Man Without Qualities

Saturday, March 01, 2003

What Time Is It?

Find out here.

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Friday, February 28, 2003

Two More

The Note says:

With Bush facing the possibility of running for re-election with an economy so weak that just might trump any national security credentials, here's your clip-and-save of why and how 43 (struggling GDP and all) is in better shape than his dad was at this point in the 1992 cycle,

and then provides a list of factors which seem to favor Mr. Bush. The list is rather long, and I'm not convinced of the significance of every listed item, but I would like to append to that list two more factors which I think do have real significance:

1. Unlike his father, the current President is making significant inroads into ethnic constituencies that are absolutely essential to Democratic success. As Donna Brazille put it: "The GOP is making inroads in the black vote. It's trending away. Groups of [minority] voters are hearing the Republican message." Every time Powell and Condi goes on television, obviously in charge, another piece of this constituency comes loose - and the Democrats still retain the proven multiply-inept Terry McAuliffe in his role over probably more capable African-Americans. And it's not just African-Americans who are "trending" - its Hispanics, too. Just one word: "Estrada."

[UPDATE: And certain remarks of Senator Lieberman that passed little-noticed outside of the African-American community are still troubling and vividly remembered within that community. Former Atlanta Mayor Maynard Jackson, a longtime civil rights activist and prominent player within the Democratic Party - the man who should now be the head of the Democratic National Committee - has said: "I didn't appreciate Lieberman saying that Thurmond is 'a man of iron with a heart of gold.' " Mr. Jackson is a man of admirable and remarkable restraint.]

2. Democrats are experiencing a huge loss of American Jewish support on the national level because of the Iraq/Israel interface and Democratic waffling over the coming Iraq war. The fact is that what the President is doing hugely helps Israel, as Israel keeps pointing out. And, no, arguments that invading Iraq may trigger Iraqi attacks on Israel are not going to get the Democrats out of this box. The Israelis see through those silly arguments and so do most Americans - including most American Jews. It's a big problem for the Democrats.

In contrast, the current President's father got into all kinds of stupid scrapes with the American Jewish community and Israel, which inculcated a deep suspicion of the former President. Just by way of example, remember the kerfluffle over the housing subsidies for settler housing in occupied areas, and the prior President's appalling comments of September 1991, when he spoke of himself as "one lonely little guy down here" and referred to his being "up against some powerful political forces?" It is all but impossible to imagine such a thing in this Administration - where Mickey Kaus runs a cottage industry analyzing the scope of Likudnik influence in the White House.

Has the current President learned from the mistakes of his father? If you have to ask, ....
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Self Serving Soros

A few years ago it was entirely arguable that the most hated man in the international community was an infamous individual who trafficked against the interests of countries around the world to the fury of foreign governments everywhere: George Soros.

For example, Malaysian prime minister Datuk Seri Dr Mahathir Mohamad has accused hedge funds owned by Soros of speculating against regional currencies including the ringgit which led to the 1997 Asian financial crisis: "When he (Soros) said that I was a menace to my own country, actually he is the menace to the world's economy." What his critics called "assaults" on currencies around the world, including the Pound, Italian Lira, Rouble, Thai baht, Malaysian ringget and Japanese yen exposed him and his funds to scathing criticisms, accusations that he was a major threat to the world economy, demonic and "worse than Hitler." International hatred of Mr. Soros at both the international government and individual levels seemed to know no bounds nor did there seem to be any limits to its scurrilousness. That criticism was often excessive, hideous and racist.

It all meant nothing to Mr. Soros, who quite properly kept racking up his billions in profits until he lost his shirt in some very bad currency bets, which caused him to scale back his investment activities.

Mr. Soros is now a full time blowhard who says the President of the United States must do what some foreign governments tell him to do, and govern by international poll results. He also complains that the Bush administration has a "visceral aversion to international cooperation."

Odd. Mr. Soros seems to have had quite a different view of the value of "international cooperation" when he was racking up his billions by blowing up currencies from one end of the earth to the other to the howls of all those international politicians.

I, personally, prefer the original, rapacious Soros, who stuck it to all those governments and currencies as a matter of economic principle - not the current blowhard sent down by central casting to play the phony, make-it-all-better philanthropist role.
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Underappreciated Dead White Men Get Boost

Talk show host Oprah Winfrey revealed that she was bringing back her book club to celebrate writers from the past, such as William Shakespeare, William Faulkner and Ernest Hemingway.

Bravo, Oprah! Bis!

But the real test will come with Mark Twain, especially Huckleberry Finn.

You can go there, Oprah! Make a real difference! Twain's a genius for everyone to read and celebrate! Go, girl! You've got a billion in the bank - you can afford to do what's right, open their eyes - you've done it before!!!
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For Those Who Prefer A Real Meal

Perhaps the reader made it a New Year's resolution: no more Herr Doktorprofessor Krugman, no more Good Professor DeLong, no more economic junk food for the mind generally.

What to read? Of course, there are many good economics blogs: Jane and Mindles. Don Luskin is an excellent economist with a personal blog who is also associated with the TrendMacro site, which regularly links to wonderful economics articles from all over the web. There are lots more, some of them listed on the left.

And for a site which finds an interesting niche between the academic and the really popular, one might try looking at the Library of Economics and Liberty. The current interview there with Dr. R. Glenn Hubbard, the just-resigned Chairman of the President's Council of Economic Advisers, is surprisingly transparent on many interesting points - avoiding many of the stock non-answers common to this kind of interview. Dr. Hubbard really does answer some questions with clarity, and puts himself on the line. In this case, at least, he's the anti-Krugman, anti-obscurationist.
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Ah, Tradition II

Tom Maguire says the problem TAPPED identified just gets worse and worse.

Ah, these kids! No respect for tradition, with their sex and their drugs and their Nobel committees that hand out economics prizes to people who aren't even economists.

And their music!

It's just noise!

And what about those blogs?! They just don't know when to shut up and leave a newly minted tradition in peace!
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Faster And Better Than Thought

The Associated Press reports:

The economy grew at a 1.4 percent rate in the final quarter of last year -- twice as fast as the government first estimated. ...

The major factors in the upward revision to fourth quarter GDP were stronger investment by businesses in building up stockpiles of unsold goods and a slight boost to consumer spending, the main force keeping the economy going. ...

Economists believe the economy is picking up momentum in the current quarter, expanding at a rate of 2.5 percent or more.

But to Paul Krugman, the apocalypse is near:

Is there any relief in sight? The conventional wisdom among business forecasters now calls for growth of a bit more than 3 percent over the next year. Growth at that pace is barely enough to keep up with rising productivity and an expanding labor force, not enough to make a serious dent in unemployment.

"Barely enough to keep up with rising productivity?" It seems that Herr Doktorprofessor sees a need for economic growth that exceeds rising productivity. Of course, when the economy is coming out of a recession or otherwise underperforming such a state of affairs is possible in the very short run. But well within sight a point must be reached where only rising productivity and an expanding labor force can sustain an expanding economy. What the heck is he talking about here? [UPDATE: And, by the way, wasn't it just a little while ago that Democrats were telling us that the real problem with the economy was that workers just didn't have enough time to spend with their families and personal lives? Why don't we hear about that issue now from the likes of Messrs. Krugman, DeLong and Daschle? Unemployment is painful for those who wish to be employed - and things like calling it "free time" the way, say, Europeans label their statute-imposed work week limitations, doesn't make the problem go away. Couldn't we at least be treated to something along the lines of "workers have even less time now, because they must now work even longer and harder to make ends meet now that there is less employment!" Just asking.]

And rising productivity - thought by the naive be a good thing - is actually seen by this sophisticated economist as a bad or threatening thing, something that we must "keep up with," like a weight problem. Apparently (resort to "apparently" is needed here because Herr Doktorprofessor provides no explanation), the current theory around the Princeton economics department is that rising productivity is luddite in its effect, and every up tick in productivity means that many more human workers displaced. Other, sillier, people might think that up ticks in productivity create more efficiency and wealth - and more jobs - pretty fast. Those jobs are clearly "in sight" to any but the intentionally myopic, although they may not come well before the next election - which is probably all Herr Doktorprofessor cares about now, anyway.

And what to make of "enough to make a serious dent in unemployment?" According to the Bureau of Labor Statistics:

Payroll employment rose by 143,000 in January, and the unemployment rate decreased to 5.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment in retail trade and construction increased after seasonal adjustment, but most other major industries were little changed.

What is a "serious dent" in an unemployment rate of just 5.7%? Surely Herr Doktorprofessor would not view a mere reduction in this rate to, say, 4.7% as a "major dent." He seems to see a need for something a lot more "major" than that. The Man Without Qualities is no fan of the Phillips Curve, but recent experience shows that an unemployment rate of less than 4%, say, has some pretty strange effects, effects which are scarcely without their problematic aspects, although not necessarily bad. For example, who says it's necessarily bad that that a new college graduate with a computer programming degree gets hired into a first job at more than the combined income of her parents? Who says it's bad that the florist shop help have to be paid way, way more than minimum wage, won't give customers the time of day and take off early to go rock climbing, or that real estate prices in the magic valley or belt or alley de jour appreciate at 25% a month? Those are decisions for the market to make. Contrary to the dogma of the Phillip's Curve worshiper cult, I can see no need to avoid such low unemployment rates, if that's what an otherwise healthy economy produces. But it is a little hard to see the political or economic imperative for driving the economy into a state that produces such effects - even if one resorts to expressing the issue in percentage-of-percentage terms (as in describing a rise in unemployment from 4% to 6% as "a 50% rise in unemployment" - a type of phrasing which seems increasingly popular on the left - although that rhetoric didn't work for them in the 2002 elections - or even describing the growth in the GDP last quarter as "twice as fast as the government first estimated").


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Thursday, February 27, 2003

Speak, Dan

Dan Rather has an op-ed piece in OpinionJournal today concerning his recent interview with Saddam Hussein. It is as completely lacking in insight as it is filled with Rathery ticks, such as his annoying use of "this reporter" when he means "I" or "me." The anchor and managing editor of "CBS Evening News" shares portentous pseudo-insights: "It is ... a story.. that can be told in a single line: Saddam Hussein considers himself to be the consummate survivor" and "one imagines, he may think that he can slip, foxlike, into the underbrush, to gather his resources for the next battle" and the like fill the allotted inches.

Let's face it: Mr. Rather did not collect information during his interview that allows him to justify the conclusion that Hussein's story can be told in such a "single line." And where the heck could the dictator of a whole country "slip, foxlike, into the underbrush" if the United States takes his country from him? Is "this reporter" suggesting that Hussein thinks he can take to the hills or the caves a la the young Castro or bin Laden? Please. If that's what he means, no wonder Mr. Rather won't come right out and say it.

But surely the most unintentionally hilarious part of this whole ream of Rather blather is this reporter's apparently naive unawareness that he has been chosen as a useful idiot:

This ... reporter found himself again interviewing the Iraqi president. ... I wound up, on this trip, in a meeting with Deputy Prime Minister Tariq Aziz. He listened and then said that they liked the fact that I knew the region well and had a reputation for being independent. He would take my request directly to the president, with the clear understanding that there would be no conditions whatsoever about questions to be asked in any interview. There was a long night and day of waiting. Then, a phone call in my hotel room, a pickup by armed guards, and a long circuitous drive, first to a "guesthouse," then to the palace. Saddam Hussein would see me there.

Can anyone think that Deputy Prime Minister Tariq Aziz cared a bit that Mr. Rather "knew the region well and had a reputation for being independent?"

No. What Deputy Prime Minister Tariq Aziz cared about and liked was that Mr. Rather has a reputation for being a foaming-at-the-mouth critic of the President of the United States and an obvious opponent of war with Iraq.

"Knew the region well and had a reputation for being independent?" Who would have guessed that Dan Rather does such droll stand up comedy?

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Krugman v Kuttner: Not Exactly The Fight Of The Century

If this were a boxing match, calling it would be strange:

This is Don Luskin at ringside in Madison Square Garden! There's the bell!

Krugman has just hit Kuttner with a savage left uppercut!

Kuttner comes back with a left to the body!

Krugman counters with a left to the jaw!

It's a left!

Another left!

And ... a left!

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More On That Shay

Aaron Haspel has some additional thoughts on Oliver Wendell Holmes Sr.'s poem: The Wonderful One Horse Shay.
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You Can't Always Get What You Want (Satisfaction)

Brad DeLong complains about the economists' letter supporting the Bush Administration's budget proposals. His complaint has landed him in some hot water.

Professor DeLong comments on this criticism in a post bearing the curiously appropriate style and grammar of a Valley Girl rant:

Wow! Gee! Especially since my major complaint was a "process" one: my major objection was not that they had signed a letter in support of the Bush plan, but that they hadn't drafted their own economist-type letter--they'd just signed something very short drafted by some clueless dweeb associated with White House media affairs.

Professor DeLong's original post quite clearly states his three reasons for objecting to the letter. But - contrary to what he says in his "explanation" - it is untrue that his "major objection was not that they had signed a letter in support of the Bush plan, but that they hadn't drafted their own economist-type letter..." In fact, Professor DeLong's major objection was that the letter did not say what he wanted it to say:

And--here is ... the reason I was most disappointed--exercising their muscles would have materially improved the chances that Bush Administration economic policy would move in a positive direction. ... The chance of establishing the dum metuant point, that good substantive economic policies are worth having, if only because otherwise one's stable of economists won't cooperate, has been lost.

Professor DeLong objected to the letter because he objects to the substantive economic policies the letter supports. Could a reasonable person believe otherwise? He did criticize the economists for signing the letter rather than drafting another, but only because their signing the letter increased the likelihood that those substantive economic policies would become reality. Professor DeLong would have objected every bit as much as he did if the economists had drafted their own letter in favor of the same substantive economic policies. In short, it is untrue that his major complaint was a "process" one.

Another criticism he offers up:

If you have an opportunity as a professional economist to gain some media attention, you have a duty to use that opportunity to raise the level of the media debate over economic policy. This letter doesn't. It doesn't tell anyone who reads it why cutting dividend taxes would (if the appropriate adjustments are made to hold the right other things constant) be a good idea.

His assertion that this matter involved a failure of "duty" is fatuous. From where does this "duty" come? It is perfectly fine for an economist to seek economic progress solely through his or her academic writings - and turn down every, single "opportunity as a professional economist to gain some media attention." One's academic writings have to be of high quality to take that route and actually be effective. In short, there is no such "duty" to grandstand. Of course, some good economists do, and more mediocre economists must, resort to manipulating the media and the government/academic revolving door for influence.

And what about his complaint that "[t]his letter doesn't... tell anyone who reads it why cutting dividend taxes would (if the appropriate adjustments are made to hold the right other things constant) be a good idea?" If this is a valid criticism of this letter, then it applies equally to the letter signed by 450 economists opposing the Administration's plans (which Professor DeLong did not sign). That letter states, without explanation:

The permanent dividend tax cut, in particular, is not credible as a short-term stimulus. As tax reform, the dividend tax cut is misdirected in that it targets individuals rather than corporations, is overly complex, and could be, but is not, part of a revenue-neutral tax reform effort.

So all of the 450 economists signing the opposing letter and the 250 economists signing the letter of support signed letters to which Professor DeLong's objection applies. Maybe the reason for this is that each of these letters was crafted to fit in a newspaper ad. It wouldn't have mattered who wrote them, there is no way they could have contained any coherent explanation of "why cutting dividend taxes would (if the appropriate adjustments are made to hold the right other things constant) be a good idea." Maybe these 700 economists thought that because they were respected in their field they could "raise the level of the media debate over economic policy" just by signing a letter with some general conclusion which did not read like an economics encyclopedia - and they were right. All of those 700 economists seem to understand these simple facts that Professor DeLong says he cannot grasp.

Professor DeLong also complains that the letter supporting the Administration "doesn't tell anyone who reads it why it would improve corporate accountability (a thing that nobody has explained to me to my satisfaction)." Now a lot of people have tried to explain this issue, and Professor DeLong says that none of those explanations is to his satisfaction. So how could a letter designed to fit in a newspaper ad possibly include an explanation? He is again dissembling. In any event, maybe this will help:

One consequence of the corporate income tax, which came into being in 1909, is that it has lessened shareholder control over corporate assets. A key way shareholders exercised control in the pre-corporate tax era was by demanding that firms pay out a large percentage of their profits in the form of cash dividends. Among other things, this helped guarantee that corporate earnings were "real" and not based on creative accounting. At this time, it was common for companies to have a dividend-price ratios of about 5 percent.

Eventually, companies and shareholders figured out that it was mutually beneficial either to retain corporate profits, thereby raising the value of company assets, or use those profits to buy back shares on the open market. The effect of both strategies is to raise stock prices. Thus, shareholders get their earnings in the form of capital gains, rather than dividends. Not only are capital gains more lightly taxed than ordinary income, but shareholders themselves decide when to pay the tax, since capital gains taxes are assessed only when shares are sold.

The flexibility afforded by receiving one's profits as capital gains allowed sophisticated investors effectively to pay nothing except the corporate tax. They could eliminate even the capital gains tax on their shares by realizing gains only when they had offsetting losses, or by borrowing against their shares.

As a consequence, there has been a steady decline in the number of companies issuing dividends and the amount of such pay-outs. According to economists Eugene Fama and Kenneth French, the percentage of large companies paying dividends in a given year has fallen from 68.5 percent in 1978 to 21.3 percent in 1998. Over this same period, the dividend yield fell from 5.28 percent to just 1.49 percent. In effect, most shareholders are now getting virtually all of their investment returns from capital gains rather than dividends.

Unfortunately, in the process, investors lost an important source of control over the assets they ultimately own. Freed from the need to come up with hard cash to pay quarterly dividends, corporate managers had much more flexibility in how to present a company's performance to shareholders. Although Securities and Exchange Commission rules and accounting conventions theoretically kept them honest, inevitably there were gray areas that could be exploited by aggressive managers.

Or perhaps Professor DeLong would prefer to read about how the taxation of corporations encourages corporate management to acquire other companies rather than concentrate on what performance management can extract from the corporate assets they already control - thereby avoiding full accountability for their past performance. In that case, he could study this paper by Nobelist Myron Scholes and others.

And there's lots more out there if he cares to look. But, then, the whole question is whether the explanations are to the Good Professor's personal satisfaction. And that is a matter that requires competence, intellectual honesty and open mindedness.

But for now it is enough to contemplate how much confusion he exhibits, and how many not-very-hard concepts and considerations he misses or misunderstands, in connection with just one short letter. It terrifies me to imagine what it is like to be his student.

Has he had accomplished students?
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Curing Health Care

In today's Wall Street Journal Walter Olson scribes a terrific article on the ongoing medical malpractice wars that threaten the heart of American health care. Subscription to the Journal is required, but the following excerpt should give some suggestion of what is at stake:

[A] comprehensive new three-year study surveying what is known about the causes of cerebral palsy and brain injury in full and near-full term infants ... [finds that] "the vast majority" of brain damage and cerebral palsy among these infants originates in factors largely or completely outside the control of delivery-room personnel -- factors that include prenatal infection, genetic fetal abnormalities, disorders of blood clotting, and maternal thyroid problems and diabetes. Contrary to what had long been assumed, interruption of oxygen during labor is "not a significant cause in most of the cases." Why is this news? In part because lawsuits blaming OBs for cerebral palsy and other infant brain damage may constitute the single biggest branch of medical malpractice litigation, yielding lawyers the highest settlements and the richest contingency fees, rivaled only by failure to diagnose cancer. If ACOG's report is to be credited, much of this litigation looks to be scientifically unfounded.

There's lots more, all of it worth reading and thinking about.

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Ah, Tradition!

Daniel Kahneman has no doctorate in economics!

And he was allowed to found an entire school of economics! So he seems to be in the business of granting doctorates in economics to other people.

Somebody alert the Nobel Prize Committee who awarded him the Nobel Prize in Economics just a few months ago!

Somebody alert TAPPED!

And for God's sakes, don't let him sign any letters to the President pretending to be an economist! For, as TAPPED says, by tradition, one can't claim to be an economist unless one has the sheepskin - and a mere Nobel Prize in economics sure ain't sheepskin, although it does help to pay the bills.

Now that he's won his Nobel Prize in economics, maybe some university will give Professor Kahneman an honorary doctorate in economics - that all-important sheepskin - which should clear up his checkered past with TAPPED.

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Wednesday, February 26, 2003

Scenes Of Clerical Life II

Peter Sean Bradley has some very interesting things to say about the ongoing attempt by a Massachusetts state court to impose a "reasonable care" standard on the Catholic Archdioceses (and, by extension, all churches) there, including a cite to the very apposite Richelle v. Roman Catholic Archbishop of San Francisco (filed 2/14/03) which came down on February 14, 2003 and of which I had no knowledge at all.

Many thanks, Peter.
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Not An Ornament To His Profession

Judge Richard Posner on Justice William O. Douglas:

Apart from being a flagrant liar, Douglas was a compulsive womanizer, a heavy drinker, a terrible husband to each of his four wives, a terrible father to his two children, and a bored, distracted, uncollegial, irresponsible, and at times unethical Supreme Court justice who regularly left the Court for his summer vacation weeks before the term ended. Rude, ice-cold, hot-tempered, ungrateful, foul-mouthed, self-absorbed, and devoured by ambition, he was also financially reckless--at once a big spender, a tightwad, and a sponge--who, while he was serving as a justice, received a substantial salary from a foundation established and controlled by a shady Las Vegas businessman. ... The deterioration manifested itself in paranoid delusions, senile rages and sulks, sadistic treatment of his staff to the point where his law clerks--whom he described as "the lowest form of human life"--took to calling him "shithead" behind his back, and increasingly bizarre behavior toward women, which included an assault in his office on an airline stewardess who had unsuspectingly accepted an invitation from this kindly seeming old man to visit him there....

One can be a bad person and a good judge, just as one can be a good person and a bad judge....Douglas was not a good judge... [T]aken as a whole, Douglas's judicial oeuvre is slipshod and slapdash. Here are typical criticisms, none of them by conservatives. "His opinions were not models; they appear to be hastily written; and they are easy to ignore" (Lucas Powe). Their carelessness is rooted in "indifference to the texture of legal analysis, which arises from an exclusively political conception of the judicial role" (Yosal Rogat). "Douglas was the foremost anti-judge of his time" (G. Edward White). A careful study of his tax opinions by Bernard Wolfman and others has documented Douglas's unreasoning hostility to the Internal Revenue Service and accuses him of "refusing to judge in tax cases."

And Posner's just warming up!

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That Old Pistol Whippin' Justice Stevens

The New York Times reports:

The Supreme Court ruled Wednesday that federal racketeering and extortion laws were improperly used to punish aggressive anti-abortion protesters, lifting a nationwide injunction that barred people from interfering with clinic business. The court's 8-1 ruling applies to protests of all sorts, not just at abortion clinics.

Upon reading that a Supreme Court ruling has come down 8-to-1, there is a strong momentary inclination to guess: who was the dissenter? Supreme Court Justices are unpredictable and the answer is often surprising - but here I was in no doubt from the instant I read the article lead. Justice Stevens dissented, of course.

Why was this obvious? Because the case under consideration essentially came down to whether federal racketeering and extortion laws could be used to pistol whip aggressive protesters. Yes, the actual Court opinion is much more esoteric:

We first address the question whether [the protestors'] actions constituted extortion in violation of the Hobbs Act. That Act defines extortion as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." 18 U. S. C. §1951(b)(2). ... [The government and other parties opposing the protestors] asserted ... that [the protestors'] committed extortion under the Hobbs Act by using or threatening to use force, violence, or fear to cause [women seeking abortions] "to give up" property rights, namely, "a woman's right to seek medical services from a clinic, the right of the doctors, nurses or other clinic staff to perform their jobs, and the right of the clinics to provide medical services free from wrongful threats, violence, coercion and fear."

Now, whatever other irregularities may be committed by overly aggressive protestors obtaining property is not one of them. The attempt to stretch the meaning of "property" to include "a woman's right to seek medical services from a clinic, the right of the doctors, nurses or other clinic staff to perform their jobs, and the right of the clinics to provide medical services free from wrongful threats, violence, coercion and fear" is clearly improper in the context of a criminal statute. Such a construction would amount to a government pistol whipping of protestors of all stripes - and was seen in this light by 8 Justices.

This was not a case aligned on current political lines. The Court's decision had been sought by activists like actor Martin Sheen, animal rights groups and even some organizations that support abortion rights, all of whom argued that protesters of all types could face harsher penalties for demonstrating, if the court ruled otherwise.

So why is it so obvious that Justice Stevens would dissent from what should have been an easy case? Simply because Justice Stevens has long seen nothing wrong with government pistol whipping as a substitute for correct policy. For example, in his critique of antitrust policy, The Antitrust Paradox, Robert Bork lamented the attitude among some policymakers and practitioners that antitrust need have neither coherence nor an intellectual foundation: "Several hundred lawyers at a meeting of the Antitrust Section of the American Bar Association listened to a nationally prominent attorney, who subsequently became an Associate Justice of the Supreme Court, contend that it was fruitless to worry about antitrust's intellectual problems. Antitrust, the attorney said, is in the good old American tradition of the sheriff of a frontier town: he did not sift evidence, distinguish between suspects, and solve crimes, but merely walked down main street and every so often pistolwhipped a few people."

That "nationally prominent attorney, who subsequently became an Associate Justice of the Supreme Court" is Justice John Paul Stevens.

Is it true, as Justice Stevens insists that "The Court's murky opinion seems to hold that this phrase [the obtaining of property from another] covers nothing more than the acquisition of tangible property?" Of course not. And the Court goes out of ts way to point out that Justice Steven's misuse of precedent is dotty and that the Court is not attempting in this case to define exacly what "property" is for purposes of the extortion laws. But Justice Stevens is. Justice Stevens thinks that anything of "value" is "property," which is not the way those words are used. General political gain and having one's own candidate elected to office also have "value" - so demonstrators who support their candidates too aggressively commit "extortion" as far as Justice Stevens is concerned. And surely Justice Stevens must think that the vote of a member of Congress is "property" since such a vote has value at least on par with what he accepts as "intangible property." And if a vote is "property," then every member of Congress or an administrative agency must be both accepting and giving a criminal bribe every time the member trades his or her vote for the vote of another - since bribery surely includes (to Justice Stevens) taking "valuable property" in exchange for one's vote.

And it is nothing short of a disgrace that the Bush Administration defended the rejected construction of the law to the extent it did.


Above, I characterize Justice Stevens dissenting position as equating "property" with "things of value" (or, more exactly, "obtaining property" with "interference with things of value"). Justice Stevens does not expressly write that. He writes: "[T]he term "property" [has] an expansive construction that encompasses the intangible right to exercise exclusive control over the lawful use of business assets. ... The use of violence or threats of violence to persuade the owner of a business to surrender control of such an intangible right is an appropriation of control embraced by the term "obtaining."

That is: My description of what Justice Stevens is doing here is my conclusion, not his admission.

The majority opinion is based on its conclusion that the Hobbs Act did not apply in this case because, as the majority puts it, Petitioners neither pursued nor received "something of value from" respondents that they could exercise, transfer, or sell. Justice Stevens objects to the restriction of the kind of "value" implied by the majority opinion (something they could exercise, transfer, or sell) and wants to reconstrue "obtaining" this generalized property to include "interference with" that property. He indicates no boundaries for his generalized "property" other than it must be a thing with "value" of some form (not just something one can exercise, transfer, or sell).

I submit that when his shell game stops, there is nowhere for his argument to go other than to include in "obtaining property" all acts of interference with activities valued by the persons conducting such activities.

Further, how often is it the case that a person voluntarilly engages in an activity that that person deems to have no value of any form? For legal purposes, never. So Justice Stevens' approach has nowhere to go than to include all acts of interference with any voluntary activity of another within the definition of "obtaining property" under the Hobbs Act. In my opinion, Justice Stevens should be writing for the Onion, not the Supreme Court.
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A Jump In Unemployment Almost Everyone Can Enjoy

The Wall Street Journal reports:

President Bush's proposal to end the double taxation of dividends has been killed off so many times in the media that many investors think it'll never happen. But the real news is that the idea has been gaining support, as politicians and business take time to understand it.

This is excellent news in one respect. "Double taxation" of corporate income is silly, counter-productive and anti-growth: Another study, by the Business Roundtable, shows that the dividend proposal will increase job creation by as many as 500,000 a year over the next five years. (On a side note, the Journal refers to this five year effect as a "short term" benefit - but "short term" within the Beltway clearly means "before the next election." This aspect of the President's tax plan will not create meaningful "short term" benefits under that Beltway definition.)

But in another respect the news is not so good, because the President's program eliminates the wrong tier of such double taxation: the taxes paid by individuals. It's the corporate income tax that should go - not the tax on dividends. Even the liberal-leaning economists who signed the letter opposing the President's tax plan all agreed that the corporate income tax should go instead of the tax on dividends. (Perhaps it was this letter's inclusion of this common sense, obviously appropriate proposal that deterred Brad DeLong from signing it - notwithstanding his hyper-partisan distain for the President.) While that letter did say that its signers would prefer that corporate income tax repeal be included in a revenue neutral reform - the issues of overall tax revenue and tax structure are not identical, and I believe that most of those signers would hold that repeal of the corporate income tax would benefit the economy regardless of the level of overall tax revenue.

Of course, many people have pointed this out and - as the Journal admits - the President's approach is correct given the current political reality that the Tom Daschle's and Nancy Pelosi's of the world would have fallen upon any proposal to eliminate the corporate income tax like hungry political wolves.

But if, as the Journal reports, the substance of the President's approach can be accepted by enough people (especially in Congress), then perhaps it can be given the right form.

The cost differences between eliminating the corporate income tax and the dividend tax would be huge. Because the effect of the President's proposal is located at the wrong (individual taxpayer) tier, it must be - and is - enormously complex. The complexity essentially models as closely as possible at the individual level tax effects that could be achieved by actually eliminating existing complexity (and introducing no new complexity) if the corporate tax were eliminated.

To get some understanding of the dimensions of the cost and complexity differences between eliminating the corporate income tax and eliminating the tax on dividends one might consider that eliminating the corporate income tax would (1) put every corporate tax accountant and tax lawyer in the country out of business, (2) eliminate the entire departments maintained by every major investment bank in the nation for the sole purpose of cranking out tax-advantageous financing structures of the very type Congress is now saying it is shocked, shocked! to find that Enron employed to "manipulate" its earnings, and (3) completely eliminate all incentives on corporate management to spend time stroking their employer's tax position - leaving management lots more time to actually run the company and make money for their investors and a lot fewer opportunities to obscure managment's performance by manipulating tax obligations.

But the President's proposal will greatly increase the complexity of many aspects of the corporate/investor interface. The substantive benefits from the President's proposal are very real - much more than enough to justify the added complexity. But there is absolutely no good reason for accepting such additional complexity and cost when substantive tax effects which are almost the same as those the President is proposing could be achieved by Congress enacting a new statute of one sentence: The corporate income tax is hereby repealed and the Internal Revenue Service is authorized and instructed to publish such rules and procedures reasonably necessary and proper to effect an orderly and efficient termination thereof. And then all those tax accountants and tax lawyers and tax investment bankers could line up at the job board!

Wouldn't it be nice to see the unemployment rate jump just that much?

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Tuesday, February 25, 2003

Berkeley Dough Boy

Don Luskin posts a bracing critique of Brad DeLong's web site. DeLong is as bloated and insubstantial and self important as any product of modern American academics I know. A veritable Pillsbury Dough Boy of economics.

And Luskin is also right that Professor DeLong is a downright copyright kleptomaniac. His routine appropriation of entire magazine articles and other proprietary materials - sometimes with little or no commentary or criticism of his own - clearly often goes way beyond any legally accepted notion of "fair use." I do not know if taxpayer money is used to support Professor DeLong's website or if the University of California tolerates systematic copyright violation by its faculty members. But many other institutions of higher education do carefully point out to their students and faculties that copyright violation is a federal crime, that all providers of Internet access have a responsibility to ensure compliance with the Digital Millennium Copyright Act of 1998, and that failure to do so can expose the University to significant penalties in the tens of thousands of dollars for each violation.

Based on Professor DeLong's ongoing, casual intellectual property theft and his personality as generally displayed on his blog, I suggest that it might be interesting to ask around Berkeley economics and other places the Good Professor has inhabited over the years to see if Professor DeLong has any history of others - especially students, junior faculty and authors of papers which he has refereed for peer review professional journals - claiming or suspecting that he has stolen ideas and published them as his own. I suggest this simply because a habit of one form of egregious intellectual property theft naturally raises the question of whether the thief has the same casual attitude about misappropriating other forms of intellectual property. My guess (and it is only a guess) is that Professor DeLong is likely as big a stinker with respect to both forms of theft. And from the high handed fashion with which he deals with his blog critics, I also would not be surprised to find that the Good Professor uses his academic positions and basically abusive style to threaten and pound potential accusers down. So as a further guess I suggest that few who have been robbed by Professor DeLong (if there are any) would readily go public.

But discreet inquiries might be made concerning the reach of those DeLongian sticky digits - those that grasp the copyrights of others with such flagrant, narcissistic entitlement. Such inquiries might finger out some interesting consistencies in the character of this academic Dough Boy.

UPDATE: This post has predictably been controversial, which is fine. But The Man Without Qualities finds it interesting that I have not received - either by e-mail or in any post - a single defense of Professor DeLong's flagrant practice of copyright kleptomania notwithstanding the widespread and intense distain for much copyright protection in the Blogosphere.
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The Twentieth Century And After

One interesting characteristic of a receding wave of racial or religious bigotry is the often hilarious rattle of the stupid human pebbles left behind. I was reminded of this great source of humor by a poisonous letter to Bill O'Reilly from a certain Howard Veit - who appears to be a frequent commenter on many blogs. The letter inarticulately sputtered:

"O'Reilly you deserve what you got. You're just a dumb mick who got lucky."

First things first. "A dumb mick?" The venomous Veit should keep in mind that the correct epithet is "thick mick," - or, sometimes, "Thick Mick Bastard". Just as a detail of historical accuracy. Of course, in fairness to Mr. Veit one must acknowledge that the pristine contempt and mindlessness conveyed by the historically accurate insult has more recently been sullied by certain pornographic and extra-Celtic associations, which he perhaps was selflessly struggling to avoid.

But what really concerns me about Mr. Veit's letter is its ambiguity. Is "dumb mick" intended as a rage against Mr. O'Reilly's Irish ancestry - or is his Catholic faith also necessary to render him "dumb?" At one time - many years ago - this particular insult would probably have been construed to refer to Irish Catholics. True, most people today seem to think that religion and intelligence are not so closely related - but perhaps not Mr. Veit. Is Irish-American-Protestant writer David E. Kelley of the ABC television series "The Practice," and many other shows, also a "dumb mick who got lucky?" Is Mr. Veit's a defanged anti-Irish slur or a somewhat nastier anti-Catholic one? Clarity, Mr. Veit, strive for clarity. And what kind of post-modernist, critical-legal-studies-ridden society have we become that the meaning of a mindless personal insult has now been so severely undermined. Where are those nineteenth century certainties we all crave like good, hi-fat comfort food?

Yes, yes - it's not the nineteenth century now. But, on the other hand, the rattle of things such as Mr. Veit's little pebble of bigotry does yield some comic effect. It's true:

Though the great song return no more
There's keen delight in what we have:
The rattle of pebbles on the shore
Under the receding wave.

OVERSIGHT CORRECTION: Original Veit letter language received from Henry Hanks.

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Sunday, February 23, 2003

Sic Et Non Krugman

Or, in this case, ridiculous and counter-ridiculous.

Jay hits this one out of the ballpark.

But there are no corrections from the Times, Herr Doktorprofessor Krugman or the ever-ridiculous Atrios, who says that Paul Krugman hates America - even as Atrios helps spread the endorsed, uncorrected Krugmania.

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