|Man Without Qualities|
Monday, March 01, 2004
Posts responding to columns of Herr Doktorprofessor Paul Von Krugman have been scarcer here recently because, frankly, it is almost impossible to find a respect in which to take him seriously, including, without limitation, as an economist, a columnist, a reporter or as a provider of political arguments. He is mostly of "interest" as a free rider, degrading the credibility, good will and other intellectual property of institutions that have allowed him access to their respective tills: Princeton, the New York Times, the regretful John Bates Clark Medal committee and, increasingly, the Democratic Party itself. But that's a fairly esoteric, second-order kind of "interest."
Herr Doktorprofessor these days may warrant a kind of "batch processing." His columns are increasingly repetitive and dilute, so perhaps by treating them as the kind of a nearly fungible sour mash one can distill something with a bit of a kick. Not that Herr Doktorprofessor these days includes much of substance to toss into the hopper. For example, consider his employment columns. It is some measure of Herr Doktorprofessor's descent into self parody that his view of America is exactly the same as the partisan view presented by the Democratic contenders. His column titled Jobs, Jobs, Jobs, could have been trimmed by his Times editor without losing any essential material to just one sentence:
"Nyah, nyah, nyah ... there aren't as many jobs as the Republicans hoped for ... thrthrtrhrthrtrthrthrtrhrthrtr."
For this we need Princeton? The column is little more than cites to various selected, negative employment statistics. Herr Doktorprofessor does add nasty, unoriginal, visionless and mostly misleading apercus with not a suggestion of analysis. But there is not even a hint in Jobs, Jobs, Jobs as to what Herr Doktorprofessor thinks might be causing this putative scarcity of jobs generation or what, if anything, this or any president might have done to create more. Trade? Silence. Increasing productivity? No mention. Overhang from the huge over-and-mis-investment boom of the late Clintonian era? Peepless. Increasing self-employment, start-ups and contracting-out? Not a word. Mandated employee benefits costs? Doesn't say. Counterproductive, burdensome regulation? He's too busy. Too-high taxes on employers? Please! Don't get him started!
Reading Herr Doktorprofessor's insights one would be left in amazement that today the stock market is up again on good employment and manufacturing news that the Wall Street Journal reported this way:
The Institute for Supply Management reported Monday that its purchasing-managers index slipped to 61.4 from 63.6. Any reading above 50 indicates expansion, while those below denote contraction. "This month, many respondents are particularly encouraged by the increased breadth of the recovery in manufacturing. All 20 manufacturing industries reported growth," said Norbert J. Ore, chairman of the group's survey committee. .... The employment index, meanwhile, shot up to 56.3, the highest level since December 1987, from 52.9. February marked the fourth straight month that the manufacturing sector has seen an improvement in hiring activity. ... The employment reading is "consistent with manufacturing payrolls accelerating to a 50,000 per month pace over the next few months," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a note to clients. "In short, ignore the dip in the headline, this is a strong report." If February's reading of 61.4 were to be maintained for an extended period of time, it would be consistent with a 7.2% annualized increase in the U.S. gross domestic product, according to the report.
CBS Market Watch chimes in that The [Institute of Supply Management's] index has been above the 60 percent mark in the last three months, but only nine times in the past 20 years. Reuter's also reports on the same developments: U.S. factories boomed at close to a 20-year high in February, according to a survey released on Monday that also suggested a turnaround in hiring may be on the horizon after a three-year struggle. ... The employment index jumped to 56.3 in February -- the highest since December 1987 -- from January's 52.9. ISM's Ore said more and more factories were reporting hiring though it has yet to show up in government employment statistics.
There are some worrying trends and less encouraging news. That's part of economic health and growth, there's almost always some worrying trends and less encouraging news except when the economy is in a bubble preceding a large correction. In a bubble almost all news is sunny and almost all trends seem to ascend. But today's reports are hardly the first breaths of economic spring. As noted above by the Journal, the manufacturing hiring has been improving for four straight months. Government employment statistics are often lagging indicators. Nor is it surprising or alarming that popular belief lags positive results by even more than government statistics. After all, it's always a lot easier to focus and rely on what is known, but leaving, than on what is unknown, better and coming. For example, as the Journal separately reports:
[C]ontrary to popular belief, the U.S. is creating new high-paying jobs. Here is one growing field: logistics. The frenetic pace of global trade, coupled with outsourcing of manufacturing around the world, has transformed delivery into a complex engineering task. Companies enlist logistics consultants to untangle supply chains and to monitor shipping lanes and weather patterns.
Jobs, Jobs, Jobs does not include a single suggestion as to what might be done now - what, say, a Democrat might propose. Of course, one doesn't expect to be presented with an integrated version of economic developments from the Democratic presidential contenders or their media sympathizers, who apparently think it their job to portray America as wallowing in deep recession, on the brink of a still deeper depression, suffering under the worst president ever, and with nearly everyone's job about to escape to, say, India. (Do reporters or politicians ever wonder how their jobs could be outsourced overseas?) But shouldn't Herr Doktorprofessor be suggesting things for his favored economic demagogues to say, rather than paraphrasing their rantings? His "new" column, The Trade Tightrope, is similarly deficient when it comes to corrective action or constructive suggestion:
First and foremost, we need more jobs. U.S. employment is at least four million short of where it should be.
Here! Here! Herr Doktorprofessor! ... Er, got any thoughts on how we should actually get those jobs you say we need? Operators at the White House and Kerry and Edwards campaign are standing by to take your calls!
Herr Doktorprofessor, apparently thinking that he's on a roll, continues:
Beyond that, we need to do much more to help workers who lose their jobs. It didn't help the cause of free trade when Republican leaders in Congress recently allowed extended unemployment benefits to expire, even though employment is lower and long-term unemployment higher than when those benefits were introduced.
What's with the "Beyond that?" Beyond what? There must be some text missing. There's no "that" there. Maybe the Times' editor accidentally cut the key sentence in the whole column - the sentence that actually contains Herr Doktorprofessor's economic advice on jobs creation? What a pity.
And what is one to make of Herr Doktorprofessor's assertion that It didn't help the cause of free trade when Republican leaders in Congress recently allowed extended unemployment benefits to expire? At most one might argue that free trade is related to extended unemployment benefits for workers whose jobs have been displaced by foreign competition. Later in the column Herr Doktorprofessor admits that imports and outsourcing didn't cause that shortfall in jobs he says we need. So how can it be so important to extend unemployment benefits? And doesn't Senator Kerry have an obligation to explain to the public that imports and outsourcing didn't cause that shortfall, instead of chattering on mindlessly as he does about "Benedict Arnold C.E.O.'s," especially where the Senator says he is offended by those who question another American's patriotism? Even with respect to jobs that are displaced by trade and imports there is a huge economic issue ignored by Herr Doktorprofessor's partisanship. Ultimately, the cause of free trade is served best by demonstrating that free trade quickly creates more good jobs than it destroys. Extending unemployment benefits for workers whose jobs have been permanently displaced would extend their period of unemployment because such extended benefits dis-incentivise such workers from retraining or finding wholly different employment. And government sponsored jobs training programs are particularly dicey in an economy in which it is especially unclear to government representatives which sectors of the economy are creating or maintaining lasting jobs. Are we really better off having the government training people to be logistics consultants, for example? No.
Similarly, Herr Doktorprofessor says he thinks universal health care is key to keeping political sympathy for free trade up. But he also says that first and foremost, we need more jobs - and countries like Germany with generous welfare benefits and universal health care have had lots more problems generating jobs than the US has had. Aren't his imperatives in serious conflict? One is no closer to answers - or even the right questions - after reading Herr Doktorprofessor's columns purporting to deal with jobs or trade.
The anti-free-trade measures offered up by Senator Kerry get a pass in Krugmanian foreign trade theory:
Mr. Kerry's Wednesday speech on trade ... decried the loss of jobs to imports, but was careful not to promise too much. You might say that he proposed speed bumps, rather than outright barriers to outsourcing: rules requiring notice to employees and government agencies before jobs are shifted overseas, steps to close tax loopholes that encourage offshore operations, more aggressive enforcement of existing trade agreements, and a review of those agreements with an eye toward seeking tougher labor and environmental standards. I don't see anything there that threatens to unravel the world trading system. If anything, the question is whether it provides enough of a "political safety valve."
In fact, Senator Kerry's proposed review of existing trade agreements with an eye toward seeking tougher labor and environmental standards would obviously very much threaten to unravel the world trading system if the United States were really serious about demanding any such result. Could there be a surer way of blowing up the WTO than for the United States to demand that, say, China and India comply with something like US environmental or labor standards? President Bush's insistence that those two countries abide by environmental restrictions similar to those applicable to the United States was a major reason why the Kyoto Accord foundered. Now President Kerry wants to introduce that same dynamic that upset the Kyoto Accord into renegotiations of every single existing American trade agreement - and Herr Doktorprofessor says he doesn't "see anything there that threatens to unravel the world trading system." Sometimes we see what we want to see.
What about internal Krugmanian inconsistencies? No recent column by Herr Doktorprofessor is complete without a howling internal inconsistency brought on by transparent partisanship! And his most recent column purporting to deal with trade does not disappoint. Ah, yes, those "political safety valves." When last we heard about political safety valves from Herr Doktorprofessor he had adopted a rather different approach regarding the Bush steel tariffs:
Just a few days ago ... George W. Bush ... capitulated, with a cravenness that surprised even his critics. ...[T]he Bush administration is all hat and no cattle when it comes to free trade, and probably free markets in general. ... We can ... dismiss the claim that this was "temporary relief so that the industry could restructure itself." Traditional steel producers are in long-term decline ... exacerbated by the fact that an increasingly service-oriented economy uses far less steel per dollar of G.D.P. than it used to. A temporary import tariff won't turn this trend around.
Does Herr Doktorprofessor thinks that Senator Kerry's "speed bumps" will turn around the trend to using foreign service providers when they're cheaper than Americans? And doesn't Senator Kerry imply that he intends to erect more than "speed bumps" with his constant references to executives who import services -- such as using lower-paid workers in foreign countries to handle customer-service calls and Internet queries from American consumers -- as "Benedict Arnold C.E.O.'s?" Doesn't one shoot traitors like Benedict Arnold? Indeed, Herr Doktorprofessor has not always been so forgiving of those who transgress free trade principles. For example, he suggested that the Bush steel tariffs did threaten to unravel the world's trading system (or something close to that) even though the United States never suggested that it would defy an WTO decision to impose sanctions for that decision. But a treaty is a contract, and a contract party's election to pay damages (or endure other remedies) for breaching a contract is not generally viewed as a threat to the rule of law - indeed, Oliver Wendell Holmes, Jr. thought such elections were the rule of law. And Senator Kerry vigorously objected to the President's removal of those very same steel tariffs. But Herr Doktorprofessor now thinks Senator Kerry just articulates a realistic political strategy in support of world trade although the imposition of those same steel tariffs showed us that the Bush administration is all hat and no cattle when it comes to free trade, and probably free markets in general. Gee.
And, while we're on the topic, why doesn't Herr Doktorprofessor think that Senator Kerry has some obligation as a "national leader" to actively oppose the "blizzard" of often loony anti-free-trade bills now being pushed by Democrats in Congress - many of which bills go far beyond the "speed bump" category? In fact, the biggest threat to American jobs is the poor education system - a threat squarely attributable to the Democratic Party and it's central public education employees constituencies. Herr Doktorprofessor also tells us that somebody (not him, of course, but the "Nelson Report," a newsletter unknown to, and unobtainable by, the vast majority of his readers) has suggested that Senator Kerry is basically a free trader. One might therefore ask if Senator Kerry's departure from his supposed commitment to free trade principles means that in giving in to the current anti-trade Democratic zeitgeist and in failing to oppose what Democrats are trying to do in Congress he "capitulated, with a cravenness that surprised even his critics."
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