Man Without Qualities


Tuesday, June 13, 2006


The Pellicano Case And The New York Times Just Keep Getting Stranger

From the New York Times:

What has not been publicly disclosed are the details of the single recording in the government's possession that it says is an illegal wiretap. According to written summaries of F.B.I. interviews seen by The New York Times, the recording concerns events that led to the divorce of a Los Angeles billionaire, Alec E. Gores, from his wife, Lisa A. Gores, in 2001.

If the government fails to crack Mr. Pellicano's passwords and turn up other direct evidence of wiretaps, that means the prosecution's star witnesses could be forced to make their painful private drama public.

Mr. Gores, principal of the private equity firm Gores Technology Group, admitted hiring Mr. Pellicano in 2000 to investigate his suspicions that his wife was cheating on him with his younger brother, Thomas T. Gores, another billionaire investor, according to summaries of F.B.I. interviews with all three family members. (A third brother, Sam Gores, runs the Paradigm talent agency.)

Mr. Pellicano installed wiretaps on both Lisa and Tom Gores's telephones, the summaries show, and confirmed Alec Gores's suspicions that the two had become inappropriately involved. Alec Gores admitted to the F.B.I. that he listened to Mr. Pellicano's wiretaps on several occasions, the summaries show. Alec Gores has not been charged, and has been assured he is only a witness in the case, said his lawyer, Louis Miller, who is also known as Skip.
So, let's see. A man (who happens to have made a billion dollars or so for himself) hires Anthony Pellicano to bug the telephones of his wife and brother - a serious and straightforward felony. He listens to the recordings. He pays Mr. Pellicano lots of money. And he has not been charged, and has been assured he is only a witness in the case?!

Boy is that weird. But there is no indication whatsoever that the New York Times thinks it's weird, or that they've asked Skip Miller or anyone else why Mr. Gores, a man who according to the Times admits that he hired and paid Mr. Pellicano to commit serious felonies, has been "assured" - apparently by the same prosecutors who have indicted Terry Christensen for allegedly doing exactly what Mr. Gores admits he did - that he is only a witness.

And if the Times doesn't find any of that worth asking about, how about this:

Why is billionaire Alec Gores relying on Skip Miller for legal advice in this case? Skip Miller is a highly competent and aggressive attorney who as late as 1994 was still claiming "white collar criminal defense" as a practice specialty. But the most recent description of Mr. Miller's practice provided by the firm he recently left to Meritas (now deleted from the web, but still available in cached form) does not even mention criminal defense as an area of Mr. Miller's practice at all:
His practice is varied and diverse and includes antitrust, securities, employment, energy, defamation/First Amendment, entertainment (motion pictures, television and music), copyright, toxic tort, civil rights, construction, real estate, inverse condemnation and other areas of the law.

Miller defended the City of Los Angeles in a series of cases arising from the operations of the LAPD including: the Rodney King civil rights action; First Amendment litigation brought by the then-Assistant Chief of Police; a dozen lawsuits brought against the Mayor, City Council members, Police Commissioners and City Attorneys arising from the LAPD's Special Investigation Section, culminating in two victories (1996 and 2000) in the Ninth Circuit Court of Appeals; a $100 million inverse condemnation/civil rights case brought by Southern Pacific Railroad; and has handled energy litigation for private and publicly-owned utilities including the City's Department of Water and Power.

Clients from all walks regularly seek out Mr. Miller's services including artists and actors such as Rod Stewart, Elton John, Nick Nolte, Bob Dylan and a member of the Eagles, as well as domestic and foreign entertainment companies and prominent local politicians including the Los Angeles County Board of Supervisors. His practice also includes representing the investors who put a billion dollars into Internet incubator Indealab; winning a $7 million judgment against musician Michael Jackson in a four-month jury trial in Santa Maria; defending the City of Riverside in the nationally prominent Tyisha Miller civil rights case; prosecuting trade secret/unfair competition for the maker of 7 Jeans and on behalf of an investment bank and for a manufacturing conglomerate; and representing the Patron Tequila brand in a dispute with Seagram.

Other prominent cases handled by Miller include prevailing on behalf of a director of Executive Life Insurance Co. after a three-month trial in a multi-billion dollar claim arising from the largest insurance failure in California history; winning sexual harassment trials on behalf of the City of Pasadena and Rose Bowl and a Los Angeles City Council member and the City of Los Angeles; prevailing on behalf of the City of Anaheim in a $50 million dispute with its telecom provider; prevailing in the Ninth Circuit and in two district courts in a series of civil rights cases brought against the City of Beverly Hills and its Mayor, Chief of Police and Councilmembers; defending Beverly Hills against toxic tort claims in connection with Beverly Hills High School; and defending inverse condemnation and contractual disputes against the cities of Carson and Monterey Park.
Did the reader detect anything of a criminal defense nature in any of that? I don't think so. Maybe it's in that "other areas of law." Is that what Mr. Gores is paying for in a case in which the New York Times says he admits he hired Mr. Pellicano to commit felonies on his behalf? Is there some reason why Mr. Gores isn't looking for advice mostly to someone with more criminal defense experience - and having that special someone speak on his behalf to outfits like the New York Times? It's not as though Mr. Gores can't afford whoever he likes.
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Contra 1994 V: Democrats Don't Do Libraries Anymore?

James Taranto comments:

E.J. Dionne, a liberal Washington Post columnist, is unhappy about last week's California election results. No, not the Republican victory in the special House election (though he's none too pleased with that), but the defeat of a pair of ballot measures (emphasis his):
The truly sobering news for liberals was in the statewide voting. Proposition 82, the ballot measure that would have guaranteed access to preschool for all of California's 4-year-olds, went down to resounding defeat, 61 to 39 percent.

Not only that, voters also rejected a $600 million bond measure for the state's libraries. A vote against libraries? Yes, the bonds went down 53 to 47 percent.

And bear in mind that these spending measures appeared on a primary ballot at a time when Democrats were holding a fierce contest for their gubernatorial nomination, while Gov. Arnold Schwarzenegger faced only token Republican opposition. There were roughly 500,000 more Democratic than Republican primary votes--meaning that a significant number of Democrats voted against both propositions.

Progressives can find plenty of alibis. Instead they need to deal with the sources of voter skepticism about public spending.
... [T]he column got us to thinking about broader trends that may be feeding public skepticism about government.

It has been widely noted that congressional Republicans have failed to live up to their billing as the party of small government, especially since George W. Bush became president. ....

In sum: Republicans favor small government but embrace big government when they have the power to control it. Democrats favor big government but insist that it can work only when they have the power to control it. ...
Taranto makes a lot of sense, of course. But I think the observations in my previous post in this series regarding Prop 82 apply equally well to the failure of Prop 81 (the library bond measure): Republicans (at least those out of government) are less enthusiastic about more debt and public spending on "small government" grounds, preferring such things to be handled more by private means. And perhaps, as Dionne argues, liberals (or "progressives") ought to favor more library spending on principle or political consistency grounds. But there is good reason to think that relatively fewer Democrats care about or have children now (Taranto has, of course, noted this fact in other contexts), and children would be the main users of those libraries, as USA Today reports:
In Seattle, there are nearly 45% more dogs than children. In Salt Lake City, there are nearly 19% more kids than dogs. ... It's not that people in a progressive city such as Seattle are so much fonder of dogs than are people in a conservative city such as Salt Lake City. It's that progressives are so much less likely to have children.

It's a pattern found throughout the world, and it augers a far more conservative future — one in which patriarchy and other traditional values make a comeback, if only by default. Childlessness and small families are increasingly the norm today among progressive secularists. As a consequence, an increasing share of all children born into the world are descended from a share of the population whose conservative values have led them to raise large families.
The news is even worse for Mr. Dionne and his pro-library funding sympathies because some studies have found that the children of liberals read less than children of conservatives, with the liberal children playing more computer games and watching more television than their conservative counterparts. Worse, some studies also suggest that children who play computer games to excess are more disposed to violence than their parents - with the effect on the children apparently detectable in their brains.

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Monday, June 12, 2006


A South American Analogue To Zarqawi and Post-Insurgency Iraq?

In 1990 Peru was being savaged by its own "insurgency." That "insurgency" took the form of the neo-Maoist terrorist organization called "Shining Path" - which was at the time busy demolishing as much of Peru's infrastructure and urban fabric, and killing as many middle-class Peruvians, as it could manage. The Shining Path meant by such methods to bring down the reasonably democratic government of Peru. The parallels with Iraq, at least on the surface, are clear.

Alberto Fujimori, a son of Japanese immigrants, was an academic and university president when he scored a surprise victory over novelist Mario Vargas Lhosa and became Peru's president. Fujimori has said that Peru was "an interesting challenge": Cocaine was a $1 billion a year export, inflation was at 7,500 percent and the use of violence as a political tool by the Shining Path and MRTA tore Peru up pretty thoroughly and had come close to tearing it completely apart into social chaos. The Shining Path is believed to have killed more than 10,000 people. In some respects Peru was worse off than Iraq is today.

Nobody seems to dispute that Alberto Fujimori's government extinguished the Shining Path - although there are those who claim the biggest steps were accomplished by "ordinary police work" and not the thuggish, admittedly uber-violent, and perhaps murderous methods of Vladimir Montesinos. Montesinos was Fujimori's de facto head of Peruvian security (MRTA) who was ultimately disgraced and found to have been highly corrupt. Whatever the ways and means, most observers agree that the biggest step in terminating the Shining Path was the celebrated capture of its founder Abimael Guzman - himself a murderous academic who directed and had essentially created the Shining Path.

The death of Zarqawi is not a perfect analogue to the capture of Guzman. For one thing, the Shining Path was essentially the only "insurgency" challenging the Peruvian state. There was no good replacement for Guzman. Some have argued that Zarqawi will simply be replaced as head of al Qaida in Iraq, and his war will go on. But as far as I can see, such speculation is not supported by any real evidence one way or the other. Moreover, there have been reports that Zarqawi's particular ultra-violent and promiscuous form of insurgency was by no means favored by his al Qaida generally. It certainly rankled lots of fellow Arabs - including Jordanians - who otherwise might have been inclined to look the other way. So Zarqawi's vision may have been rather personal, and (if that is so) eliminating Zarqawi may be a better analogue to capturing Guzman than at first meets the eye.

Two documentaries have recently been created about Fujimori's confrontation with Guzman and his Shining Path: The Fall of Fujimori and State of Fear. The Fall of Fujimori shows some real efforts at balance by its maker - although the maker's own beliefs do seem to show through (which is not all bad, since she's a nice person). And it's very well done in most respects, especially the interviews with Fujimori himself and his daughter and the use of archival film. In contrast, State of Fear is a ludicrous piece of agitprop and an attempt to equate current American anti-terrorism efforts with Peru's excesses under Fujimori. But the films are in agreement with the conclusions that taking a single man - Guzman - from the field made a huge difference in the course of the Peruvian anti-terrorist effort. Less comforting, they also both persuasively argue that after the Shining Path was in fact defeated the exceptional powers assumed by the Peruvian government were put to increasingly pernicious use.

Contrary to these film makers (especially the second), I do not believe there is much of a parallel with the US here. But there may be a very important parallel with respect to what we might expect from a post-insurgency Iraq, one forged in the smithy of counter-terrorism politics. That picture is not pretty at all. But at least one has to assume the extinction of the Iraq insurgency before having to contemplate the form of post-insurgency Iraq. In any event, Peru has today largely recovered.

UPDATE: Brett Stephens has some very interesting observations on how the nature of the insurgency may change, and some further information as to how Zarqawi had become estranged from many people one would think have to be on the side of a successful "insurgent" in Iraq.
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Dead Again III: Steve Forbes Gets One Right

Steve Forbes, writing in the Wall Street Journal:

The Net Neutrality lobbyists want Congress to pass innovation-stifling restrictions on what companies like Verizon and AT&T can do with the new high-speed broadband networks that these companies haven't even finished building yet.

These networks are the superhighways for transporting Internet content and services. They will also permit Verizon and AT&T to offer Internet-based cable TV programming in competition with the cable companies, which are already competing in telecom services. Slapping these networks with premature, unnecessary regulations would be an inexcusable barrier to the tradition of innovation at the heart of the Internet.

Phone companies are investing billions of dollars in network innovation. They need to earn a return on their investment. One logical way is to use a tiered pricing system that charges a premium price for premium services -- which means super-high-speed services that gobble extra bandwidth on the network. ...

This is the same concept as mail service. If ... you want [a] letter delivered without fail by 10 a.m. the next morning, you upgrade to FedEx and pay for the extra service you need.

Applying this principle to the Internet sounds like the free market at work to me. But the Net Neutralizers have responded with manufactured indignation, claiming that it's discrimination and somehow tramples on the egalitarian spirit of the Internet.

Surprisingly Google, E-Bay and other high-tech companies have become big supporters of this flavor of Net Neutrality; they supposedly fear discrimination from Internet providers. But they have no real evidence to back-up such fears. If problems do arise, then these can be dealt with specifically.

Passing Network Neutrality legislation would be a re-run of the disastrous Telecom Act of 1996 which forced telecom companies to provide network access to competitors at below market prices. That certainly put a chill on network innovation. After years of wasteful lawsuits and regulatory infighting, the network access monster has gone away. But it was a big factor in letting America slip into the high-tech Stone Age, with consumer broadband services lagging far behind what's available in countries like Japan or South Korea. ...

After all, what network operator would be silly enough to keep investing billions in network innovations if the fruits of its innovation had to be given away at below cost?

What network operator indeed?

For his sake, lets hope that Mr. Forbes is only trying to persuade Congress and the general public - and not the "net neutrality" supporters on the Blogosphere! Many of those people supported intellectual property theft supermarkets like Grokster - despite the obviously analogous argument: "What content creator is going to create lots of high quality, expensive content if the profit is to stripped off by file sharing web sites?"

The economic model the Net Neutralizers seem to posit is one in which expensive content and hardware networks can be supplied by a profitless system - or efficiently provided by a system that suppresses efficient returns to the providers, and quite possibly denies them any returns at all. And all of this is apparently supposed to be justified, supported and ultimately financed by the great, new, ever-increasing-returns-to-scale Paul Romerian goodies created through net-enabled activities like people watching purloined movies delivered almost for free from those Grokster-like Bit Torrent supermarkets? Sure, fellas. And no doubt Santa Claus will make up any shortfall. I just can't wait.

Why do the the arguments of the Net Neutralizers sound so much like nostalgia for the fever swamps of the late 1990's internet boom? Could it be that so many of the people writing the copy for the Net Neutralizers today are the same people (and their intellectual legatees) who fronted for the profitless 1990's boomers? Lawrence Lessig's bloviating, of course. But Paul Romer's own website today includes the giddy boast that he "was named one of America's 25 most influential people by Time magazine in 1997." Does Professor Romer have no awareness of what was going on in his immediate intellectual and financial vicinity at that time? Perhaps he should do a back-of-the-envelope calculation of how much investment was misdirected within, say, 10 miles of his current Stanford office during those years.

Could it be that so many of these Net Neutrality supporters also supported those who told us in the 1990's that "stickiness" and "hits" and the rest of the palaver of that busted era had replaced (or, better, "transcended") prosaic considerations such as "net revenue" and "cost of capital" as the variables de jour. Or could it be echos of the 1990's profitless boomers telling the world such things, and that anyone who didn't agree with such things, that "you just don't get it," with a manufactured indignation uneasily similar to the tone Mr. Forbes correctly identifies in the Net Neutralizers today?

I think it's something like that.

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Friday, June 09, 2006


Dead Again II: Tecer Camino Extraño

Here is a paper purporting to describe a "third way" in the net neutrality debate. I don't agree with the approach of this paper, or even that the approach it sketches is actually a "third way" at all. But the approach of this paper is vastly more sophisticated than the Lessig approach - and the paper points that out as politely as possible. And at least the incentive and market power economics set out in this paper are not cartoons. The "Third Way" is sketched this way:


In short, we propose a three-part, "third-way" solution:

• Congress should require broadband providers to state their broadband access and usage policies in clear terms. ... The FCC should monitor such behavior and take action against those firms that fail to comply with them. In addition, any firm selling "broadband Internet access" must make available a basic and growing level of open, unmanaged Internet access. Firms that do not meet this FCC-defined requirement would be prohibited from calling any of their services "broadband."

• In order to ensure that broadband providers do not abuse their market power, Congress should charge the FCC with the responsibility of overseeing the use of discriminatory access arrangements to make sure that any such arrangements do not harm competition (and consumers). ...

• Congress should provide financial incentives to companies investing in broadband networks (allowing first-year expensing of broadband investments and exempting broadband services from federal, state, and local taxation), but only if broadband providers provide a best-efforts, open Internet data pipe to their customers with average speeds at least as fast as the evolving FCC definition.
The "full disclosure" requirements are fairly innocuous, but also seem fairly irrelevant. The actual rates and access policies of internet providers are easily determined. So the extra FCC involvement seems to add little. The focus on "broadband" as a kind of magic word borders on the childish.

That some internet providers hold market power does create its own issues. Those issues are the exact same issues raised all the time in antitrust law. There is no clear reason why supplemental antitrust laws need to be created here, especially since the economic dynamics of the internet are at the moment so protean and ill-understood.

Finally, the whole "special incentive" aspect of this proposal seems downright perverse. Congress and the FCC are not better able to determine the needs of the internet, and the economy's needs for internet services (broadband or otherwise), than is the market. This is a huge step backwards - and anything but a "Third Way."

But perhaps the most disturbing aspect of this "Third Way" is the complete absence of any considerations pertaining to the regulatory capture issues that would be raised by the scheme itself. It's all very nice to say that the FCC (or any agency) will do this or that nice thing to the people and firms it regulates. But history shows that's not how things often work out in practice. Just what are the likely regulatory (and lobbying!) incentives that might be created by a scheme that couples big federal financial give-aways with lots of authority by a (captured) FCC to exclude competitors in the market it was supposed to facilitate? One shudders to imagine. But one shutters more to realize that the authors of this "Third Way" haven't even bothered to try to imagine - or at least to write about it here. Has the history of FCC protected competition been better than the competitive history of the unregulated internet? I don't think so.

UPDATE: IP Central points out Tom Hazlett's article The Wireless Craze, the Unlimited Bandwidth Myth, the Spectrum Auction Faux Pas, and the Punchline to Ronald Coase's "Bigt Joke" (2001), which details the dreary history of the FCC's success in supressing new technologies (pp. 405-451).
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Catching Some Z's

Ding, dong the Z-man is dead! And it is right and meet and just to celebrate June 7, the day after D-Day, as Z-Day.

But June 7 was not just the day Abu Musab al Zarqawi went to claim his virgins (or his grapes - the "virgins" who the Koran supposedly promises await Islamic martyrs in paradise may just be ''white raisins'') and the Iraqi government moved towards completion with the key appointments of two apparently competent and appropriate ministers. It is also the day on which Allied and Iraqi forces moved to seize well over a dozen insurgent sites, sites said to have been monitored for weeks and disclosed to the Allies and Iraqis by the same sources that fingered the Z-Man. The seizure of these sites is said to have yielded a "treasure trove" of intelligence pertaining to the insurgency.

Al Qaida is said to have a "cellular" structure - meaning that the location of, and other information pertaining to, its components is supposed to be very closely held. Members of each component generally are not supposed to possess information pertaining to other components. Yet the information source who turned in al Zarqawi apparently had lots of information about a large number of components. All that suggests that the intelligence source within the Zarqawi camp was very highly placed indeed.

How high? Well, on June 7 Strategy Page ran this curious and fairly amazing item (thanks to Saint Onge for drawing my attention):



Zarqawi Scheduled for Martyrdom

June 7, 2006: The relationship between terrorist leader Abu Musab al Zarqawi and and the mainline al Qaeda leadership continues to deteriorate. Zarqawi's recent audio messages have not only attacked the U.S. and the Shia-dominated government in Iraq, but also Iran. He's even claiming that the U.S., Iran, and Shia in general, are in cahoots to destroy Islam. He has also called for continued attacks against Shia.

Except for his verbal attacks on the U.S. and the Iraqi government, he is almost totally distanced himself from the central leadership. Other al Qaeda leaders have been trying to down play anti-Iranian and anti-Shia rhetoric, and have been strongly discouraging attacks on civilians.

Given that Zarqawi has become a loose cannon and that his actions are handicapping Al Qaeda's efforts, it seems reasonable to expect that an accident may befall him at some point in the near future. If handled right it can be made to look like he went out in a blaze of glory fighting American troops or that he was foully murdered. Either way, al Qaeda gets rid of a problem and gains another "martyr."
Saint Onge points out that the timing of this post is remarkable, which it is if the post went up before reports of the hit appeared.

Regardless of when the post went up, it's contents are surely remarkable (if they are correct) regardless of when the post went up. Could it be that someone high up in al Qaida itself turned in al Zarqawi and identified those insurgent sites?

Had al Zarqawi become so inconvenient that al Qaida HQ decided it was time for the Allies to catch the Big Z Man, or for him to be catching the Big Z's?

Just asking!

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Thursday, June 08, 2006


Dead Again

It is an old Chinese proverb of great carrying power that "It is better to start poorly and finish well." The personal history of Professor Lawrence Lessig suggests that he has not read it.

After a very fast start followed by lots of increasingly ill deserved adulation, Professor Lessig seems in recent years to have formed an absolute determination to come down hard on the wrong side of every hot dispute in which he takes an interest concerning intellectual property law, and especially the internet. He has praised the wisdom of copyright pirate enablers such as Grokster, employing arguments bordering on ludicrous that were quite properly and unceremoniously discarded by the Supreme Court. The Supreme Court's rejection of his ludicrous assault on the Sonny Bono Copyright Term Extension Act was correct and thorough and unimpressed and ultimately distinctly unkind (his main argument was dismissed in a curt footnote). Sadly, one could go on for a bit with Professor Lessig's recent missteps.

Now there is a new dead end of Lawrence Lessig: Congressionally mandated "network neutrality." Little can legitimately be said in favor of this effort to freeze the internet into a form that it happens to have (or may have had) at the moment or in the recent past, although the reader is invited to read Professor Lessig's linked effort to do just that. There is nothing sacred about that current form. There is nothing less destructive and anti-freemarket about federally mandated internet rate structures proposed by Professor Lessig than there was about the federally mandated railroad and trucking rates that hobbled the nation's economy for decades. The correct (and wealth creating) principle under which the internet has developed is simple: Minimal regulation. The legislation proposed by Professor Lessig and Representative Markey would grossly violate that principle for no apparent benefit.

There is one positive aspect to this new camino extraño down which Professor Lessig proposes to drag the internet: At least he is presenting his position to the legislature instead of arguing in the courts that his radical (and erroneous) approach is already dictated by the Constitution or existing statute, as he did in his prior efforts noted above. But so far Congress has wisely been as unimpressed with Professor Lessig as the Supreme Court was in his earlier efforts. By a lopsided vote of 321 to 101 the House today passed a bill that rejects mandated network neutrality, and does nothing to prevent the phone and cable providers from charging Internet content providers a premium for carrying services like video offerings that could rival those of the telecom companies – and not including the Markey amendment. One hopes the Senate has as much sense as the House on this topic.

I could write quite a bit more about the irrationality of mandated network neutrality. But an article on the topic aptly titled The Web's Worst New Idea does a pretty thorough demolition job on the pretensions advanced by Professor Lessig. As the article points out:
Increasingly, and with the backing both of the Moveon.org crowd and "Don't Be Evil" Google, a movement is afoot to give these entitlements the force of law. Congressman Ed Markey has introduced a bill to "save the Internet" by codifying Net neutrality principles in law. The FCC would be charged with enforcing "non-discrimination" and "openness" rules.
Does such FCC regulation sound like the spirit of the internet the reader has known? Of course not. That’s the old “regulated industry” model of the communications industry that the internet rejects and always has rejected. Once again, Professor Lessig pretends to the role of the visionary (even the revolutionary), while his actions and positions are those of a tired reactionary.

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Wednesday, June 07, 2006


Contra 1994 IV: Childless, Depressed Democrats?

The 50th Congressional District did not hold all of the interest in yesterday’s elections. Actor Rob Reiner's ballot initiative - Proposition 82 - to tax the "rich" (those earning more than $400,000 per year) to pay for universal preschool for four-year-olds was defeated yesterday in California by 61% to 39% - carrying only three out of 58 counties in the entire state. Why the big defeat?

Writing for Opinion Journal’s subscriber e-mail service Political Diary, John Fund explains:

Liberals like philanthropist Eli Broad and the Los Angeles Times editorial board turned against the measure when they realized their goal of universal pre-K coverage had been hijacked by the unions. Democrat Senate President Don Perata repudiated his early support of the idea, saying he couldn't justify subsidizing preschool for parents already paying for it. Even more significantly, parents with kids in pre-K, 80% of whom attend private facilities, realized the Reiner initiative represented a takeover of pre-K by the existing public school monopoly. While the initiative ostensibly would have offered parents a choice between public and private providers, the actual options available for the subsidies would have been determined by government education officials.

That's fine as far as it goes. But California voters have also rejected school vouchers more than once, even (perhaps especially) where the vouchers provided lots of real school choice. Rejecting school vouchers delivers every child whose parents cannot afford private education into the hands of those same school unions. So why the different result now? The dramatic fall of Proposition 82 is even more curious given the passage in 2004 by 53.7% to 46.3% of Proposition 63:

Should a 1% tax on taxable personal income above $1 million to fund expanded health services for mentally ill children, adults, seniors be established?
Why were Californians willing to soak the "rich" to permit the state to fund mental health services for "everyone" but not to provide services for pre-school children? It would be interesting to see a far more detailed breakdown of how voters reacted to Propositions 63 and 82 than I have seen. But in the mean time, one might ask the preliminary question: How would Propositions 63 and 82 be expected to appeal to core Democratic interest groups and constituencies?

It seems to make sense that Proposition 63 would naturally have a broad base of support. Many mental health services are often not included in medical insurance coverage. But mental health services might at least in principle be used and/or needed by anyone - although one's estimate of the likelihood that one will personally need them is likely strongly affected by one's general world view. Many more people - including family members - might see themselves as possibly or actually required to pay for such services for other people if the need arose. So its not too hard to see Proposition 63 appealing to a lot of self interest, especially of a broad class of people of modest means. Indeed, it's not hard to imagine that more Democrats than Republicans were drawn to this proposition by prospective or actual personal need, since some polling results indicate that Democrats are more prone to depression and less happy than Republicans, as suggested by this chart:



Republicans are happiest even when a Democrat is in the White House. They’re also happier regardless of income. The rich are happier than the poor, and church goers (who skew Republican, of course) are also quite happy. So there appears to be lots of room for Democrats to see themselves as potentially or actually in need of mental health services.

But what about Proposition 82? Here the most natural base of support is parents and prospective parents of pre-school children. In general, Republicans do not favor programs of the type Proposition 82 sought to create. But how many parents and prospective parents of pre-school children are Democrats? Married women generally lean Republican. Unmarried mothers doubtless lean Democrat, but by definition there is no husband to vote along side the mother.

And consider some rather substantial mostly Democratic groups: Unwed fathers and many deliberately childless people, including most homosexuals. Why would such people enthusiastically support a proposition that would provide services they will never use and that would not relieve them of any likely financial burden?

Is it possible that Proposition 82 failed so miserably because the Democratic Party now includes so few people that care about children?
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Contra 1994 III: Counting Voters Who Weren't There

Republican Brian P. Bilbray and Democrat Francine Busby were not the only candidates seeking to represent California's 5oth Congressional District. Independent William Griffith and Libertarian Paul King also sought that honor. Yesterday, 1.53% of that District's voters (1,875 voters) favored Mr. King and 3.67% (4,492 voters) favored Mr. Griffith.

It is a notoriously dangerous game to assume that if a multiparty election were winnowed down to only two candidates, voters for the minority candidates would vote in any particular fashion (or vote at all). That doesn't stop some people from doing exactly that, as Ralph Nader discovered when Al Gore's supporters accused Mr. Nader of stealing what might have been Mr. Gore's margin of victory in Florida in 2000.

But it seems to me that if one is looking to the 50th District for indications of whether the Democratic ideas and principles (as contrasted to actual human candidates) have gained in popularity nationally since 2004, it is perfectly legitimate to look at the ideas and principles favored by the minority candidates and ask: Do these ideas and principles of such minority candidates in general resemble more those of the Republicans or the Democrats nationally?

Mr. King is a Libertarian. While some ideas and principles advanced by Libertarians resemble those of the some Democrats, such as the right to use the drugs of one's choice and perhaps to abortion - as a consequence of one's right to control one's own body, although Libertarians deeming a fetus to already be an individual may not favor abortion rights at all. But on the whole, Libertarian ideas and principles are generally seen as more resembling those favored by national Republicans. That suggests that Mr. King's 1.53% does not represent much (probably no) increase favor for Democratic ideas and principles.

What about the Independent Mr. Griffith's 3.67%? Well, Mr. Griffith's campaign website has this to say about his ideas and principles:

Immigration: NO AMNESTY. NO GUEST WORKERS. NO EXCEPTIONS.

Taxation: … I pledge to work to repeal Amendment XVI and the Federal income tax (AND the so-called "inheritance tax"….

Budget: The budget and deficit are seriously out of whack. .… The fiscal woes of our country can all be traced to gargantuan federal spending.

The United Nations: GET US OUT!

Gun Control: … I am unalterably opposed to "gun control legislation" in any of its insidious forms….

Abortion: I oppose Roe v. Wade. I am unalterably opposed to abortion as a birth-control method. …

Environment: We need to CONSERVE our environment. … [W]e ought to be doing all we can - without infringing on property rights, without crippling business - to ensure a healthy environment for our children, and for THEIR children. … I will not classify myself as an "environmentalist" … but I WILL go on record as being extremely concerned about conservation, and preservation. I am in favor of reducing, if not eliminating, dependence … on fossil fuels - and of developing naturally renewable energy sources. I am a proponent of nuclear (pronounced NU-klee-ar) power. I will seek to advance research and development of nuclear fusion, solar power, wind power, hydroelectric power.


Mr. Griffith also has things to say about “Executive and Judicial Cowboying,” Technology” and “Elections,” which the reader can peruse for herself. But to my eye, it is very difficult to see in anything offered by Mr. Griffith a movement towards anything Democratic. With some quibbles, the drift seems to be quite the opposite. For example, Mr. Griffith deplores the federal budget deficit - a position often taken by Democrats. But he is also clear that he would not support reducing that deficit by increasing taxes - only by reducing spending. In fact, he wants to eliminate the income tax completely. None of that seems to be a shift to the left from where the country is now, but rather to the right (if one forces things into a one-dimensional model).

According to the California Secretary of State, Mr. Bilbray enjoyed a margin of 3.87% over Ms. Busby, prior to accounting for late arriving absentee ballots. It is by no means clear that voters favoring Mr. King or Griffith would have voted for either of the main party candidates if the minority candidates hadn't been in the race.

But it also seems that those 5.2% of voters who favored minority candidates in the 50th District exercised their choice in favor of people having ideas and principles a good deal more akin to those of the Republicans than the Democrats. In other words, by a margin of 9.07% (pre-absentee ballots), the voters of the 50th District seem more unhappy with Democratic ideas and principles than they are with those of the Republicans. That seems significant in terms of viewing the 50th as a "bellwether" of the November elections, as the Democrats and mainstream media - and some others - have been insisting for months.
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Contra 1994 II: Bring Out Your Not-Quite-Dead Democratic Hopes!

Hopes of Democrats to take at least one house of Congress in November are not quite dead. Much could happen between now and November. But yesterday’s election results suggest that, like Monty Python's Cartman, practical political analysts shouldn't be too finicky about the difference between the current state of such hopes and actual death.

Yesterday's special House election to fill the San Diego area seat once occupied by corrupt and disgraced Randy "Duke" Cunningham was by far the most-watched election nationally. The victory of Republican Brian Bilbray over Democrat Francine Busby is being widely described as "narrow," in a "solidly Republican district," and marred by Busby's "verbal gaffe" (that illegal immigrants needed no papers to vote) in the final days of the campaign that supposedly damaged her candidacy. But Mr. Bilbray was not an incumbent (an additional advantage Republicans will generally hold in November). He also overcame the Cunningham corruption scandal, meaning that the "Republicans are corrupt" message Democrats were hoping would bring them at least the House had scant effect even in a district in which the message was at its strongest. But most significant of all is this: Busby barely exceeded the percentage won by Sen. John F. Kerry (D-Mass.) in the 2004 presidential race. Busby's margin is nothing short of a disaster for Democrats' November hopes. It is also worth remembering that Democratic turnout may have been increased by the hotly contested California Democratic gubernatorial primary, although the tone of that campaign had recently turned so negative that Democratic turnout may have been tamped down a bit. The agony of the liberal Los Angeles Times over that primary and other Democratic statewide showings is summed up nicely in today's editorial:


The Democrats' shrill and shallow campaign ads may be off the air, but Gov. Arnold Schwarzenegger embarks today on a statewide bus tour. Maybe the winner of Tuesday's Democratic gubernatorial primary can take a few days, a few hours — OK, a few minutes — to pause and consider how to articulate a more positive message about the state's future. The primary did little to boost the enthusiasm Democrats feel for their state candidates, and voters were also skeptical about two ballot measures to increase public spending on preschool and libraries.
"Shrill and shallow" pretty much sums up the nature of national Democratic efforts, too. But the mainstream media is still in the denial stage after yesterday's quasi-death, including the New York Times coverage of Tom Kean Jr.'s Republican nomination to challenge Democratic Sen. Robert Menendez in New Jersey. Even the Times had to grudgingly admit that early polls indicate "a tight race," although the coverage labors mightily to suggest that Mr. Kean has problems with the Republican base - while supplying no real evidence of such problems.

What is most striking about what happened in New Jersey yesterday is that the Republican candidate for the Senate in that liberal, pro-Democratic state is highly viable. Indeed, the Times reports that Mr. Kean is "attacking Mr. Menendez as a corrupt political boss with dubious character." Yet this is a year in which the mainstream media tell us corruption is supposed to be an issue working in favor of Democrats. And, of course, we are also told that this is a year ripe for a big Democratic win generally. Yet there were few signs of such a coming win in either California or New Jersey, states in which the signs should have been strongest.

If history is a guide, the November elections will bring some normal Democratic gains - midterm elections normally do favor the party not holding the White House - although the 2002 elections were an exception. And some strong individual Democratic candidates will probably chalk up special personal victories (CUSTOMER: Who's that, then? CART MASTER: I dunno. Must be a king. CUSTOMER: Why? CART MASTER: He hasn't got shit all over him.) But it's looking less and less like a Democratic year.

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Monday, June 05, 2006


The Gas Man II: Walking The Walk, Talking The Talk, Visiting The Site

I don't read People magazine, not even in the check-out line. But I was intrigued by this report on Newsbusters:


People asked Gore: "His film 'An Inconvenient Truth' warns about global warming. So what is Gore doing about it?"

"1. I turn off lights in my house [to conserve energy]. We're getting sensor switches that automatically turn them off when the room is empty.

2. We got a hybrid car recently.

3. We try to live a carbon neutral life. On climatecrisis.org, you'll find a calculator which can add up the carbon dioxide you produce and give you options for neutralizing that.

4. This movie saves carbon dioxide because I don't have to fly and drive places to get my message across."
Mr. Gore clearly intended to display leadership and to set an example for the public at large with these responses. So I immediately considered the prospect of everyone saving carbon dioxide by making a movie so they don't have to fly and drive places to get their own messages across! For example, the man (Anibal, to be precise, who is from Guatemala) currently reconstructing on my behalf some investment property located some blocks from my own home might exercise this option. One can think of others.

I do confess to some confusion with these answers, especially Mr. Gore's admission that his family has apparently not made a practice of turning off the lights until recently, and that he has not yet acquired those sensor switches, even though he has been preaching eco-awareness and eco-doom for more than two decades. What other revelations lie in store? Are we soon to discover that Mr. Gore makes a habit of leaving the patio doors opened in the heat of summer while the air conditioning is running, but is considering closing them?

Yes, some sophisticates might argue that because the problem is whether or not to modify our civilization's overall infrastructure, and if so how to do it, there is little that anyone can do on an individual basis while remaining within society. But I was particularly excited by Mr. Gore's suggestion to the contrary, and that I could visit the web site climatecrisis.org to find a calculator which can add up the carbon dioxide you produce and give you options for neutralizing that.

So I went to the climatecrisis.org site, which is really quite remarkable - a kind of secular confessional. You plug in some information about your car and energy bills and it gives you a number of pounds of carbon you produce, your burden of sin as it were. You then can find out how to neutralize this burden you are putting on the planet. It turns out there are basically three options, and they each involve either monthly payments or one lump sum payment to one of three organizations: one of these purports to build windmills on Native American lands, one plans to burn methane from family owned dairy farms (I'm not making this up) and the only other way to buy an indulgence is to purchase Green Tags, which presumably are also good, although no explanation of what exactly happens when you buy one is offered.

Well, there you go! And you thought there was nothing you could do to keep the earth from going to hell in a hand basket!

Mr. Gore is a wealthy man. It is said that he has made many millions of dollars from his Google stock alone. That wealth, and friendships with other wealthy people who own their own forms of air transport, presumably made possible the former vice president's ability to log what seems to have been at least hundreds of thousands of private jet miles (corresponding to an awful lot of jet fuel and carbon) in the last year or so, as animated here: WMV: Hi - Low Quicktime: Hi - Low. With that kind of travel schedule, one wonders how much bovine methane must be produced, or how many Green Tags one has to purchase, to lead the "carbon neutral lifestyle" to which Mr. Gore says he aspires.
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Yet Another Cause Of Road Rage?

If that angry, horn-blasting tailgater in back of you is suffering from intermittent explosive disorder, then does that mean he is protected by the Americans With Disabilities Act?

Do local civil authorities such as the City of Los Angeles and the State of California have to make reasonable accomodation for his tirades? Are they prohibited from issuing to him the traffic ticket you would get if you engaged in the exact same behavior?

And if that's true, and there is therefore no recourse to public authorities against those like him, should you just get out and bop people like him right in the nose?

Just asking.
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Contra 1994

American Thinker and Patrick Hynes rip into the casually but intensely held mainstream media belief that the elections of 2006 will resemble the elections of 1994 in reverse (that is, 2006 will be a Democratic Congressional rout, maybe a landslide). Patrick reserves on an important point claimed by the American Thinker:

I believe [American Thinker's] Sheppard overstates the case for the Contract With America in his piece, however, which received little notice until after the election. On the contrary, 1994 was in many ways the first “moral values” election in which evangelical Christians became a dominant voting block in many areas of the country.
I tentatively agree with their conclusions. While I'm not sure how much the Contract With America and evangelicals counted in 1994, I do think that Patrick and Sheppard might do well to consider one very important feature of the 1994 election:
The 1992 election was won by Bill Clinton as a "moderate" Democratic Leadership Council type - which was and is widely conceded to be the only Democratic type to be electable in any swing race, and especially to the White House. But immediately after the Clintonites arrived in Washington the word went out - and continued to be emphasized by the mainstream media and many others for the following two years - that Bill Clinton had realized that the then-Democratic Congress was so intractable that he, as president, had no choice but to sign onto the dominant liberal Democratic agenda in order to avoid the disastrous pitfalls of Jimmy Carter's outsider status. The Clinton tax hikes, the specific and highly unpopular form of HillaryCare (carefully left vague during the campaign), and many other things that signaled the departure of the Clinton administration from the DLC formula were therefore laid by President Clinton and his people and surrogates squarely at the door of the Democratic Congress in the run-up to the 1994 elections. Every Clintonian betrayal of a 1992 presidential campaign promise therefore became a reason to vote Republican. Rarely, if ever, has a sitting president set up his own party in Congress to take the fall in midterm elections the way Bill Clinton did the Democrats from 1992 to 1994. Clinton would have done only incrementally more damage to the Democrats in Congress if he had presented himself as required by them to act and govern like Sister Souljah.
Which leads to what I believe is another big difference between 1994 and 2006:
George Bush may not be popular at the moment. But unlike Bill Clinton from 1992 to 1994, President Bush has not been busy over the past two years putting out the message that the things that have made him unpopular were dictated, ordained and determined by his need to cater to the people in his own party who are running for re-election to Congress in November. Mr. Bush has been a very strong team player in that regard. His vetoless record is just one example.
It should be a very big difference to the party controlling Congress that their own president and his surrogates have not been actively trying to shed responsibility in the direction of Congress for the past two years. Just ask any Democrat voted out of office in 1994.

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Saturday, June 03, 2006


The Gas Man, Again

When pondering Al Gore's "An Inconvenient Truth" it is perhaps worth remembering that this is not the first time the former vice president has waged a campaign to impose gigantic costs in the service of correcting a problem of dubious reality (that in fact turned out not to exist nearly to the extent he insisted) and was not substantially ameliorated by anything he proposed.

The reader will recall that Mr. Gore headed the Clinton administration's campaign against the "Y2K Bug," sometimes known as the "millennium bug." There are striking parallels between Mr. Gore's two crusades. As with potential major human-caused global warming, the larger number of Y2K Bug "experts" were predicting that the bug was a huge problem that would have cataclysmic consequences if not aggressively and expensively corrected. Indeed, in 1999 The National Journal reported:

[A] survey of industry and government executives and programmers concerning potential fallout from the millennium bug, showing that 70 percent anticipated a negative effect on the economy, with 10 percent of respondents not ruling out the possibility of economic depression and civil insurrection.
Things didn't quite turn out that way on January 1, 2000. Not even countries (including Russia and other countries of the former Soviet Union, Romania and other countries of the old Soviet bloc, Brazil and South Africa) that had made few efforts to ward off the Y2K Bug suffered more than a few glitches:


[T]he Y2K bug had threatened to set off an epidemic of computer failures affecting everything from lights and water to aviation and nuclear power as the machines failed to recognize the new millennial date.

But as the headline in the Singapore Straits Times reported, "It was all bug and no bite." Governments all over the globe have reported few glitches and no disasters caused by computers meeting up with the year 2000. ….

Romania ... reported even fewer incidents than usual in the country's ill-equipped computer industry. ….Brazil's financial markets, the biggest in Latin America, passed Y2K tests with flying colors … In the meantime, planes are flying, toilets are flushing, phones are ringing and lights are shining.

The Y2K bug did not cripple a single power plant. Even the nuclear generators in the former Soviet Union kept running hours into the new year. …. Key oil production facilities were also unaffected, and there were no reports of widespread gasoline or food hoarding ....

"Throughout the world I think you'll find that almost a trillion dollars was spent on Y2K work. ... No one has argued credibly that the Y2K bug -- the legacy of programming in which years were expressed with just two digits -- was a scam .... "I was monitoring some radio stations yesterday. People were calling in and saying, `I didn't do anything to my computer, and it's working,' " said Faizel Dawjee, a South African government spokesman.
The Y2K Bug was not a "scam" - and the possibility of serious adverse consequences of global warming is not a "scam." There were some glitches: A few satellites went out, Al Gore had problems on his campaign web site computer because it wasn't DeBugged properly, that kind of thing. But the world of economic decisions does not consist of binary decisions between "scams" and the need to spend trillions of dollars! Was it worth spending a Trillion Dollars to ward off the Y2K Bug - even though countries that did not make systematic efforts suffered few consequences, and no serious consequences at all? I very much doubt it. It is not hard to think of very good uses of One Trillion Dollars, far better uses than remorsely chasing a software bug that did little damage even where nothing was done to fix it. Of course, a Trillion Dollars would be a small down payment (peanuts, really) in comparision with the costs that An Inconvenient Truth implicitly or explicitily demands be born by the world's economy ... much of it by the world's poorest people.

And the costs of the excessive Y2K DeBugging programs spearheaded by Mr. Gore were by no means limited to excessive spending on corrections. Y2K DeBugging expenditures during the Clinton-Gore administration were probably a major cause of the internet bubble of the late Clintonian Era:

To see what other veteran investors thought about the lessons learned -- or unlearned -- from the [1990's internet] bubble bursting, I checked with Ray Rothrock, managing partner of Venrock Associates. ... Venrock, founded with money from the Rockefeller family fortune, has been evaluating young tech companies for three decades from its offices on Sand Hill Road. Its past investments have included tech titans such as Apple Computer (AAPL) and Intel Corp. (INTC).

Rothrock believes that the bubble "was a perfect storm on two fronts -- Y2K and the Internet." Corporate zealousness to prepare for a Y2K disaster "inflated IT budgets well beyond normal growth rates," Rothrock said.

The graph of U.S. corporate IT spending growth from 1960 to 2005 shows a pretty steady line, except for a spike in advance of Y2K, Rothrock explained.

That caused investors to overestimate future tech spending and see "an infinite demand for tech products" that was an illusion, Rothrock said.

There is something about Mr. Gore's speech patterns, intonations, body movements and thought processes that suggests, even insists, that he is actually a character from some old Firesign Theater album. One such album, Everything You Know Is Wrong, posited the arrival of conquering Gas Men of Jupiter, who employed reasoning and intonation strikingly similar to those of Al Gore in An Inconvenient_Truth. Humanlings and earthloids were apprised by the gassy invaders that for too long we had been the "cruel masters" of our planet, and therefore (in logic strikingly similar to that undergirding the Kyoto Accord) now everyone must learn to play the piano! In many ways An Inconvenient Truth is in spirit a retelling of the Firesign classic, sometimes veering uncomfortably close to what might be termed spiritual plagiarism. But when contemplating the similarities between the thought processes of Mr. Gore and those of the alien invaders posited by the stoned-out Firesign zanies, this is not the most important point! As the former vice president wages his campaign to impose gigantic costs on mankind in the service of correcting a problem that may not exist and (if it does exist) would almost certainly not be substantially ameliorated by anything now proposed by him, it is more interesting to remember that this is not the first time he's done that kind of thing. And it is also worth remembering that Mr. Gore had lots of opportunistic Republicans and putative conservatives egging him on in his Y2K excesses.

Al Gore appears to be a seeker of ersatz political myths posing as quasi-religious truths, and he's always looking for others of like mindset. That mindset was a product of the benighted 1970's, which also produced the Firesign Theater classic now emulated in spirit so faithfully by the former vice president's new movie. As that classic points out: There's a seeker born every minute!

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Thursday, June 01, 2006


A Good And Convenient Answer To A Recurring Question

From time to time one sees posed a question along these lines:

Has any work of art substantially changed history?

What normally follows is a series of answers and observations along the lines of "well, I don't know about changing history, but such and such piece of art changed my life" or "I don't know of any particular work of art that changed history, but so-and-so was an artist who had a personal effect on histoy." But these are not what the question asks.

There is a good example of a work of art that probably profoundly changed both American and world history, and whose effects continue to be felt today: Uncle Tom's Cabin by Harriet Beecher Stowe.

It was widely believed in 1860, and is still widely believed by American historians today, that Uncle Tom's Cabin was a highly material cause of the election of Abraham Lincoln to the presidency of the United States. Of course, there is never a single cause of such an event. But Ms. Stowe's book was and is believed to be an important cause.

The election of Mr. Lincoln, of course, directly precipitated the American Civil War, the ultimate end of American slavery, and the consolidation of the American federal republic into a vastly more unified state than the semistable near-confederacy that prevailed antebellum.
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Bad Economist? IV

As always, I enjoyed Arnold Kling's TCS article/review of David Warsh's fine new book Knowledge and the Wealth of Nations. And I also enjoyed the book itself - although I have some reservations with regard to the basic academic works of both Paul Krugman and (to a lesser extent) Paul Romer which are celebrated by Mr. Warsh. My reservations are for the most part not original, but they are serious, especially with respect to Herr Doktorprofessor Krugman's contribution. That's why I was a little surprised that Arnold's review does not mention, for example, Don Davis's very serious criticisms of Krugman's original papers, as I discussed here (for example). And although Professor Davis is now Chair of the Columbia economics department and was a professor of economics at Harvard at the time he issued his original criticisms, he does not even get a mention in Warsh's index!

It is true that Krugman to some extent recovered from the Davis criticism, but at the expense of having to make a great many concessions in the sweep of his original conclusions while concocting his (in my opinion) pretentious "New Geography." Krugman has admitted that his approach has a lot more to say about inter-regional trade issues than it has to say about true international trade. I discuss more of these reservations and developments here and here. I also mention that, in private correspondence with me, one economic Nobelist who knows something about international finance has rather openly disparaged Krugman's work. So, if Herr Doktorprofessor is correct to claim in his own review of the Warsh book (a review that Arnold correctly points out can barely conceal Herr Doktorprofessor's resentment that Romer gets top billing in the book), that "an intellectual revolution, largely invisible to the general public ... swept through the economics profession ...[in which] I was a prominent player," it would appear that not all sovereigns have yet recognized the new "revolutionary" government.

Of course, no one has an obligation to share any of my reservations about Krugman or Romer, but I think there is one aspect of their works that must be addressed in any meaningful evaluation of them: What significant predictions and policies flow from them. Consider Krugman's trade theories, for example. It is obvious that Ricardo's comparative advantage theory (supposedly displaced by the Krugmanian "revolution) has had tremendous predictive and policy consequences over the past two centuries - it is not necessary to list any. But can any reader provide one single example of an application of Krugman's theory to the creation of a policy that has clearly resulted in an increase in general wealth? Or of anyone's wealth (besides Krugman and his academic acolytes)? I can't. But every single day I notice many things in my life that were manufactured in countries with big comparative advantages to the US in doing so!

Similarly, what about real predictions - and I don't mean the silly game of testing Krugman's theory against "traditional" theories by doing comparative country analysis (as noted above, even that doesn't do Krugman much good - by his own admission). I mean predictions that help the society or someone make real money, or help some policy maker take a significant decision. Is the reader aware of a single currency trader, commodities trader or corporate CEO, COO or CSO or any other such professional who uses Krugman's theories to make predictions or plans in this period of intense globalization in which trade plays an ever larger role?

Similarly, is the reader aware of a single example of Krugman's work influencing anything relating to the EU Constitution debate - or the EU at all? Does the reader know of any politician who was alarmed or comforted by something from Krugman's work in connection with the greater integration of Europe? I'm not - and I was there when the French were deciding to vote it down! The arguments then and there were all about comparative advantage and input costs (Polish plumbers) within the EU region. Yet it is exactly in the zone of "regional" trade that Herr Doktorprofessor claims his insights have their greatest significance.

What about the ongoing Doha Round? For that matter, does any reader know of any significant WTO policy or concern or dispute that has been clearly influenced by the distinct trade economics insights of Herr Doktorprofessor Paul Von Krugman? I don't.

More generally: What example, in the real world, is a single meaningful application of Paul Krugman's trade insights anywhere outside of academe and academic journals? I am aware of nothing.

At least to my understanding, there is a lot more to - and remaining of - Paul Romer's work than Paul Krugman's work. That may be why Warsh concentrates on Romer. But Romer's work is not without its serious problems. Robert Solow - who is largely responsible for the very existence of the field of growth economics and won his own Nobel Prize for that work - has expressed serious reservations about Romer's contributions to "endogenous growth." Solow has made the uncontroverted point that it is trivial to make growth "endogenous" to a growth model, and that the trick is to make it endogenous in a way that is meaningful - which is what Romer and his people may (or may not) have done. I personally have reservations about Romer's assumptions concerning the nature of intellectual property, but such of my thoughts are not at issue here. Solow follows up his observation with more serious concerns, as the Economist's review of the Warsh book points out:

Mr Romer's theory, by contrast, calls for a more worldly response: educate people, subsidise their research, import ideas from abroad, carefully gauge the protection offered to intellectual property. But did policymakers need Mr Romer's model to reveal the importance of such things? Mr Solow has expressed doubts. Despite the caricature, he did not intend in his 1956 model to deny that innovation is often dearly bought and profit-driven. The question is whether anything useful can be said about that process at the level of the economy as a whole. That question has yet to be answered definitively. In particular, Mr Solow worries that some of the “more powerful conclusions” of the new growth theory are “unearned”, flowing as they do from powerful assumptions.

Professor Romer has not absented himself from all policy involvement by any means - as noted by Mr. Warsh. But in my opinion, Romer's involvement in the Microsoft case - and the case itself - was and remains a disaster. More generally, I am again aware of no meaningful policies or predictions from Professor Romer's work that have resulted in a clear gain for the economy or for any real-world players in it. Mr. Warsh seems to provide none. Can any reader help?

I very much want to like Paul Romer and his work (I confess that my sentiments towards Herr Doktorprofessor Paul Von Krugman are more complex, but the reader already knew that). Heck, I used to be a mathematician, and I love a good functional analysis/game theoretic riff as much as the next guy. So I would be very much in the debt of any reader who could help clarify my thinking with a few choice examples or rebuttals of my concerns.

My e-mail address appears above. Operators are standing by!

In truth, it appears that Arnold is trying extra hard to be nice in his review - which is not surprising since Arnold Kling is generally an extra-nice sort of person. Since he is being nice, he would probably have highlighted any clear benefit or application of these theories. That he didn't mention any such benefit or application speaks volumes about his likely true sentiments. But there is room for ambiguity in comments like this:
I have to separate my views of Krugman the New York Times columnist (execrable) with my views of Krugman the research economist (original and significant).
The economic models on which both of Professors Romer and Krugman have made their reputations employ rather involved (but not cutting-edge) mathematics. Such models are hugely hard to construe intuitively - one needs to first crank through the mathematical calculations they disgorge. In contrast, people like, say, Becker, supply mathematically rigorous arguments to back up their intuitive arguments, but the intuitive arguments make perfect sense before the mathematics is trotted out. That's not true of models of the Romer/Krugman type. That makes the fine structure of their mathematics much more central to the whole process - and makes it very easy for the mathematics to obscure intellectually weak (that is, overly powerful!) assumptions that support the model.

My guess is that models of the Romer/Krugman type have lots of mathematical eccentricities and mathematically obscured weaknesses. Davis' assault on Krugman's work is one example. It's interesting that Warsh focuses on Krugman's and Romer's efforts to address "transversality" as an effort to establish that their models are in a particular manner "stable." Ironically, Davis showed that Krugman's model was highly unstable in a totally different manner! That is, Davis showed that Krugman's initial results depended on what Krugman presented as a faux innocuous simplifying assumption - an assumption that was both seriously wrong and anything but innocuous.

The Krugman/Romer generation of economists is not the first to employ fancy mathematics. It looks like some people think that even the fine structure of now-venerable general equilibrium is wrong - or at least not economically meaningful. Observations available here and here and here argue that some of the basic papers in general equilibrium theory have also obscured the weaknesses of the theory with a cloud of mathematics, as in this summary:
[O]ur findings show that the existence results [of general equilibrium theory] are mathematical theorems devoid of any economic sense. As a consequence, this paper implies a direct criticism of dominant economic theory from two points of view. The first one being the theoretical soundness and rigor of neoclassical theory. The second criticism is more general, as it concerns the relationship between mathematics and economic theory.


I do not endorse such criticisms of general equilibrium theory, nor do I fully agree with the significance that these critic assign to it. General equilibrium theory is an odd part of economics. Often praised as "the most important this or that of 20th century economics...," it often just sits there. Sometimes it seems mostly to form the "foundation" of the Arrow/Debreau reputations. As the critical papers note, nobody seems to have spent a lot of time picking apart even the basic functions that the models use to see how they square with supply and demand requirements.

But what might be a "leave it alone as a sacred cow" attitude may be changing with the dawn of the new hyper-mathematical models of the Romer/Krugman type. Even the willingness to closely examine the mathematical fine structure of general equilibrium as may be such an early effect.

UPDATE (June 2): Don Luskin gets results! In response to Don's link to my post an astute reader provides a clear example of how one can make money with Herr Doktorprofessor's thinking (if not his trade theories):

Dear Robert,

(I need to remain anonymous, but please feel to share with your many readers. And thank you for your work. I've CCed Donald, as I know he'd enjoy this letter to you.)

Paul Krugman and his theories and beliefs have made me money. Seriously. That's because I'm a Paul Krugman contrarian.

I remember a lesson from a finance professor at Wharton. He stated that the most useless person in the world is someone that is right half of the time. Those that are right more often than chance should be watched carefully, and mimicked. And those that are wrong more often than chance should be watched VERY carefully. The person that is consistently wrong will provide you with opportunities to create wealth again and again.

Paul Krugman is such a person.

I have made money by betting the opposite of what Paul thinks, both in legitimate financial markets and "illegal" betting sites. For example, when he became convinced that Dean was the man to win the election, I made money on Kerry winning the primary. When Paul was convinced that Kerry would win the whole election, I bet on Bush. Paul last year said the bubble in the housing market would burst. I knew that I could wait a year, and any bursting would be very slow than very sudden. Paul is convinced that growth is slow and that unemployment is high -- I've been long the market (and very happy) since he turned into a sourpuss.

I conservatively estimate that Paul Krugman has earned me an 'excess return' of about $25,000 on my capital over the past five years, adding about 5% more to my portfolio annually.

The Times Select fee is well worth the price, as it lets me know what Paul thinks. So I can bet the opposite.

Regards,

"Anonymous"


There you have it! Found money!

And, as a bonus, the reader is invited to steal (er, "use") this valuable contra-Krugmanian recipe as a consequence of Professor Romer's finding that the world is a better place because we can all work the same recipe at the same time without getting in each others' way.

So, Grasshopper, may your economies of scale increase without limit .... even in the long run!

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