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Chronicle of the Conspiracy Saturday, March 15, 2003
It all started two weeks ago, on February 28, when the "Washington Wire" column of The Wall Street Journal reported (all emphasis in original):
Then about a week later, on March 8, Bill Keller's column in the New York Times repeats the story, with the meeting having morphed into a "briefing." Keller concludes by faulting the Bush Pentagon for wasting its time.
Keller is right when he says "I am not making this up" -- he's recycling a week-old Journal story without acknowledging the source. Anyway... three days later, on March 11, a letter from author Drosnin was published in the Times, including the following statements:
No doubt the snobbish Times felt that Drosnin's letter hilariously confirmed and reinforced Keller's condescending comments. Liberal bloggers have caught the proper tone -- Charles Kuffner says "Unbelievable...just laugh. He deserves no better," and Atrios reproduced the text of the letter in full with nothing more than the snotty heading, "Lord Help Us." I'm sure there was more in the leftist blogosphere, but I can't bring myself to read very much of that kind of thing. That should have been the end of it, anyhow. But now -- yep, you guessed it -- Paul Krugman has dredged up the incident once again and has inflated it to a new level of fraudulent misrepresentation. He mentions the Drosnin Pentagon meeting in a post on his personal web site Friday, citing it as evidence that the Bush administration is too stupid to engage in a particular conspiracy that has been proposed:
So now, in just over two weeks, a reluctantly granted meeting with a couple officials was morphed by one Times columnist into a "briefing," and then by another Times columnist into a briefing of "the Pentagon" -- the whole damn building, it seems -- and a briefing that the Bush administration "invited." At this rate, next week Maureen O'Dowd will probably be writing that Bush begged Drosnin to come to the Crawford ranch and lead the Bush family in prayer. >> Postscript... Strangely, it turns out that Bible codes have been associated with the Pentagon before, long before Bush ever took office. From the pages of The Bible Code itself we find Harold Gans, a "senior code-breaker" spending not just "several man-hours of valuable intelligence-crunching time" but hundreds of hours, investigating the original Bible code research of Jewish scholars Doron Witztum, Eliyahu Rips, and Yoav Rosenberg:
It's not at all clear from information available on the web, but from what I can tell Gans was probably retired from the NSA when he did this work. But be that as it may, on June 3, 1997, shortly after the book was first published and started to climb the best-seller lists, Gans issued a statement confirming what had been claimed about him in the book. While Gans is careful to assert that there is no scientific reason to expect that Bible codes can predict the future, he concludes,
Gans continued with his experiments, and on March 24, 1998 he issued a second statement to quell rumors that his further investigations suggested lack of conviction in his original results. Needless to say, Bible codes and Gans' research in support of them has been the subject of significant skepticism from the scientific community (see here, here and here). Posted by Donald L. Luskin at 8:50 PM |
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Friday, March 14, 2003
A grim reminder that Social Security remains the great unexploded bomb in American public finance. Tick... tick... tick... Posted by Donald L. Luskin at 12:02 PM |
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Posted by Donald L. Luskin at 9:37 AM |
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Where's the "long list of pundits"? He doesn't even name one (although he could have easily named the New York Times edit page, which changes its mind on Iraq almost daily). Who are the "fair number of people in the Treasury Department, the State Department and, yes, the Pentagon"? He doesn't name even one. If this is supposed to be an appeal to authority, an appeal to consensus, why can't he name even one? The only source quoted in the entire column is The Nelson Report, which Krugman describes as "an influential foreign policy newsletter" -- and the quote doesn't name names either, or for that matter do much more than throw its own tantrum in the form of the metaphorical likening of President Bush's Iraq and Korea policy to Clinton's Waco fiasco. And The Nelson Report, I assure you, is not itself one of the "long list of pundits who previously supported the Bush administration." Josh Marshall, who describes its author Chris Nelson as "my friend," was quoting it last December -- the same Waco thing, with Ruby Ridge thrown in for good measure. Marshall describes The Nelson Report as "the news and gossip sheet of choice for DC's Asia policy hands and trade policy mavens. ...Yes, such a thing actually exists..." Riiiight... an "influential foreign policy newsletter." But of all the unnamed pundits and their epiphanies, perhaps the best epiphany is Krugman's own, at which he arrives at the end of his column: "The odds are that by the time you read my next column, the war will already have started." Posted by Donald L. Luskin at 12:35 AM |
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Thursday, March 13, 2003
But other than that, Kvetchin' got it all exactly right. Posted by Donald L. Luskin at 3:05 PM |
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Posted by Donald L. Luskin at 12:10 AM |
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Wednesday, March 12, 2003
First impressions can be the best impressions, Mickey. Trust your instincts, my friend -- not Brad DeLong's econo-babble! Mickey, when you caught Paul Krugman in a contradiction, noting that in one of his New York Times columns he said that deflation is a crisis and then in another column he said that inflation is a crisis, you were right -- it was a contradiction. Good catch! Bravissimo! Now don't let Krugman's understudy DeLong spin up an apologia for him and snow you with a bunch of elephant-shit about how, well -- ahem! -- if you were an economist like me you'd understand this... it's all very complicated and I know you don't understand algebra... but, you see, deflation is a short term problem and then after that there will be inflation...and then... well, you see it has to do with demographics, and… Really, Mickey, more than three economists can't even agree on what deflation and inflation are, or how to measure them. The track record of economists at predicting either one of them, or anything else for that matter, is abjectly embarrassing. Krugman himself repeatedly predicted accelerating inflation throughout the 1990s, when just the opposite was the case (proof: see the various editions of his book The Age of Diminished Expectations: U.S. Economic Policy in the 1990s). We really should agree to get together over a drink in five or ten years, and look back at how DeLong's first-deflation-then-deflation scenario played out. I guarantee you it will be good for a laugh or three. Who the hell knows if DeLong's complicated rationale for Krugman's contradictory crises really matches Krugman's thinking at all -- if Krugman even has any thinking on this beyond manufacturing political arguments. Even if it is what Krugman had in mind, believing either one of them when they tell you that first there will be deflation because of this and then there will be inflation because of that -- well, it's like taking a couple of blind men to the race track and having them pick the trifecta for you. Mickey, you're modest enough and honest enough to want to accept a credible-sounding explanation in a specialized subject when it comes from a credentialed source, but trust me on this... don't overestimate the powers of economics or of economists. If DeLong could make predictions of this complexity with any accuracy at all, he wouldn't be hanging around the faculty lounge at UC Berkeley downing doughnuts and ripping off reams of other people's copyrighted material on his website. >> Update... Here's Robert Musil's excellent vivisection of DeLong's apologia. Posted by Donald L. Luskin at 9:05 PM |
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Today's edit page carries what at first appears to be an op-ed commentary by St. Louis Federal Reserve Bank president William Poole, titled "''Unforecastable Shock,'" warning of risk to the economy if the Federal National Mortgage Association ("Fannie Mae") were to suffer losses beyond its arguably too-small capital base. In the print edition it's positioned at lower right on the main edit page, just where third-party commentaries often go -- and on the Journal's web site it's labeled "Commentary." But Poole's commentary isn't quite "commentary." This morning St. Louis Fed spokesman Randy Sumner told me, "We didn't submit anything to the Journal." Poole's apparent commentary was, as the Journal properly disclosed, "...an excerpt from a speech he gave in Washington on Monday." Another St. Louis Fed spokesman, Joe Elstner, told me, "They called -- left a voice mail actually -- and asked if he would do an op-ed piece. I replied that he's in the middle of a pre-FOMC meeting blackout period. CEO's never discuss policy-related items this close to a meeting. Apparently they decided if he doesn't agree to it we'll just excerpt what's on the web site." Obviously Poole's remarks are in the public domain, and the Journal is certainly entitled to reproduce them without permission. The issue is whether reproducing them in the form of an op-ed commentary could give the false impression that the author had deliberately submitted the commentary for publication. Yes, the disclosure was there -- as Elstner told me, "If it had run without the disclaimer I would have had to take some action." But the potential false impression was there, too. By the way, I have communicated with a spokesman for Dow Jones, the parent of the Wall Street Journal, but as of this writing they have not come back with comments. The question of the appearance of the author's intent is critical, because an opinion that is published at the author's initiative underscores the strength of his conviction -- the fact that he would seek to have the views republished makes them seem more emphatic than if the same views were simply quoted in a news item. That distinction is especially true for this author, and for this publication. When Poole made his speech on Monday, his remarks sent shares of Fannie Mae plunging -- and raised new worries in a market that already has plenty to worry about. Fed officials normally don't like to roil the markets with their remarks -- so the appearance that Poole has chosen to repeat his controversial concerns in the edit page of the Journal suggests that he must feel very strongly indeed about the matter. Especially, perhaps, on the edit page of the Journal, which has written many editorials warning about risk at Fannie Mae and harshly criticizing its management (one such editorial ran today, next to Poole's commentary). I share the Journal's and Poole's concerns about Fannie Mae -- and I continue to admire the Journal's edit page as a powerful and all-too-lonely voice for freedom and capitalism (in fact I've been honored to have one of my own commentaries appear there). And I hope I don't piss off my friends there by writing this sincere criticism. But I do have truth-in-labeling concerns about this case -- I think the bright line between news and opinion must be scrupulously maintained both on the news pages and the editorial pages. >> Update... After posting this story, a spokesman for Dow Jones, the parent of the Wall Street Journal, called me to say that the Journal declined to comment on the origin of the Poole op-ed, as a matter of policy. Posted by Donald L. Luskin at 12:14 PM |
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Tuesday, March 11, 2003
The self-determined definition of "rich" varied across sub-groups, but overall it was defined as annual household income over $122 thousand and net worth of over $1 million. Only something like 7% of American households are currently that "rich," and an even smaller percentage of poll respondents said that they were already that "rich." Yet in all age groups -- even among people over 65 -- hope springs eternal.
So much for this being an "age of diminishing expectations." Posted by Donald L. Luskin at 11:41 AM |
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Fewer investors probably look to Paul Krugman's New York Times column for tips. Good thing -- his glowing story on Enron for Fortune magazine -- written while he was taking Enron's dirty money as a member of their advisory board) -- even makes a coat-tail investment in Coca-Cola look good. So hopefully not too many investors will be suckered in by Krugman's column today, in which he announces his latest investment -- "...last week I switched to a fixed-rate mortgage." Let's set aside whether writing about this investment of his violates the New York Times' Code of Conduct, which prohibits writers from making investments "in anticipation of forthcoming articles." Wouldn't that be "based on exploiting insider status," as Krugman would say? Well, let's move on. Let's just look at Krugman's reasoning for making this investment to begin with. The reasoning is just another rehash of Krugman's usual economic catastrophism -- a blend of well-known end-of-the-world problems like Social Security insolvency peppered with the usual charges of fiscal irresponsibility of the Bush administration. This week's clichéd metaphor is that it's a "fiscal train wreck." You see, it will all lead to deficits -- and deficits will lead to higher interest rates. Yep, it's the same old Rubinomics mantra. Why is it OK for the Krugman family to go into debt to buy a house, but not OK for the government to go into debt to fight the war against terrorism, or whatever? Krugman never really gets into that (because he has no answer for it), but he nevertheless proves that deficits lead to higher interest rates by quoting a passage from a textbook by N. Gregory Mankiw, Bush's new head of the White House Council of Economic Advisors: "When the government reduces saving by running a budget deficit, the interest rate rises." Funny how when Bush administration officials say things that Krugman agrees with, he quotes them as corroborative authorities. So what does Krugman -- putatively a great economist -- suggest that we do in order to avert the train wreck? Not much -- just two sarcastic sentences. The first:
We should ask corroborative authority Greg Mankiw what he thinks about that. If interest rates will rise because "government reduces saving by running a budget deficit," won't they also rise when government reduces savings by raising taxes? OK, then there's this:
At least this would work -- though I suspect that Krugman intends little more here than to assert that a future Republican administration will use voting fraud to throw granny over a cliff in her wheelchair. If you subscribe to Krugman's bleak zero-sum vision of an age of diminishing expectations, then the alternatives of raising taxes or running deficits are just equivalent non-solutions, no risks are ever worth taking, and your only way out is to cut spending. But there's a whole 'nother way of looking at the world, which apparently Krugman's cognitive apparatus is simply not equipped to grasp -- the possibility of growth. If you assume that the pool of wealth can be grown, then choices in public finance -- such as running a deficit or not, raising or lowering taxes, and so on -- can be made with an eye toward what will create additional new wealth. The problem of dividing up the pie becomes very different -- and very much easier -- when the pie is growing, and when you are not bound by the idea that a slice for one person necessarily comes at the expense of another person. Liberals like Krugman are not the only ones who are blind to the possibility of growth -- the risk-averse zero-sum vision afflicts conservatives, as well, and leads them into the same intellectual paralysis. It need have nothing at all to do with politics -- in fact, in this way, Krugman and Buffett are really quite alike. Buffett's view of investing is strictly based on "value," not growth -- he wants to buy stocks cheap at distress-sale prices, when the seller is making a mistake by pricing them too low. A zero-sum game -- the seller is the loser, Buffett is the winner. Just remember when you read Buffett or read Krugman that the history of the human race -- the parts worth remembering and repeating at least -- are the parts about growth. The really great men in history aren't necessarily the richest ones, like Buffett, or the ones with the loudest voices, like Krugman. They're the men who believed that you could take a little risk and make the world not just a better place, but a bigger place. >> Want a good laugh? Visit the Unofficial Paul Krugman Archive -- maintained by a tirelessly devoted fan known only as "Bobby" -- for a little celebration of Krugman's 50th birthday. As "Bobby" puts it,
A smiling studio portrait of Krugman follows, set against drawings and photographs collected by "Bobby" of those whom he must consider to be Krugman's historical antecedents: Adam Smith, David Ricardo, Alfred Marshall, John Maynard Keynes, John Hicks, Paul Samuelson, James Tobin and Robert Solow. >> Update... My friend Dave Nadig points out that I should have been clear here that I was not particularly disagreeing either with Buffett's junk bond buy, nor with Krugman's mortgage move, as personal investment plays at this time. However politically motivated Krugman's column may have been, "go ahead -- get a cheap mortgage," as Dave puts it. Posted by Donald L. Luskin at 1:50 AM |
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Here are some Socratic questions for multilateralists:
Posted by Donald L. Luskin at 12:04 AM |
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Monday, March 10, 2003
Krugman could afford it -- he's a DINK (double-income no kids) who claims to be "definitely comfortable" and says "My wife and I hope to be even more comfortable when the...textbook we're writing starts to yield royalties." He adds, "Hey, it's OK to make money as long as it's not based on exploiting insider status, and as long as you pay your proper share of taxes." I have no doubt that this former Enron consultant has sufficiently sterling ethics to scrupulously assign only Greg Mankiw's or Glenn Hubbard's textbooks to his Princeton economics students, rather than his own, to avoid even the appearance of "exploiting insider status." But what about Krugman's paying what he calls "your proper share of taxes," considering that in this case it would be his proper share of taxes -- or his and "the little woman's," so to speak. William Quick at The Daily Pundit links to an item in the Boston Herald showing that -- not surprisingly -- people don't pay more taxes than they absolutely have to, even when the idea to pay more voluntarily is suggested to them directly. In Massachusetts this year, it seems that not very many taxpayers have chosen to pay the state's new "optional tax rate" under which "Taxpayers have the option to pay a higher tax rate on certain types of income. Taxpayers may pay 5.85% as opposed to 5.3%..." According to the Herald item,
I have no idea whether Krugman & Wife will choose to give a little something extra to the state of New Jersey or the US Treasury when they pay their taxes this year, even though there's no formal "option" for them to do so. It's probably safe to assume that they will not. Why not? Certainly they would pay if what Krugman advocates came to pass -- if higher tax rates were legislated for the rich. So why don't they pay them now voluntarily, rather than only advocate paying them if a law were passed requiring it? If it's the right thing to do, why wait until everybody is forced to do it at the point of a gun before you, who advocate it, will do it yourself? It's an interesting subject for Krugman's textbook. Posted by Donald L. Luskin at 12:37 AM |
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