Man Without Qualities

Tuesday, December 31, 2002


In case you wanted to know, but never clicked on the link to the left:

Robert Musil was not very pleasant company. Adolf Frise indexed ... the qualities that were associated with Robert Musil by those who knew him.

Cool, proud, uncommunicative, cold, harsh in his judgement, sharp, a military tone of speaking, vain, elegant, polite, well dressed, distant, official, impeccable, an impressive personality though not a sympathetic or congenial one, proud of his time as officer during the First World War, inaccessible, felt unrecognized, kept people far from him and hence fell into isolation, made slighting rather than positive remarks.

These qualities are usually, in his biographies, associated with two other aspects. The poverty he had to deal with for the bigger part of his life, and his attitude towards other authors of his time. Both come, biographers often state, from his earnestly felt lack of recognition as an important figure in German Literature.

Robert Musil was always in dire need of money: always wondering how he and his wife Martha could live through the next day. In his diary there are regularly complaints that they only have little money left to live on. In a diary-fragment he notes: I am (spiritually and moral) exhausted.

This poverty was not new to Musil and his wife. Ever since he decided to dedicate his life to writing, instead of a promising career at the University, he spent his days in poverty. In Berlin and Vienna admirers founded Musil Societies in order to make his work publicly known and thus enabling him to work on, and perhaps even complete, his one great masterpiece The Man Without Qualities. In his later years in Geneva father Robert Lejeune was the one who, through what Musil described as 'begging', found him the financial means to continue writing. The people who donated money were invariably admiring authors, or philanthropists.

In 1930 Robert Musil is desperate: he is going to be 50 years old, and the first parts of The Man Without Qualities are being published. What is bothering him the most is the discrepancy between his immense efforts and the public attention and recognition. He has been working on The Man without Qualities for ten years now; other author publish four or five books in this time, and do not mind writing for the public. In an interview with Oskar Maurus Fontana he states he wishes to give a "Beitrage zur geistigen Bew䬴igung der Welt".

The most important reproach to other authors concerns their shallowness. They are not capable, or prepared to be reflexive, that intellectually the time in which they live and about which they should write is far beyond their grasp. Hence their success. This success, in turn, is responsible for the lack of profundity that he reproaches them.

A particularly fine head on a man usually means that he is stupid; particularly deep philosophers are usually shallow thinkers; in literature, talents not much above the average are usually regarded by their contemporaries as geniuses. [Man Without Qualities III, Chapter 14, p. 851]

Thomas Mann is one of those authors. As far as Musil is concerned Mann owes his success to the fact that he is the spokesman of the biased liberal intelligentsia, be it a bit more refined. The person of an intellectual average can relate to the thoughts and words of Mann. When Musil is told that Thomas Mann is, along with others, one of the founders of the Musil Societies, and what these societies do for him he admits he is moved by the gesture of the man whom he has been so unjust to. But the distrust towards successful author remains.

This distrust could be dealt with as envy, were it not that it reflects Musils poetics. To Musil the writer/poet is a representative for his country. In works of literature, and art in general, what is thought and lived in a country is reflected. German language literature in his time is not equipped for this task. She remains shallow, deals too often with political, esthetical or ethical fashions, writes only about itself, and thus caters to an irrelevant need.

The disappointment with the lack of recognition and his poverty make Musil a bitter and lonely person. He dies in obscurity in Switzerland, where only a namestone on the cemetery remains of him.

Daß du nicht berühmt bist, ist natürlich; daß du aber nicht genug Leser zum Leben hast, ist schändlich. That one is not famous is only natural: that one has not enough readers to live is a shame!

And that brings us to why we have InstaPundit now.

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FURTHER UPDATE: The Two Ivory Towers

Insightful reader AA points out that when Paul Krugman noted that "yes, the tax cut also made a marginal contribution" in the list of reasons for 2002's resumption of growth in the column discussed here, he was not conceding error:

You might have pointed out (as Krugman should have as the statement is too compressed for folks like you and Mickey) that the marginal effect of the "Bush tax cut" on the economy was due to its front loading of cuts to the regular folks. That part of the cut was a Democratic idea.

Maybe. I'm not sure what Professor Krugman was referring to when he wrote "yes, the tax cut also made a marginal contribution" - and I think the reader's not being able to know is often just the point with Professor Krugman. I don't think this represents compression - it's more like evasion.

What Professor Krugman wrote reads (at least to me, and, I think, Mickey) more like a concession that at least some aspects of Professor Krugman's prior positions on the tax cut were wrong than would, say, "and, yes, the part of the tax cut to ordinary folks which was championed by Democrats also made a marginal contribution - as hoped and expected here." That would have been just as easy to write and packs a lot more information than what actually appears in the column. But it's also easier to check against past and future facts - which Professor Krugman increasingly seems to want to avoid, in my opinion.

Even what at first seem to be his simple predictions on closer inspection often appear crafted to avoid subsequent identification as bad predictions if they go wrong, but to allow Professor Krugman to claim them as good predictions, if things go his way. For example, consider his statement in the same column that "Taxes, mainly taxes that fall most heavily on the poor and the middle class, will go up" - discussed by Jane Galt and here. At first this seems eminently verifiable against future facts: if states don't mostly use regressive taxes to fund their deficits, then his prediction is wrong.

But not so fast. The elegiac style and context of the assertion can also be read as expressing mere concern and anxiety on Professor Krugman's part that regressive taxes will go up. If regressive taxes don't rise, Professor Krugman can claim that his hopes were fulfilled - but his concern and the threat were both nevertheless very real.

All of which leaves open whether it is a bad thing that "regressive" taxes go up. For example, the BTU tax advocated by many Democrats would likely have been highly regressive - as is the federal gasoline tax. Is it a bad thing if such taxes cause energy users to internalize the costs they would otherwise impose on others through the environment? Many sensible and knowledgeable people also believe that there is a clear need for congestion pricing (i.e. tolls) on freeways - which would probably be regressive, but might benefit everyone and the environment overall. Is it clear that such tolls would be a bad thing? Does Professor Krugman think they would be bad things? He doesn't say - but he implies that a rise in regressive taxation would be bad regardless of its nature – a position most better economists would consider not to be thoughtful economics.

That's all fine for a partisan columnist, but the serious economist inside has quite clearly expired, if he really had a lot of life to begin with.
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Have A Happy New Year, Some Say It Was Probably A Good Retail Season

Astute reader HV from West Hollywood, California, writes to say that, contrary to the doomy-gloomy Paul Krugman and much of the media, retails sales have actually been good:

The big item really is that it is the RISE in retail sales that is the smallest in 30 years, not retail sales. Retail sales set a record. The so-called reporting by the usual suspects was the usual "Bush stinks and the economy is in trouble" variety. Only if you factor in an inflation indicator, something that is missing from all past data, do you see a very small shrinkage. If you then factor in the quite remarkable online sales ($2 billion plus) sales were great.

The WaPo ran a snide article a week or so ago about online sellers and their rotten stuff for rotten people. When I checked some sites listed I found that many were sold out, couldn't fill orders til well into next year, and had merchandise that retailers would not take. One woman has made a killing selling duct tape purses and wallets, another seller is a specialty seller who sells the most unique merchandise ever who would only succeed if he could hit a mass market of millions on the cheap, which he has done since 30% of what he has is sold out.

The days of buyers on the take in large retail chains, exacting bribes, advertising for the stores, and exploiting small start ups in general are over. This Christmas may mark a major change in how retailers conduct their businesses.

Various statistics have been passed around concerning this holiday season's retail results. My understanding has been that some of them inlude at least some on-line sales results. But is it possible that reports of a bad bad retail season have more to do with reporters and some economists just not keeping up with the American consumer - or just not doing their homework?

We should know by February!

UPDATE: Reports of tentative big increases in on-line retail sales: here and here.

Reference from astute reader HV.

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Monday, December 30, 2002

UPDATE: The Two Ivory Towers

Jane Galt makes the excellent point that the Paul Krugman column discussed here claims that states are going to have to raise regressive tax rates in order to meet the latest crisis. Jane quite correctly points out that no evidence or argument is provided in the column to support the assertion.

And there is probably a good reason for that lack of support: The assertion probably isn't correct, if the following observations are correct:

Every state maintains a mixture of regressive and progressive taxes. Every interest group (including the wealthy and those of modest means) vie with each other in the legislature to impose costs somewhere other than themselves. An actual tax structure is a kind of topographical map of the relative political power of the various interest groups.

Why does that matter?

Because, as Jane and others point out, the current state deficits mostly come from increased spending - which were based on prior "assumptions" that then momentarily -enlarged capital gains tax streams would continue to flow indefinitely. Capital gains taxes on income from securities sales are paid disproportionately by the relatively wealthy. There is good reason to believe that those (wealthier) people who lost the last round in the legislative taxation game when it came to paying for the last round of state spending hikes will for the most part lose again if the legislature chooses to fund whatever programs are not cut through tax increases.

I cannot guaranty that the above analysis is correct. But I do guaranty that the question addressed is one for that area of economics known as "public choice theory" - a field which is mentioned in Paul Krugman's columns only rarely and normally only to be misused.

In contrast to empty and/or wrong Krugmanian non-predictions, one may find in the works of James M. Buchanan, probably the world's most important economist working in this field, a willingness to apply the principles of public choice theory to specific tax reforms. For example, Professor Buchanan was willing to go on the record to predict how Congress would behave after the 1986 federal income tax overhaul. - and most of what he predicted turned out to be correct.
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Continuing Patty Murray Whitewash

Best of the Web continues the chronicle of the ongoing liberal media whitewash of Patty Murray's witless paeans to Osama bin Laden:

The Newark Star-Ledger weighs in with an astonishingly lame defense of Washington state's Sen. Patty Murray, whom the paper styles "a patriot in the proudest tradition" for her recent comments about Osama bin Laden's purported humanitarian works. The Star-Ledger pats Patty on the back for having "the integrity to tell uncomfortable truths." But at the same time, the paper acknowledges that Murray wasn't telling the truth: "Murray was wrong to suggest that Osama bin Laden's appeal is based on decades of charity work. ... In the division of terrorist labor, bin Laden provides more muscle than munificence."


Murray's remarks, incidentally, probably reflect stupidity more than a genuine animus toward America. In the Washingtonian magazine's annual survey of Capitol Hill staffers, conducted several months ago, Murray placed first among senators in the "No Rocket Scientist" category ...

Ah! The invaluable stupidity defense. Yes, it saves Senator Murray from being cast as unpatriotic.

But does a senator easily persuade voters who would otherwise turn her out of office that she made such remarks because she is stupid? Or does she just count on the voters to know that she is stupid - and love her for it?

And note the tension here: As with so many in the liberal media, this editorial writer knows that he or she basically agrees with Senator Murray - even though the editorial acknowledges that what Senator Murray said was wrong. As noted in an earlier post about a different liberal media editorial:

The agreement is with her larger premises and with her willingness to distort whatever facts it takes and can be gotten away with to support and advance those premises. They agree with her "deeper" belief that it was a failure on the part of the United States .... that should be the focus of our concern, that the military should not be a component of the measures taken to address terrorism, and, most importantly, that there is some low budget magical thinking that will allow the United States to have all the Pell Grants and other federally paid public programs it wants - while simultaneously inducing the the world's terrorists to love us on the cheap.
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Good Property Rights And Regulation Make Good Neighbors

Lighthouses and Wall Street are next door to each other, if you get the economics down like Jane does.
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Wither Affirmative Action

As the Supreme Court gears up to reconsider its Bakke decision and address the University of Michigan's racial preferences, Stuart Taylor reports on one new poll:

As to public opinion, consider the responses to a question on the Washington Post/Kaiser Family Foundation/Harvard University racial attitudes survey in spring 2001: "In order to give minorities more opportunity, do you believe race or ethnicity should be a factor when deciding who is hired, promoted, or admitted to college, or that hiring, promotions, and college admissions should be based strictly on merit and qualifications other than race or ethnicity?"

Of the 1,709 adults surveyed, 5 percent said "race or ethnicity should be a factor," 3 percent said "don't know," and 92 percent said "should be based strictly on merit and qualifications other than race/ethnicity."

More surprising, of the 323 African-American respondents, 12 percent said "race or ethnicity should be a factor," 2 percent said "don't know," and 86 percent said "should be based strictly on merit and qualifications other than race/ethnicity."

That's right: By a ratio of 7-to-1, black respondents in this poll rejected racial preferences.

There's lots more.

In the experience of the Man Without Qualities, the response one receives from an "affirmative action" question depends very much on rather minute details of how the question is formulated, the context in which it is asked and often hard to determine personal factors. And this is, after all, just one poll.

But also in my personal experience, a lot more African-Americans professionals seem comfortable in themselves and their personal capabilities today than even a few years ago, and the pace of adjustment seems to be accelerating. They also seem perfectly aware of continuing - often hidden - racial bias. But they also usually know how to deal with it constructively when it arises, and do. In sum: From my personal experience, there seems to be a declining interest in and attachment to the more aggressive forms of affirmative action among African-American professionals, who increasingly seem to regard the whole subject as a distraction.

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Saturday, December 28, 2002

The Two Ivory Towers

Deep within Ostelfenbeinturm Kraugaman settled into the comfy chair before his eerily glowing monitor and reviewed a few news items that caught his eye. Fodder. Fodder. Must find fodder. Oil futures were up! A thought crossed his mind, new to him. So Kraugaman brooded in his stronghold: "I hadn't thought about that!" It was December 26 and there was need for a December 27 column. So Kraugaman wrote:

Oil futures are already above $32 per barrel. Donald Rumsfeld assures us that we can fight two wars at once, but nobody seems to have thought about the state of oil markets if there is simultaneous turmoil in the Persian Gulf and Venezuela.

And Kraugaman thought: "This is good, so good. I hadn't thought about the state of oil markets if there is simultaneous turmoil in the Persian Gulf and Venezuela, and I am a genius. Rumsfeld and the rest of them are idiots. They won't have thought about it either." It was the holidays, after all, so little time for research and fact checking.

Meanwhile, days prior to Kraugaman's holiday offensive, - working from a Reuters item titled "UPDATE 1-Oil prices shoot higher on war and strike woes" and available to Kraugaman at the drop of a Google - had reported:

"The turmoil in Venezuela and the tension in Iraq is keeping traders at their desks over the Christmas week," said Lawrence Eagles at GNI Research. ... OPEC exporters sought to tame soaring prices on Saturday by pledging to fill any supply gap left by the strike in Venezuela or a possible war on Iraq. Ministers said they saw no signs of a real shortage on world markets yet, but they agreed to partially reverse a recently agreed output curb if prices stayed high. "Shortages, when determined, will be made up. We want to have no imbalances in the market," Saudi Oil Minister Ali al-Naimi told reporters on the sidelines of a meeting of Arab oil ministers in Cairo.

The remainder of the column is an empty box. There is vague but apparently exaggerated moaning ('apparently" because it is so vague) about retail sales: "Retailers found lumps of coal in their stockings this Christmas; the holiday shopping season was disappointing." There is dwelling on unemployment - but no mention that the unemployment rate never got very high in the first place. That, in most people's books, is a cup of joy indeed - but here the recovery is "jobless" and "joyless," and no mention that jobless claims recently fell. There is an unfocused, elagaic mention that the stock market is down - but no mention why a decline from prior bubbled stock prices is necessarily a bad thing. There are musings over state deficits (and a short but nasty exploitation of children) - but no mention that those deficits are largely caused by massive, imprudent spending increases. Future state spending cuts are lamented - but there is no mention of the pernicious effects a constantly growing government encroachment on the economy would eventually have on overall efficiency and wealth production - and the welfare of children. Notice is taken that the Fed can't push interest rates much lower - "So don't expect Uncle Alan to bail us out anytime soon" - but no mention that "uncle Alan" and the Fed don't seem to think it necessary to push interest rates down further. There's a dig at the tentative Administration plan to eliminate double taxation on dividends - a modest proposal which most sensible economists support. Mickey Kaus even finds a bit of false humility in the admission that the prior Bush tax cuts have helped (despite Kraugaman's violent protests against them) and another admission of error in the past Kraugamanian predictions of imminent consumer spending collapse. But such flecks of intellectual honesty are very small compared to the huge intellectual house cleaning that's needed.

[Dec. 30 UPDATE: With respect to Kraugaman's "lumps of coal" - he gives no indication that he understands that retail dynamics have changed in recent years. For example, the week after Christmas is now as important as the week after Thanksgiving. And there has been a huge increase in the popularity of gift "certificates" and "cards", which are not accounted for until they are redeemed for merchandise. That all means that the holiday retail season now runs well into January. Nobody will know if there was a "lump of coal" left for the retailers this year until around February 1. And some major retailers, such as Penney's (which expects to beat estimates) and Walmart, seem to be doing rather well. But, heck, does one look to a full Princeton Professor of Economics for subtlety of analysis or an awareness of the relevant factors in making an economic projection?]

In short, the column is another incoherent, unscientific mess. It is apparently supposed to pass for a kind of prediction for the coming year - but the language is so deliberately vague and inconsistent that it's almost impossible to find anything that might be tested against future facts. The main prediction? "I hope I'm wrong, but this doesn't look like a happy new year." Jeane Dixon's visions were usually more testable and precise. Kraugaman seems to be taking lessons in style from Nostradamus.

Kraugaman's rejection of economic science and his embrace of the cargo cult superstitions of partisan advocacy had long been established beyond peradventure. Once considered by some to be a potentially significant economist, albeit one whose narrow expertise of international trade did not generalize easily - he now holds forth from his Ostelfenbeinturm near great ancient groves of academe, including the famous Institute Woods, groves which Kraugaman willfully plunders, casting entire branches of economic science to immolation to feed his hungry demons.

Yes, There is a union now! The Two Ivory Towers have joined forces! Has all hope forsaken these lands? The forces of Westelfenbeinturm will be angry now that Kraugaman has again burned so much of his own credibility for want of Googling. "Credibility"- for so long the only thing Kraugaman has to sell!

Yes, it is true that with each Kraugaman foray a fellowship of the ring of Kraugaman watchers sallies forth to flood the zone with Kraugaman-corrective critiques. But where is the powerful if slow moving leader to arouse the Ecs - the ancient shepherds of economic intellectual growth! Do they think this is not their battle?

What will it take to stir them to flood the zone at Ostelfenbeinturm as Treebeard led the Ents to flood the zone at Isengard!

Or will the Ecs hold off indefinitely? As one Ec remarked about an advocate of dangerous market and price regulation fulsomely praised by Kraugaman: "I think we have better things to do than beat up a straw man."


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Succinct Lott

Most of the remainder of this Bill Keller Op-Ed is not to my liking, but he includes a wonderfully succinct replay of Trent Lott's stages of enlightenment:

I loved watching Senator Lott clamber up the remorse curve, from clueless (If you're so thin-skinned that you found my innocent remarks insulting, I feel sorry for you) to defensive (I'm sorry I gave you the erroneous impression that I'm a racist) to abject (I am one sorry bigot).

True, true. All so true.

Perhaps Mr. Keller would now care to scribe stages necessary for Senator Murray to attain her own form of enlightenment - and maybe some spiritual exercises to help get her through them?
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If A Picture's Worth A Thousand Words...

... how about a great cartoon?

From Pejman Pundit

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Friday, December 27, 2002

Standing Patty

Best of the Web makes a good case that media apologists for Senator Patty Murray's kooky bin Ladenisms - such as the Washington Post editorial discussed below - are not doing her any favors when it comes to re-election time.
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Comments On: Subsidy By Another Name?

Astute reader KP writes from Tacoma, Washington:


You quote Peter Huber as saying: "Most of the time, it's a mistake to force companies to share reservation systems, power transmission lines, copper loops..."


I find his inclusion of 'copper loops' (and possibly transmission lines, though I'm less certain of the recent history there) quite inappropriate as example of the ill effects of forced sharing of resources. That's because in many cases, those loops were strung by regulated statutory or virtual monopolies, none of whom have fully transitioned to being fully competitive private companies. (It also begs the question of whether utility wiring, poles, and vaults, like surface streets, are not "natural monopolies" where the right way to provide real competition is a regulated infrastructure provider owning the loop with telcos competing for the service.)

Thanks for a very interesting site!
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Learning From The Saudis?

InstaPundit writes:

[I]n countries where there's a substantial Islamic population ... the Saudi money is there year in and year out. The U.S. may come in and do things for a few years, but we get distracted and our interest dries up. The Saudis' interest doesn't. They build mosques, they build schools, they provide a lot of medium-influential folks with a secure livelihood and some money to spread around that lets them build up local patronage webs of their own. We could learn from that. Not only should we work to formulate a reputation for steadfastness instead of flightiness (which we'll have to do, over time, by actually being steadfast instead of flighty) but we should also seek to make the Saudi money less reliable by interdicting it -- either at the source, or somewhere along the line.

Professor Reynolds may be right - and his approach evidences his customary and admirable sifting of flawed ideas for whatever grains of gold they may contain. But it is far from clear to the Man Without Qualities that such a model of using American foreign aid money to "provide a lot of medium-influential folks with a secure livelihood and some money to spread around that lets them build up local patronage webs of their own" is itself a very good idea, or that the United States has much to learn from such a model - other than as mostly something to avoid.

Yes, Saudi money does build mosques and schools, as noted in this article from the Washington Times:

[F]or years Saudi petrodollars have financed thousands of madrassahs, the "schools" that have radicalized Islamic students by relentlessly preaching "jihad" (holy war) against Christian and Jewish "infidels." Saudi money has spread the hateful message of Wahhabism throughout Pakistan, Afghanistan and India. In fact, the vitriol that pollutes the Saudi landscape has even found its way to Saudi-sponsored Islamic schools in Virginia.

If this is the kind of "school" the Saudi's are building, it seems likely that the mosques also have a rather politicized and harsh aspect - and, indeed, there is no shortage of reports of radical Islamic clerics holding forth from Saudi-sponsored mosques around the world.

All of this Saudi activity is quite consistent with the current domestic Saudi uber-welfare state, and also quite consistent with Mickey Kaus' observation that such uber-welfare breads uber-terrorism - in France, the middle east and elsewhere. There is substantial agreement now that Saudi Arabia's actions are conducive to terrorism. In my opinion, that is largely structural - not just a matter of who one chooses to subsidize. In any event, creating and financing a large class of influential locals dependent on foreign (that is, United States) government handouts hardly seems a natural way of encouraging democratic capitalism.

Instead, it seems to the Man Without Qualities that the American focus should be on the development of private commercial interests in Third World countries through various free market friendly efforts. One of the most important of those efforts should be a termination of direct and indirect trade barriers and subsidies that impede exports from Third World countries to the developed world, obviously including the United States. Such goods are largely - but not exclusively - agricultural in nature. Everything from EU agricultural policies that irrationally subsidize European farmers to lingering efforts of former imperialist nations to cultivate relations with their old colonies to naked American protectionism - some of it promulgated by the current Administration - should go to the extent possible.

International terrorism strikes at the structures that support democratic capitalism and the efficient operation of its markets. Our reputation for steadfastness should be our reputation for steadfast commitment to allowing economies to exploit their comparative economic advantages, not a reputation for steadfastly being there to finance what seems like a nice project to some government or international agency. The medium-influential folks with a secure livelihood and some money to spread around that lets them build up local patronage webs of their own should be small and medium private businessmen engaging in efficient economic activity - not some crowd on a foreign aid dole. This is all only to state my opinion, and I do not pretend to have provided a full argument supporting that opinion, although I do believe that in large measure to state it is to prove it.

As for interdicting Saudi money - yes, of course. Another argument against the Saudi model is that it has not really worked to the benefit of the Saudi's. These massive Saudi expenditures have probably on the whole reduced Saudi security. Indeed, the Saudi's seems acutely aware that without American support - including military support - the Saudi government would soon reap the whirlwind they have been sowing so steadfastly. The United States should explore ways of using our leverage, Saudi dependency and common sense to argue within the Saudi government and to act through mechanisms outside or even opposed to the Saudi government, to stop that flow of money.

And more efforts should be made to open up the information markets in Third World countries - with private satellite news and the Internet being leading candidates. But China's remorseless efforts to contain and control such outlets are some indication of how hard this path will be.

But the most important American project should be cultivation of electoral democratic forms of government in Third World countries. Democracy is no cure-all and Twentieth Century political experience has shown fairly conclusively that sustainable democracy requires extensive, reliable individual property rights - and therefore some form of capitalism (if only of the attenuated Scandinavian variety). Russia, for example after a long bout of corrupt collectivism followed by a nasty jolt of kleptocracy, seems to have recently convinced itself of the necessity of such things. Government structure - as opposed to local economic and social policy - is something another government is more able to get more right.

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Thursday, December 26, 2002

New Smarter Harper's

Excellent things for January 2003.
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The Patty Murray Whitewash

Best of the Web today takes note of some of MWQ's Murraywork and provides lots more.
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Subsidy By Another Name?

Consider two types of competitors:

Category One competitors are competitors that are well-run but inefficiently small. Suppose two of them want to merge. But antitrust regulators won't let them merge. If the competitors had merged, they would have been able to consolidate operations and compete profitably. Instead, each goes bankrupt.

Category Two competitors are competitors that are badly-run but their size is not a cause of their problems. Suppose two of them want to merge (or enter into a contractual combination) so that they can obtain market power and charge their customers more than the customers would have to pay in an efficient market. But antitrust regulators won't let them merge. If the competitors had merged, they would have been able to consolidate operations and compete profitably, subsidized by their market power. Instead, each goes bankrupt.

Peter Huber says that a lot of Category One competitors are being treated as if they were Category Two competitors:

Regulators and antitrust courts must come to grips with the economic realities of network industries. Huge economies of scope and scale mean that competition will inevitably involve small numbers of very large players. 'Cuisinart' policies that chop and dice networks, services and corporations into little pieces don't promote competition, they undercut it. Most of the time, it's a mistake to force companies to share reservation systems, power transmission lines, copper loops and other core assets, on terms minutely prescribed by regulators. Such meddling promotes a short-term illusion of competition, but not the long-term reality.

What Mr. Huber says certainly seems correct. And his general focus on the difficult and often perverse connections between bankruptcy and antitrust policies is wonderful - especially with regard to the effects on the markets of "walking zombies" who continue to compete after bankruptcy. Market competition theory depends on poor competitors actually failing - but modern bankruptcy law seriously complicates all of that. However, he also seems to suggest than some bankruptcies themselves are evidence of bad antitrust policy. But I don't see how a bankruptcy itself helps tell us whether the bankrupt competitor/debtor was Category One or Two.

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Now That Everything Glows So Brightly VI

The Washington Post at least finds Senator Murray's comments worth reporting - if only on Christmas Day and only to be decked out with an all-forgiving apology.

But the Post's report of Senator Murray's comments is astonishing. The Post says:

What did Patty Murray actually say? According to the Columbian, she said that Osama bin Laden has "been out in these countries for decades, building schools, building roads, building infrastructure, building day-care facilities, building health care facilities, and the people are extremely grateful. . . . How would they look at us today if we had been there helping them with some of that rather than just being the people who are going to bomb in Iraq and go to Afghanistan?"

This seriously misquotes the Senator. What she actually said was:

[Ossama Bin Laden's] been out in these [third-world] countries for decades, building schools, building roads, building infrastructure, building day care facilities, building health care facilities, and the people are extremely grateful. We haven't done that ... How would they look at us today if we had been there helping them with some of that rather than just being the people who are going to bomb in Iraq and go to Afghanistan?"

In the eyes of the Washington Post, the denial by a United States Senator of the efforts of thousands of American aid workers and the expenditure of many billions of American aid dollars over many decades, is just a detail to suppress under some marks of ellipsis.

And that suppression allows the Post to present Senator Murray's bizarre rant as just the imperfect articulation of a new and perfectly useful idea: image management. Where Senator Murray just outright denied that the United States had provided infrastructure foreign aid, the Post erroneously recasts her comments as focusing on a mere need to get get the message of such good works out:

[I]t ought to be possible to discuss America's image in the Islamic world, and the kinds of mistakes the United States has made there. For decades, American governments have spent remarkable amounts of money in Egypt, Saudi Arabia and elsewhere, relatively little of which is visible on the ground. Yet if successive American administrations had identified the United States more closely with good works in the Middle East and had tried more assiduously to explain American values, then American relations with the Islamic world might look different today.

Contrary to the Post assertions, Senator Murray didn't say that our problems come from a public relations failure, she simply falsely denied that we have provided substantive foreign aid to build infrastructure. And the Post is also wrong to suggest that the differentiation of substantive aid from image management was "a deeper point that Sen. Murray, with extraordinary ineptitude, seemed to be trying to make." In fact, there is nothing in Senator Murray's remarks that suggests that she was thinking that the United States' (or al Qaeda's) doing good foreign aid work in some Third World country does not lead automatically to the people in that country understanding that the United States (or al Qaeda) has done the good.

The Post itself is remarkably obtuse for a media outlet in understanding the difficulty in making people understand the good the United States does when the paper editorializes "Yet if successive American administrations had identified the United States more closely with good works in the Middle East and had tried more assiduously to explain American values, then American relations with the Islamic world might look different today." Just how is the United States suppose to do all that in countries in which the media is largely state controlled and openlly hostile to American and Israeli interests, and in which the local government has every incentive to claim all of the good that comes of a project for itself, while blaming the neo-imperialist Americans for anything negative? Is the Post suggesting some large scale "Voice of America" type project accompany each World Bank and/or United States financed project in the Third World? If so, that's a lot to leave unsaid in the editorial. How would other members of the World Bank react to such behavior, for example? In fact, the difficulties in making the local population understand the benefits bestowed by foreign aid is one very good reason why most foreign aid is not an effective means of cultivating international good will.

But it gets weirder. The Post goes on to claim:

Sen. Murray got a few things very wrong. Osama bin Laden spent a lot more money on terrorist training camps than on day-care centers; the senator appears to have confused him with the fundamentalist charities that have won so much support for the Islamic fundamentalist group Hamas on the West Bank.

So the Post seems to think that Senator Murray's big error was in thinking that it was Osama bin Laden who built all those day-care centers when it was really Islamic fundamentalist charities who built them. The Post thinks that Islamic fundamentalist charities build day-care centers. That's nice. As Best of the Web put it, an Islamic man and all four of his wives can then drive by the day-care center and drop off the kids on the way to work - perhaps as government officers striving to re-create the Islamic theocratic societies of the middle ages!

But, wait! This can't be right. As Maureen Dowd has pointed out - women aren't allowed to drive in a fundamentalist Islamic society.

Details, details. Nothing a few marks of ellipsis can't handle.

But this weird Washington Post squib gives the clearest evidence yet that the liberal Old Media are not coming down hard on Senator Murray for one basic reason: THEY LARGELY AGREE WITH HER. The agreement is with her larger premises and with her willingness to distort whatever facts it takes and can be gotten away with to support and advance those premises. They agree with her "deeper" belief that it was a failure on the part of the United States (not enough foreign aid in her case, image maintenance in the Post's) that should be the focus of our concern, that the military should not be a component of the measures taken to address terrorism, and, most importantly, that there is some low budget magical thinking that will allow the United States to have all the Pell Grants and other federally paid public programs it wants - while simultaneously inducing the the world's terrorists to love us on the cheap.
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Snow On The Tracks!

Poor and Stupid says that when it comes to CSX's taxes, wheels aren't all that's spinning at the New York Times.

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Wednesday, December 25, 2002

Now That Everything Glows So Brightly V:
The Universal Liberal Background Radiation, Or The Left's Music Of The Political Spheres

A prior post noted:

The constant racial "invention" of the liberal Old Media in their ordinary news coverage is a special case of the constant pro-liberal/anti-conservative invention in that same coverage. Failure to cover the Murray story adequately is just part of the constant liberal background radiation emitted by the liberal Old Media all the time.

As if on cue, Adam Nagourney of the New York Times now manages to write an entire article about Democrats challenging the Administration's terrorism policy, astonishingly without even mentioning Democratic Senator Patty Murray or her bizarre suggestion that the American approach to terrorism is flawed because Osama bin Laden has curried favor in Third World countries by building roads and other infrastructure where the United States has not.

The focus of this article is on what likely Democratic contenders for the 2004 presidential race are saying, which presumably provides the excuse for not mentioning Senator Murray. But Mr. Nagourney has no trouble quoting Florida Democratic Senator Bob Graham, outgoing chairman of the Senate Intelligence Committee, simply on the grounds that he says he is "considering" a presidential race. And, more to the point, Mr. Nagourney provides no explanation for his not expressly asking any of these supposed presidential contenders what they think of Democratic Senator Murray's public musings on the exact subject of possible flaws in the Administration's approach to terrorism.

Could there be a clearer example of the liberal background radiation emitted by the ordinary news coverage of old media like the New York Times?

As a risible aside, the Times quotes Senator Edwards as dismissing the significance of the creation of the Department of Homeland Security as a meaningless political trick - where only weeks ago the Democrats were aggressively arguing that it was their idea in the first place.

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Reutersville As Spin City Amok

Reports on this year's Holiday sales are all over the map! One report is all doomy gloomy:

U.S. retailers, reeling from a lackluster holiday season that is forecast to be the weakest in more than 30 years, may ring in the new year with steep markdowns on clothing, accessories -- and profit forecasts. Analysts cut earnings estimates for retailers ranging from sector leader Wal-Mart Stores Inc. to upscale jeweler Tiffany & Co. Inc. on Tuesday, a day after major chain stores reported another week of tepid sales in what was supposed to be the biggest shopping period of the year.

That's pretty clear: Retail sales this year are less than for any of the last 30 years. A disaster.

But wait. Another reports says that Ho;liday sales are up compared to last year:

In a weekly report on Tuesday, the Bank of Tokyo-Mitsubishiand UBS Warburg forecast holiday sales in November and December would be up an anemic 1.5 percent over last year, the smallest gain since the banks began tracking weekly sales in 1970.


It's not easy to be sure, but it looks like its the annual rate of increase that's supposedly low.
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Swiss or Greek?

Yesterday, Best of the Web commented on some odd behavior at the International Red Cross:

You may be wondering how an outfit called the Red Cross can be so skittish about Christianity. The "cross" in Red Cross is not actually a crucifix, but rather the Swiss battle standard (which appears on the Swiss flag as a white cross on a red background). On the Swiss cross, unlike the Christian one, both vertical arms are of the same length.

This doesn't really get the Red Cross off the hook. The "Swiss Cross" is just a version of the Greek Cross, which is every bit as Christian as the Latin Cross - which has one long arm.

The Greek Cross is so Christian that the original Bramante/Michelangelo plan for the reconstructed Saint Peter's in the Vatican was in this shape. That plan was accepted by the Pope, but later enlarged into a Latin Cross because more space was needed.
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Now That Everything Glows So Brightly IV:
Insufficiently General?

Glenn Reynolds suggests another reason why the liberal mainstream media missed the Trent Lott story:

But that's the folks at Old Media: presented with real "racial insensitivity" -- as in Trent Lott's case -- they don't even recognize it until someone else points it out. That's because they're too used to it as an invented item to even think about the real thing.

It's worth keeping a couple of points in mind here.

I don't think it is completely accurate to write that "Old Media" missed the story so badly. The Wall Street Journal [OpinionJournal/Best of the Web] is "Old Media" - but recognized the story's significance early (although not as early as some bloggers). It seems to have been the liberal Old Media that really tripped up.

InstaPundit's observation that Old Media people are "too used to [racial bias] as an invented item to even think about the real thing" does not explain why bloggers and the Wall Street Journal, on one hand, and liberal Old Media, on the other hand, had different sensitivities to the topic. Everyone in this country- Old Media, bloggers, the kid waiting on the corner for his mom, you name it - is inundated with racial bias as an invented item. So why is it only "Old Media people" have become so numb that they can't "even think about the real thing?" Moreover, not every kind of media - new or old - "invents" racial bias at anything like the same rate. "Invention" of racial bias to discredit public figures or institutions can crop up anywhere, but in fact it is overwhelmingly a liberal and Democratic practice. For example, one does not see such invention on the editorial and op-ed pages of the Wall Street Journal the way one does in the New York Times. So when one does see accusations of racial bias in the Journal one pays attention.

Put another way: The racial coverage in every media outlet does not glow with racial invention to the same degree - and it's much easier to see the real thing when it appears in an outlet that doesn't emit so much background radiation generally.

Nor does this InstaPundit explanation do much to explain the Old Media reaction to Senator Patty Murray's bizarre comments, even though many people - including InstaPundit - sense that the Lott and Murray situations have a fair amount in common. As InstaPundit puts it:

PATTY MURRAY'S REMARKS ON BIN LADEN are reportedly causing a "groundswell of anger" on talk radio and the Internet, while being ignored by major media. I wonder why? Of course, the Trent Lott story started out that way, too.

But the "major media" are not generally ignoring Senator Murray's comments. The liberal major media are ignoring it. The Wall Street Journal, which I think most people would consider "major" as well as "old" media, has covered the story (as far back as December 20), with Best of the Web even raising the same question and providing another partial explanation:

Murray's remarks have not brought anything like the national outcry that Lott's did. In part that's understandable, since Lott as majority leader was a more important figure than Murray, the outgoing chairman of the Democratic Senatorial Campaign Committee (i.e., architect of her party's loss of the Senate). It's also probably bad news for the Democrats. Whereas the furor over Lott's comments forced the GOP to do the right thing and demote him, Murray's ode to Osama is likely to come back to haunt her in 2004, when she faces re-election. In a state that leans Democratic but not so far that it tips over, she ought to be beatable.

A search for "Murray" in the New York Times shows a rather different approach.

One problem here is that having focused on the media response to racial issues, the InstaPundit explanation of the Lott story does not generalize easily to explaining media response to non-racial issues such as Senator Murray's comments.

There is another explanation noted here and here and here, that does generalize in a way that helps one understand the Murray case: The constant racial "invention" of the liberal Old Media in their ordinary news coverage is a special case of the constant pro-liberal/anti-conservative invention in that same coverage. Failure to cover the Murray story adequately is just part of the constant liberal background radiation emitted by the liberal Old Media all the time.

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Tuesday, December 24, 2002

Merry Christmas!

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Context, Anyone?

It has been a while now since New York Times columnist Bob Herbert reported that Ward Connerly said on television that "Supporting segregation need not be racist .... One can believe in segregation and believe in equality of the races." Since then I have not seen a transcript of Mr. Connerly's interview, although I have no reason particular to doubt Mr. Herbert. So I will assume he is right.

In any event, I have only Mr. Herbert's excerpt and no close context for it. But with that caveat, I think it is worth pointing out that it is not that hard to give a perfectly reasonable and non-racist construction to Mr. Connerly's comment. Many groups - ethnic, religious, national and linguistic groups come to mind, but there are probably others - choose to live in high concentrations because this allows for services, experiences and contacts which would not be feasible otherwise. For example, if one speaks only Chinese and is new to the United States, one would probably be wise to reside in a Chinese-American community in which Chinese food, language, medicine, conversation, culture and ideas can be obtained easily and cheaply. There is no question that, even without a desire of the residents of such a community to exclude others, de facto segregation will often occur in such communities. It is not hard, for example, to find communities in and around Los Angeles with almost completely Asian populations, where this is the result of neither discrimination for or against Asians.

[It was not always so. Many deeds for older homes in Los Angeles (now unenforceable) provide that the property may be sold only to Caucasians - where the intent of the restriction was to prevent sales to Chinese, not African-Americans as is often incorrectly supposed.]

These Asian communities are segregated. Most Americans would say that these Asian newcomers have a perfect right - moral and legal - to do what they have done. Would Mr. Herbert consider that widespread acceptance of impulses that result in this segregation a sign of "deep seated racism," or is it a vindication and public accomodation of the individual's right to choose one's culture and religion? Most people would not consider segregation in this case and with this intent to be a problem. And these Los Angeles Asian communities are obviously but one example of a great many in a great many cities.

Would Mr. Herbert say that supporting this segregation is racist?

Or can one can believe in this example of segregation and still believe in equality of the races?

Again, I do not have the benefit of any context to Mr. Connerly's comments, and if such context were provided perhaps the above discussion would be revealed as inapposite.

But I also have to say that I find it more than passing strange that Mr. Herbert did not provide more context in his column. It suggests he is playing an inappropriate game where volleys can do real damage where none is warranted.

MORE: Pandagon, Hauser and MinuteMan

STILL MORE: David Frum gives a lot more context - and takes Mr. Herbert, game, set and match, although he comes at it from an angle rather different from the one presented above:

Could that be any clearer? Either Herbert failed to read the whole interview (which I can hardly believe) or else he willfully misconstrued it (which would be even worse). Connerly was a product of and victim of the segregated South. But with characteristic generosity, he is unwilling to condemn all the people implicated in segregation as racists and bigots. What Herbert is attacking Connerly for is Connerly's capacity for forgiveness. Pretty nasty.

And also pretty dumb. Because segregation has not vanished from the United States. As Connerly himself points out, every campus of the University of California now offers special blacks-only and Hispanics-only graduation ceremonies, some of them paid for with university (that is public) funds. Many universities have blacks-only and Hispanics-only dormitories or floors within dormitories.

Does Herbert regard these segregationist practices as racist? It would make him a more interesting columnist if he did - and would say so - but if he doesn't and won't, he is not well positioned to condemn Connerly for his Christmas-season words of charity.

Link from MinuteMan Update.
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Internalizing The Abuse

It is not a seasonal sentiment to hope that an "internal e-mail" from one disgruntled Princeton student or junior faculty member to another accuse Paul Krugman of including smears in his column to deliberately, illegally and successfully manipulate the price of a particular publicly traded security - and that the accusing e-mail carry only as much support for its smear as Professor Krugman generally requires of his own published accusations and self promotional claims. It would be particularly unseasonal to hope that the accusing e-mail also claim that Professor Krugman's alleged crimes be the product of a shadowy conspiracy. Perhaps the memo could include a bald assertion that the sender had personally heard Professor Krugman confess to such an intent.

And I don't wish such things on Professor Krugman - although the temptation is great. And the hideous experience of having to disentangle himself from the tar baby of an accusing memo might actually help concentrate his mind when he cobbles together his own insinuations.

Market behavior is hard to understand. Professor Krugman, for example, has argued or insinuated that the recent California electricity market run up was caused by market manipulation. But specialists have testified before the California legislature that "manipulative" activities Professor Krugman cited as important and pernicious in this regard (“Fatboy,� etc) could have moved the market by, perhaps, five percent. A recent federal regulatory decision found that California had been overcharged by only a small fraction of what California authorities or Professor Krugman had asserted. He congratulates himself anyway.

Accusations of market manipulation are not vindicated by internal e-mails, which aren't even very good evidence of intent, despite - often because of - their often intense confessional appearance. Instead, that's the kind of thing one calls in a real economist to help to evaluate. It took a long time for antitrust enforcement officials to learn not to take seriously executives bragging of their intent to effect market dominance. There exists an extensive serious economics literature on the topic and the pitfalls of memo-dependency. But lazy, intellectually dishonest and/or simple minded people latch onto e-mails, memos, bragging conversations and the like because such people think that evidence of that type spares them from having to do their economics homework.

But it doesn't.

Economists don't think in terms of internal memos. They have other, better, harder things to do. But not Professor Krugman - who takes this opportunity to praise Eliot Spitzer, fresh from Mr. Spitzer's broadside assault on markets and paens to government regulation and price controls. In a world such as Professor Krugman's, in which conspiracies and old boy networks (only of politically incorrect casts, of course) are the dominant considerations, such scraps of paper and deleted e-mail files are everything.

In this column, Professor Krugman also leaves many other undeserved gifts under his own tree. His suggestion that someone has disserved the World Trade Center victim families by treating them as uppity and insignificant peasants ("Villeins ye are, and villeins ye shall remain.") appears to have exceeded even the Times tolerance for his slanders - and the person allegedly doing the disserving is not even identified - the entire Krugmanian smear being attempted in the elliptic! (He writes: Americans received many promises of reform. But once the political danger had passed, all those promises - even, incredibly, the promise that families of victims would get to choose one member of the Sept. 11 commission - became non-operational.) But he is simply too tedious, too wrong, too vague and too insubstantial to spend the time at this time of year unpacking all of his silly, self promotional claims.

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Sunday, December 22, 2002

It's That Injunction Time Of The Year

That is, it's the time of year for injunctions against public religious displays, or against laws prohibiting public religious displays.

This Wall Street Jounal editorial gets the big picture right, but curiously describes Jefferson as the author of the Establishment Clause. A comment on the editorial asserts that Jefferson didn't write the Establishment Clause, if anyone did it was James Madison.

But Thomas Jefferson was neither the author of the "Establishment Clause" nor a mere bystander to James Madison's authorship.

Jefferson's relationship to the Establishment Clause is a little complicated, as I described in this prior post.

But he certainly wouldn't have approved of all this nasty, petty enjoining and couter-enjoining - or of the generally crabbed actions that are the targets of the injunctions.
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Trent Lott

Still in denial. Somebody should sit Senator Lott down and convince him that there was no "trap" set for him.

He did it to himself.

True, his enemies fell upon him when his self-inflicted injury became apparent. But there was no "trap."
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Homeless Crime

I'm not so sure why this article about the vicious attack on a woman by "homeless" men in New York has such an air of surprise in it.

For example, Santa Monica, for years one of the "homeless" capitals of the county, long ago went public with the fact that the great majority of sexual assaults in that citry were being perpetrated by "homeless" men.

It is as if some people have a determination to view "homeless" men solely as victims - not criminals. But they are often criminals. Serious, violent criminals.
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Got To Hand It To The Aussies

There's just nobody who can keep up with them when they want to be direct and to the point.

Although one must admit that there's an occassional Canadian who can give them a run for their money (even if it's some commonwealth dollar or other).
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Ze Franch And Iraq

The Man Without Qualities is a real Francophile. But to admire a people requires acknowledging their limitations. Many people have linked to articles suggesting that the French may join an invasion of Iraq. And that would be nice and help vindicate the peerless French contributions to democracy, universal human rights and may other great things.

But one must also acknowledge that as a United States incursion into Iraq looks more inevitable and more proximate, the French have an increasingly difficult commercial decision to make: Abstain from joining with the United States and risk considerable investment in Iraq and future commerical contacts once the Uited States takes over, or join with the United States at more or less the last minute to preserve future commerical relationships. So, as the United States action becomes more likely, one can expect that France will behave better and better.

Of course, these are the mirror images of the calculation the French have to make now, with a fairly obvious conclusion: Join with the United States now and, if the United States does not move into Iraq, risk losing the commercial advantage and relationships now held by the French.

Does this analysis seem cynical? Perhaps it is. Perhaps they are.

But I still love the French and France, anyway.
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What "Crisis?" What "Inevitable?"

California Governor Gray Davis now admits that his State faces a $35 Billion budget shortfall, where it was running a $10 billion surplus when he entered office four years ago.

Davis blames the poor economy and a decline in tax revenue, due in part to the burst of the technology bubble and the subsequent fallout in the stock market.

But the problem really stems from the fact that the California legislature perpetrated a 35 percent increase in state spending since Davis took office - which almost exactly accounts for the huge deficit.

Davis also says that none of the "experts" saw California's problems coming. But the Governor's claim is preposterous since the recent decline in tax revenues is linked directly to the and technology collapse, as Mr. Davis admits, a collapse which a great many experts predicted was inevitable all along, which Mr. Davis denies.

But California is hardly alone among the states in its excess spending and overly optimistic predictions. Spending went up, now spending must come down California will hardly face a crisis by returning to spending levels pre-Davis spending levels. The population has increased during Mr. Davis' term, and there are arrearages in some needed state spending, such as transportation. But that's not enough to constitute or cause a "crisis."

There is a dead weight loss here: many people will have organized their lives and economic plans on the assumption that planned state spending would become actual state spending. Most of that misdirected activity will now have to be undone. It is not a small amount of damage that is occasioned here. Contractors and other firms that do business with the state will have retained employees and other resources that should have been let go. New plans must be made. State agencies that were required to conduct business as if the planned spending would materialize will experience especially large waste. In sum, this was a massive stupidity that will not be cheap to correct.

But it is not a crisis. The situation pales in comparison to what happened in the early 1990's - when, for example, McDonnell Douglas, then the state's largest private employer, laid off the great majority of its entire work force and residential property values on the West Side of Los Angeles declined by up to 70% (although the local mainstream media, such as the Los Angeles Times, seem to be in permanent deranged denial on this last point, which almost every real estate professional in the area acknowledges).

And, most importantly, contrary to the Governor's additional preposterous assertion: new state taxes are definitely not "inevitable". Indeed, they would be highly counterproductive. However, the spending cuts that are inevitable are going to be very painful for the politicians who have to put them through - including the Governor. And the Governor's actions to date look to increase that pain. For example, Mr. Davis just appointed Steve Peace, a former lawmaker and key architect of the state's failed electricity deregulation plan, as his top budget adviser.

Now, it is not all Mr. Peace's fault that the deregulation plan went awry. However, Mr. Peace's history has, shall we say, eroded his credibility as an economic forecaster.

During the height of the last real California financial crisis, Orange County went bankrupt (Chapter 9, actually). Howls of "inevitable" new taxes went up from the Los Angeles Times, the New York Times, California Democrats and the rest of the usual suspects. The County was grimly warned that to close the huge gap in its finances by budget cuts alone would impair the County as a desirable place to live, ... which would likely create a downward spiral ... which might result in a DISASTER OF AN EVEN HUGER SCALE! [The County was told to think Appalachia-on-the-Pacific!]

Well, the usual suspects were ignored, the cuts were made but taxes were not raised substantially ... and Orange County did very well, thank you very much.

California could, too.

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Saturday, December 21, 2002

Your Grandmother May Have Been Right, Again

The modern diet - especially eating sweets - may cause acne.
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Opportunity Knocks

The Trent Lott mess has given rise to many calls that the GOP must "do more" about race, many of those calls issuing from highly disingenuous quarters such as Nancy Pelosi.

Representative Pelosi presides in a party that has Donna Brazille commissioned to promote local African-American candidates to defeat Al Sharpton's capture of the African-American vote in the next Presidential round. So one might be tempted to counsel Ms. Pelosi and her ilk to tend her own fields and be done with it.

But that would be passing up a real opportunity, because what Ms. Pelosi is saying is correct and the fact that she is saying it creates a real opportunity for the Republicans to do something constructive.

One of the bitterest consequences of the structure of the current Democratic coalition is that many urgent and worthy African-American interests are perversely suppressed within the party in favor of the other, competing interests. Perhaps the worst example is the submersion of the educational opportunities of African-American and other minority children to the interests of the teachers unions. Many younger African-American leaders are acutely aware of this disgrace.

Now that the GOP again controls both houses of Congress, a program of school vouchers for children from disadvantaged schools may be a real possibility. By proposing such a targeted, well-funded voucher program, the President and Congressional Republicans would send a message to African-Americans that Republicans care about them in the ways that count. The best result would be that if such a program became law, African-American children would benefit enormously.

But proposing such a program would also split the Democratic coalition in several ways, even if it does not pass Congress. Young, visionary African-American leaders would be further encouraged to break from the manipulative, traitorous Sharptons and Brazilles who have inherited the old civil rights estate. And minority parents would be encouraged to understand that the Democrat/Union monolith is a main obstacle to their childrens' progress, education and happiness.

It is also interesting at least to consider the consequences of formulating such a program as a partially unfunded federal mandate. That would induce the states to reallocate their own educational funding towards enhancing minority student achievement. But it would also cause budget stress and controversy at the state level, which could adversely affect the program's prospects. However, if the state requirements were phased in over a period of years, the effects on state educational funding priorities might be very beneficial.

As Ms. Pelosi points out, more needs to be done. The furor surrounding Senator Lott's departure from GOP leadership may make such a program more likely. So perhaps more can be done.

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Friday, December 20, 2002

No Discounts?

One of the characteristics of insider trading that makes it so common is that it is not often detected and, when it is, it is very hard to prove. For that reason, many people believe that it is especially important that insider traders be fined a multiple of their illegal winnings if the behavior is to be deterred. The reasoning is fairly straightforward: If there is only a 10% (say) chance of getting caught and fined, then the actual fine should be fixed at ten times the amount obtained through insider trading - so that when discounted by the 10% there is no ex ante benefit to breaking the law.

It is therefore curious that George Soros was fined only what he obtained in his insider trade. This fine provides little incentive to refrain from additional insider trading - although it does provide some.

Of course, there are some serious people such as Henry Manne who believe that insider trading actually helps the economy. If that is true, it is always economically irrational to deter insider trading - and every fine is too much, at least from an efficiency standpoint.

Last August 2, for example, Professor Manne argued in the Wall Street Journal article linked above ("Options? Nah, Try Insider Trading"):

Now, ... as we are seeing the problems of stock-option plans, insider trading is beginning to look like an interesting alternative.


The problem was -- and is -- that no one could suggest an alternative to stock options for encouraging management to behave in the interests of shareholders. A few academics have joined me in suggesting that insider trading was nearly ideal for that purpose. But politicians won't come near it, and the SEC gags at the suggestion.


After the option is exercised, the executive becomes a larger shareholder. Stock ownership pushes management to maximize share price, especially if the shares represent a substantial part of an employee's undiversified portfolio. But as the employee's shares represent only a tiny fraction of all shares outstanding, the induced incentive for risky choices may still fall short of what would be dictated by the interest of shareholders. In other words, stock options offer no greater incentive than would a similar number of shares held by the manager, however acquired.

Insider trading , on the other hand, allows the insiders to meticulously craft their own reward for innovations almost as soon as they occur and to trade without harm to any investors. The incentive is immediate and precise and is never confounded with stock-price changes that are not of the managers' making. The effect of this trading will always be to move the stock price in the correct direction quickly and accurately, irrespective of what accounting entries are made for the underlying event. Stock prices will, for example, reflect the present value of anticipated future gains from new developments, something accounting cannot and should not provide for.


Currently, the SEC sees its job as regulating the entire market for information. This is madness. It starts at the supply side with accounting rules that began life as managerial tools and tries to make them into a valuation scheme. It finishes on the demand side by restricting insider trading , which merely shifts the identity of the people who may trade first on undisclosed information.

If insider trading were legal and used to replace or supplement stock options, there would be no "tragedies" of employees being left high and dry with options way out of the money. There would be no loss of reward when an innovation merely resulted in a reduction of an expected loss. There would be no unearned gain because a company's stock appreciated in line with a market or industry rise. And there would be no peculiar problems of accounting since such trading would be entirely extraneous to the company's accounts.

There are plenty of ways companies could regulate their own insider trading to best fit their needs. Some might limit trading to buying on good news and prohibit selling on bad news. Some could limit the amount of stock an employee could purchase, or outlaw insider trading altogether. We would certainly see some innovation in enforcement techniques and perhaps in the publicity given to insider transactions.


All we have to do is make the present laws optional. Just one thing: I would require companies to disclose details when they had adopted an insider trading system. That way I could go load up on the company's shares.
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Dim Bulb Finally Going Out II?

And then, of course, there's this, which almost seems to be the Senator's personal effort to prove me wrong.

By the way, when Trent Lott went off the rails, a lot of conservative bloggers spoke up - although early posts were made by some liberal bloggers.

It is now late Friday night, and the Murray story has been out all day. The three liberal blogs credited by Kausfiles with respect to the Trent Lott story don't seem to have a word about Senator Murray's howler: Atrios, Josh Marshall and Timothy Noah.

Is their shared thought that it would be hard to give Senator Murray's comments a pro-liberal, anti-Republican spin, so why post? Nah. That would just be too, too cynical.

Just the silence of the lambs?
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Dim Bulb Finally Going Out?

My post stating that Senator Patty Murray is not an idiot has inspired a large and forcefully disagreeing response.

It has, for example, been pointed out to me that The Progressive found Senator Murray to be the fourth dumbest person in Congress, and for reasons that are certainly not insubstantial:

No. 4


Democrat, Washington

Staffers report that Murray frequently seems confused about the finer details of procedure and debate, a fact reflected in her complete lack of accomplishments since winning office in 1994 as the "Mom in tennis shoes." Virtually the only legislation she is closely associated with is a bill calling for an expansion of family and medical leave, and it has languished in the Senate for years.

Murray often talks about how her experience as a preschool teacher left her with an abundance of compassion for children. Such compassion was hard to spot during an interview she gave to Gannett News Service, in which she described a three-year-old boy in one of her classes as "the epitome of every teacher's nightmare, the kind of kid you want to nail to the wall."

Murray calls herself an environmentalist, but her gooey sentiments on the subject could drive Mother Nature over to the Wise Use camp. She once said she wanted to be the voice of the salmon in Congress because fish "don't talk."

Murray at least appears to recognize her own limitations. As she once told a group of schoolgirls, "If I can do this job, anybody can."

But I do not believe this kind of thing qualifies Senator Murray as a true "idiot." Instead, I view the Senator as in possession of a shrewd, cynical and intensely limited but highly destructive intelligence that must be acknowledged to be defeated.

One must recognize excellence in all of its forms!
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I didn’t fail ten thousand times. I successfully eliminated, ten thousand times, materials and combinations which wouldn’t work.

Why does Virginia Postrel underestimate herself?

Virginia is absolutely correct when she denies "that progress depends on grim, self-denial--what I call the "repression theory of progress."

One of the greatest, most liberating aspects of modern science is that it does not depend on grimness or any other emotional state or posture. My prior post from Richard Feynman amply displays how the objective, non-emotional nature of modern science - including the social sciences, such as economics - allows for the essentially unbounded personal joyful exuberance and sheer fun that Richard Feynman personified.

Grimness is for religious cults - objective scientific truth will set you free.

But why does Virginia bother with those who have spent their careers progressively undoing themselves? Her fabulous 1999 lecture on "Economics Play" makes vastly more sense that the Paul Krugman quote she reproduced in her book and again in her December 19 post:

"You can't do serious economics unless you are willing to be playful. Economic theory is not a collection of dictums laid down by pompous authority figures. Mainly, it is a menagerie of thought experiments--parables, if you like--that are intended to capture the logic of economic processes in a simplified way. In the end, of course, ideas must be tested against the facts. But even to know what facts are relevant, you must play with those ideas in hypothetical settings. And I use the word 'play' advisedly: Innovative thinkers, in economics and other disciplines, often have a pronounced whimsical streak."

Another brilliant Southern writer, Flannery O'Connor, told a story of a brilliant dinner party in 1950 at Mary McCarthy's. The conversation turned to the Catholic Eucharist, which, being the Catholic, Flannery was supposed to define. Mary McCarthy said it was a symbol and that it was "a pretty good one". O'Connor replied: "Well, if it's a symbol, to hell with it!"

If economics or any putative science is mainly a menagerie of thought experiments or parables that are intended to capture the logic of economic processes in a simplified way which only in the end must be tested against the facts then to hell with it. As Feynman's lecture points out: there is great, exuberant play in formulating science - but science is mainly about the objective world and repeatable experiments. That is very, very hard work. Without a primary focus on that work, activity that is supposed to be science becomes just self indulgence.

And that, for example, is why another very playful American who really understood these things said: "Genius is one per cent inspiration and ninety-nine per cent perspiration."

Professor Krugman, on the other hand, seems more a once-talented person who has not done his homework for a very long time. And this quote gives some insight as to why he has gone so wrong.
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I'm Sorry To Be Personal, But ...

... anyone who would write this at the time of someone else's mother's murder is way out of line, at best.

As one of the post commenters correctly puts it: "Another in a long line of totally tasteless posts, accompanied by similarly tasteless comments from the loyal toadies. This post ranks up there with the the despicable comments of Lott at Strom's birthday party."

A public apology is very much in order here, too, but don't count on it. Trent Lott on this count is clearly the better person.

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The Long, Long Line at L'Idiot II

Innocents Abroad posts some facts that would make Senator Murray stay in her house for a year if she had any shame.

Innocents' post also raises a central human question: Senator Murray's comments contain a huge helping of contempt and disrespect for all the United States funded aid workers who struggle with imperfect tools (aren't they all?) to help Third World people.

I have argued here in the past that among the most viciously uncivil actions we can commit is to ignore the contributions of those who deserve acknowledgement. On that count, Senator Murray is a savage.

If she can't bring herself to stay home and out of sight, Senator Murray should give up those tennis shoes to some kid from Bangladesh and walk barefoot for, say, six months to discipline herself from spouting off like this again.

God, and at Christmastime, no less.
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Now That Everything Glows So Brightly III

An astute reader from Wisconsin responds to this and this prior post:

Dear Mr. Qualities:

I think there is a simple answer for your question: Why the liberal mainstream press missed the Lott story.

True, the blogs pushed it, but it was first raised by ABC's the Note the day after it occurred, which also mentions quotes from offended politicians presumably aired by ABC News. ABC pretty much is a cornerstone of the mainstream liberal press.

But I would argue the larger reason why none of the other dozen or so reporters who were at the birthday party recognized the story was this: Washington reporters are part of a pack that filters every story through the lens of conventional wisdom and the story line of the day. Anything that falls outside those boundaries can be, and often is, overlooked.

Yes, the Washington press, like press virtually everywhere, is disproportionately liberal. They do protect their sources -- and here Insta-professor is correct -- and that protection racket often (not always, but often) compromises aggressive reporting. (Recall that Woodward was a lowly metro desk reporter, covering minor matters in Virginia, when he was sent to a court hearing of the Watergate burglars where the names "Howard Hunt" and "CIA" came up. And it was WaPo's Bradlee who argued for keeping Woodward and his sidekick on the story when others at the paper wanted the White House/Washington desk to cover it. At least, that's how it was portrayed in the movie.)

Remember, the Washington press corps love nothing more than a story like this -- it feeds the beast back home! The press corps love a feeding frenzy. The true dynamic at work in the press corps isn't a "they're liberal so they miss conservative stories" argument, even though that's true. The true dynamic is that the corps are always on the lookout for something that will spur a feeding frenzy.

Particularly during dead news days like these -- post-election, pre-budget fighting. So the incentives for the press corps, liberal or not, is to be on the lookout for stories like this. (The Lott story, in form and approach by the press corps, bears remarkable resemblance to the Condit/Levy story, and the Gennifer Flowers/Clinton story, and the. ......)

When the pack misses a story (we covered the birthday, not the racist remarks), the only thing that can yank it back is some mainstream press/commentator who points to the obvious -- this is a story, you idiots!. So, as this story developed, one can argue that the racist remark was ignored by the press initially because it didn't fit the conventional story line. The observations of liberal interest groups (in the initial ABC Note item) and liberal bloggers (first Noah, then JJ Marshall) could be ignored by the mainstream press, because that's what they do -- criticize Republicans.

The tipping point, I would argue, came when the Insta-professor condemned the remarks, late in the evening the day (Dec. 6) after the birthday party. Reynolds, I would argue, has become mainstream. He's kind of like the city editor of the blogosphere -- passing on stories left and right, making pithy little comments here and there. But when Reynolds -- who is not non-partisan, but who's partisan tendencies are pretty well disguised -- condemns something that the rest of the mainstream press ignores, it becomes a red flag. Instapundit has huge traffic numbers, and is probably read by as many influential bloggers on the left as on the right. Once he jumped on the quote buttressed by a WaPo story that same day -- buried on page A6 -- that had damning quotes from Kristol), others were sure to follow -- Sullivan, Frum, the rest. By Sunday, Lott was doomed, his forced apology causing him only further troubles.

Thanks for indulging a long note.

Keep up the good work!
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Another Surprise From Pop-Up Stopper

I have found that the version of Pop-Up Stopper that I use often prevents me from "republishing" my Archives on Blogger.

Pop-Up Stopper seems to think that the "republish" button activates an "Archives Pop-Up" on Blogger - and Stops it.

If I turn off Pop Up Stopper, the problem goes away, and I can "republish."
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But Small, ... Really Small

Richard Feynman, almost everyone's favorite physicist, noted that even psychology can be a serious research science in the right hands!

SIDE NOTE: The Man Without Qualities was present in the crowd to which Professor Feynman gave this address originally, and remembers it well. It was an incredible experience - maybe almost as profound for me as his nude baths at Esalen were for the Professor. But my Cal Tech experience lacked a good beautiful-girl-toe-massage episode.
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The Long, Long Line at L'Idiot

Senator Patty Murray is in it:

"[Ossama Bin Laden]'s been out in these [third-world] countries for decades, building schools, building roads, building infrastructure, building day care facilities, building health care facilities, and the people are extremely grateful. We haven't done that," Murray said. "How would they look at us today if we had been there helping them with some of that rather than just being the people who are going to bomb in Iraq and go to Afghanistan?"

Al Qaida has engaged in some Afghan infrastructure work - as noted in the linked article - but that's not the source of al Qaida's popularity on, say, the streets of Karachi. And Senator Murray knows that the United States - both through its government and its many private charities - has for many decades done each and every thing she lists at a scale that dwarfs by orders of magnitude anything bin Laden did on these fronts. The World Bank, for example, is largely funded by the United States and is very much in the third world infrastructure business, for example (although it's amazing that any examples are needed) here and here and here.

The Senator's suggestion that al Qaida has been building day care facilities is just bizarre. Does Senator Murray think that Afghan woman under the Taliban dropped their children off at al Qaida day care centers before work?

Buying the affection of Third World populations through foreign aid is a very old, difficult, often-tried and highly problematic effort. She trots it out as a new idea.

Senator Murray is no idiot. So why would she say such things?

She seems to be groping for some politically effective way to oppose the war on terrorism generally, by arguing that the money should be spent domestically:

For example, she told students, "You'll be graduating into a world that is very difficult. … The economy is struggling. War in Iraq is a very real possibility in the short term" and could cost $200 billion even if it were to last only a few weeks. The cost of waging war could result in cuts to domestic programs such as Pell grants for college students.

But even accepting the Senator's suggestions at face value, massive foreign aid also costs a lot of money - which also allows less to fund Pell grants and the like. Building roads and dams, for example, is not cheap. To finance meaningful infrastructure projects at a scale that would affect the opinions of a good number of the billions of Third World residents would be very expensive.

Further, such aid often (many would argue, "usually") does a lot more harm than good to the residents of the "aided" countries while enriching the local kleptocracy. Does the Senator imagine a road through, say, the Amazon rain forest is an obvious good that the United States should finance? How about the Three Gorges Dam in China? Criticism of infrastructure foreign aid is not confined to conservatives, but comes from many political directions.

Maybe someone should sit the Senator down and explain to her that foreign aid has to pass the approval of the local Third World government, which often is mugging the governed and doesn't care about environmental and social damage.

And even massive aid would probably not change Third World opinions very much, simply because even where aid does good there is no easy way to convince residents that the United States has done the building, a necessary precondition to affecting popular opinion.

The difficulty in effectively convincing people that United States aid has helped them should be obvious to Senator Murray, since she is herself ignoring past and present United States efforts in these very comments.

Links from DRUDGE.


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