (which isn't true - e.g. for just one recent example, who do you think started the meme "non-bank bank run" in the recent financial crisis?), about how he needs more space to explain himself in more detail, how what he will say is predictable, he'll just bash Bush no matter the policy, etc., etc.

I don't have any substantive disagreements with Brad's take on this but I'm still not sure I fully understand it.

Maybe you can help me see this better. So here's the question. If you agree with Krugman's critics, even to a small degree, or even if you don't, how could he have been more effective? In his shoes, how would you have communicated the points he needed to make in a way that would have had more impact? I'm not convinced there is such an alternative path, but I'm curious to hear other thoughts.

Monday, October 29, 2007

"We Just Can't Afford to Cut Social Security Benefits Further"

Dean Baker is amazed:

The End Is Near! Post Publishes Column Defending Social Security, by Dean Baker: Is that a trumpet I hear in the distance? Why are the rivers flowing backwards? And who are those four guys on horses?

Yes, the Washington Post has published a column arguing against the Social Security crisis story. Robert Ball, the former Social Security commissioner, a member of the 1983 Greenspan commission, and a great defender of the system got 700 words in the paper this morning to make the case. Read it carefully, most of us will probably not live to see another such piece in the pages in the Post.

Here's the article:

A Social Security Fix For 2008, by Robert M. Ball, Washington Post: In the Oct. 19 editorial " Mr. Giuliani's No-Tax Pledge," The Post stated: "It's no more responsible for Republicans to rule out tax increases [to strengthen Social Security] than it is for Democrats to insist on no benefit cuts." The Post praised, as a "bipartisan blend," President Ronald Reagan's acceptance of a 1983 fix that included both.

I take exception. It's the essence of responsibility, in my view, to insist on no benefit cuts.

In 1983, I served on the National Commission on Social Security Reform (better known as the Greenspan Commission)... What was right in 1983 -- a balanced package of benefit cuts and tax increases as part, roughly half, of the final agreement -- would be wrong today.

Social Security benefits are modest by any measure and are already being cut -- by raising the age of eligibility for full benefits and by deducting ever-rising Medicare premiums from benefit checks. So the benefits provided for under present law will replace, on average, a lower percentage of prior earnings than in the past. To cut them further would undermine all that Social Security has achieved -- exposing millions of vulnerable people, both elderly and disabled, to needless economic hardship.

Social Security has never been more important to more Americans than it is now. Private pension plans continue to dwindle -- currently covering only about 20 percent of private-sector employees -- and the national rate of savings hovers around zero. We just can't afford to cut Social Security benefits further. ...

Social Security benefits are vital... About a third of the elderly rely on Social Security for 90 percent or more of their income; two-thirds count on it to supply at least half of their income. The program lifts 13 million elderly beneficiaries above poverty.

Without Social Security, 55 percent of the disabled -- and a million children -- would live in poverty. The program is particularly important to women and minorities. It provides 90 percent or more of the incomes of almost half of all unmarried women age 65 and older..., and it is the sole source of income for 40 percent of elderly African Americans and Hispanic Americans.

Social Security is the nation's most effective anti-poverty program. But it's much more than that. For every worker it provides a solid base on which to try to build an adequate level of retirement income. To weaken that foundation would be grossly irresponsible.

The good news is that there's no need to weaken it. ... The program can be brought into close actuarial balance over the long run with just three revenue-enhancing changes that are desirable in any case:

Gradually increase the maximum amount of earnings covered by Social Security so that the traditional goal -- covering 90 percent of all earnings -- is once again achieved. This change would affect only the 6 percent of earners...

Allow Social Security to improve earnings by investing some of its assets -- up to 20 percent, say -- in equities, as just about all other public and private pension plans do.

Provide a new source of income by retaining a residual estate tax and dedicating it to Social Security. ... Dedicating the income from the tax to Social Security would considerably improve the progressivity of Social Security financing as well as increasing revenue.

Presidential candidates should be expected to discuss Social Security financing. But in 2008 they shouldn't be held to a 1983 formula. We're in a different time, with different needs -- and there are much better options available than benefit cuts.

Saturday, October 27, 2007

"Where Does the Right-Wing End and the Media Begin?"

This is part of an interview with Paul Krugman on the relationship between the right-wing and the media, and other matters:

Where Does the Right-Wing End and the Media Begin? By Rory O'Connor, AlterNet: I had the opportunity to sit down this week with ... Paul Krugman... He certainly pulled no punches during our conversation...

Rory O' Connor: ...What role if any do the media play in movement conservatism?

Paul Krugman: The media are a very important force... They shape perceptions, and they conceal issues. Look at the 2000 presidential campaign, for example, where the media were so heavily biased against Al Gore. That's what brought Bush to within a Supreme Court decision of the White House. ...[T]he role of the media in not telling you reasons why you should be skeptical about the course of the war, for example, it's enormously important. ...

[T]here are several major parts of the news media that are for all practical purposes part of "movement conservatism" -- Fox News, the New York Post, the Washington Times -- and in which other news organizations are intimidated, at least to some extent. I sometimes talk about ... "asymmetrical intimidation." If you say a true but unflattering thing about Bush or in fact about any other prominent conservative, oh, boy! People are going to go after you. I mean, I've got people working full-time going after me, right? But if you say a false, unflattering thing about a Democrat or a progressive, no risk ... And that shapes coverage, no question about it. It's better now, but it's still very asymmetric. The other thing ... about the media is their addiction to the trivial. We've got the most substantive election coming up, I think, ever. ... And what are we seeing news stories about? John Edwards' hair and Hillary Clinton's laugh ... this is horrifying! And again -- it's asymmetric. ...

ROC: It sounds like you're saying there's a bias in the media. If you are, what is the bias?

PK: The media's bias, a large part of it is in fact right-wing bias, because they are effectively part of the right wing. Fox News ... there's ... no liberal equivalent..., there is no network that, if a conservative got the Nobel Peace Prize, would have responded the way Fox News did to Al Gore's Peace Prize...

Beyond that, there's two things at least; first, the hatred of substance -- they really want to talk about all that trivia -- and there's also the fetish of evenhandedness. ... Way back in the 2000 campaign, I wrote ... that if Bush said the earth was flat, the headline would read: "Opinions Differ on Shape of the Planet." I was thinking specifically about what Bush was saying about taxes and Social Security, which were just out and out lies! But no one would say that, and they still won't. It's better now, a little, but they still won't say it... [T]he Big Lies are all on the right right now. So it works much more to their advantage.

ROC: Do you think it's possible that economics is driving politics in the media?

Continue reading ""Where Does the Right-Wing End and the Media Begin?"" »

Monday, October 22, 2007

The Great Lie of Supply-Side Economics

I am very pleased to see this, and not just because there's a link to this site. I've been frustrated with the press on the 'Laffer curve, tax cuts have paid for themselves' issue because the press has enabled a big lie. It's a lie Republican candidates, even the president, can still repeat with very little attention from the mainstream media. No matter how often reputable economists on the right and the left have said this is a lie, the press has ignored it and allowed it to continue unquestioned. Some of you around here are probably tired of hearing about it (though see here), but it's a lie with consequences. The tax cuts that went through were sold on false premises - what it costs us is far greater than advocates said, advocates who claimed it would actually increase revenue and cost us nothing. It does cost us, hundreds of billions of dollars so far, and that cost has not been presented honestly to the public by either the advocates of the tax cuts or the press reporting on the issue. Without an adequate understanding of the true costs, the public discussion on the issue is distorted and the result is bad public policy.

The big lie matters, and the sooner the press starts to call politicians on it, the better for us all. There are encouraging signs, Jon Chait's recent book being one example and this being another, but it's still possible to tell the lie with little consequence from the mainstream media. Here's James Surowiecki (whom I've come to respect as an excellent reporter on economics):

The Tax Evasion: The Great Lie of Supply-Side Economics, by James Surowiecki, The New Yorker: In American politics, supply-side economics is the monster that will not die. The supply-side argument that, in the United States, tax-rate cuts pay for themselves ... has little or no support within the mainstream economic profession, and no hard empirical data to back it up. Myriad studies have demonstrated that both the Reagan tax cuts of the nineteen-eighties and the tax cuts put through under the current Administration shrank government revenues and led to bigger budget deficits.

Yet the absence of proof for supply-side theory has not dimmed Republicans’ devotion to it. Last month, President Bush told Fox News that his tax cuts had “yielded more tax revenues, which allows us to shrink the deficit.” Dick Cheney insists that “sensible tax cuts increase economic growth and add to the federal treasury.” Every major Republican Presidential candidate ... is on the record as saying that tax cuts pay for themselves. And, just last week, a New York Sun editorial published a list of what “the Republican Party stands for.” First on the list? “Reductions in top marginal tax rates . . . lead to greater government revenues in the long run.”

This supply-side orthodoxy is striking in a couple of ways. First, it requires Republican politicians to commit themselves publicly to a position that is wrong—and wrong not as a matter of ideology or faith but as a matter of fact. ... Second, despite the fact that the supply-side faith has no grounding in reality, within the Republican Party there is little room for dissent on the subject, as Jonathan Chait details in his new book, “The Big Con.” Last week, the blogger Megan McArdle wrote that she had a book review for an unnamed right-wing publication spiked because in it she dared suggest that, in the U.S., tax cuts decreased government revenues.

The cynical explanation for the persistence of the supply-side dogma is that it’s simply cover for cutting taxes for the rich. But the supply-side orthodoxy has flourished for other reasons, too. To begin with, the absurd idea that tax cuts pay for themselves is based on an idea that is not at all absurd, which is that tax rates can have an impact on people’s behavior. Increase taxes too much, and people may work less ... and invest less..., and so the economy will grow more slowly. The opposite can happen if you cut taxes. (How much of an impact tax rates have ... is a subject of much debate in economics, but it’s inarguable that they do matter.) What supply-siders have done is start with that reasonable idea and extrapolate it to unreasonable lengths.

They’re aided in that extrapolation by the simple fact that the American economy grows over time. As a result, even if you cut taxes the federal government will eventually take in more tax revenue than it once did. And that allows supply-siders to fashion a spurious syllogism: taxes were cut in 2001, government revenues are higher in 2007 than they were in 2001, therefore the tax cuts increased revenue. The comparison that really matters in analyzing the impact of the tax cuts, of course, is ... the comparison between actual tax revenue in 2007 and what tax revenue would have been in 2007 had there been no tax cuts in 2001. And studies that make these types of comparisons—including one by Bush’s own Treasury Department ... find that government revenues would be greater had taxes not been cut. But that hasn’t stopped President Bush from claiming victory.

In one sense, of course, it’s odd that a Republican President should treat higher government revenues as a point of pride. Historically, after all, Republicans have been the party of small government...

The conservative pundit Larry Kudlow recently attacked the Republican candidates for failing, in their most recent debate, to explain what spending cuts they would advocate to accompany the tax cuts they propose. But Kudlow should hardly have been surprised, because supply-side rhetoric suggests that spending cuts aren’t really necessary. ... This tax-cut-and-spend approach is the promise of a free lunch, something that voters like to hear. The appeal of that promise may make it easier for politicians to run a campaign. But the fraudulence of the promise makes it awfully hard to run a government.

Update: Maybe I spoke too soon:

The Case of the Missing Surowiecki Column, by Felix Salmon: Memo to Jeff Bercovici: What's with Jim Surowiecki's column in this week's New Yorker? It's right there on the website – complete with no fewer than nineteen hyperlinks. (Someone give this guy a blog!) But it's in the "online only" section: if you pick up the actual magazine, it skips straight from the Talk of the Town section to the feature well, which means that Surowiecki's "Financial Page" is a page only in metaphor.

The most charitable explanation I can think of is that the New Yorker decided the column was simply too reliant on its hyperlinks to work in print. But if that's the case, why didn't they just ask Surowiecki to write a different column, or to rewrite this one so that it worked in print form? ...

I can't remember Surowiecki ever being banished from the print edition like this before, which is why it's so bittersweet to read this, from Mark Thoma:

I am very pleased to see this, and not just because there's a link to this site. I've been frustrated with the press on the 'Laffer curve, tax cuts have paid for themselves' issue because the press has enabled a big lie. It's a lie Republican candidates, even the president, can still repeat with very little attention from the mainstream media. No matter how often reputable economists on the right and the left have said this is a lie, the press has ignored it and allowed it to continue unquestioned.

He's writing, of course, about Surowiecki's column, which is about supply-side economics. And it turns out that the one time he singles out "the press" for praise in exposing the lie is also the one time that the article remains unprinted by any physical press.

Friday, October 19, 2007

"Debunking Myths Can Backfire" wonders if debunking false and misleading claims does more harm than good:

Cognitive Science and, or Why We (Still) Do What We Do, by Joe Miller, Have you heard about how Al Gore claimed to have invented the Internet? What about how Iraq was responsible for the attacks on the World Trade Center? Or maybe the one about how George W. Bush has the lowest IQ of any U.S. president ever? Chances are pretty good that you might even believe one (or more) of these claims. And yet all three are false. At our stock in trade is debunking these sorts of false or misleading political claims, so when the Washington Post told us that we might just be making things worse, it really made us stop and think.

A Sept. 4 article in the Post discussed several recent studies that all seemed to point to the same conclusion: Debunking myths can backfire because people tend to remember the myth but forget what the debunker said about it. As Hebrew University psychologist Ruth Mayo explained to the Post, “If you think 9/11 and Iraq, this is your association, this is what comes in your mind. Even if you say it is not true, you will eventually have this connection with Saddam Hussein and 9/11.” That leaves myth busters like us with a quandary: Could we, by exposing political malarkey, just be cementing it in voters’ minds? Are we contributing to the problem we hope to solve?

Possibly. Yet we think that what we do is still necessary. And we think the facts back us up.

The Post story wasn’t all that surprising to those who follow the findings of cognitive science research, which tells us much of our thinking happens just below the level of consciousness. The more times we hear two particular bits of information associated, for example, the more likely it is that we’ll recall those bits of information. This is how we learn multiplication tables – and why we still know the Big Mac jingle.

Our brains also take some surprising shortcuts. In a study published in the Journal of Personality and Social Psychology, Virginia Tech psychologist Kimberlee Weaver shows that the more easily we recall something the more likely we are to think of it as being true. It’s a useful shortcut since, typically, easily recalled information really is true. But combine this rule with the brain’s tendency to better remember bits of information that are repeated frequently, and we can run into trouble: We’re likely to believe anything we hear repeated frequently enough. At we’ve noted how political spin-masters exploit this tendency ruthlessly, repeating dubious or false claims endlessly until, in the minds of many voters, they become true. Making matters worse, a study by Hebrew University's Mayo shows that people often forget “denial tags.” Thus many people who hear the phrase “Iraq does not possess WMDs” will remember “Iraq” and “possess WMDs” while forgetting the “does not” part.

The counter to this requires an understanding of how it is that the brain forms beliefs.

Continue reading ""Debunking Myths Can Backfire"" »

A Unified Voice is Not Always a Good Thing

They're already bigger than they ought to be, but Big Media wants to get even bigger and FCC chairman Kevin Martin is doing his best to quietly aid and abet the cause:

Stopping the press barons, by Robert McChesney, Guardian: Yesterday, the New York Times revealed that Federal Communications Commission (FCC) chairman Kevin Martin is rushing through a plan to rewrite media ownership rules by the end of the year, making it possible for the biggest media companies to continue their march toward consolidation. And he's doing it without giving the public a fair chance to respond.

The FCC under then-chairman Michael Powell tried to do this in 2003, and nearly 3 million people rose up in protest. This massive public outcry forced ... the agency back to the drawing board. But in a move that even Powell calls "courageous," Martin is trying to quickly and quietly ram through this massive giveaway before the Bush administration leaves office. ...

During his tenure at the FCC, Martin has consistently gamed the regulatory process - hiding research, leaking sensitive information to industry lobbyists, pushing forward a biased research agenda and making critical decisions in secret - while putting up an official façade of proper procedure.

Fortunately, some members of Congress have had enough of this regulatory subterfuge. Democratic senator Byron Dorgan of North Dakota ... teamed up with Mississippi Republican senator Trent Lott in a letter warning Martin to "slow down" and "proceed with caution."...

These senators prove that media is not a left-right issue, but one of concern to people from all walks of life. It is simply unacceptable for a self-governing people to tolerate any public policies that reduce the diversity of opinion in our democracy. ...

Americans ... frustrated by what is happening to news and journalism in this country ... witness every day how celebrity nonsense, talking head shouting matches and glorified stenography dominate the news.

The poverty of news content is not the fault of work-a-day journalists - among the most hardworking people on the planet. The problem sits squarely on the shoulders of public policies that make it good business to form massive media conglomerates whose mission is to cut costs, shed reporters and reduce output to the lowest common denominator.

But when the spotlight is put on the process, the public interest always wins. It is why corrupt insiders work so hard to keep the policymaking process hidden behind closed doors, and then try to pollute public discourse with the most outrageous, misleading propaganda.

Media ownership is a citizen issue of urgent importance - consolidation is a one-way street and there's no turning back. Rich media equals poor democracy.

You can't take your eyes off Bush appointees even for a moment, can you? We need more competition in this industry, not less, that's pretty clear.

Wednesday, October 10, 2007

"His Writing Often Makes Me Cringe"

Jagdish Bhagwati says contrary to what you might hear, "free trade is alive and well among economists":

The free trade perspective lives on, by Jagdish Bhagwati, Commentary, Financial Times: Turn to the leading US newspapers these days and you will read about the ... “loss of faith”... in free trade by economists. Many write about free trade in funereal overtones. Yet... The truth of the matter is that free trade is alive and well among economists. ...

Such media stories ... have been recurrently written in the past 20 years. There have been three episodes in recent years when false notes of alarm were sounded over free trade.

The most striking dissent over free trade, the equivalent of a category five storm, came from Paul Krugman. He extended the theory of imperfect competition to international trade and began to argue in the late 1980s that “free trade was passé after all”. The effect on the media, and on the opponents of free trade, was electric, largely because the rise of Japan, and the allegations that it was protectionist...

Mr Krugman was right at the level of theory..., imperfect competition among producers could undermine the case for free trade... But eventually Mr Krugman and other trade economists came back to free trade, abandoning [protectionists]... to twist in the wind. Some returned to the fold by saying that ... the product market imperfections were, on empirical investigation, not substantial enough to warrant departing from free trade. Others, Mr Krugman among them, bought into the conservative argument that protection in practice would make matters worse, not better.

The protectionists who had celebrated Mr Krugman as their icon were disappointed, even furious...

[T]he rise of India and China would lead to another category five storm. This time, it came from the Nobel laureate, Paul Samuelson. Writing in ... summer 2004..., he argued that the advocates of globalisation were ignoring the reality that the rise of India and China would mean that the welfare of the US could take a hit. ... But, Mr Samuelson was careful to note that this did not mean that ..[we] should respond by shutting off trade: that would only deepen the anguish.

Yet the protectionists thought that they had another icon ... in their camp...; and there were numerous stories again in the media.... As the truth of the matter became manifest in the media, with many trade economists challenging the self-serving distortions by protectionists, the free trade consensus was again seen to be robust and the protectionist buzz died down.

But then the US media went back to the well for a third time when the macroeconomist, Alan Blinder, published an essay in ... April 2006... that bought into the line that outsourcing of services via the internet would increasingly export American jobs to other countries and imperil the US and its working and middle classes. So he was now the new icon for the protectionists. ...

Mr Blinder, when challenged, shifted ground to arguing that, as services became tradeable online, the number of jobs that would become “vulnerable” would rise pari passu, requiring adjustment assistance. However, there is hardly any serious trade economist who has objected to providing adjustment assistance. ...

Mr Blinder, who started talking poetry, has therefore wound up talking prose. We free traders have no problem with him as he backs into our corner. But if he is to remain the new icon for those who oppose free trade, they have to be pretty desperate.

Apparently those were happier times for Paul Krugman:

What makes me happy: So, I was teaching one of my classes..., and somehow the subject veered off into monetary policy and the lessons of Japanese experience ... in the 90s.

And one of my students said, “You look so happy!”

It’s true: back in the 90s, when I was writing about Japan’s liquidity trap and other overseas problems, were good years. My own country was governed by responsible people; we were actually having policy discussions based on intelligent, if differing, viewpoints. The truth is that I don’t like having to do what I do in the Times, pointing out lies and corruption all the time. I wish we were having a civilized discussion. But we aren’t.

Here is Dani Rodrik's reaction to Jagdish Bhagwati's column:

Bhagwatian rhetoric: Jagdish Bhagwati is a sweet and courteous man in private, but his writing often makes me cringe. That is not because I frequently disagree with him, but because of the rhetoric he uses to attack his intellectual opponents. It's as if he has an evil twin that sometimes takes control of his writing hand. Recent example in point: his op-ed in the FT where he takes Alan Blinder to task for what Bhagwati claims is Blinder's about-face on trade. "We free traders," Bhagwati writes, "have no problem with him as he backs into our corner."

"We" free traders? "Our" corner? If you wanted evidence that orthodox trade economists form an exclusive club and speak in a single voice, could you get any better than this?

And Blinder "backs" himself into a corner? Am I the only one who thinks that Bhagwati's language does not aid his cause?

I've asked the same question about William Easterly's writing. If he is writing to other economists, I think Dani is correct, this may not be the best way to make friends and influence people. And it sounds like Jagdish is "a sweet and courteous man" when discussing issues with colleagues.

But if your audience is much wider than economists and largely includes people who are unfamiliar with names like Blinder and Samuelson, I'm not sure the same cringe factor is there. It's different when the people are unknown, just names in a newspaper column, and for most of the audience that's all they are. He is telling the world about economists and trying to convince them that his view, the free trade view, is correct and widely supported in the profession. His words have to somehow stand out and be noticed amid all the information people are bombarded with daily. I don't know for sure what style is best, what allows a voice to be heard above all the others, and maybe my view is shaped by the fact that I don't think I'm aggressive enough for the most part (though there is that Laffer curve thing), but I'm not convinced that this approach is as detrimental to his cause as Dani is.

I'm not saying I don't wish we were having civilized discussions all the time, I do, I'm just not sure that's the best way to get the word out and prevail in today's "he said-she said" media environment. But in any case, this is something Paul Krugman hears a lot too and I think Dani's question about what it takes to be effective at persuasive communication in the media is a good one.

Friday, October 05, 2007

Newspapers in the Digital Age

Way back in ancient times when I was a kid, TV came to your house through an antenna on the roof. Watching TV wasn't free, of course, you had to buy a TV, the antenna (and maybe a fancy device to turn it toward the signal), but you didn't have to pay for the signal itself. TV stations made money by embedding advertising in the signal so that watching TV meant watching the ads too, and the more people that watched a show the more money that could be charged for advertising during the broadcast.

I've been wondering why newspapers and other print media don't follow a similar model with blogs. If you go to, say, YouTube or Google video, for bloggers using standard software it's pretty easy to post a video on your blog. You click on a button, enter the name of your blog, give it the password, a title, and some text, and it posts to your blog automatically. It's really easy (and you can get the computer code as well if you prefer, as I do, to post things yourself).

Why don't newspapers and magazines do this, but embed ads in the articles just as ads are embedded in TV programs? Suppose you see an Op-ed you want to post on your blog. Just as with YouTube or Google video, there could be a button at the bottom of each article to push to post the article to your blog. In the article, or beside the article in the sidebar, ads would appear (my preference would be to give up sidebar space for Google style ads that run beside the article). The agreement would be that you can run the articles freely so long as the ads are there.

This seems to have lots of advantages. Newspapers would increase their circulating substantially as their articles went out to all the blogs, and since the ads would accompany the articles their ad revenue ought to increase. People running blogs would have free access to content without worry about copyright, etc., allowing them to collect information from various publications and specialize in particular topics (e.g. economics). Newspapers would, essentially, be like TV stations of old and blogs would play the role of TVs (though with more specialization) and receive and show the content along with the embedded ads.

What am I missing about the economics that would make this infeasible?

Sunday, September 30, 2007

Ben Stein Watch: The Inaugural Edition

Ben Stein has Felix Salmon so upset that he has lost track of what month it is. I have to admit that I didn't actually read Stein's column, and still haven't, thereby avoiding a similar fate:

Ben Stein Watch: October 30, 2007, by Felix Salmon: I'm a uniter, not a divider. I'm a lover, not a fighter. I don't like to engage in the politics of personal destruction. But as Jonathan Landman might say, we have to stop Ben Stein from writing for the Times. Right now. And so, by popular demand, the first weekly Ben Stein Watch.

Stein uses his column this week to ask a question: "Is It Responsible to Shun Military Contractors?". Stein is a believer that investing isn't just about money:

I certainly believe in socially responsible investing for myself. I sold my tobacco shares long ago. (They have done fantastically well since then, but I don't regret my decision.)

Unfortunately, Stein doesn't tell us why he sold his tobacco shares. So we're going to just have to take a wild guess: maybe it's because cigarettes kill people?

Yet somehow Stein just can't comprehend why some socially responsible investors don't want to invest in arms manufacturers. "I don't understand this whole attitude," he writes. "Maybe someone can explain it to me."

Here, Ben, let me try, in words of one syllable:

Guns and bombs kill people.

Oh, damn, "people" is two syllables.

But let me rewind, to the very first sentence of Stein's column:

Henry Blodget should have started out as a writer.

I might point Stein to the second sentence of Blodget's wikipedia page:

Blodget received a Bachelor of Arts degree from Yale University and began his career as a freelance journalist and was a proofreader for Harper's Magazine.


Stein finishes up his column seemingly asking the SEC to regulate everything that absolutely anybody might conceivably invest in. He doesn't claim that this massive expansion of regulatory responsibilities would do any good, mind you; he just ends his column, cryptically enough, by saying that "the ladder of law should have no top and no bottom." It's a Bob Dylan lyric which Stein obviously loves, since this is the second time this year he's trundled it out.

So here's my idea. Since Stein clearly isn't being featured in the business section on the grounds of his economic expertise, he's obviously got this gig on the grounds of his celebrity status. Maybe the Times has no desire to replace Stein with someone (like DeLong, say) who actually knows what he's talking about - what they want is a writer who's vaguely familiar with economic concepts but who's also something of a household name. My suggestion: Bob Dylan.

Thursday, September 20, 2007

Are You Journalists or Theater Critics?

Paul Krugman gives us a taste of what is blog will be like:

What I Hate About Political Coverage, by Paul Krugman: Warning: this is a bit (actually, more than a bit) of a rant.

One of my pet peeves about political reporting is the fact that some of my journalistic colleagues seem to want to be in another business – namely, theater criticism. Instead of telling us what candidates are actually saying – and whether it’s true or false, sensible or silly – they tell us how it went over, and how they think it affects the horse race...

There are two big problems with this kind of reporting. The important problem is that it fails to inform the public about what matters. ... The other problem, which has become very apparent lately, is that this sort of coverage often fails even on its own terms, because the way things look to inside-the-Beltway pundits can be very different from the way they look to real people.

Which brings me to the Petraeus hearing.

To a remarkable extent, punditry has taken a pass on whether Gen. Petraeus’s picture of the situation in Iraq is accurate. Instead, it was all about the theatrics – about how impressive he looked, how well or poorly his Congressional inquisitors performed. And the judgment you got if you were watching most of the talking heads was that it was a big win for the administration – especially because the famous MoveOn ad was supposed to have created a scandal, and a problem for the Democrats.

Even if all this had been true, it wouldn’t have mattered much: if the truth is that Iraq is a mess, the public would find out soon enough, and the backlash would be all the greater because of the sense that we had been deceived yet again.

But here’s the thing: new polls by CBS and Gallup show that the Petraeus testimony had basically no effect on public opinion: Americans continue to hate the war, and want out. The whole story about how the hearing had changed everything was a pure figment of the inside-the-Beltway imagination.

What I found striking about the whole thing was the contempt the pundit consensus showed for the public – it was, more or less, “Oh, people just can’t resist a man in uniform.” But it turns out that they can; it’s the punditocracy that can’t.

"To a remarkable extent, punditry has taken a pass on whether Gen. Petraeus’s picture of the situation in Iraq is accurate." We'll hear a lot more about whether the evidence in the OJ trial is accurate than we'll ever hear about the accuracy of the evidence that Petraeus presented in his testimony. That's pretty sad.

Sunday, September 16, 2007

What Did Greenspan Say and When Did He Say It?

[Originally posted April 26, 2005] Yesterday, in this post, I discussed a Washington Times editorial attempting to absolve Alan Greenspan of responsibility for playing a role in promoting tax cuts that led to the current budget deficit. Quoting from the editorial:

Mr. Greenspan told Mr. Sarbanes that the charge was "frankly unfair" because it neglected the Fed chairman's unambiguous endorsement of "trigger" mechanisms during the same testimony. "I advocated tax cuts" in 2001, Mr. Greenspan acknowledged Thursday, "but I also advocated triggers in the same testimony."

Did he advocate triggers? While that term is not used directly in his testimony, it is used in a CBS report noted below, the only report I could find explicitly discussing spending restraint mechanisms, and Greenspan does say:

… In recognition of the uncertainties in the economic and budget outlook, it is important that any long-term tax plan, or spending initiative for that matter, be phased in. Conceivably, it could include provisions that, in some way, would limit surplus-reducing actions if specified targets for the budget surplus and federal debt were not satisfied. Only iaf the probability was very low that prospective tax cuts or new outlay initiatives would send the on-budget accounts into deficit, would unconditional initiatives appear prudent. … Indeed, the current economic weakness may reveal a less favorable relationship between tax receipts, income, and asset prices than has been assumed in recent projections. … But the risk of adverse movements in receipts is still real, and the probability of dropping back into deficit as a consequence of imprudent fiscal policies is not negligible.

But let me end on a cautionary note. With today's euphoria surrounding the surpluses, it is not difficult to imagine the hard-earned fiscal restraint developed in recent years rapidly dissipating. We need to resist those policies that could readily resurrect the deficits of the past and the fiscal imbalances that followed in their wake.

In my view, he does add quite a bit of caution regarding slipping back into large deficits, cautions that, as noted below, were not reported widely in the press. So, as far as it goes, the Washington Times editorial is correct.  He did talk about mechanisms to restrain spending and warned about the return of deficits.

However, it is also my view that this does not absolve him of responsibility. ... He knew that a zero budget target ... would create deficit problems in the future, but he did not protest. ... From the time of Greenspan’s testimony on January 25, 2001 until now, the press has missed what Greenspan was really talking about. He was afraid of a large surplus building up and the effect that would have on the private market when the government invested the large surplus in the private sector. To avoid this problem, his solution was to accumulate the Trust Fund surplus in private accounts so that individuals rather than the government would participate in the private market, and to cut taxes. At the time, Krugman stated in a column in the NY Times:

Some people — including, alas, Alan Greenspan — have made it seem as if any purchase of private-sector assets by the trust funds would instantly politicize the financial markets and undermine the foundations of the free-enterprise system. But that's ideology, not analysis; people who have looked seriously at the issue think that these concerns are vastly overblown. There are well-established techniques for protecting government investment accounts from political meddling, such as legal requirements that the funds buy a broad index. Are these techniques imperfect? Maybe — but who would argue that rather than running some slight risks of politicizing the markets, we should squander the money that was supposed to pay for our retirement?

Only a politician with an irresponsible tax cut to sell.

However, when the economy began slipping into deficit and the Trust Fund assets were evaporating, Greenspan did not protest, and importantly, neither did the press.

Continue reading "What Did Greenspan Say and When Did He Say It?" »

Saturday, September 01, 2007

It's Always a Mistake

This is Brad DeLong's fault. In reference to a Larry Kudlow article he said:

It is always a mistake to surf over to National Review. Always.

So, of course I had to go see what Larry Kudlow said to generate Brad's comment.

Continue reading "It's Always a Mistake" »

Thursday, August 09, 2007

Bruce Bartlett: Talking Heads

Bruce Bartlett on "talking heads" in the news media:

Talking Heads, by Bruce Bartlett: In this morning's Wall Street Journal, my friend Brian Wesbury complains about the "talking head" culture on business television where every interview seems designed to provoke debate. If one of the guests is a bull, Brian says, then the other has to be a bear. If there is only one guest, he says, the interviewer generally plays Devil's advocate.

The result, Wesbury says, is that viewers are often misled into thinking that there is a great deal of disagreement among economists when in fact there may be a virtual consensus. By seeking out a few incompetents or cranks just to have "balance" and create sparks, news shows may be unintentionally misleading viewers by implying that isolated views that are well outside the mainstream actually have validity. ...

This is a pet peeve of my own and a reason why I avoid these sorts of programs. One thing that annoyed me particularly was that the producers would often put me up against some total nobody who had no clue about what he was talking about. In one case--I kid you not--I debated the minimum wage with an honest-to-God, fresh-off-the-streets homeless person. I refused to ever appear on that channel ever again and it eventually went off the air. ...

I don't mind debating those whose views are diametrically opposed to mine. In fact, I enjoy a good debate... I know that we can probably agree on the facts and will argue along predictable lines. But too many producers find such sober discussions to be boring, so they try to liven things up by setting up debates with people who make up their own facts, argue illogically, make no effort to be consistent, and, too often, use up most of the alloted air time. Thus you end up wasting your own time refuting the other guy's errors rather than making your own points.

This is not an ideological problem. I know that my friends on the left are just as frustrated by the system as I am. And the problem is not isolated to economic discussions but extends into every area of news...

I have noticed that over the years there has been a dumbing-down of the talking heads. Whereas previously the two heads would belong to noted experts from respected institutions, today they are more likely to be labeled "Democratic consultant" or "Republican strategist." These people are often so obscure that when I do a Google search on them there is no evidence that they even exist.

I know that the artificial debate format is not going to go away. But maybe it would be possible for the networks to encourage those conducting the interviews to be a little more proactive when one of the guests goes off on a tangent or makes outrageous claims with no factual basis. They should behave more like baseball umpires than boxing referees who just want to keep it clean.

I am not sure what the right answer is. The false, misleading ideas driven by politics, ideology, pursuit of profit, etc., are out there looking for a place to express themselves, and forums such as talk shows and opinion pages are a key place where that occurs. One hope is that news agencies, talk shows, and so on will not invite people on the air or print their views if they are not credible brokers. But that requires the news agencies actually knowing the difference, to understand the underlying theoretical and empirical evidence, and that seems to be a big hurdle. It also requires them to look beyond ratings and entertainment value, which is understandably difficult. It's a hurdle they should be able to get over, credible and entertaining are not mutually exclusive, but don't seem to be able to. I think a lot, or at least some of the "he said-she said" journalism (particularly in print) is not for "balance" for the sake of balance, where balance here means a view from two sides, but rather it's because the reporter does not have any idea which side is correct and tries to cover all the bases.

So the question for me is, if these ides are going to be expressed one way or the other, then what's the best way to rebut them? Do we refuse to go on shows, call reporters idiots, and generally make their lives as miserable as possible from blogs, etc. in the hopes of changing their behavior, i.e. in the hope they won't invite these people on their shows or present their views in their stories? Do we give these ideas credibility by simply engaging with the people who are promoting them, or does engaging show the problems with their arguments and undermine their positions?

I think these people are going to appear in the the media one way or the other and I am more likely than Bruce to advocate an active role in trying to rebut them. It's a fine line - I often don't engage with things I see because shining a light on the views gives them an audience, and I don't want to do that. But if it's an idea I see a lot, or if it's from a person who has been pushing nonsense repeatedly, then I am likely to react, perhaps more so than Bruce. I see no need to debate someone literally dragged off the street as in the story above, but there are people and ideas that do require rebuttal no matter how annoyed I am that they are even in the public discourse.

Monday, August 06, 2007

Not Laffing

Mathew Yglesias notes the press's failure to challenge false statements about tax-cuts made by Giuliani in the GOP debate:

Laffer Press Roundup, by Mathew Yglesias: Here's an interesting test case for the press. It seems that at yesterday's GOP debate, Rudy Giuliani derided the idea that higher taxes raise revenues as a "Democratic, liberal" assumption and put forward his alternative view that you generate revenue by lowering tax rates. This is a stunning confession of total ignorance of tax policy and economics by the GOP front runner. So how did the press cover it? Chris Cilizza at the Fix lives down to my expectations by totally ignoring the fact that Giuliani is incorrect:

"There is a liberal Democratic assumption that if you raise taxes, you raise more money," said Giuliani to huge applause from the crowd assembled at Drake University.

Michael Shear in The Washington Post's page A1 story also doesn't care about the merits of the issue:

Former New York mayor Rudolph W. Giuliani sparked loud applause when he declared that "the knee-jerk liberal Democratic reaction -- raise taxes to get money -- very often is a very big mistake."...

Nor does Stephen Braun of The Los Angeles Times care at all whether or not GOP tax policy makes sense:

Referring to last week's devastating bridge collapse in Minneapolis, the GOP rivals found common ground in insisting that increased private investment from cutting taxes would provide more money to repair the nation's failing infrastructure. ...

Mike Glover at the AP doesn't seem to mention the issue at all.

Adam Nagourney at The New York Times, by contrast, doesn't go nearly as far as I'd like, but does way better than his colleagues at the major papers. Here he is on the NYT political blog:

Mr. Giuliani proceeded to explain that when he was mayor of New York he had cut taxes, and that those tax cuts had produced revenues that allowed him to finance bridge reconstruction. (Actually, there’s a good argument that it was the stock market boom in New York that brought all that money into the city’s coffers, but we’ll let that pass for now).

And here he is teamed up with Michael Cooper in the print edition:

Mr. Giuliani said that as mayor of New York, he had increased revenues to pay for bridge and road repair by cutting taxes, thereby jolting the economy, and that he would do the same thing as president. The city’s treasury in that period was flush largely with revenues produced by the stock-market boom of the late 1990s.

It'd be nice to see reporters go further than Nagourney does here, but improvements at the margin deserve recognition and the Times is doing a much better job than the Post here.

Even Nagourney's "we’ll let that pass for now" is inadequate. Any reporter who thinks there's a debate about whether cutting taxes has increased tax revenues has not been paying attention and has no business covering economics. Let's take a cue from Paul Krugman and ask what the press should have asked, what does this say about Giuliani's character? First, I disagree with the characterization of his statements as ignorant. I don't believe he is ignorant about this topic, so that is no excuse (and if he were ignorant, i.e. if he has not bothered to find out about the consequences of tax cuts by now, that would tell us a lot too.)  He noted that he is aware of the evidence, but chooses to portray it as a "liberal Democratic assumption" even though it is nothing of the sort (see Andrew Samwick and Greg Mankiw's statements about this, both of whom served under Bush in the Council of Economic Advisers, or any reputable conservative economist for that matter, or this recent CBO report).

What this tells us is that just like George Bush in the run-up to the Iraq war, Giuliani is not an honest broker. He is willing to tell people what they want to hear in spite of compelling evidence to the contrary, and to surround himself with people who will not challenge him when he uses misleading statements to push a policy. He has no problem using dishonest statements to sell policy. There's a lot to be gleaned about his character from his willingness to engage in this type of dishonest salesmanship, a style of leadership that led us into our current predicament, and it's disappointing to see the press not even bother to make the connections.

Wednesday, August 01, 2007

Robert Samuelson's Three Beliefs

Someone said that Robert Samuelson thinks three things are true, deficits are bad, there's a demographic crisis coming, and both parties share the blame for any problem. Based upon these beliefs, he's been writing the same column in one form or another for many years. Notice, for example, how he weaves all three of these points into the opening of his latest column:

Making the Think Tanks Think, by By Robert J. Samuelson, Commentary, Washington Post: Just in case you haven't noticed, the major presidential candidates -- Republican and Democratic -- are dodging one of the thorniest problems they would face if elected: the huge budget costs of aging baby boomers. In last week's CNN-YouTube debate, New Mexico Gov. Bill Richardson cleverly deflected the issue. "The best solution," he said, "is a bipartisan effort to fix it." Brilliant.  There's already a bipartisan consensus: Do nothing. No one plugs cutting retirement benefits or raising taxes, the obvious choices.

End of story? Not exactly. There's also a less-noticed cause for the neglect. Washington's vaunted think tanks -- ... both liberal and conservative -- have tiptoed around the problem. Ideally, think tanks expand the public conversation by saying things too controversial for politicians to say on their own. Here, they've abdicated that role.

The aging of America is not just a population change or, as a budget problem, an accounting exercise. It involves a profound transformation of the nature of government: Commitments to the older population are slowly overwhelming other public goals; the national government is becoming mainly an income-transfer mechanism from younger workers to older retirees. ...

Consider the outlook. ... Social Security, Medicare and Medicaid -- programs that serve older people -- already exceed 40 percent of the $2.7 trillion federal budget. By 2030, their share could hit 75 percent of the present budget, projects the Congressional Budget Office.

These projections are daunting. ... Little wonder politicians stay silent. ... Wrenching honesty might be deeply embarrassing. Liberals might have to concede that government could grow too large and that spending and benefit cuts are needed. Conservatives might have to concede that, even with plausible benefit and spending cuts, tomorrow's government would be bigger than today's. For think-tank scholars, brutal candor might offend friends and political mentors. For the ambitious, it might jeopardize future appointments to top government jobs.

As an antidote to this timidity, I propose that some public-spirited sugar daddy (the MacArthur Foundation? Warren Buffett?) sponsor a short book. A possible title: "Facing Up to an Aging America." Six leading think tanks would be invited to participate: three liberal -- the Brookings Institution, the Center on Budget and Policy Priorities, and the Urban Institute-- and three conservative: the American Enterprise Institute, the Cato Institute, and the Heritage Foundation.

After an introduction describing America's aging, each think tank would receive 35 pages to respond to questions and to present its vision. Are the looming budget changes good for America? If so, how would they be financed? If not, why not? How could adverse consequences be avoided? The think tanks would be expected to be specific. Higher eligibility ages? Well, how much and when? Higher taxes? Which ones and how much? If a think tank rejected the invitation, the publisher would run 35 blank pages and an explanation: "Think tank X declined to participate."

This approach would force think tanks to compete. They'd have to make their vision of the future explicit within the untidy framework of government's past commitments. ... Writing for a general audience, it would favor plain English, not the usual technobabble. If published in April, the book might prod the presidential candidates to address the future. If they didn't, it would demonstrate the magnitude of their evasion.

If we are going to give think tanks an assignment coupled with a threat of bad press if they don't participate, let's have them work on the important part of the problem (there are other choices besides think tanks for such assignments). Social Security is not the problem, it won't take much to get it on solid footing, though the scare stories over the past several years have made many people believe otherwise (and Samuelson has helped to generate this false impression). The problem is not demographics either, though it certainly costs more to serve a larger number of people.

The main problem is rising medical costs, and unlike the misplaced emphasis on Social Security in the last election, there is a lot of focus on health care reform in the political debate this time around. Samuelson seems to have completely missed the connection between health care reform and his pet column peeve, hence his claim that the problem is being ignored in the political debate when that isn't the case. In addition, Samuelson's continual focus on the budget deficit obscures the real problem. It doesn't matter whether health care is in the public domain or the private domain, the costs will be daunting either way if they continue on their present trajectory, so finding ways to hold down health care costs is where the focus needs to be.

If Samuelson really wants to help, he can quit writing the same misleading and counterproductive column over and over again. Quit saying "cutting retirement benefits or raising taxes" are the "obvious choices" when it's not obvious at all. Cutting retirement benefits or raising taxes will do nothing to reign in health care costs so these measures do not address the main problem. It's time for Samuelson to write a new version of this column and address the core issues, or perhaps better yet, just stop writing about these issues altogether.

Thursday, July 26, 2007

Traditional News vs. Opinion-Mongering

Traditional news is fading away?:

Make news, not views, by Dan Kennedy, Comment is Free: Don't cry for Paula Zahn. Her show on CNN's US network wasn't all that great, hardly anyone watched... But before her August 2 departure from the House That Ted Turner Built, it's worth pondering what she told Jacques Steinberg of the New York Times:

"We worked so hard to maintain a high quality of objective reporting on the air," she said. "Yet what has become clear when you look at the landscape, particularly in the eight o'clock hour, it seems pretty obvious the audience is drawn to opinion-driven shows. That is not what I do."

Zahn is right. There's less and less news on the three cable news channels - CNN, Fox News, and MSNBC - and that's especially true in the evening, when people might actually be watching.

Zahn had it particularly tough. In her 8-to-9pm time slot, she was up against ... Bill O'Reilly, Fox's loofah-wielding ratings king. MSNBC counters with cable's sole liberal host, Keith Olbermann. The entirely predictable result: Zahn's program is a distant third. ...

Rupert Murdoch's Fox News, which now dominates the market, offers one conservative talk show after another, with the sole exception of Shepard Smith's 7pm newscast. Even Special Report with Brit Hume (how can it be special if it's on every night?), hosted by an actual journalist, tilts noticeably to the right, while primetime hosts O'Reilly and Sean Hannity deal strictly in cartoonish stereotypes. ... Greta Van Susteren offers an hour's worth of tabloid trash before the O'Reilly rerun.

MSNBC's signature personalities are Olbermann and political shouter Chris Matthews...

CNN - the original cable news outlet, ... has done a little better. But its best-known host these days may be Lou Dobbs, whose attacks on illegal immigrants have made him an unlikely star... Larry King's talk show is non-ideological, but it's also non-news. At least the network continues to put on something resembling an actual newscast: Anderson Cooper 360....

CNN's once-sober sibling, Headline News, has gone on a bender with loathsome programs hosted by sob sister Nancy Grace and reactionary doofus Glenn Beck.

It wasn't always this way. Just a few years ago, CNN and MSNBC competed head-to-head with hour-long newscasts at 10pm... Since then, the success of Fox has clearly affected the competition. Opinion is cheaper than news, and apparently more popular, too. ...

The problem with all this opinion-mongering is that it contributes to cynicism about the news and the alleged biases of the folks who report it. ... Thus we have arrived at a point where even the horrors of, say, Abu Ghraib can be dismissed as little more than partisan sniping. ... If the cable news channels can't survive by bringing us, you know, news, then that's a pretty sad commentary.

When I still watched, I was never much impressed with Paula Zahn, partly because the way the show was structured, its "he said-she said" format allowed the impression to emerge that important issues are nothing more than partisan sniping. I stopped watching during the run-up to the last presidential election when there was far too much back and forth argument presented as journalism at a time when people needed much more than that from those responsible for making sense of the world. I remember sending an email to Zahn (which I doubt anyone read) asking why, after one guest had uttered what were demonstrable lies, the guest was invited back for another of CNN's "news" reports to offer more of the "other side," where the other side was nonsense. It didn't seem like there was anything an entertaining guest could say that would prohibit them from being asked to return. There also seemed to be a coziness or mutual reliance between Zahn and many of her guests, guests who were mostly the same mouthpieces recycled again and again on every issue, and the mutual dependence was more than you would hope for from an objective news source. It did not appear she was willing to take any chances, to risk ruffling any feathers by challenging even the obvious distortions, because that would risk access to the guests, those connected with the administration in particular, and potentially bring the scorn of the noise machine standing ever ready to protect its own.

I don't know the answer, it appears that the profit maximizing strategy, i.e. the business strategy that maximizes entertainment value, is not consistent with producing news and information that optimally serves the public interest. But I do know we are not well served by what we have.

Wednesday, July 25, 2007

Brad DeLong: Robert Samuelson's "Intellectual Three-Card-Monte"

Since Brad took the time to do this good deed, I should help out as I can, so here's his reaction to Robert Samuelson's latest column:

Carbon Blogging: "In That Case, We Have No Time to Lose. Plant [the Trees] This Afternoon!" (Why Oh Why Can't We Have a Better Press Corps?/Robert J. Samuelson Is a Bad Person/Washington Post Edition), by Brad DeLong: Mark Thoma does an evil deed by telling me that somebody should take note of Robert Samuelson. And he's right: somebody should. But why does it have to be me?

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

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

Economists believe that things work well when the incentives individuals face--the good or ill that their actions cause for themselves--match up to the good or ill of the impact that their actions have on society as a whole. Thus our liking for energy taxes...: ...a tax on carbon makes [individuals] feel that harm in their pocketbook and so matches up individual incentives with social outcomes. That's what the Gore BTU tax proposal was trying to do.

There are in general two ways that you can match private incentives with social outcomes.

Continue reading "Brad DeLong: Robert Samuelson's "Intellectual Three-Card-Monte"" »

Monday, July 23, 2007

"Goodbye to Newspapers?"

This is Russell Baker with an analysis of the fate of newspapers in the internet age, the failure of the press in the run-up to the Iraq war, and other issues. This is part of a much longer essay:

Goodbye to Newspapers?, Book Review by Russell Baker, NY Review of Books: ...The American press has the blues. Too many ... good newspapers are in ruins. It has lost too much public respect. Courts ... now taunt it with insolent subpoenas... It is abused relentlessly on talk radio and in Internet blogs. It is easily bullied into acquiescing in the designs of a presidential propaganda machine determined to dominate the news. Its advertising and circulation are being drained away by the Internet, and its owners seem stricken by a failure of ... entrepreneurial imagination...

Then there are the embarrassments: hoaxers like Jayson Blair and Stephen Glass turn journalism into farce. The elite Washington press corps is bamboozled into helping a circle of neoconservative connivers create the Iraq war. What became of heroes? Journalists used to dine out on the deeds of Bob Woodward and Carl Bernstein during Watergate; of David Halberstam, Neil Sheehan, and Malcolm Browne in Vietnam; of "Punch" Sulzberger and Kay Graham risking everything to publish the Pentagon Papers. Instead of heroes, today's table talk is about journalistic frauds and a Washington press too dim to stay out of a three-card-monte game.

Rupert Murdoch of course has long spread melancholy in newsrooms around the world, but it was the disclosure in May that the Bancroft family, which controls The Wall Street Journal, might be ready to sell him their paper ... that really struck at journalism's soul. ... The Wall Street Journal is not another newspaper. It is one of the proudest pillars of American journalism. Like The New York Times and The Washington Post, it has for generations been controlled by descendants of a founding patriarch.

Family control has sheltered all three newspapers from Wall Street's most insistent demands, allowing them to do high-quality—and high cost— journalism. It was said, and widely believed, that the controlling families were animated by a high-minded sense that their papers were quasi-public institutions. Of course profit was essential to their survival, but it was not the primary purpose of their existence. That one of these families might finally take the money and clear out heightens fears that no newspaper is so valuable to the republic that it cannot be knocked down at market for a nice price. Murdoch at the Journal is a dark omen for journalists everywhere. ...

Papers everywhere [feel] relentless demands for improved stock performance. The resulting policy of slash-and-burn cost-cutting has left the landscape littered with frail, failing, or gravely wounded newspapers which are increasingly useless to any reader who cares about what is happening in the world, the country, and the local community. ...

2. ...Neil Henry's ... book is concerned with...: How does the Internet affect what we still call "the press"? Is "blogging" the journalism of the future? How can the journalist avoid being manipulated by the vast and deadly effective propaganda machinery of government and business? ...

Continue reading ""Goodbye to Newspapers?"" »

Wednesday, July 18, 2007

Economics Columnists at the New York Times

While promoting his new role as a columnist for the New York Times, Greg Mankiw asks a question:

Economics at the NY Times, by Greg Mankiw: At the end of his column today, David Leonhardt reports:

If you read Sunday’s business section, you probably noticed that Gregory Mankiw, the Harvard economist, blogger and Republican policy adviser, wrote the Economic View column. His debut as a regular contributor is the start of some changes in our economics coverage.

The View column will now be written by a rotating panel of outside economists. Besides Mr. Mankiw, it will include Alan Blinder, Judith Chevalier, Robert Shiller and Lester Thurow, as well as three of the economists who have been writing the Economic Scene column on Thursdays: Austan Goolsbee, Tyler Cowen and Robert Frank. (The fourth member of the Scene rotation, Hal R. Varian, is leaving to concentrate on his new role as Google’s chief economist.)

They are a stellar group, and they will use the column to examine everything from big policy questions to the economics of everyday life. By moving the economists to Sunday, when our section isn’t filled with news, we think we can give their writing more attention.

...Is this a "fair and balanced" group? In particular, ... if you count the number of these eight economists who lean left and the number who lean right, perhaps leaving out a few without any particular political viewpoint, what ratio do you get?...

To which Dani Rodrik esponds:

New economics columnists at NYT, by Dani Rodrik: Via Greg Mankiw, I learn of a new group of rotating economists who will be writing columns for the New York Times. ... With one glaring exception (you guess which one...), I think this is an absolutely terrific group. ...

But I am puzzled somewhat by the assignment Greg gives his readers:

First, if you count the number of these eight economists who lean left and the number who lean right, perhaps leaving out a few without any particular political viewpoint, what ratio do you get?

I do not quite understand the preoccupation with the political orientation of these economists. Is Greg implying that he and his fellow commentator-economists filter their views on economic matters through an ideological prism?

Since nobody else has done so, let me say that I will miss Hal Varian who, as noted above, is leaving the columnist rotation to serve as chief economist for Google.

My comment is this. I would like to see more economists in the rotation like Hal. When you read his columns, it is very difficult to detect his political orientation - I read them all and I couldn't tell you for sure which political party he belongs to.

Hal is a microeconomist, something those of us who used his book in graduate school won't forget easily. With Hal leaving, the rotation is losing an excellent microeconomist, someone who can write knowledgably about issues such as patents and copyrights, information economics, insurance markets, energy markets, market regulation, anti-trust issues, and all sorts of other important topics. There is a bit of a tilt toward macroeconomics in the list, but I'm glad to see that microeconomics is represented. There are a lot of important microeconomic policy issues that sometimes get overlooked in the public discussion, anti-trust issues are one example, and Hal was one of the few columnists consistently addressing issues in the microeconomic arena.

Thursday, July 12, 2007

Bruce Bartlett: Changing World of Commentary

[I meant to note this yesterday, but somehow didn't get it posted.] Bruce Bartlett announces a change. This is his last weekly column:

Changing world of commentary, by Bruce Bartlett, Washington Times:  - About 12 years ago, I got a call from Tom Bray, then editorial page editor of the Detroit News. I had known him since the early 1980s, when he was an editor of the editorial page of the Wall Street Journal, where I had written many articles. Tom asked if I would be interested in writing a column for the News and I agreed. Subsequently, I offered my column to The Washington Times and eventually it was picked up by Creators Syndicate for national distribution.

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Monday, July 09, 2007

The "Single-Villain" Rhetoric, the Two Al Qaedas, and the Multi-Faceted Challenges in Iraq

I would guess that people who visit here try to keep up with the news and have a pretty good idea about what is going on in the world. So I'm curious to see how well the press has been informing you about the administration's discussions of the Iraq war.

Did you know there are two Al Qaedas? The public editor at the New York Times thinks you should realize that the Al Qaeda emphasized by the administration when discussing the surge did not exist prior to the invasion, is not same as Bin Laden's Al Qaeda, and  is but one part of the problem we are facing:

Seeing Al Qaeda Around Every Corner, by Clark Hoyt, Public Editor, NY Times: As domestic support for the war in Iraq continues to melt away, President Bush and the United States military in Baghdad are increasingly pointing to a single villain on the battlefield: Al Qaeda.

Bush mentioned the terrorist group 27 times in a recent speech on Iraq at the Naval War College... The Associated Press reported last month that although some 30 groups have claimed credit for attacks on United States and Iraqi government targets, press releases from the American military focus overwhelmingly on Al Qaeda.

Why Bush and the military are emphasizing Al Qaeda to the virtual exclusion of other sources of violence in Iraq is an important story. So is the question of how well their version of events squares with the facts of a murky and rapidly changing situation on the ground.

But these are stories you haven’t been reading in The Times in recent weeks as the newspaper has slipped into a routine of quoting the president and the military uncritically about Al Qaeda’s role in Iraq...

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Saturday, June 30, 2007

Washington Lobby Shops

Lobbyists for hire:

Undercover, under fire, by Ken Silverstein, Commentary, LA Times: Earlier this year, I ... headed to downtown Washington for meetings with ... prominent lobbyists. I had contacted their firms ... pretending to be the representative of a London-based energy company with business interests in Turkmenistan. I told them I wanted to hire the services of a firm to burnish that country's image.

I didn't mention that Turkmenistan is run by an ugly, neo-Stalinist regime. They surely knew that, and besides, they didn't care. As I explained in ... Harper's Magazine, the lobbyists I met at Cassidy & Associates and APCO were more than eager to help out. In exchange for fees of up to $1.5 million a year, they offered to send congressional delegations to Turkmenistan and write and plant opinion pieces in newspapers under the names of academics and think-tank experts they would recruit. They even offered to set up supposedly "independent" media events in Washington that would promote Turkmenistan (the agenda and speakers would actually be determined by the lobbyists).

All this, Cassidy and APCO promised, could be done quietly and unobtrusively, because the law that regulates foreign lobbyists is so flimsy...

Now, in a fabulous bit of irony, ... the ... lobbyists have attacked ..., saying that it was unethical of me to misrepresent myself when I went to speak to them. That kind of reaction is to be expected from the lobbyists exposed in my article. But what I found more disappointing is that their concerns were then mirrored by Washington Post media columnist Howard Kurtz...

I can't say I was utterly surprised... Some major media organizations allow, in principle, undercover journalism — assuming the story ... is deemed vital to the public interest and could not have been obtained through more conventional means — but very few practice it anymore. And that's unfortunate, because there's a long tradition of sting operations in American journalism, dating back at least to the 1880s, when Nellie Bly pretended to be insane in order to reveal the atrocious treatment of inmates at the Women's Lunatic Asylum on Blackwell's Island in New York City.

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Friday, June 29, 2007

Paul Krugman: The Murdoch Factor

Paul Krugman wonders why anyone would think it is O.K. for Rupert Murdoch to gain control of the Wall Street Journal:

The Murdoch Factor, by Paul Krugman, Commentary, NY Times: In October 2003, the nonpartisan Program on International Policy Attitudes published a study titled “Misperceptions, the media and the Iraq war.” It found that 60 percent of Americans believed at least one of the following: clear evidence had been found of links between Iraq and Al Qaeda; W.M.D. had been found in Iraq; world public opinion favored the U.S. going to war with Iraq.

The prevalence of these misperceptions, however, depended crucially on where people got their news. Only 23 percent of those who got their information mainly from PBS or NPR believed any of these untrue things, but the number was 80 percent among those relying primarily on Fox News. In particular, two-thirds of Fox devotees believed that the U.S. had “found clear evidence in Iraq that Saddam Hussein was working closely with the Al Qaeda terrorist organization.”

So, does anyone think it’s O.K. if Rupert Murdoch’s News Corporation, which owns Fox News, buys The Wall Street Journal? ...

Mr. Murdoch ... is an opportunist who exploits a rule-free media environment — one created, in part, by conservative political power — by slanting news coverage to favor whoever he thinks will serve his business interests.

In the United States, that strategy has mainly meant blatant bias in favor of the Bush administration and the Republican Party — but last year Mr. Murdoch covered his bases by hosting a fund-raiser for Hillary Clinton’s Senate re-election campaign. ...

Now, Mr. Murdoch’s people rarely make flatly false claims. Instead, they usually convey misinformation through innuendo. During the early months of the Iraq occupation, for example, Fox gave breathless coverage to each report of possible W.M.D.’s, with little or no coverage of the subsequent discovery that it was a false alarm. No wonder, then, that many Fox viewers got the impression that W.M.D.’s had been found.

When all else fails, Mr. Murdoch’s news organizations simply stop covering inconvenient subjects. ...[T]he Project for Excellence in Journalism found that in the first quarter of 2007 daytime programs on Fox News devoted only 6 percent of their time to the Iraq war, compared with 18 percent at MSNBC and 20 percent at CNN. ...

Defenders of Mr. Murdoch... say that we should judge him not by Fox News but by his stewardship of the venerable Times of London, which he acquired in 1981. Indeed, the political bias of The Times is much less blatant than that of Fox News. But a number of former Times employees have said that there was pressure to slant coverage...

In any case, do we want to see one of America’s two serious national newspapers in the hands of a man who has done so much to mislead so many? ...

There doesn’t seem to be any legal obstacle to the News Corporation’s bid for The Journal: F.C.C. rules on media ownership are mainly designed to prevent monopoly in local markets, not to safeguard precious national informational assets. Still, public pressure could help avert a Murdoch takeover. Maybe Congress should hold hearings.

If Mr. Murdoch does acquire The Journal, it will be a dark day for America’s news media — and American democracy. If there were any justice in the world, Mr. Murdoch, who did more than anyone in the news business to mislead this country into an unjustified, disastrous war, would be a discredited outcast. Instead, he’s expanding his empire.

Previous (6/15) column: Paul Krugman: America Comes Up Short
Next (7/2) column: Paul Krugman: Just Say AAA

Wednesday, June 20, 2007

Bruce Bartlett: Tax Cuts and the Not So Great Economy

Bruce Bartlett says if conservatives want to argue for lower taxes, fine, do so. But do it honestly and leave the exaggerated claims about tax cuts and tax increases out of the debate:

Greatest Economy?, by Bruce Bartlett: For an interview with a reporter about the state of the economy, I looked up a few numbers that are interesting. I compared the state of the economy today to where it was at the exact same point during the previous business cycle. Thus, according to the National Bureau of Economic Research, the most recent recession ended in November, 2001. If you count forward 21 quarters to the first quarter of 2001 [2007], we see the following:

Real gross domestic product: Up 16.4 percent Real gross private domestic investment: Up 10.2 percent Payroll employment: Up 5.3 percent Standard & Poor's 500 stock index: Up 34.2 percent

Viewed in isolation, these numbers don't seem too bad. For example, real GDP has risen at a 3.1 percent annual rate since the end of the recession. But in areas such as this, there are no objective criteria for saying what is a good performance from a bad one; only experience can guide us. Thus it is interesting to look at the same numbers above counted forward the same number of months from the end of the previous recession, which the NBER tells us ended in March, 1991:

Real GDP: Up 17.9 percent Real investment: Up 51.2 percent Payroll employment: Up 10.8 percent S&P 500: Up 82.2 percent

It is obvious that by every standard, the recovery and expansion after the 1990-91 recession was significantly better than that after the 2001-01 recession. Recognizing this fact is important for several reasons.

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Wednesday, May 30, 2007

"Mr. Dobbs Has a Somewhat Flexible Relationship with Reality"

CNN has been going downhill for awhile now:

Truth, Fiction and Lou Dobbs, by David Leonhardt, NY Times: The whole controversy involving Lou Dobbs and leprosy started with a “60 Minutes” segment a few weeks ago.

The segment was a profile of Mr. Dobbs, and while doing background research for it, a “60 Minutes” producer came across a 2005 news report... In the report, one of Mr. Dobbs’s correspondents said there had been 7,000 cases of leprosy in this country over the previous three years, far more than in the past.

When Lesley Stahl of “60 Minutes” sat down to interview Mr. Dobbs.., she mentioned the report and told him that there didn’t seem to be much evidence for it. “Well, I can tell you this,” he replied. “If we reported it, it’s a fact.”

With that..., Mr. Dobbs escalated the leprosy dispute into a full-scale media brouhaha. The next night, back on his own program, the same CNN correspondent who had done the earlier report, Christine Romans, repeated the 7,000 number, and Mr. Dobbs added that, if anything, it was probably an underestimate. A week later, the Southern Poverty Law Center — the civil rights group that has long been critical of Mr. Dobbs — took out advertisements in The New York Times and USA Today demanding that CNN run a correction.

Finally, Mr. Dobbs played host to two top officials from the law center on his program, “Lou Dobbs Tonight,” where he called their accusations outrageous and they called him wrong, unfair and “one of the most popular people on the white supremacist Web sites.” We’ll get to the merits of the charges and countercharges shortly...

Mr. Dobbs argues that the middle class has many enemies: corporate lobbyists, greedy executives, wimpy journalists, corrupt politicians. But none play a bigger role than illegal immigrants. As he sees it, they are stealing our jobs, depressing our wages and even endangering our lives. That’s where leprosy comes in.

“The invasion of illegal aliens is threatening the health of many Americans,” Mr. Dobbs said on his April 14, 2005, program. From there, he introduced his original report that mentioned leprosy...

According to a woman CNN identified as a medical lawyer named Dr. Madeleine Cosman, leprosy was on the march. As Ms. Romans, the CNN correspondent, relayed: “There were about 900 cases of leprosy for 40 years. There have been 7,000 in the past three years.” ...

Mr. Dobbs and Ms. Romans engaged in a nearly identical conversation a few weeks ago, when he was defending himself the night after the “60 Minutes” segment. ...

[T]he official leprosy statistics do show about 7,000 diagnosed cases — but that’s over the last 30 years, not the last three. The peak year was 1983, when there were 456 cases. ... Last year, there were 137. “It is not a public health problem — that’s the bottom line,” Mr. Krahenbuhl told me. “You’ve got a country of 300 million people. This is not something for the public to get alarmed about.”...

So Mr. Dobbs was flat-out wrong. ... Of course, he has never acknowledged on the air that his program presented false information twice. Instead, he lambasted the officials from the law center for saying he had. ...

I have been somewhat taken aback about how shameless he has been during the whole dispute, so I spent some time reading transcripts from old episodes of “Lou Dobbs Tonight.” The way he handled leprosy, it turns out, is not all that unusual.

For one thing, Mr. Dobbs has a somewhat flexible relationship with reality. He has said, for example, that one-third of the inmates in the federal prison system are illegal immigrants. That’s wrong, too. According to the Justice Department, 6 percent of prisoners in this country are noncitizens (compared with 7 percent of the population). For a variety of reasons, the crime rate is actually lower among immigrants than natives.

Second, Mr. Dobbs really does give airtime to white supremacy sympathizers. Ms. Cosman, who is now deceased, was a lawyer and Renaissance studies scholar, never a medical doctor or a leprosy expert. She gave speeches in which she said that Mexican immigrants had a habit of molesting children. Back in their home villages, she would explain, rape was not as serious a crime as cow stealing. ...

Finally, Mr. Dobbs is fond of darkly hinting that this country is under attack. He suggested last week that the new immigration bill in Congress could be the first step toward a new nation — a “North American union” — that combines the United States, Canada and Mexico. On other occasions, his program has described a supposed Mexican plot to reclaim the Southwest. In one such report, one of his correspondents referred to a Utah visit by Vicente Fox, then Mexico’s president, as a “Mexican military incursion.” ...

The most common complaint about him, at least from other journalists, is that his program combines factual reporting with editorializing. But I think this misses the point. Americans, as a rule, are smart enough to handle a program that mixes opinion and facts. The problem with Mr. Dobbs is that he mixes opinion and untruths. ...

[I]f Mr. Dobbs’s arguments were really so good, don’t you think he would be able to stick to the facts? And if CNN were serious about being “the most trusted name in news,” as it claims to be, don’t you think it would be big enough to issue an actual correction.

Thursday, May 24, 2007

The Pluralistically Ignorant Silent Majority?

I'm pretty sure I'll be the only one who doesn't agree with this:

A New Silent Majority, by Mark Buchanan, Commentary, NY Times: ...[W]hen the speaker of the House, the Democrat Nancy Pelosi, visited Syria and met with President Bashar al-Assad, a poll had 64 percent of Americans in favor of negotiations with the Syrians. Yet this didn’t stop an outpouring of media alarm.

A number of CNN broadcasts  ... show[ed] Pelosi with a head scarf beside the title “Talking with Terrorists?”... The conventional wisdom on the principal television talk shows was that Pelosi had “messed up on this one” ... and that she and the Democrats would pay dearly for it.

So it must have been a great surprise when Pelosi’s approval ratings stayed basically the same after her visit, or actually went up a little.

A common explanation of this tendency toward [media] distortion is that the beltway media has attended a few too many White House Correspondents’ Dinners and so cannot possibly cover the administration with anything approaching objectivity. No doubt the Republicans’ notoriously well-organized efforts in casting the media as having a “liberal bias” also have their intended effect in suppressing criticism.

But I wonder whether this media distortion also persists because ... many Americans think that what they see in the major political media reflects what most other Americans really think – when actually it often doesn’t.

Psychologists coined the term “pluralistic ignorance” in the 1930s to refer to this type of misperception... A study back then had surprisingly found that most kids in an all-white fraternity were privately in favor of admitting black members, though most assumed, wrongly, that their personal views were greatly in the minority. Natural temerity made each individual assume that he was the lone oddball. ...

In pluralistic ignorance, as researchers described it in the 1970s, “moral principles with relatively little popular support may exert considerable influence because they are mistakenly thought to represent the views of the majority, while normative imperatives actually favored by the majority may carry less weight because they are erroneously attributed to a minority.”

What is especially disturbing about the process is that it lends itself to control by the noisiest and most visible. ... Their strong vocalization can produce “false consensus” ... as others, who think they’re part of the minority, keep quiet. As a consequence, the extremists gain influence out of all proportion to their numbers, while the views of the silent majority end up being suppressed...

Over the past couple months, Glenn Greenwald at has done a superb job of documenting what certainly seems like it might be a case of pluralistic ignorance among the major political media... Routinely, it seems, views that get expressed and presented as majority views aren’t really that at all. ...

As most people get their news from the major outlets, these distortions – however they occur, whether intentionally or through some more innocuous process of filtering – almost certainly translate into a strongly distorted image in peoples’ minds of what most people across the country think. They contribute to making mainstream Americans feel as if they’re probably not mainstream, which in turn may make them less likely to voice their opinions.

One of the most common examples of pluralistic ignorance, of course, takes place in the classroom, where a teacher has just finished a dull and completely incomprehensible lecture, and asks if there are any questions. No hands go up, as everyone feels like the lone fool, even though no student actually understood a single word. It takes guts, of course, to admit total ignorance when you might just be the only one.

Last year, author Kristina Borjesson interviewed 21 prominent journalists for her book “Feet to the Fire,” about the run-up to the Iraq War. Her most notable impression was this:

The thing that I found really profound was that there really was no consensus among this nation’s top messengers about why we went to war..., and if they weren’t clear about it, that means the public wasn’t necessarily clear about the real reasons. And I still don’t think the American people are clear about it.

Yet in the classroom of our democracy, at least for many in the media, it still seems impolitic – or at least a little too risky – to raise one’s hand.

He gives a lot of examples of "pluralistic ignorance" in the longer article and in the process seems to give the media a break - it's not a failure to do their job, it's a well-known psychological misperception problem that strikes us all, including reporters ("what certainly seems like it might be a case of pluralistic ignorance among the major political media").

I'm not so sure about that. The public has surely been misled at times and "pluralistic ignorance" might explain some public misperceptions. But many of the examples of media distortions given in the article could have been avoided with more thorough reporting. Knowing what the polls actually say before reporting on them is not too much to ask. To me, "pluralistic ignorance" of the media doesn't quite cover this "typical" case of misreporting poll results:

In a typical example in March, NBC’s Andrea Mitchell reported that most Americans wanted to pardon Scooter Libby, saying that the polling “indicates that most people think, in fact, that he should be pardoned, Scooter Libby should be pardoned.” In fact, polls showed that only 18 percent then favored a pardon.

Wednesday, May 16, 2007

Andrew Leigh: The Economics of Media Bias

Andrew Leigh surveys the literature on the relationship between media bias and the ideology and voting behavior of typical readers:

Economics of Media Bias, by Andrew Leigh, Australian Financial Review, 17 May 2007: Two years ago, a team of economists from Yale University decided to answer a question...: does the newspaper you read affect the way you vote? To test the theory, Alan Gerber, Dean Karlan and Daniel Bergan randomly chose one thousand households in the Washington DC area, and gave them a free subscription to either the left-leaning Washington Post or the conservative Washington Times. A few months later, they surveyed both groups – plus a control sample – to see how they voted. The finding? Those who received the Post were 8 percentage points more likely to vote for the Democratic Party. Getting the Times had no impact on how you voted. ...

What impact does the media you consume have on your political behaviour? And how and why do media outlets shape the news?

From a theoretical standpoint, one of the most important contributions has been a paper ... by ... Matthew Gentzkow and Jesse Shapiro. ...[T]hey argue that media slant emerges mainly as a result of outlets trying to tailor their news reporting to consumers’ prior beliefs. For example, people who buy a progressive broadsheet will be more likely to think that it provides accurate news if the newspaper gives a positive spin to Labor’s policy ideas. ...

In a separate study, Gentzkow and Shapiro set about testing their theory.. To estimate each newspaper’s bias, they develop a unique index. Searching the 2005 Congressional Record, they identify the phrases most commonly used by Democratic and Republican politicians. Among the top phrases used by Democrats are “change the rules”, “budget deficit”, “American workers” and “veterans’ health care”. Among the top phrases used by Republicans are “death tax”, “personal accounts”, “private property” and “stem cell”. Some of these reflect a concerted effort by political strategists, such as the campaign by Republicans to re-label estate taxes as death taxes, and to refer to personal social security accounts instead of private accounts.

How much of this subtle difference in language was picked up by the media? The duo then look to see which newspapers opt for the Democrats’ ... and ... Republican phrases. When writing about tax reform, will the economics correspondent use the Republican phrase “tax relief”, or the Democratic phrase “tax cuts for the wealthy”? ... Using these subtle differences, they place all local US newspapers on a left-right spectrum. According to this index, the Tri-Valley Herald (circulating in the San Francisco Bay area) is the most left-wing newspaper, while the Houston Chronicle is the most right-wing.

Gentzkow and Shapiro then turn to explaining media slant. Consistent with their theory..., they find that reader ideology explains significantly more of the variation in media bias than the identity of its owner. ...

So while Gerber, Karlan and Bergan have shown that left-wing newspapers make people more likely to vote for left-wing candidates; Gentzkow and Shapiro demonstrate that in areas with more left-wing people, newspapers are also likely to be more left-wing. These mutually reinforcing results raise the prospect of a vicious cycle, in which the media feeds and reinforces voters’ prejudices. How can we stop it?

Reassuringly to economists, the answer is a familiar one: more media competition. In the 2000 US election, places with a larger number of local television stations tended to give more equal airtime to the two presidential candidates. ... The more journalists are reporting on a topic, the less biased each can be. ...

[T]his finding has a straightforward implication: policymakers who want to reduce bias should focus on boosting the number of independently owned media outlets... All the news that’s fit to print doesn’t come from one source.

How does the internet fit into this? I've heard it argued both ways, that the internet magnifies the "vicious cycle" as people seek out sites that reflect and reinforce preexisting ideologies, and that, as I believe, it provides more competition to traditional outlets.

John Stossel Should Do a Fraud Investigation on Himself

John Stossel makes a false claim about tax cuts. As we know, tax cuts do not pay for themselves. No credible analyst claims that. But John Stossel does:

The Tax-Cut Myth, by John Stossel, RCP: ...[T]ax cuts stimulated the economy and increased tax revenues. It happens because, as the Laffer Curve illustrates, lower rates mean higher rewards for productive activities. ...

Any decent reporter would know that isn't true. He can't even keep his story straight. After saying it was tax cuts that increased revenues, he then says:

President Bush brags that the deficit is coming down -- and it is. ... But that's largely because your FICA taxes currently exceed Social Security and Medicare payments. ...

He then goes back to the tax cuts increase revenues propaganda and quotes the president pushing the same myth:

Bush boasted last year, "This economy is growing, federal taxes are rising, and we're cutting the federal deficit... Some in Washington say we had to choose between cutting taxes and cutting the deficit. Today's numbers show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring."

Remember what Andrew Samwick, who was chief economist of the Council of Economic Advisers from 2003 to 2004, said about statements like this?

Next, Stossel gets himself all tied up in knots. Tax cuts are good. But if tax cuts increase government revenue, then tax cuts are bad because it means government takes more of our money. So tax cuts aren't good after all:

But I don't want tax revenues to soar. That's money you and I could be spending for things we want. I want revenue and spending and government overall to shrink. So I'm not celebrating with the president.

So a higher tax rate is bad, a lower tax rate is bad, and the tax rate we have is unacceptable. It's all the government's fault anyway. Because of politicians, we'll never, ever get to the promised land on the other side of the Laffer curve:

If revenues are pouring in, why don't the politicians return it to the taxpayers instead of spending it? Because politicians love to spend money. They get reelected not by how much they save but by how much they shower on interest groups.

He has a book called Myths, Lies, and Downright Stupidity. I haven't read it and don't plan to, but from the above, I assume it's autobiographical.

Friday, May 11, 2007

The Six-Billion Dollar Soapbox

Brad DeLong responds to Felix Salmon's comments on Rupert Murdoch's attempt to takeover the Wall Street Journal:

What Does Rupert Murdoch Think that He Is Doing?, by Brad DeLong: Felix Salmon thinks that Rupert Murdoch is crazy like a fox--like Fox News, that is. Salmon contends that Rupert Murdoch must intend to grow and enlarge rather than cut back the Wall Street Journal...

...It seems pretty clear to me that Murdoch would like to take the Wall Street Journal as a brand and expand it--new-media-ize it (and, perhaps, old-media-ize it through broadcast and cable TV as well). But it seems very likely to me that that is perfectly consistent with cutting back large parts of the current journal--cutting back the news reporters who write the long articles that bore Rupert Murdoch, and expanding the red-meat-to-those-who-hate-that-communist-Roosevelt audience. Worldwide the next generation is going to see a lot of rich people who will be willing to pay to be told that they deserve their money and that anybody who wants to tax or regulate them is an enemy of human freedom. And, as Murdoch has said before, that is a market opportunity--the opportunity he has tried to seize with Fox news, and may well try to seize further with a more propagandistic and less reality-based Wall Street Journal.

Can Murdoch make the financials work to make the Journal a good way for News Corp. to spend $6 billion? I doubt it. Can he find enough synergies to make the financials not be a total disaster? I think so. And in the meantime will it give him a platform on which he can play global statesman for a decade? Yes.

He could always start a blog.

Update: After quoting a Murdoch profile at length, Felix counters:

...This is, without a doubt, a portrait of a global statesman. Murdoch might not receive a lot of respect in the Wall Street Journal's newsroom, but he has had prime access to the most powerful people in the world for decades. Which is why I'm puzzled that Brad DeLong can write this:

Can Murdoch make the financials work to make the Journal a good way for News Corp. to spend $6 billion? I doubt it. Can he find enough synergies to make the financials not be a total disaster? I think so. And in the meantime will it give him a platform on which he can play global statesman for a decade? Yes.

This is the "return on ego" argument for why Murdoch wants to buy the Wall Street Journal, and to some small degree it surely holds some truth. But the fact remains that Murdoch is already a global statesman, and he has been one for decades. In fact, he has been the most powerful press baron in the world for many years now. Owning the Journal would, at the margin, increase his influence. But Rupert is not some déclassé billionaire with more money than clout.

As for the Journal's newsroom, I think that Murdoch would certainly shake it up - but he wouldn't cut it back. I think he would significantly expand the number of journalists that the Journal has overseas, and that he would turn the Journal's anachronistic front page into a must-read destination for breaking news, rather than giving over vast amounts of hugely valuable real estate to quirky magazine-style feature articles of no real import. Those are "the long articles that bore Rupert Murdoch," in DeLong's words, and frankly the vast majority of them don't belong on the front page of a daily newspaper, if they belong in a daily newspaper at all. The front page of a newspaper should be a home for news - and if that happens at the Journal, there's a good chance that Murdoch is going to need more journalists, not fewer.

Saturday, May 05, 2007

Brad DeLong: Why Oh Why Can't We Have a Better Press Corps?

Brad DeLong wants to know why the press has been asleep on the job:

America’s Sleeping Watch Dog, by Brad DeLong, Project Syndicate: I want to deviate from my usual economic theme this month and focus instead on the system by which the press – mostly the American press – covers government nowadays. But perhaps this is not too great a deviation, for the behavior of the press affects not only politics, but economics as well.

Consider an editorial written in March by the Washington Post’s editorial director, Fred Hiatt, in which he makes a very small and limited apology for the newspaper’s coverage and evaluation of the Bush administration. According to Hiatt, “We raised such issues” as whether the Bush administration had properly thought its proposed adventure in Iraq through, “but with insufficient force.” In other words, Hiatt finds fault with himself and his organization for saying the right thing, but not loudly enough.

Next, consider a comment by the former editor of the New York Times, Max Frankel, about how the Washington ecology of media leaks is healthy, because “most reporters do not just lazily regurgitate...leaks.” Instead, “they use them as wedges to pry out other secrets” and so oversee the government. The system may be “sloppy and breed confusion,” but “tolerating abusive leaks by government [that misinform] is the price that society has to pay for the benefit of receiving essential leaks about government.”

So, where Hiatt sees a press corps that was a little too cowardly about overseeing the Bush administration, Frankel sees a press corps where a sloppy and confusing process is nevertheless doing a reasonable job. I see a very different picture.

It was the summer of 2000 when I began asking Republicans I know – generally people who might be natural candidates for various sub-cabinet policy positions in a Republican administration – how worried they were that the Republican presidential candidate, George W. Bush, was clearly not up to the job. They were not worried, they told me, that Bush was inadequately briefed and strangely incurious for a man who sought the most powerful office in the world. One of President Clinton’s problems, they said, was that the ceremonial portions of the job bored him – and thus he got himself into big trouble.

Look at how Bush had operated as president of the Texas Rangers baseball club, they said. Bush let the managers manage the team and the financial guys run the business. He spent his time making sure the political coalition to support the Texas Rangers in the style to which it wanted to be accustomed remained stable. Bush knows his strengths and weaknesses, they told me. He will focus on being America’s Queen Elizabeth II, and will let people like Colin Powell and Paul O’Neill be America’s Tony Blair and Gordon Brown.

By the summer of 2001, it had become clear that something had gone very wrong. By that point, Bush had rejected O’Neill’s and Christine Todd Whitman’s advice on environmental policy, just as he had rejected Alan Greenspan’s and O’Neill’s advice on fiscal policy, Powell’s and Condoleezza Rice’s advice on the importance of pushing forward on negotiations between Israel and Palestine, and – as we learned later – George Tenet’s and Richard Clarke’s advice about the importance of counterterrorism.

A strange picture of Bush emerged from conversations with sub-cabinet administration appointees, their friends, and their friends of friends. He was not just under-briefed, but also lazy: he insisted on remaining under-briefed. He was not just incurious, but also arrogant: he insisted on making uninformed decisions, and hence made decisions that were essentially random. And he was stubborn: once he had made a decision – even, or rather especially, if it was glaringly wrong and stupid – he would never revisit it.

So, by the summer of 2001, a pattern was set that would lead British observer Daniel Davies to ask if there was a Bush administration policy on anything of even moderate importance that had not been completely bollixed up. But if you relied on either the Washington Post or the New York Times, you would have had a very hard time seeing it. Today, it is an accepted fact that the kindest thing you can say about the Bush administration is that it is completely incompetent, which is the line now taken by hard-line Bush supporters like the National Review and the commentator Robert Novak.

Why didn’t the American press corps cover the Bush administration properly for its first five years? I really do not know. I do know that the world cannot afford to rely again on America’s press for its information: fool me once, shame on you; fool me twice, shame on me. So I appeal to all of you working for newspapers, radio, and television stations outside the United States: it is to you that we – including those of us in America – must look to discover what our own government is doing.

Update: Brad adds:

There are honorable exceptions. Ron Suskind. Paul Krugman. McClatchy--the news service and organization formerly known as Knight-Ridder. David Wessel and the crew at the Wall Street Journal's Washington Bureau got medieval on economic policy missteps early. The Financial Times was measured but accurate, and didn't follow the strategy of keeping its good reporters off the front page.

Suggestions for other notable candidates for the honor role would be welcome...

Wednesday, April 25, 2007

Robert Samuelson: Inflation Terminology and the Upside of Recessions

I'm afraid I am going to have to take issue with Robert Samuelson on both of his main themes. He says:

The Upside of Recession?, by Robert J. Samuelson, Commentary, Washington Post: It's increasingly clear that much of our standard economic vocabulary needs revising, supplementing or at least explaining. The customary words we use don't fully convey what's happening in the real world. Let me illustrate with two basic economic terms: inflation and recession. There are also larger lessons.

Start with inflation. ... We all know about oil. Prices are about $60 a barrel. They seem unlikely to return to $28, the 2000 level. The real surprise involves food prices. In the past three months, they've risen at a 7 percent annual rate. We may be seeing the first adverse effects of the ethanol boom. Corn is a main feed grain for poultry, cattle and hogs. Corn is also the main raw material for ethanol... Competition for grain has pushed up corn prices..., almost double a typical level. High feed prices have discouraged meat producers from expanding. The resulting tight meat supplies raise retail prices.

"Poultry is the best example," says economist Tom Jackson of Global Insight. "In the past 40 years, we almost never have year-to-year decreases in production. In the past few months, we've seen production go down." ...

So the government's subsidies for corn-based ethanol are worsening inflation, perhaps permanently. ...

Now switch to recession. ... We've been conditioned to think of recessions as automatically undesirable. The labeling is simplistic.

Hardly anyone likes what happens in a recession. Unemployment rises, production falls, profits weaken, stocks retreat. But the obvious drawbacks blind us to collateral benefits. Downturns check inflation -- it's harder to increase wages and prices -- and low inflation has proved crucial to long-term prosperity. Downturns also punish and deter wasteful speculation. When people begin to believe that an economic boom won't ever end, they start to take foolish risks. Partly, that explains the high-tech and stock bubbles of the late 1990s and, possibly, the recent housing bubble.

Some sort of a recession might also reduce the gargantuan U.S. trade deficit... Almost everyone believes that the U.S. and world economies would be healthier if Americans consumed less, imported less, saved more and exported more. The corollary is that Europe, Japan, China and the rest of Asia would rely more on domestic spending -- their own citizens buying more -- and less on exports.

Ideally, this massive switch would occur silently and smoothly. Realistically, the transition might not be so placid. ... Almost no one wishes for a recession, but the consequences might not be all bad. The larger lessons here involve perceptions. Our regular vocabulary often fails to describe the complexities of a changing economy. We must be alert to new possibilities. Things are not always what they seem.

Let's start with what he calls inflation. His point was about the language of core versus overall inflation and he tries to question that usage, but as he notes:

Since the early 1980s, the two indexes (the CPI and the core CPI) have recorded -- despite many monthly differences -- virtually identical increases.

So he rebuts his own point effectively and I left that part out (though he should be talking about the overall and trimmed mean PCE instead of the CPI and core CPI). The rest of his point is just speculation about core inflation and not worth addressing since I want to move on to his point about economic terminology, in this case his use of the term inflation which isn't technically correct.

I'll use some hypothetical numbers for illustration. Suppose that when the price of oil is $28, the price level is 100, and also suppose that when the price of oil increases to $60, the price level increases to 120 all else equal (again, these are not intended to be realistic numbers).

Now, let the spike in oil prices happen quickly, but due to sluggish wage and price adjustment suppose the resulting 20% increase in the price level takes more time, say 2 years. During this two year period, as the price level rises from 100 to 120, inflation will be reported in the news.

But this is not what economists mean by inflation when they say, for example, that "inflation is always and everywhere a monetary phenomena." To see this, suppose that the change in oil prices and the price level are both instantaneous rather than having the change in the price level drawn out over two years as before. That is, the price level jumps from 100 to 120 instantaneously and stays at the higher level from then on.

In this case, there is no inflation. Prices were stable before the instantaneous jump in the price level, and prices are stable afterward. From that day forward prices remain at 120 and do not increase any further. There is no inflation.

When the change in the price level is drawn out over two years it doesn't really change anything except that the change is no longer instantaneous and hence looks like an ongoing inflation. That is, it looks just like (and is easily confused with) the continual rise in prices that occurs with a continual increase in the money supply beyond what is needed to accommodate economic growth. But at some point, after two years in the example here, the price level will stabilize at 120 and after that there will be no further change in prices and no inflation.

Whether the change is instantaneous or drawn out, it is technically a change in the price level, not inflation, though economists (myself included) are not very careful when they talk about inflation to distinguish changes in prices that reflect drawn out adjustment to factors such as increases in oil prices (which eventually end) and those that arise from excess growth in liquidity (which do not necessarily end).

Now to Samuelson in particular. First, he calls the change in the price level resulting from a change in the price of oil from $28 to $60 inflation. But as just explained, even if the oil price change causes a drawn out adjustment in the price level that looks just like inflation, the increase in the price level will end once it reaches the higher level and there will be no inflation after that. These kinds of changes where the price of oil moves from one level to another do not cause permanent changes in the inflation rate, only temporary changes during the adjustment period.

He makes the same mistake with subsidies. It's just not possible that "the government's subsidies for corn-based ethanol are worsening inflation, perhaps permanently" as Samuelson claims. A one time increase in subsidies could change relative prices and fuel a short-term inflation, but it cannot fuel a long-term inflation (but it may not change inflation at all - see point three).

Second, looking at individual sectors and noting whether their prices or quantities have gone up or down is not how we assess inflation, that is done by looking at aggregate demand. When there is an oil price shock, it will ripple through the economy and cause a general realignment of prices, i.e. general changes in relative prices. Some relative prices will move such that resources are drawn into the sector, while other will move such that resources move away, so you don't learn much from looking at just a few sectors.

The distributional consequences and potential hardships for lower income households from changing relative prices are certainly worthy of our attention. But learning that the demand for corn is up and the production of chicken is down doesn't necessarily inform us about what is happening to the average of all prices in the economy (and there are, of course, many other confounding factors that affect sectoral relationships). Again, to assess pressures on prices generally you look at the aggregate level - i.e. how aggregate demand and aggregate supply are affected and how they are likely to move in the future. Now it is true that, all else equal, an increase in the price of oil will increase the price level, but you don't look (or need to look) at the price of chicken to figure that out.

Third, subsidies to ethanol do not necessarily increase aggregate demand (and hence inflation) as Samuelson claims, the subsidies have to be paid for somehow and that reduces demand in other areas. They could be paid through deficit spending and the new spending would affect aggregate demand, but in any case it's the aggregate effect that matters and it's not necessarily the case that subsidies increase demand.

More generally, a long-term, 10 or 20 year inflation cannot be driven by increases in government spending and cuts in taxes (which includes increased subsidies). The increase in government spending that would be required to fuel such an increase in aggregate demand and inflation would eventually eat up all of GDP, and the tax cuts that would be required would quickly run into a lower bound, zero in the limiting case, and after that there could be no further stimulus and prices would stabilize. Long-run inflations are driven by increases in the money supply because the money supply, unlike increasing government spending or decreasing taxes, can be increased pretty much without bound and hence sustained in the long-run if a government decides to permanently turn up the printing presses. [Update: More on inflation here.]

Okay, next let's turn to the silliness about the virtues of recessions. Samuelson says:

We've been conditioned to think of recessions as automatically undesirable. The labeling is simplistic.

It's not the labeling that is simplistic here. He also says there are hidden virtues to recessions:

Hardly anyone likes what happens in a recession. Unemployment rises, production falls, profits weaken, stocks retreat. But the obvious drawbacks blind us to collateral benefits.

And one of the main benefits he cites is that it punishes speculators for taking too much risk, i.e. that:

Downturns ... punish and deter wasteful speculation.

This is what Krugman calls the Hangover Theory. I've posted this before, but it applies again:

Powerful as these seductions may be, they must be resisted--for the hangover theory is disastrously wrongheaded. ... The many variants of the hangover theory all go something like this: In the beginning, an investment boom gets out of hand. Maybe excessive money creation or reckless bank lending drives it, maybe it is simply a matter of irrational exuberance on the part of entrepreneurs. Whatever the reason, all that investment leads to the creation of too much capacity--of factories that cannot find markets, of office buildings that cannot find tenants. Since construction projects take time to complete, however, the boom can proceed for a while before its unsoundness becomes apparent. Eventually, however, reality strikes--investors go bust and investment spending collapses. The result is a slump whose depth is in proportion to the previous excesses. Moreover, that slump is part of the necessary healing process...

Sounds just like Samuelson's description of punishment for the excesses that caused the high-tech and housing booms, and the subsequent healing process:

Downturns check inflation ... and low inflation has proved crucial to long-term prosperity. Downturns also punish and deter wasteful speculation. When people begin to believe that an economic boom won't ever end, they start to take foolish risks. Partly, that explains the high-tech and stock bubbles of the late 1990s and, possibly, the recent housing bubble. Some sort of a recession might ... reduce the gargantuan U.S. trade deficit... Almost everyone believes that the U.S. and world economies would be healthier if Americans consumed less, imported less, saved more and exported more.

So what's wrong with this? Back to Krugman:

Except for that last bit about the virtues of recessions, this is not a bad story about investment cycles. Anyone who has watched the ups and downs of, say, Boston's real estate market over the past 20 years can tell you that episodes in which over-optimism and overbuilding are followed by a bleary-eyed morning after are very much a part of real life.

But ... nobody has managed to explain why bad investments in the past require the unemployment of good workers in the present. Yet the theory has powerful emotional appeal. Usually that appeal is strongest for conservatives... But moderates and liberals are not immune to the theory's seductive charms--especially when it gives them a chance to lecture others on their failings. ...

The point is that Samuelson implies unemployment is the necessary cost of attaining this virtue of reigning in speculators, curing the trade deficit, lowering inflation, and so on. But why do workers have to pay this cost through higher unemployment? Why shouldn't the government step in and stimulate employment and the use of idle capacity rather than having the idle workers watch the idle capital creatively rot and destruct? We can build new capital while the old capital is still operating, there is no requirement that old capital be destroyed before new capital can be "creatively constructed." There is simply no need to let workers pay the costs of punishing and deterring wasteful speculation, let the speculators pay those costs themselves.

Samuelson says in his first sentence that:

It's increasingly clear that much of our standard economic vocabulary needs revising, supplementing or at least explaining.

And he's right. He's made a pretty good case that there's confusion about these basic economic terms.

Tuesday, March 13, 2007

Students and Faculty Given Free Access to TimesSelect

Thought I'd pass this along:

'NYT' Opening TimesSelect to Students and Teachers for Free, by Jennifer Saba, Editor and Publisher: The New York Times is opening up access permanently to TimesSelect to all students and faculty who have .edu e-mail addresses beginning on March 13.

“It's part of our journalistic mission to get people talking on campuses,” says Vivian Schiller, senior vice president and general manager at “We wanted to open that up so that college students and professors can have a dialogue.” ...

Those students who are current subscribers will receive pro-rated funds for their paid subscriptions. Schiller explains that students and faculty will have to register for the service but that it’s self-regulatory. ... [via Freakonomics]

Friday, February 02, 2007

Paul Krugman: Missing Molly Ivins

Paul Krugman pays tribute to Molly Ivins:

Missing Molly Ivins, by Paul Krugman, Commentary, NY Times: Molly Ivins, the Texas columnist, died of breast cancer on Wednesday. I first met her more than three years ago, when our book tours crossed. She was, as she wrote, “a card-carrying member of The Great Liberal Backlash of 2003, one of the half-dozen or so writers now schlepping around the country promoting books that do not speak kindly of Our Leader’s record.” ...

Molly never lost sight of two eternal truths: rulers lie, and the times when people are most afraid to challenge authority are also the times when it’s most important to do just that. And the fact that she remembered these truths explains ... her extraordinary prescience on the central political issue of our time.

I’ve been going through Molly’s columns from 2002 and 2003, the period when most of ... the press cheered as Our Leader took us to war on false pretenses, then dismissed as “Bush haters” anyone who complained... Here are a few selections:

Nov. 19, 2002: “The greatest risk for us in invading Iraq is probably not war itself, so much as: What happens after we win? ... There is a batty degree of triumphalism loose in this country right now.”

Jan. 16, 2003: “I assume we can defeat Hussein without great cost to our side (God forgive me if that is hubris). The problem is what happens after we win. The country is 20 percent Kurd, 20 percent Sunni and 60 percent Shiite. Can you say, ‘Horrible three-way civil war?’ ”

July 14, 2003: “I opposed the war in Iraq because I thought it would lead to the peace from hell, but I’d rather not see my prediction come true and I don’t think we have much time left to avert it. That the occupation is not going well is apparent to everyone but Donald Rumsfeld. ... We don’t need people with credentials as right-wing ideologues and corporate privatizers — we need people who know how to fix water and power plants.”

Oct. 7, 2003: “Good thing we won the war, because the peace sure looks like a quagmire. ...

“I’ve got an even-money bet out that says more Americans will be killed in the peace than in the war, and more Iraqis will be killed by Americans in the peace than in the war. Not the first time I’ve had a bet out that I hoped I’d lose.”

So Molly Ivins — who didn’t mingle with the great and famous, didn’t have sources high in the administration, and never claimed special expertise on national security or the Middle East — got almost everything right. ...

Was Molly smarter than all the experts? No, she was just braver. The administration’s exploitation of 9/11 created an environment in which it took a lot of courage to see and say the obvious.

Molly had that courage; not enough others can say the same.

And it’s not over. Many of those who failed the big test in 2002 and 2003 are now making excuses for the “surge.” Meanwhile, the same techniques of allegation and innuendo that were used to promote war with Iraq are being used to ratchet up tensions with Iran.

Now, more than ever, we need people who will stand up against the follies and lies of the powerful. And Molly Ivins, who devoted her life to questioning authority, will be sorely missed.

Previous (1/29) column: Paul Krugman: The Sum of All Ears
Next (2/5) column: Paul Krugman: The Green-Zoning of America

[Note: Links to columns added.]

Thursday, February 01, 2007

The Press Corps' Countercyclical Aggressiveness

Could it be that the answer to Brad DeLong's question "Why of why can't we have a better press corps" is that the economy isn't doing badly enough? According to this research, the White House Press Corps becomes more aggressive when unemployment and interest rates increase:

When lap dogs become attack dogs: UCLA study isolates triggers for DC press, EurakAlert: Presidents don't enjoy a honeymoon period with the White House press corps. But neither do reporters turn on presidents just because their popularity has tanked. Still, that doesn't mean that the relationship is without certain predictable patterns, according to a UCLA-led team of researchers that has closely examined 48 years' worth of press conferences.

"Nothing makes the watchdog bark more readily than a downturn in the economy," said Steven E. Clayman, a UCLA sociologist and lead author of the first systematic look at a wide range of conditions that influence the tenor of White House media relations.

And heaven help the second-term president when both unemployment and interest rates start to mount.

"They face much more vigorous questioning," said John Heritage, also a UCLA sociologist, and co-author of the study, which appears in the February issue of the journal American Sociological Review. ...

Continue reading "The Press Corps' Countercyclical Aggressiveness" »

Friday, January 26, 2007

Why Oh Why Can't We Have a Better Press Corps? (The Press Corps Says We're Trying Edition)

Peter Coy at BusinessWeek Online sends along the following:

Why We Ignore the Margin of Error--And Everyone Else Does, Too, by Peter Coy, BusinessWeek Online, Hot Property: A reader named Dave makes an important point in a comment on my item last week about the supposed 4.5% rise in housing starts in December.

Dave says--accurately--that we don't really know whether housing starts rose at all, because the margin of error in the Census Bureau's survey was so large. He thinks we should have admitted our ignorance. In Dave's words: "Such statistically negligent reporting continues to amaze me!"

He's right. I didn't mention the margin of error at all in my blog item, instead treating the "increase" like a settled fact. In my defense, I was hardly alone: just about every journalist and financial analyst and economist who wrote about the Census Bureau report stated that housing starts rose and made no mention of the margin of error.

If we had been scrupulous, we would have written something like this:

Census Bureau Doesn't Know if Housing Starts Rose or Fell in December

Confusion over the state of the housing industry continued today as the Census Bureau once again said that it doesn't know whether the rate of construction of homes rose or fell in the most recent month. The bureau estimated that starts rose 4.5%, but the margin of error was plus or minus 8.8 percentage points. The same thing happened for October, where the estimated increase was 6.7% but the margin of error was plus or minus 10.1 percentage points. On the bright side, we're pretty sure that starts really did increase in September, because the estimated increase then (14.6%) was bigger than the margin of error (plus or minus 7.6 percentage points).

As this exercise goes to show, the strictly scrupulous approach can be tedious. On the other hand, it has the important advantage of sticking to what's actually known. So I agree with Dave. I'm going to make more of an effort in the future to point out when numbers are particularly squishy because of sampling error. ...

By the way, Census uses 90% confidence intervals. If the bureau used a 95% confidence interval, as many social scientists do, the margins of error would be even greater. ...

Overlooking the everyone else does it too defense, there is another alternative within the "scrupulous" approach - not reporting statistics with zero or almost no information content and using the valuable space to report statistics that are actually informative. It's also possible to give readers a strong sense of the information content of the statistics without talking about confidence intervals and standard errors (I realize the write-up was intentionally tedious). For example, just saying something like "monthly home construction statistics should be interpreted cautiously because they are known to exhibit large random jumps from month to month" helps, I think, without resorting to formal statistical language. The phrase "particularly squishy" works too.

Tuesday, January 09, 2007

Klein vs. Klein

And Ezra has the upper hand:

The Bad Klein, by Ezra Klein: I don't really know what to say about Joe Klein's recent tantrums and continuous self-humiliation. ... But amidst Klein's attempts to discredit my surname and his laughable posts whining about nasty rhetoric while calling liberals fools and dilettantes, he's actually making a point, and it's one that doesn't deserve to go unchallenged. Klein writes:

The latest to make a fool of himself is Paul Krugman of the New York Times, who argues that those who favor the increase in troops are either cynical or delusional. Mostly the latter. Delusional neocons like Bill Kristol and Fred Kagan, to be precise. But what about retired General Jack Keane--whom Krugman doesn't mention--and the significant number of military intellectuals who have favored a labor-intensive counterinsurgency strategy in Baghdad for the past three years...they, not Kagan and Kristol, are the motivating force behind Bush's new policy. As for K & K, Krugman's right: they've been wrong about Iraq. But at least they've taken the trouble to read the doctrine and talk to key players like Keane and General David Petraeus. Liberals won't ever be trusted on national security until they start doing their homework.

Here's Michael Duffy, writing this week's cover story for Time magazine, Klein's employer:

The surge belongs to the neocons and in particular to Frederick Kagan, who taught military history at West Point for a decade and today works out of the American Enterprise Institute as a military analyst. Kagan argued for a surge last fall in the pages of the Weekly Standard, the neocons' house organ, after the military's previous surge, Operation Forward Together, failed in late October. Kagan turned to former Army Vice Chief of Staff Jack Keane, a retired four-star general who still has street cred at the Pentagon, to help flesh out the plan and then sell it to the White House.

Let's recap: Klein is arguing that Paul Krugman is a lazy fool because he attributes the surge strategy to Frederick Kagan and the neocons. This week, in Time magazine, Michael Duffy, their main political reporter and a guy who presumably does "talk to key players" and "read the doctrines," reported that the surge "belongs to the neocons and in particular to Frederick Kagan," and made it clear that Kagan sought out Jack Keane to add credibility to his proposal. A far cry from Klein's claim that military intellectuals "are the motivating force behind Bush's new policy."

So only one of two interpretations can be true here: Either Joe Klein is wrong on the facts, or Michael Duffy is. In either case, Time magazine is paying someone to misinform their readership. Since Klein is so quick to throw out challenges ..., here's a question for him: Are you misrepresenting the facts in order to blast liberals, or is your magazine's cover story a heap of lies? I, by the way, am a subscriber, and so would really like to know.

Untruth and Consequences

Recently, the editorial page of the Wall Street Journal was complaining about the reimplementation of paygo by Democrats because it means there can be no more unfunded tax cuts:

Tax As You Go, Editorial, WSJ: Congressional Democrats are dashing out of the gates to establish their fiscal conservative credentials. And as early as today House Speaker Nancy Pelosi will push through so-called "pay-as-you-go" budget rules for Congress. ... "Paygo" ... sounds like a fiscally prudent budget practice... But ... This version of paygo is ... designed ... to make it easier to raise taxes while blocking future tax cuts. ...

It might be useful to remind the editors why these rules were reinstated. Had Republicans not deceived the public about tax cuts paying for themselves, had prominent editorial pages and other media outlets not participated in the deception, and had Republicans not run up the deficit as a consequence of those false promises, there would be no need to reinstate Paygo. If Republicans have a need to blame someone, they ought to blame themselves.

For example, this is an editorial that appeared in the Wall Street Journal last July:

Soaking the Rich Guess who is paying more in taxes now?, Editorial, WSJ, July 2006: Yesterday's political flurry over the falling budget deficit shows that even Washington can't avoid the obvious forever: to wit, the gusher of revenues flowing into the Treasury in the wake of the 2003 tax cuts. ... They've succeeded even beyond Art Laffer's dreams, if that's possible. ... In the 12 quarters ... since the tax cut passed, growth has averaged a remarkable 4%. ... This growth in turn has produced a record flood of tax revenues, just as the most ebullient supply-siders predicted. ...

Remember the folks who said the tax cuts would "blow a hole in the deficit?" ... [T]ax cuts ... are reducing the short-term deficit...

Or, a commentary from Donald Lambro, the chief political correspondent of The Washington Times, the July before that:

Deficit tide ebbing, By Donald Lambro, Commentary, Washington Times, July 2005: The good news this week is the unexpected surge in federal tax revenues that is slashing the federal budget deficit... This is especially welcome news to supply-side tax-cutters who argued all along that lower tax rates spur stronger economic growth, which, in turn, ... increases tax revenues. That is happening now.

It's embarrassing news for President Bush's diehard Democratic critics, who predicted his tax cuts would worsen the budget deficits and drive the government deeper into debt. ... Surely, it has become quite clear they were wrong on all counts.

Surely not. Republicans, with the help of editorials such as these and many, many others, led the public to believe that the tax cuts would be self-financing, or at least largely so. Now that the deception is coming to light, Republicans should quit complaining about having to face the consequences of their false promises.

Saturday, January 06, 2007

The Rules

With the Democrats taking power in congress, I want to remind everyone what the rules are for assigning credit or blame for economic conditions.

I found the rules for divided government -- a president of one party and congress controlled by the other -- on the editorial pages of the Wall Street Journal, the National Review Online, the Washington Times, and a few other places. They were last used during the Clinton years. The rules are fairly simple:

  1. Anything good that happens is because of legislation from congress.
  2. Anything bad that happens is the president's fault.

These rules apply without exception.