Posted: May 24, 2014 Filed under: Gun Control, income inequality, morning reads, racism, The Bonus Class, U.S. Economy, U.S. Politics | Tags: Chris Giles, Donald Sterling, economic theory, Financial Times., guns, inequality, Kevin Drum, LA Clippers, mass murder, mass shootings, NBA, offshore tax havens, open carry laws, Paul Krugman, Reinhart and Rogoff, Shelly Sterling, Ta-Nehisi Coates, The Case for Reparations, The Economist, Thomas Picketty, wealth distribution, wealth vs. income
Have a Stupendous Saturday!
It’s too bad Dakinikat is so busy today, because there’s an economics food fight brewing. Perhaps she’ll still find time to comment on the controversy later the evening after she returns home with her newly adopted canine family member, Temple. Meanwhile, I’ll do my best to describe the dispute over Thomas Picketty’s conclusions about wealth inequality, published in his book Capital in the Twenty-first Century.
At the Financial Times, Economics Editor Chris Giles has claims to have found problems with Picketty’s work: Piketty findings undercut by errors.
Thomas Piketty’s book, ‘Capital in the Twenty-First Century’, has been the publishing sensation of the year. Its thesis of rising inequality tapped into the zeitgeist and electrified the post-financial crisis public policy debate.
But, according to a Financial Times investigation, the rock-star French economist appears to have got his sums wrong.
The data underpinning Professor Piketty’s 577-page tome, which has dominated best-seller lists in recent weeks, contain a series of errors that skew his findings. The FT found mistakes and unexplained entries in his spreadsheets, similar to those which last year undermined the work on public debt and growth of Carmen Reinhart and Kenneth Rogoff.
The central theme of Prof Piketty’s work is that wealth inequalities are heading back up to levels last seen before the first world war. The investigation undercuts this claim, indicating there is little evidence in Prof Piketty’s original sources to bear out the thesis that an increasing share of total wealth is held by the richest few.
Prof Piketty, 43, provides detailed sourcing for his estimates of wealth inequality in Europe and the US over the past 200 years. In his spreadsheets, however, there are transcription errors from the original sources and incorrect formulas. It also appears that some of the data are cherry-picked or constructed without an original source.
John Maynard Keynes
In one specific example, Giles says the corrected data do not show significant growth in Europe since 1970. In a second article, Giles goes into more detail. In addition, he argues that the U.S. data doesn’t support the conclusion that a greater proportion of the wealth is controlled by top 1% than in recent decades. He does admit to the top 10% controlling a greater share of wealth than previously.
An investigation by the Financial Times, however, has revealed many unexplained data entries and errors in the figures underlying some of the book’s key charts.
These are sufficiently serious to undermine Prof Piketty’s claim that the share of wealth owned by the richest in society has been rising and “the reason why wealth today is not as unequally distributed as in the past is simply that not enough time has passed since 1945”.
After referring back to the original data sources, the investigation found numerous mistakes in Prof Piketty’s work: simple fat-finger errors of transcription; suboptimal averaging techniques; multiple unexplained adjustments to the numbers; data entries with no sourcing, unexplained use of different time periods and inconsistent uses of source data….
A second class of problems relates to unexplained alterations of the original source data. Prof Piketty adjusts his own French data on wealth inequality at death to obtain inequality among the living. However, he used a larger adjustment scale for 1910 than for all the other years, without explaining why.
In the UK data, instead of using his source for the wealth of the top 10 per cent population during the 19th century, Prof Piketty inexplicably adds 26 percentage points to the wealth share of the top 1 per cent for 1870 and 28 percentage points for 1810.
A third problem is that when averaging different countries to estimate wealth in Europe, Prof Piketty gives the same weight to Sweden as to France and the UK – even though it only has one-seventh of the population.
Get even more detail and charts here: Data problems with Capital in the 21st Century.
The Pushback So Far:
Paul Krugman: Is Piketty All Wrong?
Great buzz in the blogosphere over Chris Giles’s attack on Thomas Piketty’s Capital in the 21st Century. Giles finds a few clear errors, although they don’t seem to matter much; more important, he questions some of the assumptions and imputations Piketty uses to deal with gaps in the data and the way he switches sources. Neil Irwin and Justin Wolfers have good discussions of the complaints; Piketty will have to answer these questions in detail, and we’ll see how well he does it.
Krugman suggests that Giles may be doing something wrong.
I don’t know the European evidence too well, but the notion of stable wealth concentration in the United States is at odds with many sources of evidence. Take, for example, the landmark CBO study on the distribution of income; it shows the distribution of income by type, and capital income has become much more concentrated over time:
It’s just not plausible that this increase in the concentration of income from capital doesn’t reflect a more or less comparable increase in the concentration of capital itself….
And there’s also the economic story. In the United States, income inequality has soared since 1980 by any measure you use. Unless the affluent starting saving less than the working class, this rise in income disparity must have led to a rise in wealth disparity over time.
At Mother Jones, Kevin Drum notes that
Giles’ objections are mostly to the data regarding increases in wealth inequality over the past few decades, and the funny thing is that even Piketty never claims that this has changed dramatically. The end result of Giles’ re-analysis of Piketty’s data is [below] with Piketty in blue and Giles in red. As you can see, Piketty estimates a very small increase since 1970.
R.A. at The Economist: A Piketty problem?
Mr Giles’s analysis is impressive, and one certainly hopes that further work by Mr Giles, Mr Piketty or others will clarify whether mistakes have been made, how they came to be introduced and what their effects are. Based on the information Mr Giles has provided so far, however, the analysis does not seem to support many of the allegations made by the FT, or the conclusion that the book’s argument is wrong.
There are four important questions raised by the FT‘s work. First, which data are wrong? Second, how did errors in the work, if they are errors, come to be introduced? Third, how do the errors affect the specific points made in the relevant chapters? And fourth, how do the errors affect the fundamental conclusions of the book?
Mr Giles focuses on wealth inequality, to which Mr Piketty turns in Chapter 10 of his book. Mr Piketty has not published nearly as much research on the question of wealth inequality, and it seems that much of the analysis in Chapter 10 was done specifically for the book, based on others’ research. Mr Piketty’s wealth-inequality analysis certainly matters as a component of the book’s argument, but it is not accurate to say, as Mr Giles does, that the results in Chapter 10 constitute the “central theme” of the book.
Are the data wrong? Mr Giles identifies discrepancies between source material cited by Mr Piketty and the figures that appear in the book. He identifies cases in which Mr Piketty appears to have chosen to use data from one source when another would have made more sense. Further, the calculations in Mr Piketty’s spreadsheets (which have been available online since the book’s publication) seem to include adjustments in the data that are not adequately explained, and some figures for which Mr Giles cannot find a documented source. Finally, Mr Piketty has made choices concerning weighting of data used in averages, and assigning of data from one year (1935, for example) to another (1930) when such assignments seem unnecessary or inadvisable.
The author concludes that, unfortunately, ideology will determine how many people respond to the Giles critique. Much more extensive analysis at the link.
Here is Picketty’s–presumably preliminary–response to Giles in a letter to the Financial Times:
Let me also say that I certainly agree that available data sources on wealth are much less systematic than for income. In fact, one of the main reasons why I am in favor of wealth taxation and automatic exchange of bank information is that this would be a way to develop more financial transparency and more reliable sources of information on wealth dynamics (even if the tax was charged at very low rates, which you might agree with).
For the time being, we have to do with what we have, that is, a very diverse and heterogeneous set of data sources on wealth: historical inheritance declarations and estate tax statistics, scarce property and wealth tax data, and household surveys with self-reported data on wealth (with typically a lot of under-reporting at the top). As I make clear in the book, in the on-line appendix, and in the many technical papers I have published on this topic, one needs to make a number of adjustments to the raw data sources so as to make them more homogenous over time and across countries. I have tried in the context of this book to make the most justified choices and arbitrages about data sources and adjustments. I have no doubt that my historical data series can be improved and will be improved in the future (this is why I put everything on line). In fact, the “World Top Incomes Database” (WTID) is set to become a “World Wealth and Income Database” in the coming years, and we will put on-line updated estimates covering more countries. But I would be very surprised if any of the substantive conclusion about the long run evolution of wealth distributions was much affected by these improvements.
I thought this was important:
…my estimates on wealth concentration do not fully take into account offshore wealth, and are likely to err on the low side. I am certainly not trying to make the picture look darker than it it. As I make clear in chapter 12 of my book (see in particular table 12.1-12.2), top wealth holders have apparently been rising a lot faster average wealth in recent decades, at least according to the wealth rankings published in magazines such as Forbes. This is true not only in the US, but also in Britain and at the global level (see attached table). This is not well taken into account by wealth surveys and official statistics, including the recent statistics that were published for Britain. Of course, as I make clear in my book, wealth rankings published by magazines are far from being a perfectly reliable data source. But for the time being, this is what we have, and what we have suggests that the concentration of wealth at the top is rising pretty much everywhere.
In Other News:
There has been a mass shooting in Southern California–this time perpetrated from behind the wheel of a car. From the LA Times, 7 dead in drive-by shooting near UC Santa Barbara.
The shootings began about 9:30 p.m., a sheriff’s spokeswoman told KEYT-TV. It wasn’t clear what the attacker’s motivation might have been.
An 18-year-old Newport Beach man who was visiting Santa Barbara described a confusing scene as the shots rang out.
Nikolaus Becker was eating outside The Habit, 888 Embarcadero Del Norte, near the scene when the first set of shots was fired about 9:30 p.m. At first he thought it was firecrackers. A group of three to five police officers who were nearby started to casually walk toward the sounds, said Becker, but ran when a second round of shots broke out.
“That’s when they yelled at us to get inside and take cover,” Becker said.
The BMW took a sharp turn in front of The Habit, Becker said, and moments later a third round of shots was heard. Becker and his friends moved toward the restaurant’s kitchen but were told to wait in the seating area by employees.
He estimates there were at least 13 to 15 shots total at three locations. The locations were about 100 yards from one another.
The shooter, whose motivation is unknown, was found dead in his BMW. It’s not yet clear if he shot himself or was killed by sheriff’s deputies.
In another gun-related story, TPM reports that some gun nuts are reconsidering their campaign of carrying long guns into public places: Scaring The Crap Out of People Oddly Not Winning Fans.
Earlier this week we reported how Chipotle felt obliged to ask its customers not to bring guns to chipotle restaurants. Seems like a reasonably enough request to most of us. And it’s been preceded by similar requests by various other chains like Starbucks and others.
Now the top pro-gun group in Texas pushing the demand for “open carry” firearm rights and trying to get people to show up at various restaurant chains with long guns is deciding it may not be such a hot idea after all.
Open Carry Texas and a group of other aggressive gun rights groups have issued a joint statement telling their members, Dudes, let’s stop taking our guns to restaurants. It’s freaking people out and making them hate us.
Read the full statement at TPM.
Soon-to-be former LA Clippers owner Donald Sterling has signed over the team to his wife and wants her to negotiate the sale.
Shelly Sterling, who previously shared ownership of the beleaguered NBA franchise with her estranged husband, is now in talks with the NBA over selling the team, the source said.
The NBA banned Donald Sterling for life from all league events after an audio tape became public that caught him on tape uttering racist comments to his assistant V. Stiviano. He told her not to post photos of herself with black people on Instagram — such as Magic Johnson — or bring them to his basketball games.
But the NBA isn’t buying it. From ESPN: Why the NBA won’t allow Shelly Sterling to control the Clippers.
At first glance, Donald Sterling’s gesture may seem like serendipitous news for the NBA. Taking him at his word, Donald Sterling has agreed to leave the league without a fight and has signed off on the sale of his team. Digging deeper, however, reveals possible ulterior motives on Sterling’s part to delay and potentially block the sale of the team. Do not forget a crucial point: capital gain taxes. As first reported by SI.com, the Sterlings have significant incentives under capital gain tax law to avoid the sale of the team and keep it in the Sterling family. Doing so, would save them hundreds of millions of dollars. Also, contrary to some reports, the Sterlings are unlikely to benefit from the “involuntary conversion” tax avoidance provision of the Internal Revenue Code. The bottom line is if the Sterlings have to sell the Clippers, they will probably pay hundreds of millions in state and federal taxes.
Along those lines, Donald Sterling’s proposed maneuver does not accomplish the NBA’s goal of ousting the entire Sterling family on June 3. As explained in a previous SI.com article, the NBA interprets its constitution to mean that ousting Donald Sterling on June 3 would also automatically oust Shelly Sterling as co-owner, with the Clippers then falling under the control of commissioner Adam Silver. Donald Sterling’s proposed maneuver risks the prospect of Shelly Sterling undertaking a slow-moving effort to sell the team. A sale process that takes months or years would clearly aggravate the NBA, which wants to erase the Sterling family name from the league as quickly as possible. A protracted sale of the Clippers by Shelly Sterling might also constitute a potential rationale for players to boycott NBA games.
Even of greater risk to the NBA, what is to stop Shelly Sterling from deciding to keep the Clippers? She could plausibly reason, on various grounds, that now is not the right time to sell the team. Also, her instruction from her husband to sell the team would not be legally binding; it would be a mere suggestion the moment she takes over the team.
Read much more at the link.
I’ll end with a long article that I haven’t gotten to yet, but I’m hearing it’s a must read: The Case for Reparations, by Ta-Nehisi Coates at The Atlantic. Here’s the tagline:
“Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole.”
The Guardian: The ‘Case for Reparations’ is solid, and it’s long past time to make them.
Slate: An Ingenious and Powerful Case for Reparations.
The Wire: You Should Read “The Case for Reparations.”
NPR: How To Tell Who Hasn’t Read The New ‘Atlantic’ Cover Story.
WaPo: Culture change and Ta-Nehisi Coates’s ‘The Case For Reparations’.
What else is happening? As always, please post your links in the comment thread.
Posted: August 2, 2013 Filed under: morning reads | Tags: Ariel Castro, Baby Elephant, Brad Delong, do NOT google pressure cookers and backpacks, Fed Chair, Ft Worth Texas, Larry, Mitch McConnell polls, Paul Krugman, rape culture, Summers
Still a little bit left of summer vacation left and I am sure some of you are hitting the road. It’s still hot down here in New Orleans but this weekend is Satchmo Summer Fest. Every little festival weekend is like a ready made holiday for me! I will probably go listen to some music and taste some home cooking!
There’s the usual this and that sorta stuff out there. Here is one helluva depressing take on a man that kidnapped and brutalized women for years. “Most of the sex… was consensual.” Yeah. RIGHT. Three young women held captive for 11 years and of course, they asked for it.
Ariel Castro’s words at his sentencing hearing on Thursday are almost jaw-dropping. Given a chance to speak before he was sentenced to life in prison, plus a thousand years for aggravated murder and for holding three young women captive for 11 years, he repeatedly blamed his victims.
He denied he raped and beat Michelle Knight, Amanda Berry and Gina DeJesus, claiming instead that they asked him for sex and that his sexual addiction was to blame. He even said the abuse couldn’t have been that bad because DeJesus “looks normal.” While many onlookers were astonished, abuse experts said they hear that kind of language and justification every day.
NBC News asked them to weigh in on specific comments Castro made:
“Most of the sex that went on in that house, probably all of it, was consensual,” Castro said. “These allegations about being forceful on them — that is totally wrong. Because there was times where they’d even ask me for sex –many times. And I learned that these girls were not virgins. From their testimony to me, they had multiple partners before me, all three of them.”
The denial and rationalization comes as no shock to experts on rape and abuse. In fact, they say, it’s typical that men who rape or batter women will deny they did anything wrong, and even that the victim was “asking for it”.
“I think it’s actually very typical of an abuser,” says Barbara Paradiso, who directs the center on domestic violence at the University of Colorado-Denver.
“There is a widely held belief that women enjoy rape or that it is ‘just sex at the wrong time, in the wrong place’,” Rape Crisis of England and Wales says on its website. “Often when a woman is raped she is afraid that she will be killed – rapists often use the threat of killing a woman or her children to ensure her ‘submission’ and her silence after the attack. Women do not enjoy sexual violence. Victims of murder, robbery and other crimes are never portrayed as enjoying the experience.”
“I am not a violent person. I simply kept them there without being able to leave.”
“It is not uncommon for offenders to have justified their own behavior, oftentimes to see themselves as a victim,” Paradiso said in a telephone interview. “They often have a sense of righteousness around their behavior, that they had a right to do what they did or it was acceptable to do what they did that they were forced to do what they did because of the victim.”
“I never had a record until I met my children’s mother.My son was on there the other day saying how abusive I was but I was never abusive until I met her. And he failed to say that at the end before she passed away that them two weren’t even talking.
Castro’s son Anthony has said Castro beat him and his mother, Grimilda “Nilda” Figueroa, who died in 2012.
“What he’s saying, that I was a wife beater – that is, that is wrong. This happened because I couldn’t get her to quiet down. I would continuous tell her the children are right there, would you please? She would respond, I don’t care if the children are there and she would just keep going…the situation would escalate until the point where she would put her hands on me and that’s how I reacted, by putting my hands on her.”
It’s familiar thinking to Paradiso. “‘I had to hit her because she did x, y or z’,” she says. “(They are saying) ‘I had to bring her back into line’ … It doesn’t really surprise me at all that he said what he said. That behavior is completely based on power and control and domination, which our society supports. So I am not surprised that he said that.”
While his is an extreme case, experts say the pattern is anything but rare.
“I was taken aback [by Castro's statements] but at the same time not shocked by it,” says Jennifer Marsh, vice president of victim services for RAINN, the Rape, Abuse and Incest National Network. “It’s somebody who was not willing to accept that what they did was wrong and who may have convinced themselves that what they are doing is not wrong or justified. It read like the way that a perpetrator thinks.”
According to RAINN, someone is sexually assaulted in the United States every two minutes, and only three out of every 100 rapists ever spends any time in jail.
So this is a real interesting story about a writer that basically googled two words and got a visit from the Counter Terrorism People. Those two words are “backpack” and “pressure cooker”.
It was a confluence of magnificent proportions that led six agents from the joint terrorism task force to knock on my door Wednesday morning. Little did we know our seemingly innocent, if curious to a fault, Googling of certain things was creating a perfect storm of terrorism profiling. Because somewhere out there, someone was watching. Someone whose job it is to piece together the things people do on the internet raised the red flag when they saw our search history.
Most of it was innocent enough. I had researched pressure cookers. My husband was looking for a backpack. And maybe in another time those two things together would have seemed innocuous, but we are in “these times” now. And in these times, when things like the Boston bombing happen, you spend a lot of time on the internet reading about it and, if you are my exceedingly curious news junkie of a twenty-year-old son, you click a lot of links when you read the myriad of stories. You might just read a CNN piece about how bomb making instructions are readily available on the internet and you will in all probability, if you are that kid, click the link provided.
Which might not raise any red flags. Because who wasn’t reading those stories? Who wasn’t clicking those links? But my son’s reading habits combined with my search for a pressure cooker and my husband’s search for a backpack set off an alarm of sorts at the joint terrorism task force headquarters.
That’s how I imagine it played out, anyhow. Lots of bells and whistles and a crowd of task force workers huddled around a computer screen looking at our Google history.
This was weeks ago. I don’t know what took them so long to get here. Maybe they were waiting for some other devious Google search to show up but “what the hell do I do with quinoa” and “Is A-Rod suspended yet” didn’t fit into the equation so they just moved in based on those older searches.
I was at work when it happened. My husband called me as soon as it was over, almost laughing about it but I wasn’t joining in the laughter. His call left me shaken and anxious.
What happened was this: At about 9:00 am, my husband, who happened to be home yesterday, was sitting in the living room with our two dogs when he heard a couple of cars pull up outside. He looked out the window and saw three black SUVs in front of our house; two at the curb in front and one pulled up behind my husband’s Jeep in the driveway, as if to block him from leaving.
Six gentleman in casual clothes emerged from the vehicles and spread out as they walked toward the house, two toward the backyard on one side, two on the other side, two toward the front door.
A million things went through my husband’s head. None of which were right. He walked outside and the men greeted him by flashing badges. He could see they all had guns holstered in their waistbands.
“Are you [name redacted]?” one asked while glancing at a clipboard. He affirmed that was indeed him, and was asked if they could come in. Sure, he said.
They asked if they could search the house, though it turned out to be just a cursory search. They walked around the living room, studied the books on the shelf (nope, no bomb making books, no Anarchist Cookbook), looked at all our pictures, glanced into our bedroom, pet our dogs. They asked if they could go in my son’s bedroom but when my husband said my son was sleeping in there, they let it be.
Meanwhile, they were peppering my husband with questions. Where is he from? Where are his parents from? They asked about me, where was I, where do I work, where do my parents live. Do you have any bombs, they asked. Do you own a pressure cooker? My husband said no, but we have a rice cooker. Can you make a bomb with that? My husband said no, my wife uses it to make quinoa. What the hell is quinoa, they asked.
They searched the backyard. They walked around the garage, as much as one could walk around a garage strewn with yardworking equipment and various junk. They went back in the house and asked more questions.
It seems even Kentucky folks are tired of Mitch McConnell. Can I get a witness?
New poll numbers released Thursday suggested that Senate Minority Leader Mitch McConnell (R-KY) is entering his reelection campaign next year facing two perilous obstacles: an electorate that wants him out of office and a viable Democratic challenger.
The latest survey from Democratic-leaning Public Policy Polling — conducted on behalf of the Progressive Change Campaign Committee (PCCC) and Democracy For America and provided in advance to TPM — found Kentucky Secretary of State Alison Lundergan Grimes, who launched her Senate campaign on Tuesday, drawing the support of 45 percent of Bluegrass State voters and narrowly edging McConnell by a single point. Eleven percent of voters said they are undecided. The two liberal groups to commission the poll are both opposed to McConnell.
A slight majority of Kentucky voters — 51 percent — disapprove of the job McConnell is doing, giving the GOP leader an approval rating of 40 percent. PPP has previously identified McConnell as the least popular senator in the country, but the latest poll marks a marginal improvement It marks for a marginal bump since April, when McConnell nursed a 36 percent approval rating. PPP polled 1,210 Kentucky voters on those two questions, and the margin of error is 2.8 percent.
Kentucky voters may also be experiencing McConnell fatigue, according to PPP’s latest. When the pollsters asked if McConnell deserved reelection “[a]fter 30 years in the U.S. Senate,” 54 percent said he does not, compared with just 38 percent who said he does deserve another term. The pollster asked 625 voters that question, and it has a margin of error of 3.9 percent.
Nonstop cute at the Forth Worth Zoo where I might be spending a bit of time this month relearning the joys of teenagers. Don’t ask yet … I’ll share in good time. Just promise me you won’t faint when I do. Long time relationship curmudgeon–me–is in one and I am trying to relearn the joys of monogamy coupled with the agony of distance. There are pictures but I am trying not to jinx things quite yet. So, anyway, humor and pity me until I figure out wtf I am doing. Okay?
But now, time to OOOOOOOOOOOOO AND ahhhhh at Baby Elephant Belle!
The Fort Worth Zoo’s new baby elephant is already a big hit with children who visit the zoo.
Their youthful fascination was enhanced Tuesday when zoo officials added a child’s inflatable pool to the elephants’ enclosure for Belle’s enjoyment. Belle could be seen rolling in the pool.
Bell was born July 7 and is just the second Asian elephant to be born at the Fort Worth Zoo in its 104-year history.
Zoo spokeswoman Katie Giangreco says Belle weighed 330 pounds at birth is gaining two pounds per day. She says Belle “is curious and full of personality, learning new things every day, learning what her trunk is for, learning to use her legs.”
Belle’s mother, Rasha, is helping in that instruction.
Asian elephants have been listed as endangered since 1976.
I am gonna close with Krugman on an Op Ed by Brad Delong on Larry Summers. I have no idea why any one thinks Larry Summers has the temperament for the job of Fed Chair despite his credentials, but oh well. Let’s let the shrill one say it better than me.
Brad DeLong asks why the left views Larry Summers as a right-wing hyena. I think that’s a straw man, or maybe a straw hyena. What is true is that a lot of people even on the moderate left don’t trust Summers, even though much of his commentary over the years has been very much center-left — and since leaving office he has become one of our most prominent fiscal doves.
Where does this mistrust come from? Well, let me give you an example: Jackson Hole, 2005, a conference dedicated to celebrating the record of, ahem, Alan Greenspan. Raghuram Rajan had presented a paper warning that the risks of financial instability were much higher than most people were acknowledging. (I think Rajan has been wrong on many issues since then, but that was certainly a prophetic paper). And the response, in general, took the form of ridicule.
The principal discussant was Don Kohn (pdf), who was (barely) polite but completely wrong-headed, celebrating financial innovations such as “the growing ease of housing equity extraction”:
Leading off on the rest of the discussion (pdf) was Larry Summers, who wasn’t polite, dismissing Rajan for being “slightly Luddite” in questioning the value of financial innovation, which he compared (in a really bad analogy) to technological progress in transportation.
Let’s face it. Summers is an asshole. I don’t care about his degrees or whatever. Assholes should not be in places where they have to influence people into doing the right thing on policy that effects the entire globe. Even, if it is a well-educated asshole, it is still just an asshole.
That is all.
What is on your reading and blogging list today?
Posted: July 3, 2013 Filed under: Barack Obama, Foreign Affairs, Republican politics, U.S. Politics | Tags: Benghazi, deliberately obtuse, fake scandals, Glenn Greenwald, hype, Jonathan Chait, Paul Krugman
A few days ago Paul Krugman wrote a not-very-exciting post at his blog “The Conscience of a Liberal.” The point of the post was that right wingers have not been as successful in their efforts to hype fake scandals during the Obama administration as they were in the Clinton years. Krugman writes:
When Barack Obama was elected, I was sure that it would be the Clinton years all over — that he would be subjected to an endless series of claims of “scandal”, creating the sense of a tainted administration even though all the alleged scandals would turn out to be either trivial or nonexistent. Remember, after all those years of front-page headlines and $70 million in public funds, the Whitewater investigation came up dry.
In fact, however, none of that happened during Obama’s first term. But would the second term be different? For a little while it looked as if the old scandal machinery was finally springing back to life, with Benghazi, the IRS, and more. You could almost hear the sigh of contentment from a certain part of the press corps.
Krugman’s post had nothing to do with the NSA leaks, Edward Snowden, or Glenn Greenwald; but he made the mistake of just barely mentioning the NSA story.
But now it has all evaporated. Benghazi never made sense; it turns out that the IRS was targeting conservative as well as liberal groups. And as Chait says in the linked article, the NSA stuff is a policy dispute, not the kind of scandal the right wing wants.
And today, Greenwald chose to sic his permanently outraged
shock troops fans on Krugman based on a deliberately obtuse reading of Krugman’s referencing Chait’s characterization of the NSA issue as a “policy dispute.” Here’s Greenwald’s take on it.
Defending the Obama administration, Paul Krugman pronounced that “the NSA stuff is a policy dispute, not the kind of scandal the right wing wants.” Really? In what conceivable sense is this not a serious scandal? If you, as an American citizen, let alone a journalist, don’t find it deeply objectionable when top national security officials systematically mislead your representatives in Congress about how the government is spying on you, and repeatedly lie publicly about resulting political controversies over that spying, what is objectionable? If having the NSA engage in secret, indiscriminate domestic spying that warps if not outright violates legal limits isn’t a “scandal”, then what is?
Of course it was really Jonathan Chait who made the distinction between “scandals” and “policy disputes.” Here’s what Chait wrote about it:
Obama’s prosecution of leaks, or use of the National Security Agency — is not a scandal at all. It’s a policy controversy. One can argue that Obama’s policy stance is wrong, or dangerous, or a threat to democracy. But when the president is carrying out duly passed laws and acting at every stage with judicial approval, then the issue is the laws themselves, not misconduct.
And of course it’s really Chait with whom Greenwald is enraged; because Chait had the temerity to write a somewhat humorous column in which he noted the similarities between Greenwald and Ralph Nader–one of which is that each of these men was apparently born without a sense of humor.
But instead of attacking Chait, Greenwald picks a fight with Krugman, who really doesn’t need that right now since he’s grieving the lost of his father. It’s probably a low blow for me to bring that up, but I can’t believe Greenwald didn’t know it, since he apparently reads Greenwald’s blog.
Greenwald has been running around to any media outlet who will have him announcing that he’s got an upcoming “bombshell” scoop that “will shock the world.” I wish he’d just get busy and publish it instead of spending so much time hyping his stories and lecturing everyone about how to interpret Edward Snowden’s behavior.
I think today I’ve finally had enough of St. Glenn to last me the rest of my life.
Posted: May 24, 2013 Filed under: Austerity, morning reads, The Media SUCKS, U.S. Economy, Voter Ignorance, We are so F'd | Tags: austerity, Bruce Bartlett, Jim Grant, Mark Thoma, Micheal Kinsley, Paul Krugman, serious issues of fact avoidance
I am grading essays and papers on currency crises (circa 1999-2002) and financial crises (the last one) and basically all those kinds of crises the tend to come from out of control speculation and the government encouraging the wrong kinds of things. This mostly happens because rich people donate to the campaigns of politicians and own newspapers and media outlets. Politicians want to get reelected and get more powerful and more rich. Rich businesses and investors want to get more powerful and rich. It’s kind of the perfect alignment of shared interests based on lust and greed and all the baser instincts. Isn’t it terrible when the facts get in the way? So, they just ignore them or consider them an alternative liberal opinion. It drives me nuts.
So, BB asked to me write something about what I research and teach and usually regurgitate to you. You know that the austerity narrative has theoretically fallen apart. Well, it’s also falling apart via the numbers, data, facts and reality So, let’s start out with some very bad, awful, terrible horrible Dubya Bush Policy 10 years ago and why tax cuts for the rich still don’t do good things for the economy or now, even the investment markets. This is written by economist Bruce Bartlett who was an adviser to the Reagan administration.
Ten years ago this month, Congress enacted the third major tax cut of the George W. Bush administration. Its centerpiece was a huge cut in the tax rate on dividends. Historically, they had been taxed as ordinary income, but the Bush plan, enacted by a Republican Congress, cut that rate to 15 percent. The tax rate on ordinary income went as high as 35 percent.
This initiative originated with the economist R. Glenn Hubbard, who had been chairman of the Council of Economic Advisers when the proposal was sent to Congress. Mr. Hubbard was a strong believer that the double taxation of corporate profits – first at the corporate level and again when paid out as dividends – was a major economic problem.
During the George H.W. Bush administration, Mr. Hubbard had been deputy assistant secretary of the Treasury for tax policy and wrote a Treasury report advocating full integration of the corporate and individual income taxes.
Mr. Hubbard had also spearheaded enactment of big tax cuts in 2001 and 2002 that he said would jump-start the American economy. In an op-ed article in The Washington Post on Nov. 16, 2001, he predicted that the soon-to-be-enacted 2002 tax cut, which President Bush signed on March 9, 2002, would “quickly deliver a boost to move the economy back toward its long-run growth path.”
Mr. Hubbard predicted that it would create 300,000 additional jobs in 2002 and add half a percentage point to the real gross domestic product growth rate.
There is no evidence that the tax cut had any such effect. The unemployment rate remained above 5.7 percent all year, rising to 5.9 percent in November and 6 percent in December. The real G.D.P. growth rate fell each quarter of 2002, and by the fourth quarter growth was at a standstill. Hence the need for yet another big tax cut.
The idea of the 2003 legislation was to raise dividend payouts, thereby bolstering personal income, and raise the prices of common stock, which would improve household balance sheets. As President Bush explained in his signing statement, “This will encourage more companies to pay dividends, which in itself will not only be good for investors but will be a corporate reform measure.” He also said the dividend tax cut would “increase the wealth effect around America and help our markets.”
The Treasury Department issued a fact sheet on July 30 asserting that the decline in dividends had been a cause of the weak stock market and noting that dividend payouts had risen since enactment of the tax cut on May 28.
Subsequent research, however, found that the increase in dividends was a short-term phenomenon and mainly at companies where stock options were a major form of executive compensation. A 2005 Federal Reserve Board study found that the United States stock market did not outperform European stock markets after the dividend cut. Nor did stocks qualifying for lower dividend taxes outperform those, such as real estate investment trusts, that did not qualify for lower dividend taxes. Non-dividend paying stocks slightly outperformed dividend-paying stocks, and many corporations that did pay higher dividends scaled back stock repurchases by a similar amount.
So, this is yet another example where Republican economic policy is totally out of step with outcomes, data, and reality. Yet, they keep repeating that it works the way it doesn’t work just because, remember, the agenda is greed, power, and more wealth to the already greedy, powerful and wealthy. The deal is they get it wrong, got it wrong, and continue to get it wrong but that doesn’t stop them from trying to weasel their way into a narrative that says, hey, this really isn’t wrong. There’s still some validity there and all economists must be liberals like Paul Krugman who are just talking up their philosophical line. Take austerity economics, please. I mean it. Take it and those idiots who push it to hell and leave them there. Still, the very serious people want to take this very seriously even when it is just plain seriously wrong. Take Michael Kinsley, please. He can report from Hell.
I’ve spent a rather alarming portion of this week wading into intellectual pissing matches, so I’m loath to respond to Michael Kinsley’s response to last week’s brouhaha over austerity policies. But one paragraph does merit some pushback. After noting the backlash to his last column, Kinsley writes the following:
There are two possible explanations. First, it might be that I am not just wrong (in saying that the national debt remains a serious problem and we’d be well advised to worry about it) but just so spectacularly and obviously wrong that there is no point in further discussion. Or second, to bring up the national debt at all in such discussions has become politically incorrect. To disagree is not just wrong but offensive. Such views do exist. Racism for example. I just didn’t realize that the national debt was one of them.
Kinsley assumes that it must be the second explanation, and then goes on from there.
I can’t speak for anyone else who pushed back against Kinsley’s column from last week. Speaking for myself, however, I blogged about it because Kinsley was “spectacularly and obviously wrong.” I say this because almost everything I wrote in my response to Kinsley I knew at age 18 after taking Economics 101 in college.
To explain, let me focus on Kinsley’s motivation for thinking that the austerians have a point:
Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run. This doesn’t mean that they have forgotten the lessons of Keynes and the Great Depression. It means that they remember the lessons of Paul Volcker and the Great Stagflation of the late 1970s. “Stimulus” is strong medicine—an addictive drug—and you don’t give the patient more than you absolutely have to.
This is wrong for three reasons, one pedantic and two substantive. First, to be pedantic, the austerity debate is about the wisdom of using expansionary fiscal policy — i.e., running a significant federal budget deficit — to alleviate downturns. Paul Volcker was the chairman of the Federal Reserve and thereby responsible for setting monetary policy. He had nothing to do with fiscal policy. This is a distinction that I learned in my first few lectures on macroeconomics. So either Kinsley phrased this badly or he’s confused about what this debate is about.
It just keeps coming down to the fact that most journalists and politicians simply do not know what they are talking about when it comes to economics. So, they assume an economist like Paul Krugman has a liberal bias on all things–including the color of the sky and the laws of gravity and demand–and they make the worse assumption that those arguing Republican policy these days must have a valid point when the only point is, yes, you know it … to deliver more wealth, power and influence to themselves and their friends that already have it. Some times a lie really is just a lie.
Here’s a good blog post by Jonathan Bernstein that’s just oozing with the issue. There is no argument or theoretical question about austerity. But that’s not stopping the punditry.
A wonderful example of the myopia of the deficit scolds…
The background is that Michael Kinsley wrote a particularly bad column last week about “austerity,” a key point of which was based on factually incorrect memories of what went wrong in the 1970s; as you can imagine, this earned him plenty of corrections and dismissals from people who used access to accurate economic and government policy statistics.
Kinsley was quite taken aback by this, apparently, and wrote a follow up to defend himself. Dan Drezner has already pointed out that Kinsley is still relying on the same inaccurate memories that got his first column into trouble, but I actually found a different part of Kinsley II more interesting, in which he thinks he’s caught Paul Krugman in a contradiction.
Paul Krugman takes credit for good economic news whenever it happens. On Krugman’s blog site (“The Conscience of a Liberal”) last week were two bits of prose side-by-side. One was an ad for his latest book, End This Depression Now! “How bad have things gotten?” the ad asks rhetorically.” How did we get stuck in what now can only be called a depression?” Right next door is Krugman’s gloat about the recent pretty-good economic news. “So where are the celebrations,” he asks, “now that the debt issue looks, if not solved, at least greatly mitigated?” Greatly mitigated? By what? Certainly not by anyone taking Paul Krugman’s advice. He has been, in his own self-estimate, a lone, ignored voice for reason crying out in an unreasoning universe.
What’s the problem? The linked post by Krugman isn’t a gloat about good economic news! It is, to be sure a gloat; it’s a gloat about deficits…Krugman goes so far as to call lower deficits “progress,” although as I read it he’s really just saying that lower deficits should be counted as progress from the point of view of the deficit scolds.
What’s happening here is that Kinsley is projecting onto Krugman a classic deficit scold mistake; Kinsley is conflating the federal budget deficit with the economy. Krugman isn’t doing that; it’s purely Kinsley’s invention.
It gets, however, to exactly why Kinsley was buried under a large pile of abuse after his first column. Well, in part; the other part, as Krugman notes elsewhere, is “the existence now of a policy blogosphere…which makes bluffing harder.” Say something factually inaccurate these days, and you’re going to get slammed; it seems that some pundits who preceded that development find it hard to get used to it.
I still have no idea why journalists feel they just know everything about economics compared to say, knowing everything about Brownian motion or performing brain surgery. It’s the same with politicians. They just seem to confuse a really complex subject that most people really struggle with in college and never take beyond that with something like a political science class or a journalism class. You don’t even get real economic stuff until you way up there in school. The introductory stuff is like the ABCs and they don’t even seem to grasp that. Anyway, stop confusing getting facts wrong with just another opinion …
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