Man Without Qualities

Monday, December 29, 2003

The Wrong Year?

It is surely true that Presidential elections are strongly influenced by some of the economic conditions prevailing at the time of the election. The unemployment rate and employment prospects (job security) are probably the two most significant economic factors.

It is also surely true that Federal Reserve interest rate policy has a big effect on many economic variables.

But most knowledgeable observors believe that the economic effects significant to voters that are worked by changes in the Fed's interest rates take one year or more to take hold. For example, a change in Fed interest policy in June of an election year is unlikely to create or eliminate many jobs by the beginning of November - or even a broadbased change in feelings of job security (or anxiety).

Restating the above: Economic conditions prevailing at the time of a Presidential election are mostly correlated to Fed policy prevailing at least a year previously, Fed policy during an election year has much less effect on the outcome of the election than does Fed policy prevailing in the the year immediately before the election year.

So why does Mickey D. Levy, chief economist at Banc of America Securities, scribe a long and detailed article in the Wall Street Journal attempting to show that the Fed has not historically based its policy moves on any attempt to affect Presidential elections by analysing Fed policy moves in Presidential election years? Those moves are a year late and many basis points short to change the opinions of many voters - other than, say, the opinions of economists at fancy investment banks.

Mr. Levy notes, for example:

Conventional wisdom holds that the Federal Reserve is influenced by politics and does not raise interest rates during presidential election years.

Really? Who would have thought conventional wisdom was so out of touch with the common knowledge that interest rate changes take time to work. Perhaps it depends on the conventions one attends. Mr. Levy does note that history refutes this notion. I believe Mr. Levy's historical facts figures, but they seem almost irrelevant to the question of whether the Fed tries to influence presidential elections - since the relevant facts and figures pertain to Fed moves in the immediately preceding years.

Even stranger, Mr. Levy also notes:

Some circles blame the Fed's tight monetary policy for incumbent President Bush's loss to Bill Clinton in 1992, but the record shows the Fed eased its federal funds target dramatically, from 4.4% in December 1991 to 3% in November 1992. This rate reduction, which lowered short rates below inflation, occurred amid moderate economic recovery but a soft labor market with a rising unemployment rate. Criticism of the Fed in the early 1990s should focus on 1990, when the Fed remained stubbornly tight as recessionary conditions unfolded.

But the circles that blame the Fed's tight monetary policy for incumbent President Bush's loss to Bill Clinton in 1992 focus exactly on the Fed's stubbornly tight approach in 1990-1991, which is the period of Fed policy which created the economic conditions prevalent in the run-up to the November, 1992 election.

That the Fed eased its federal funds target dramatically, from 4.4% in December 1991 to 3% in November 1992 did create profound economic effects - but those effects were realized in 1993, the year in which Mr. Greenspan got to sit next to first lady Hillary Rodham Clinton.

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Friday, December 26, 2003

Children's Letters To God

Via another e-mail:

1. Dear God,
Please put another holiday between Christmas and Easter.
There is nothing in there now.
2. Dear God,
Thank you for the baby brother but what I asked for was a
puppy. I never asked for anything before. You can look it up.
3. Dear Mr. God,
I wish you would not make it so easy for people to come apart.
I had to have 3 stitches and a shot.
4. Dear God,
If we come back as somebody else, please don't let me be Jennifer Horton - because I hate her.
7. Dear God,
When did you know you were God? Who told you?
8. Dear God,
Is it true my father won't get in Heaven if he uses his golf words in the house?
9. Dear God,
I bet it's very hard for you to love all of everybody in the whole world. There are only 4 people in our
family and I can never do it.
10. Dear God,
Did you really mean, Do Unto Others As They Do Unto You?
If you did then, I'm going to get even with my brother.
11. Dear God,
I like the story about Noah the best of all of them. You really made up some good ones. I like walking on
water, too.
12. Dear God,
My Grandpa says you were around when he was a little boy.
How far back do you go?
Love, Dennis
13. Dear God,
Do you draw the lines around the countries? If you don't, who does?
19. Dear God,
Please send Dennis Clark to a different summer camp this year.
21. Dear God,
I keep waiting for spring, but it never did come yet. What's up? Don't forget.

23. Dear God,
My brother told me about how you are born but it just doesn't sound right. What do you say?
24. Dear God,
If you watch in Church on Sunday I will show you my new shoes.
25. Dear God,
Is Reverend Coe a friend of yours, or do you just know him through the business?
26. Dear God,
In Sunday School they told us what you do for a job. Who does it when you are on vacation?
27. Dear God,
In school we read that Thomas Edison made light, but in Sunday School they said you did it first. Did he steal your idea?
Sincerely, Donna
28. Dear God,
I do not think anybody could be a better God than you. Well, I just want you to know that. I am not just saying that because you are already God.
29. Dear God,
It is great the way you always get the stars in the right place. Why can't you do that with the moon?
30. Dear God,
I am doing the best I can. Really.

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Wednesday, December 24, 2003

A Lawyer's Christmas

E-mailed from a friend:

Whereas, on or about the night prior to Christmas,
there did occur at a certain improved piece of real property
(hereinafter "the House") a general lack of stirring by all creatures
therein, including, but not limited to a mouse.

A variety of foot apparel, e.g. stocking, socks, etc.,
had been affixed by and around the chimney in said House
in the hope and/or belief that St. Nick a/k/a/ St. Nicholas
a/k/a/ Santa Claus (hereinafter "Claus") would arrive at sometime thereafter.

The minor residents, i.e. the children, of the aforementioned House were
located in their individual beds and were engaged in nocturnal
hallucinations, i.e. dreams, wherein visions of confectionery treats,
including, but not limited to, candies, nuts and/or sugar plums and/or other
caries causing items, did dance, cavort and otherwise appear in said dreams.

Whereupon the party of the first part (sometimes hereinafter referred to as
"I"), being the joint-owner in fee simple of the House with the party of the
second part (hereinafter "Mamma" or "She Who Must Be Obeyed;" collectively,
the "Parties"), and said Mamma had retired for a sustained period of sleep.
(At such time, the Parties were clad in various forms of headgear, e.g.kerchief, cap, sleepstocking, etc.)

Suddenly, and without prior notice or warning, there did occur upon the
unimproved real property adjacent and appurtenant to said House, i.e. the
lawn, a certain disruption of unknown nature, cause and/or circumstance.
The party of the first part did immediately rush to a window in the House to
investigate the cause of such disturbance.

At that time, the party of the first part did observe, with some degree of
wonder and/or disbelief, a miniature sleigh (hereinafter "the Vehicle")
being pulled and/or drawn very rapidly through the air by approximately
eight (8) reindeer. The driver of the Vehicle appeared to be and in fact
was, the previously referenced Claus.

Said Claus was providing specific direction, instruction and guidance to
the approximately eight (8) reindeer, and specifically identified the
animal co-trespassers by name: Dasher, Dancer, Prancer, Vixen, Comet, Cupid,
Donner and Blitzen (hereinafter "the Deer"). (Upon information and belief, it is
further asserted that an additional co-conspirator named "Rudolph" may have been involved.)

The party of the first part witnessed Claus, the Vehicle and the Deer
intentionally and did willfully trespass upon the roofs of several
residences located adjacent to and in the vicinity of the House, and noted
that the Vehicle was heavily laden with packages, toys and other items of
unknown origin or nature. Suddenly, without prior invitation or permission,
either expressed or implied, the Vehicle arrived at the House, and Claus
entered said House via the chimney.

Said Claus was clad in a red fur suit, which was partially covered with
residue from the chimney, and he carried a large sack containing a portion
of the aforementioned packages, toys, and other unknown items. He was
smoking what appeared to be but may not have been tobacco in a small pipe
in blatant violation of local ordinances and health regulations.

Claus did not speak, but immediately began to fill the foot apparel of the
minor children hanging adjacent to the chimney with toys and other small
gifts. (Said items did not, however, constitute "gifts" to said minors
pursuant to the applicable provisions of the 26 USC 1, et seq, to-wit: the U.S. Tax Code.)

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Sunday, December 21, 2003

Isn't This The Same James Carville ...

... who said: "I used to think if there was reincarnation, I wanted to come back as the President or the Pope...But now I want to come back as the bond market. You can intimidate everyone."

Corporal Cueball said that after Bob Rubin shot down some of the zanier Clinton/Carville proposals by reference to the bond market. Considering the even zanier proposals Cueball is making now, he may want to call his old friend Bob to learn that the bond market still does intimidate everyone who pays attention and isn't a flakey professional opportunist.
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For The Holidays, Send A Gift With A Wish Attached III: The New York Times Continues It's Long Journey Through Denial

Today's lead editorial in the New York Times is an interesting early example of the concession/uberdenialism combo to which the liberal media and many Democrats are likely to be driven increasingly if the economy and foreign affairs continue to improve.

First, the concession: the Administration effort to obtain debt relief for Iraq is admitted to be correct, and an appropriate exception to America's general resistance to national debt foregiveness pleas.

Then, the many and egregious denials. The Times tells us that The leaders of France and Germany were already looking for politically feasible ways to work with Washington on Iraq. Is that right? Was the German Chancellor, who obtained his office by running on a platform of opposition to American efforts in Iraq, really looking for politically feasible ways to work with Washington on Iraq? And was France signaling that it was looking for politically feasible ways to work with Washington when French representatives recently mocked an American request that NATO supply more helicopters in Afghanistan? The French and German leaders didn't let on that their real motivation was looking for politically feasible ways to work with Washington when (as reported by CNN) only a few weeks ago they responded to British Prime Minister Tony Blair saying: "whatever the differences there have been about the conflict, we all want to see a stable Iraq," by highlighting their differences. Chirac even corrected Blair when Blair suggested there might be some movement on agreeing to the transfer of power from the U.S. occupying force to Iraqi officials. The whole affair was such a fiasco that Professor Richard Whitman, of the University of Westminster in London, told CNN the talks were a "major disappointment." Professor Whitman observed: "(We) hoped for a real push towards some firm agreement at least among European states. It is very difficult to see where we are going to see some common ground."

Ah, those inscrutable Parisians and Berliners! The Times appears to perceive that in correcting and rebuffing Washington's great ally that Messrs. Chirac and Schroeder were only looking for politically feasible ways to work with Washington on Iraq! Nor does it appear that the French and Germans were already looking for politically feasible ways to work with Washington on Iraq when they refused to contribute more than a token amount to Iraq's reconstruction. Perhaps Professor Whitman feels chastened and corrected - but I wouldn't bet on it.

The Times begins its editorial with the witless pronouncement: James Baker III is quickly showing how old-fashioned diplomacy can advance Washington's policy objectives. Old-fashioned diplomacy? Old-fashioned diplomacy is the job of the Secretary of State - to whom Mr. Baker does not even report. Colin Powell's hospitalization doesn't explain this substitution - the trip was hardly of such an urgency that it could not have been postponed for a few weeks, and Mr. powell could have sent his first in command. That's the way old fashioned diplomacy works.

By the rules of old-fashioned diplomacy there was plenty of time for Mr. Powell to recover, since Mr. Baker's entire trip should have been (under those rules) at least postponed following what the Times calls a Pentagon memo excluding France, Germany, Russia and other opponents of the war from Iraqi reconstruction contracts financed by American tax dollars whose release on the eve of Mr. Baker's European trip was inept. Interestingly, the Times does not join with the naive crowd arguing that the memo's release or text was not fully approved by the White House or Mr. Baker (even, to paranoids, such as Herr Doktorprofessor Paul Von Krugman, a deliberate attempt to undermine Mr. Baker's efforts). Nor does the Times tarry to explain why the memo's release did not prevent French and German cooperation on debt relief for Iraq. Not only did it not prevent it, the memo's release almost certainly enormously aided in securing that cooperation, which is nothing more or less than agreement to contribute through debt relief value economically identical to the very reconstruction funds that the Europeans had earlier refused to provide. The memo drew a clear line indicating that further European outrages such as their refusal to contribute to reconstruction would be met with dramatic and effective and very expensive retorts from the United States. Almost certainly, that's what drew the cooperation and that's why the trip was not postponed and that's why neither Mr. Powell nor anyone reporting to him made the trip.

That's anything but old fashioned diplomacy. That's hard-scrabble, Texas-style, cram-down workout maneuvering. Mr. Powell can pick up on the old fashioned diplomacy when Mr. Baker - the Texan - finishes his work.

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Saturday, December 20, 2003

Never Let the Facts Get in the Way of a Good Rant III

The really bad news is that it now seems likely the insurgency has been operating free of Hussein and his money. --- Richard Cohen, Washington Post, December 16, 2003

BAGHDAD - Saddam Hussein was personally directing the postwar insurgency inside Iraq that has claimed the lives of more than 200 coalition troops, playing a far more active role than previously thought, American intelligence officers have concluded since his capture. Despite the bewildered appearance of the deposed dictator when he was hauled from his hiding hole last weekend, he is believed to have been issuing regular instructions on targets and tactics through five trusted lieutenants....[S]ince the arrest and interrogation of guerrilla leaders identified in the paperwork, U.S. investigators now believe that Saddam was at the head of an elaborate network of rebel cells. ... This network enabled him to issue commands without the use of satellite phones that monitoring devices could pick up.

The Sunday Telegraph also has learned that millions of dollars to support the insurgency were recovered in raids on other suspected Saddam safe houses. ....

By capturing Saddam and several leaders of his Fedayeen fighters, the Americans believe that they have dealt a serious blow to the Ba'athist insurgency.

-- Washington Times/LONDON SUNDAY TELEGRAPH news article December 21, 2003.

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Friday, December 19, 2003

Just Keep Chanting ...

... that the war in Iraq has not made America safer. Nope. No safer at all - just like Howard Dean and the angriest of the left keep saying.

And Libya's agreeing to let in weapons inspectors has nothing whatsoever to do with what happened in Iraq. And Moammar Gadhafi having secret negotiations with the United States and Britain and then agreeing to halt his nation's drive to develop nuclear and chemical weapons and the long-range missiles to deliver them has nothing to do with Saddam Hussein's capture.

And it must all be a big mistake, anyway, because Gadhafi negotiated with the United States and Britain who scoff at international law - and ignored the sacred United Nations, the French and even the Germans! Mr. Gadhafi must have been on some kind of bender and is simply not responsible for his own acts.

And, in any even, it doesn't mean anything because Libya never threatened to attack the US. It just blew up commercial airliners. So it doesn't matter what happens there or what Mr. Gadhafi agrees to. The Democrats and the left can just keep chanting that - and win the election! Right?



UPDATE: The revisionism and attempt to distract from the Bush and Blair Administrations' accomplishments with respect to Libya of course begin immediately. The Washington Post provides an early and rather desperate signal of the left's future arguments that Libya's concessions had little to do with the Iraq or Afghanistan invasions:

Libya's stunning decision yesterday to surrender its weapons of mass destruction followed two decades of international isolation and some of the world's most punishing economic sanctions. ... The turning point in Gaddafi's undoing may have been the U.S. intelligence investigation that eventually tracked a tiny piece of the bomb that blew up Pan Am Flight 103 over Lockerbie, Scotland, killing 270 people, back to two Libyan intelligence agents, U.S. and British officials say. The evidence mobilized the world and produced an international effort that may now peacefully disarm Libya.

"What forced Gaddafi to act was a combination of things -- U.N. sanctions after the Lockerbie bombing, his international isolation after the Soviet Union's collapse . . . and internal economic problems that led to domestic unrest by Islamists and forces within the military," said Ray Takeyh, a Libya expert at the National Defense University.

So twenty years of ineffective "international efforts" are what did the trick - even though American boots were heading for Iraqi ground at the time Libya acted:

Whether by coincidence or fear that Libya might be targeted, Gaddafi's envoys approached Britain on the eve of the Iraq war to discuss a deal, U.S. officials said.

And then there's this pearl:

For all the Bush administration's focus on deadly arms, however, the United States may have missed an opportunity to act earlier because of its preoccupation with Afghanistan and then Iraq, said U.S. officials familiar with earlier overtures.

"Within months after September 11th, we had the Libyans, the Syrians and the Iranians all coming to us saying, 'What can we do [to better relations]?' We didn't really engage any of them, because we decided to do Iraq. We really squandered two years of capital that will make it harder to apply this model to the hard cases like Iran and Syria," said Flynt Leverett, a former Bush administration National Security Council staff member now at the Brookings Institution.

I don't know who Flynt Leverett is, or what his agenda might be, or why he resigned or was removed from the National Security Council. But the Brookings Institution is generally a Democratic redoubt. Mr. Leverett is not only at the Brookings Institution. He was at least until recently Visiting Fellow at the Saban Center for Middle East Policy at the The Brookings Institution. That would be "Saban" as in Haim Saban, arguably the Democratic Party's biggest financial supporter ever. From just February 2002 to March 2003 Dr. Leverett was Senior Director for Middle East Affairs at the National Security Council - that is, he departed after one year. It looks as if Ms. Rice was pleased to see him leave. Not that the Post bothers to mention any of that.

Anyone - including Dr. Leverett - who seriously argues that Libya's sudden decision wasn't overwhelmingly predicated on what had happened in Afghanistan and then Iraq, or that Libya's sudden cooperation was mostly the result of "international sanctions," is a poor student of history. Moreover, the United States didn't seem distracted from, say, possible Syrian overtures as Mr. Leverett reported things when he testified before Congress in last October, when he said:

Unfortunately, the Bush Administration has had little success to date in getting Syria to modify its problematic behaviors or in cultivating a more constructive relationship with the Assad regime, despite letters and phone calls to Dr. Bashar from President Bush, personal meetings with Secretary Powell, and visits by other senior officials such as Ambassador Burns.

Really? All those calls and attention from the Administration? But Dr. Leverett told the Post that we didn't really engage Syria because we decided to do Iraq.

From his statements as they are reported in the Post, the nation is a safer and better place for Dr. Leverett's departure from the Council. Contrary to Dr. Leverett, the Post and other organs of the left, it is extremely unlikely that Libya, Syria or Iran were moved to more than lip service by September 11, and few sensible voters are going to buy such an argument. All of these countries were opponents of the US in UN votes and every other effort to stem terrorism since September 11. It's absurd to think they have been more resolved against the US since then because of US steadfastness.

I would be surprised if top Administration strategists were not right now hoping and praying that the Democrats will take up the message conveyed by this absurd Washington Post article. It is hard to imagine a approach that would undermine the Democrats more than their chanting with the Post and the Leveretts of the world:

It doesn't matter. And invading Afghanistan and then Iraq didn't make it happen. Afghanistan and Iraq were just distractions.

UPDATE: Even the New York Times senses how absurd the chant sounds:

Mr. Bush and Mr. Blair are entitled to claim a large share of the credit for Libya's surprising announcement. To an extent that cannot be precisely measured, the fate of Saddam Hussein, who was ousted from power by the American military with British backing after endless prevaricating about Iraqi weapons programs, must have been an important consideration in Libya's decision.

There were other factors as well. ...

Over the past five years, by turning over two suspects for trial, acknowledging its complicity in the Lockerbie bombing and paying compensation to victims' families, Libya finally managed to persuade the United Nations Security Council to lift the international sanctions that had shadowed its economy and its international reputation for more than a decade. Those sanctions were lifted in September. This page recommended lifting American sanctions as well, but President Bush left them in place pending further steps, most notably Libya's decision to end its unconventional weapons programs. It is now clear that he was right to do so.

In other words, the "international sanctions" that the Post article credits with persuading Libya had already been lifted when Libya even approached Britain and the US.

It's superficially nice of the Times to credit Bush with maintaining American sanctions. But without the cooperation of the rest of the world, those sanctions would alone have been easily avoidable - and their economic impact could not have made much difference to Libya.

No, what made the difference here was a clear indication that the United States was willing to take direct military action that was not easily avoidable - or avoidable at all.

UPDATE: The Wall Street Journal has its say.

A correction to the above post: The Libyans made their approach in march - which means that the international sanctions were in effect at that time, although they had been lifted by the time the most intensive negotiations were held and when the actual concessions were made.
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If There Were Ever An Argument For Charging "Freeway" Users For The Road Use ...

... this is it.

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Thursday, December 18, 2003

Especially If You Love Saint Petersburg ...

.... these are way cool.

And even if you're not in love with that particular burg, they're pretty interesting.

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Wednesday, December 17, 2003

Politically Polymorphously Perverse

In the eyes of Herr Doktorprofessor Paul Von Krugman, the Bush-led Republican Party is truly a remarkable political organism. Just days ago Herr Doktorprofessor wrote franticly that the Bush Administration - even at the very top - was so riven by uncoordinated, disobedient, self-interested faction that Paul Wolfowitz was actually the leader of a neo-conservative pack deliberately undermining James Baker:

If the contracts don't provide useful leverage, however, why torpedo a potential reconciliation between America and its allies? Perhaps because Mr. Wolfowitz's faction doesn't want such a reconciliation. .... [M]any insiders see Mr. Baker's mission as part of an effort by veterans of the first Bush administration to extricate George W. Bush from the hard-liners' clutches. If the mission collapses amid acrimony over contracts, that's a good thing from the hard-liners' point of view.

Yes, Herr Doktorprofessor convinces us that President is unable to control the "policy freebooting" even within the highest ranks of his own administration. Bush incoherence. Bush incompetence. So it always goes with Herr Doktorprofessor.

But what a difference a few days make! In his most recent column, Herr Doktorprofessor urgently reports that the real threat from the Bush led Republicans comes not from incoherent policy freebooting and refusal to cooperate, but from their monolithic, obedient group-mind:

[I]t's hard to think of a time when U.S. government dealings have been less subject to scrutiny. First of all, we have one-party rule - and it's a highly disciplined, follow-your-orders party. There are members of Congress eager and willing to take on the profiteers, but they don't have the power to issue subpoenas.

So there you have it. A few days ago, the Administration was so undisciplined that feuding factions were undermining and tearing apart each other and the President's policies, but now the entire Republican expanse has become a a highly disciplined, follow-your-orders party - a discipline that extends not just to the White House, the Pentagon and throughout the Executive Branch, but even subsumes Congress! Does, for example, Senator John McCain, know about this? The John McCain who is Ranking Member of the Senate Committee on Commerce, Science, and Transportation, member of the Senate Committee on Armed Services, a member and former Chairman of the Committee on Indian Affairs, and a self-proclaimed high-profile opponent of "pork barrel" spending? Does that John McCain know that he is unable or unwilling to obtain subpoenas to investigate what Herr Doktorprofessor finds to be obvious signs of fraud against the government?

John McCain will not be the only surprised Senator. And that's nothing compared to the surprise that will hit all the divisions of the various intelligence services devoted to detecting and prosecuting federal government contractor fraud (every branch of the armed services has one, for example) - divisions that have been relatively recently expanded and think themselves to be fully and effectively employed. I was speaking to a relatively senior member of one such division just the other day, and I know that they'll really be surprised to find out that they are without the will and power to investigate fraud against the federal government. It's amazing what you can find out by reading the Times.

Herr Doktorprofessor is alarmed that what he sees as a tide of fraud against the government is not just bad - but rising:

Brown & Root, which later became the Halliburton subsidiary doing those dubious deals in Iraq, profited handsomely from its early support of a young politician named Lyndon Johnson. So is there any reason to think that things are worse now? Yes. The biggest curb on profiteering in government contracts is the threat of exposure: sunshine is the best disinfectant.

Since Herr Doktorprofessor has raised the subject of whether there is reason to think that fraud against the federal government is worse now than it was in the 1960's, it's indeed odd that he fails to mention qui tam. What is qui tam? It's a kind of law suit that can be brought under a federal law greatly strengthened and enhanced by Congress in 1986 - well after a young politician named Lyndon Johnson walked the earth - that allows a whistleblowiing individual plaintiff to recover up to 30% of amounts recovered from those who commit fraud against the federal government and grants the whistleblower extensive protection against any retaliation for bringing the suit. As described in one site:

The Civil False Claims Act, also known as Lincoln's Law, the Informer's Act, or the Qui Tam Statute, 31 U.S.C. Section 3729 et seq., allows a private person to sue a person or company who is knowingly submitting false bills to the federal government. The Act also protects qui tam plaintiffs who are demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of employment for acts done in furtherance of filing a claim under the Act. This provision allows reinstatement, double back pay, interest on the back pay, plus special damages including litigation costs and reasonable attorneys fees.

More than 2,400 qui tam suits have been filed since 1986, when the statute was strengthened to make it easier and more rewarding for private citizens to sue. The government has recovered over $2 billion as a result of the suits, of which almost $340 million has been paid to relators/whistleblowers.

If the qui tam suit alleging false billings is successful, the whistleblower (known as a "relator") will also be entitled to 15-30% of the government's total recovery, which includes damages for the false bills, tripled, plus civil penalties of from $5,000 to $10,000 per false claim. To recover this bounty, the relator must have complied with the complex and unusual statutory requirements, however. Merely providing information to a hotline will not entitle the relator to a recovery under the False Claims Act.

To state a cause of action under the False Claims Act, a qui tam plaintiff may allege that defendant either:

(1) knowingly present[ed] or caus[ed] to be presented, to an officer or employee of the United States government . . . a false or fraudulent claim for payment or approval;
(2) knowingly, ma[de], use[d], or cause[d] to be made or used, a false record or statement to get a false or fraudulent claim paid by the government;
(3) conspir[ed] to defraud the government by getting a false or fraudulent claim allowed or paid.

To put this in perspective, a Halliburton employee who filed and documented a qui tam suit regarding what that company's more heated critics have said is about $60 million in overcharging for gasoline in Iraq could receive roughly SIXTY MILLION DOLLARS under federal law for blowing that particular whistle. That kind of money buys a lot of disinfectant. Since he's chosen to wring his hands over the issue, one might have thought that Herr Doktorprofessor would mention the economic incentives created by the qui tam statute in favor of employees and contractors for businesses doing work for the government to expose fraud. Herr Doktoprofessor is, after all, supposed to be an economist. But is he a serious economist - has he ever been?

The Man Without Qualities has expressed (here and here and here, for example) serious skepticism over whether Herr Doktorprofessor has ever been a really serious and good economist - instead of another gifted academic self-promoter who exploited weaknesses in the structure of his profession to hype the significance of his own rather modest accomplishments to the point of securing a John Bates Clark Medal and a Princeton appointment. His customary arrogant disrespect for much of his profession is also evident in this recent column, where Herr Doktorprofessor tosses off this nugget:

Let's be clear: worries about profiteering aren't a left-right issue. Conservatives have long warned that regulatory agencies tend to be "captured" by the industries they regulate; the same must be true of agencies that hand out contracts. Halliburton, Bechtel and other major contractors in Iraq have invested heavily in political influence, not just through campaign contributions, but by enriching people they believe might be helpful. Dick Cheney is part of a long if not exactly proud tradition.

Passing over the gratuitous, scurrilous and unsupported lible against the Vice President at the end of the passage, one might ask: Does Herr Doktorprofessor believe the theory of "regulatory capture" to be robustly valid? At first it appears not, since he writes that only conservatives have long warned that regulatory agencies tend to be "captured" by the industries they regulate - and he does not seem to count himself as a "conservative." But then he goes right ahead and argues in support of the very point he is making that the same must be true of agencies that hand out contracts. Further, much "regulatory capture" theory turns on the observation that once widespread public interest in a regulatory matter abates, the regulated parties are free to have their way with the regulators. But public interest in the circumstances of American involvement in Iraq - and especially in Iraq's reconstruction - has certainly not abated. So much "regulatory capture" theory would not apply very well here at all - although that may change once Iraq has been pacified and ceases to appear as front page news every single day. Could that be why Herr Doktorprofessor is so elliptical and tentative in citing "regulatory capture" theory? I leave it to the reader to determine for herself whether a man who passionately - or even seriously - cares about economics would abuse his field to the point of not even disclosing whether he approves of this application of a theory he is in fact using to support his argument and without disclosing that the facts under consideration differ seriously from those generally addressed by the theory in the first place.

I do not.

I have previously noted the casual, even contemptuous, manner in which Herr Doktorprofessor treats broad areas of economics - a treatment that suggests more than anything else that he does not really understand the significance of those areas:

But, even worse than that from a professional standpoint: Herr Doktorprofessor is entirely oblivious to the fact that he is writing a column about a topic which is informed by a fairly well-developed economic theory: regulatory capture. A lot of economic research has gone into analyzing what symptoms one should look for to determine whether a regulated business controls its regulators. But Herr Doktorprofessor ignores all that learning ... But it can't be ignored. ... Further, federal regulation and regulatory capture works mostly through the Congress - not the Administration. But Herr Doktorprofessor just entirely cancels Congress out of both sides of his equation.

Introducing Congress into the equation would expose that Herr Doktorprofessor is also ignoring a second branch of modern economics: public choice theory - the branch of economic that concerns economic choices made by democratic societies. As so often the case with this columnist, resort to silly conspiracy charges substitutes for the hard work of applying difficult economics. He can leave that to real geniuses like Dr. James M. Buchanan, who won the 1986 Nobel Prize in economics for his contributions to public choice theory. A man has to know his limitations.

Others also express skepticism over Herr Doktorprofessor's bona fides.

Don Luskin quotes an e-mail from Reuven Brenner of McGill University, a prolific author of economics:

[I]t is still beyond me why Krugman was ever considered to be a decent economist: I never found anything in his writings. Am still waiting to hear someone identify one insight (have you found it?). I looked into it when Washington-based Institute for International Economics (on whose board Krugman was sitting at the time), asked me to review his book, The Return of Depression Economics. I called it 'Depressing Krugnorance,' and it was reprinted around the world. Parts of it are included in my Force of Finance book. Others appeared long ago in my "Making Sense out of Nonsense" in my Educating Economists book, some 12 years ago."

MORE: From Antler.

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Tuesday, December 16, 2003

Never Let the Facts Get in the Way of a Good Rant II

The really bad news is that it now seems likely the insurgency has been operating free of Hussein and his money. --- Richard Cohen, Washington Post, December 16, 2003

BAGHDAD, Dec. 16 -- A document discovered during the capture of former Iraqi president Saddam Hussein has enabled U.S. military authorities to assemble detailed knowledge of a key network behind as many as 14 clandestine insurgent cells, a senior U.S. military officer said Tuesday. "I think this network that sits over the cells was clearly responsible for financing of the cells, and we think we're into that network," said Army Brig. Gen. Martin E. Dempsey, commander of the 1st Armored Division. .... "As I've always stated, repeatedly, our expectation was that Saddam was probably involved in intent and in financing, and so far that is still my belief," Sanchez told reporters Tuesday at a news conference at the Baghdad airport. --- news story, Washington Post
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Bye, Bye. And Get Enough Rest To Clear Your Mind.

I confess to a certain meanspirited motive in checking in on Eschaton today, a site I don't consistently visit.

I was "curious" what the word around Bedlam would be following Saddam Hussein's capture. But I never expected that the site would be dark, with the following message hung in the gritty cyber window:

Atrios will be away from 12/16-12/19.

Somewhere in there, he took time off for a birthday breakfast, saying: With that I turn the asylum over to the inmates. But just for a few hours. At least he knows his audience - even if any differences between them and the management are, shall we say, a bit blurred.

He announced his planned absence shortly after Saddam was captured, and there is a fair amount of confused, mostly dispirited gibberish on the site following the capture: A pathetic But, it really doesn't change much post. A confused group message to Senator Kerry about linking Dean to Al-Qaeda - it's really come to that on the left. Hope is expressed that the Telegraph story isn't true. A bizarre complaint that George Bush focuses our attention on the negative aspects of Saddam's capture. Tasteless joke about CNN fails to inform us that Powell's virility is unmatched in its report about the Secretary's cancer operation. Some other odds and ends, including something about vibrators (260 comments on that one).

But nobody's heart seems to be in the lunacy now. It's like they're just going through the motions. It's sad, really. So sad.

As Atrios would say:

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For The Holidays, Send A Gift With A Wish Attached II: Germany And France Aren't Naughty, This Time

I don't generally read Michael Elliott's column in TIME because I don't generally read TIME. But I was traveling over the weekend (Wilmington, Delaware, bankruptcy court, for the curious - but neither I nor any affiliate of mine is either a creditor or the bankrupt debtor) and TIME managed to put it's cover issue with the captured Saddam Hussein in the airport shops even before the dailies, so I made an exception. Mr. Elliott's column on the interaction of Paul Wolfowitz's memo of Dec. 5 that fleshed out for the public who is eligible to win prime contracts, funded by $18.6 billion of U.S. tax money, to rebuild Iraq's infrastructure and supply its new army with James Baker's debt relief efforts was a fascinating tour de force of current crippled, liberal thinking:

Even if you accept the memo's argument that "limiting competition for prime contracts will encourage the expansion of international cooperation in Iraq" (in other words, war naysayers have to join the occupation if they hope to fully cash in) "and in future efforts" (what future efforts, by the way?), its timing was idiotic. Wolfowitz's findings were posted on a Pentagon website just as President Bush was phoning other heads of state to ask them to give a fair hearing to former Secretary of State James Baker III, whom Bush has just deputed to help renegotiate Iraq's hefty debt. Of the $21 billion (excluding interest) that Baghdad owes to non-Arab states, more than $9.3 billion is due to Germany, Russia, Canada and France. (The U.S. is owed an additional $2.2 billion.) Political leaders in debtor countries left off the list yelped at the bizarre conjunction of events, while U.S. allies like the British sighed at the plan's unhelpful diplomacy. In the best case, Baker will have to spend time on his travels smoothing ruffled feathers ?— one reason the White House, which had initially signed off on the Pentagon policy, later suggested that it was less than thrilled by the way and time it was announced.

As I have explained in my prior post on this topic, Mr. Elliott's image of James Baker traveling hat-in-hand to European creditors smoothing ruffled feathers and begging for debt relief is risible. Even without the Wolfowitz memo, Mr. Baker held most of the cards: Iraq could just repudiate the debt. Mr. Baker was benefited substantially by Paul Wolfowitz's memo because the main issue Mr. Baker has to confront in his negotiations is European skepticism that the US really had the temerity to cause and support Iraq's repudiating the portion of its debt that constitutes credit extended by those countries to Saddam's regime. The US is very careful about endorsing debt repudiation - as has been clearly displayed in the endless rounds of third-world debt workouts that have clogged the international finance system since the early 1980's (Brazil Argentina, etc.). Mr. Wolfowitz's memo made credible the point that the US was perfectly prepared to make an exception for Iraq - while the White House "protests" that they really, really wished that the timing and tone of the memo had been better (even after Mr. Bush approved the policy and then frankly backed up the contents of the memo) just provided the appropriate diplomatic fig leaf. In other words, every aspect of the Wolfowitz/Baker approach is fully consistent with it having been worked out down to the last detail - which, in turn, is fully consistent with the reputations of Messrs. Wolfowitz and, especially, Baker, for working out everything they do down to the last detail. Mr. Elliott's silly political agenda seems to leave him little room for acknowledging such merits in Messrs. Wolfowitz and Baker - but those merits are there for all to see.

For a bungled and "idiotic" handling of the matter, the Wolfowitz/Baker approach certainly seems to have produced rapid, positive results:

"Germany and the United States, like France, are ready not only for debt restructuring but also for substantial debt forgiveness toward Iraq (news - web sites)," German Chancellor Gerhard Schroeder's spokesman Bela Anda said in a statement. ... Despite responding to Washington's call for debt relief, Schroeder expressed misgivings about the Pentagon (news - web sites)'s exclusion of German companies from Iraqi reconstruction contracts.

Would it have been possible for Mr. Baker to have achieved his results more promptly? How much time does this allow for "smoothing feathers."

The large portion of the Iraq debt that is "involuntary" debt (essentially, war reparations) from Iraq's assaults on other countries is in a different category. But it would be morally difficult (although practically straightforward) for the US to ask Kuwait, say, to waive a slug of its war reparations if France and Germany are not made to waive a good portion of the debt owed to them. The European debt was extended to Saddam Hussein's government to finance the very infrastructure that enabled him to invade Kuwait in the first place and neither of these countries has agreed to extend substantial reconstruction funds. It's preposterous that the Europeans do not contribute more if Kuwait is asked to contribute. That, in turn, gives Mr. Baker yet another argument against the Europeans: You Europeans must forgive so that Kuwait will forgive. That's another reason you Europeans should take seriously the threat of naked Iraqi debt repudiation and US support for such repudiation.

It all seems to be working nicely so far. But, then, that's true of most things to which James Baker turns his hand.



Astute reader Avinash Singh asks by e-mail: "I wonder why James Baker is doing Colin Powell's job."

I think one reason is that Baker's not on a true diplomatic mission - it's fundamentally a cramdown negotiation, and Mr. Baker's positioned to play the "bad cop."

Maybe Powell will resurface as the "good cop" after Mr. Baker does his shorter-term, harsher work. That's pretty standard debt negotiation strategy: First the nasty debt negotiations are handled by hard nosed work-out counsel who aren't afraid to be dislaiked or to deliver the harsh realities, then the corporate types come in for the longer haul.

There's another possibility. It's still early - but I wonder if Mr. Powell is setting himself up for a graceful exit? He hasn't messed his position up, at least not in a big way, and he's done some very good - even brilliant - work (his UN talk, for example).

It is my opinion that the Baker/Powell dyad should be - and may be - the institutionalization of an approach to Old Europe that clearly denies them the ability to obtain their larger ends through essentially costless manipulation of "international law" and international institutions ("free riding") unless and until they start doing the things needed to be taken as fully serious players in the international theater (real economic reform, real military committment).


Unlike most of the American media, some German media get the Baker/Wolfowitz connection right:

The Berlin newspaper Der Tagesspiegel said Germany must decide whether it wants to play a constructive role.

"Amid the warranted irritation, the government must decide what is more important: continuing skirmishes with hard-liners in the Pentagon like Paul Wolfowitz or making progress with the reconstruction of Iraq," the paper commented today.

"If the talks with the United States about debt relief bring German firms a few contracts, so much the better. The French and Russians won't do otherwise."

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Sunday, December 14, 2003

Saddam, From The Spider Hole ...

... and into the bag.

The improbable conditions of Saddam Hussein's capture bring home - among other things - why it may be so difficult to locate any weapons of mass destruction in Iraq.

Greg Scobe thinks Saddam will likely have lots of embarrassing things to report on German and French complicity with his regime.

The giant sucking-up sounds now coming from the better furnished European weasel pens is consistent with that kind of conclusion.

UPDATE: Doesn't seem as though a lot of love is being lost on Saddam in Araby.

FURTHER UPDATE: This is still preliminary. But if reports of Atta/Saddam/Nidal/Niger/Uranium/al-Qaeda connections hold up, it looks like they'll be singing "It's Beginning To Look A Lot Like Christmas" early, often and with extra brio this year at the White House.

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Friday, December 12, 2003

For The Holidays, Send A Gift With A Wish Attached

The purchase of debt issued by a sovereign nation is correctly known in banking circles as "a gift with a wish attached."

It appears that many people - a lot of those people being Continental Europeans - made gifts to Iraq while Saddam Hussein was in charge. Some $120 Billion worth of gifts. That's a lot of wishing on a deranged dictatorial star of Arabia.

Now the President has dispatched James Baker to bring Saddam's gifters back down to earth. Although a sovereign nation is not obligated to repay its debts under international law, most do when they can because they don't want to obtain the reputation of not paying, since that would deter people from lending to the sovereign in the future.

Of course, that consideration has little force in obligating Iraq to repay Saddam's $120 Billion. There is a clear break between the incoming government and the old Saddam government. A repudiation by Iraq of its old debt will have effects similar to those of a bankruptcy reorganization that wipes out the old creditors so new financing can be obtained on a going-forward basis. Did the Federal Republic assume the debts of the old Nazi regime? Of course not - and the German economic miracle flourished!

In exchange for their repudiated debt, the existing Iraq gifters/lenders can be given some kind of equity interest in Iraq's future appreciation - what is sometimes called a "carried interest." That is, if Iraq prospers from its reconstruction, the lenders/gifters-cum-equity-participants will be entitled to a share of the appreciation. Investment bankers are really very clever at crafting such instruments. It should be sophisticated fun for all the individual professionals involved in the work-out - real Bang-On-A-Can stuff!

Although it will not be so much fun for the institutional gifters/lenders, at least not at first.

Mr. Baker is surely the right man for the job. And despite the ridiculous posturing of the New York Times the Pentagon has done him a huge favor by barring obstructionist European nations from reconstruction contracts. That act - and the President's endorsement of it - credibly evidences United States willingness to have Iraq unilaterally repudiate every last dime of that $120 Billion.

Citing out-of-the-loop senior diplomats telling tales out of school, the Times and other opportunist hand-wringers, such as Herr Doktorprofessor Paul Von Krugman, argue that the Pentagon decision and its "highly offensive language" about national security needs constitute a gaff that has made Mr. Baker's job harder, even though the White House signed off on the Pentagon decision ahead of time.

Maybe. But, personally, I don't believe a word of it.

The Iraq gifters/lenders are the same bunch who refused to contribute more than a pittance to the construction effort. Having refused voluntarily to contribute funds directly, these same players are not going to agree to do the same thing indirectly by voluntarily agreeing to debt foregiveness. THIS IS GOING TO BE A CRAMDOWN.

What Mr. Baker needed was a club and a lot of bad-cop credibility. And he got it from that Pentagon decision - especially its nasty tone and "highly offensive language." I'll bet he's a very happy debt negotiator right now.

Heck, even Herr Doktorprofessor could have figured that one out ... if he spent any time now-a-days thinking about economics. Instead we get another one of his silly hunts for "deeper meanings" and implied, paranoid conspiracy riffs - this one about Mr. Baker supposedly being some kind of emissary from the first Bush Administration and some neo-cons at the Pentagon undermining our reconciliation with Europe. But more and better of the same kind of fantasy thinking hits the silver screen on December 17.

It's impossible to take any part of Herr Doktorprofessor's December 12 column seriously, but I can't resist reproducing an exquisite Taranto catch on this one:

"Yes, Halliburton is profiteering in Iraq--will apologists finally concede the point, now that a Pentagon audit finds overcharging?"--former Enron adviser Paul Krugman, New York Times, Dec. 12

"The officials said Halliburton did not appear to have profited from overcharging for fuel, but had instead paid a subcontractor too much for the gasoline in the first place."--news story, New York Times, Dec. 12

As I said, even Herr Doktorprofessor could have figured that one out ... if he spent any time now-a-days thinking about economics ... or reading the Times.

UPDATE: Astute reader Dennis Culkin writes:

Dear Man Without Qualities:

Kudos on the commentary re Halliburton and Iraq.

As a one-time USAID program manager with some experience in overseeing federal contracts with profit/non-profit entities for work overseas, I've found the illiterate, demagogic, at times absurd "coverage" of the whole Halliburton thing among the most annoying and outrageous examples of poor current journalism (which is saying A LOT).

The only timid counter-punch based on reality so far has been a thin op-ed in the WashPost by a former senior federal contracting type (a Clinton appointee). He at least took on the notion that contracts are handed out to friends of VP Cheney, or anything remotely like that. The op-ed grossly understated its case, and most importantly failed to heap deserved vituperation on the lazy and biased journalists who continue to keep this paticularly baseless myth alive.

It's a deadly dull topic, but not one that's impossible to explain to the public.

As on several other issues, however, the passivity or incompetence of the administration in explaining the realities of the Halliburton case are perhaps of equal importance. It's a self-inflicted wound for the administration, but more importantly it's a disservice to the taxpayers, to the mostly honest and hard-working federal employees overseeing contracting, and to the mostly honest and hard-working Halliburton/KBR employees (some of whom literally are risking their lives).

On the related topic of the widespread inability (NYT, major media, Dem. candidates, even some GOP office-holders) to understand how this is a marginal positive contribution to Baker's mission, you also nail it.

Dennis is right. The leftish mainstream media's fixation on Halliburton has become nothing short of obsessive. That Halliburton is providing incredibly valuable, competent services in Iraq - services that would otherwise have to be performed by overstretched American military units - is almost a grudging footnote in much of the coverage.

Watching CNN, for example, while working and not paying too much attention, one could easily get the impression from the tone of much of the coverage that Halliburton is actually in the employ of Saddam Hussein. There is a sickness festering in some of the American liberal mind that is manifesting itself here. And it isn't pretty.
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Gored Again VI: Hillary Clinton Has Already Won The Most Important Democratic Primary

John Ellis again cogently replies by e-mail:

Again, recent (Nixon '72, Reagan '84, Bush '88) crack-ups did not produce huge down-ballot shifts (Reagan '80 did, but the "incumbent" was being tossed, not retained). I suspect the GOP will make significant gains in the Southern Senate races that will outnumber their defeats elsewhere for a net Senate gain of 2-3 seats. The House has now been through three software-perfect re-districtings and thus is all but impervious to up-ballot wind shifts. The governors are, mostly, elected in presidential off-year and mid-term elections. So I don't think there were will something as spectacular as airliner-meets-Mt. Fuji down ballot.

There are to my mind three key indicators of the President's political health (any president's health) going into a re-election campaign. They are: rising right track/wrong direction numbers, rising consumer confidence and improving "re-elect" numbers. If he (or she, someday) has those three at his (her) back, then re-election is all but assured. If those numbers are going South, time to call United Van Lines.

These indicators are far more reliable than, say, an ARG poll of New Hampshire. Presently, the President has rising right track/wrong direction, improving consumer confidence and indifferent re-elect numbers. As the re-elect number generally lags the other two, I would agree that President Bush should be favored to win re-election. But predictions of a Reagan '84 blow-out seem premature, at best.

Frankly, just because the Dems were heading south in the South before the Rise of the Deanies doesn't mean the Rise hasn't made things worse for them in the South and almost everywhere else. That is: I agree with John's point, but it doesn't move the main issue: Will a Dean nomination substantially increase the risk of a big Congressional Democratic loss?

I think the answer is clearly "yes."

For one thing, a big Dean loss will seriously erode the ability of Democrats to win OPEN SEATS in Congress - especially the Senate. In a big Dean loss Illinois could move from "likely-Dem" to "likely-Rep" all at once - that's not the South. Here in California a REALLY BIG Dean loss could be real trouble for Senator Boxer. This is a state in which OVER SIXTY PERCENT of voters voted Republican in the recent recall election, including very substantial blocs of Hispanics and African-Americans. If that can happen here in Lotus Land, focusing on the absence of coat tails effects in '72 and '88 isn't that much comfort for the Dems.

And I think they know that.

What can the Dems do? Some people suggest Hillary! is their salvation, but Maguire thinks not.

I agree with Maguire. Hillary! is poison in the South - and for her to snatch the nomination from Dean at this point would risk a fissure in the Democratic Party that might create a disaster even bigger than the coming likely Deanerdammerung.

But she still might be able to work the snatch - because she would be snatching from within the Democratic Party, whose mechanisms and institutions she for the moment largely controls (read "superdelegates" and "proportional representation").

The Democratic delegates that are chosen in primaries and caucuses are awarded to candidates proportionally to the total number of votes each receives in state primaries and caucuses. As long as a candidate earns more votes than a threshold level, the candidate receives a certain number of delegates. If no clear front-runner emerges, several candidates could go into the Boston convention with relatively equal numbers of delegates. Even with the ominous Rise of the Deanies - now abetted by the Gorebot - polls suggest that multiple candidates are a real possibility.

What happens then? Well, the proportional representation system does not apply to "superdelegates," who are obligated to no candidate and who include Democratic members of Congress, governors and state party chairmen. Superdelegates will account for nearly 40 percent of the votes needed to clinch the nomination.

And Hillary! leads the Democratic establishment that provides those superdelegates. So tell me again who's leading in the primaries?

Yes, for Hillary! it's just Fun, Fun, Fun until Deanies takes the T-Bird away!!!!

If she's going to let that happen, that is. I'd say look for her to limber up her sock puppet, Wesley Clark, as an early warning sign of her intent to move in 2004.
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Gored Again V

If I understand John Ellis' answer correctly, he's discounting the possibility of a one-way Mount Fuji trip for the Democratic airliner with Howard Dean at the helm in 2004. But I'll stick to my belief that such a crack-up is a distinct possibility - perhaps the most likely probability. And I'm all the more cheeky in sticking to my position given this recent report from New Hampshire:

A stunning new poll shows President Bush would clobber Democratic front-runner Howard Dean by nearly 2-1 in politically potent New Hampshire - even though Dean has a giant lead over Democratic rivals in the state.
Bush gets 57 percent to Dean's 30 percent among registered voters in the American Research Group poll. In fact, Dean, from neighboring Vermont, does worse in the Granite State than a generic "Democratic Party nominee" who loses to Bush by 51 to 34 percent. Another ARG poll this month showed Dean with a 30-point lead over Sen. John Kerry (Mass.) for the Jan. 27 New Hampshire primary, the second test after the Jan. 19 Iowa caucuses.

New Hampshire is a swing state. So by John's calculations that 2-to-1 lead can't be happening - nothing like it can be happening. I admit that the 2-to-1 lead is very unlikely to hold in the general election. But if Dr. Dean loses to Mr. Bush by margins in the 10% range - a distinct possibility - there will be huge coat tails effects. If that were to happen, Congressional Democrats won't be able to hold their caucuses in a hall closet in 2005, but it would be close. And if that were to happen, I don't think they'd be chattering about how eager they are to have Al Gore or anyone else who got them there pick up the pieces.

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Thursday, December 11, 2003

There Was A Time When The French Knew About Personal and Political Rights

But it's hard to imagine a worse way to address expressions of religious differences in public schools than this:

A report delivered to President Jacques Chirac on Thursday called for a new law banning the wearing of "conspicuous" religious symbols in French public schools - large crosses for Christians, head scarves for Muslim girls, or skullcaps for Jewish boys.

The recommendation was the most striking in an official reassessment of how to preserve the principle of the separation of religion and state in France in light of such developments as the rise of a large Muslim population and a new wave of anti-Semitism.

In other words, to preserve the principle of the separation of religion and state in France the state is to take a highly intrusive official position against expressions of traditional religion. And to think that it is a true insult in France to call a person "stupid" - especially someone in public service.

The policy will apply to only "large" and "conspicuous" religious symbols. The adjudications required should be exquisite. For example, will the special undergarments worn by some Mormons be considered "conspicuous" under the law because they show up big time in the locker room? (Hey, for a while, the disrobing kid is wearing nothing else!) Just how long can an Orthodox Jewish boy let his hair grow before the state intervenes with the clippers? What if a student adds a blob of red paint to that small crucifix - or a glow-in-the-dark coating? Better have a judge on hand to decide! There will be many sensitive issues and refined distinctions to be made!

So why stop with a ban on "large" and "conspicuous" symbols. It's just not workable - and selective squelching of other people's religious expressions can be so tiring on a unionized teacher! A "zero tolerance" position is the way to go. Clear and crisp and mindless. That would really root out the "problem" - although there will be difficult issues remaining, like what to do when some sneaky little Catholic brings a bottle of Svyatoi Istochnik filled with Holy Water! There are precedents to follow in such cases.

What next? A government decision to destroy Paris in order to save it?
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Gored Again IV

As usual, John Ellis does not disappoint, but exhibits both political acumen and good breeding in his e-mailed reply:

Robert --

#1> "Obvious reasons Gore didn't run:" 1. popular incumbents generally win re-election. President Bush is a popular incumbent. 2. Gore needed distance from the 2000 defeat, 3. Money. He wasn't raising any money. And he didn't have any money (by upper elite measurement) of his own.

#2> Of course the Dean network is not a piece of software that can be inserted, like a CD, into the Gore computer or the Clinton computer or whatever. It's a peer network and not a client-server model. But it is, stand alone, a powerful force (ask John Kerry, Dick Gephardt, et alia) and because it is a network, based upon shared values, I would argue that Howard Dean's charisma (such as it is) is not the connective tissue. The Dean network is about community and force multiplication (in political terms). Dean may lose or win, but the community his campaign has created will endure regardless of the outcome and how that community feels about 2008 will be significant/important.

Successful presidential campaigns are successful because large (or significant) constituencies compel them forward. The largest, most significant constituency in the Democratic Party is the Dean-o network. If the majority of them coalesce around someone in 2008, that someone will have a solid base from which to run a campaign for the 2008 Demo Prexy nomination. Combine it with Gore's other strengths as a candidate (labor support and the like) and you have the makings of a possibly winning operation.

Obviously, no one knows what will happen (Gore or Dean or Hillary or me, for that matter). But if you were looking to begin to engage the Dean network as allies in the 2008 campaign, you could not have done a better job of it than Gore did this week.

#3> Airliners and Mt. Fuji.....Nixon won landslide in 1972, minimal GOP gains in Congressional races (and this was when, pre-redistricting software, there were Congressional races!), Reagan won landslide in 1984, virtually no GOP gains at all, Bush wins half-landslide in 1988, Connie Mack elected to the US Senate in FL (the only coat-tail).

On paper, it seems unlikely that the Democratic candidate (unless it's Sharpton) will win less than 44% of the vote and the various modeling that has been done suggests a 53-47% outcome (Bush wins) and a 60-100 point spread in the electoral college. It ain't Mt. Fuji, it's just a routine case of a popular incumbent winning re-election by a comfortable margin.

I will grant you that the Dems are likely to lose Senate seats in the South, but that was expected long before it was expected that Howard Dean would be the nominee.

UPDATE: Maguire's confused, too.

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One Of The Greatest

Robert Bartley

Surely no journalist of any political stripe has had an impact comparable to Bob Bartley's since Walter Bagehot wrote the unwritten British constitution in The English Constitution.

Robert Bartley was far more than an advocate or a polemicist or a popularizer - and he was never an opportunist. With apologies to James Joyce, Robert Bartley forged in the smithy of his soul and his opinion pages the uncreated conscience of modern conservativism.

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Wednesday, December 10, 2003

Herr Doktorprofessor Loots Trade Theory II: Hillary Clinton Says It's The Other Way Around

As noted in the post linked above, Herr Doktorprofessor Paul Von Krugman thinks that the big problems with President Bush flow from his unchecked desire to be re-elected to a second term.

But Hillary Clinton is worried about what happens when President Bush is unchecked in his second term by any need to be re-elected:

"I worry about four years of a second term of the Bush administration with no accountability — no election waiting at the end," Clinton said, adding that "extreme legislation (is) waiting in the wings if the president gets re-elected. There will be a move to turn the courts into an adjunct of the Republican Party and their extreme ideology and agenda."

There you have it. The only thing worse than George Bush's need to be re-elected is his having no need to be re-elected. Some Democrats seem to be living out (or living in) some version of a joke popular in Communist Poland:

"Capitalism is the exploitation of man by man! ... Communism is the other way around!"

And, by the way, is Senator Clinton speaking from her own experience in the White House - when Bill Clinton is widely believed to have thrown away his entire second term?

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Pending Revision

One of the more curious aspects of reports of the recent "weak job numbers" is the widespread failure of the media to note that such numbers are subject to revision - and have in fact been recently subject to substantial revision upwards.

The nifty new Senate Joint Economic Committee website goes into it more here and here and here.

At a minimum, before spinning any significant thoughts on why jobs growth has been "weak" it would be wise to wait for the revision.
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If Further Proof Were Needed That Sandra Day O'Connor Is A Victim Of Senile Legal Dementia

Without question, one of the most shameful Supreme Court fundamental rights decisions since Korematsu.

Be afraid. Be very afraid.

UPDATE: John Fund describes how Justice O'Connor has grown into her dementia.
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Gored Again III

I think pretty highly of John Ellis. So maybe he can help me out on this one. I understand that now that Al Gore has endorsed Howard Dean, that if Dr. Dean wins the White House in 2004 then Mr. Gore will be in a good position to claim various goodies. Check.

But I'm having a little trouble with what happens if Dr. Dean steers the Democratic Party into the political equivalent of an airliner collision with Mount Fuji in 2004, losing the White House and more seats in Congress - thereby weakening or eliminating the ability of Senate Democrats to block Republican judicial nominees. John explains:

[A]ssume that former Vermont Governor Howard Dean is defeated by President George W. Bush in the 2004 presidential election. Who picks up the pieces? .... There is one man ... who thinks that he will pick up the pieces after the 2004 Democratic debacle. His name is Al Gore, the former vice president and winner (in the popular vote) of the 2000 election. He chose not to run this time around, for obvious reasons, but left the door wide open for a Nixon-like return to the '08 campaign. And this week he all but announced his candidacy for the 2008 Democratic Presidential nomination by endorsing Gov. Dean for president.

John, explain to me again how by endorsing Dr. Dean and helping cause such a gigantic, historic wreck, Al Gore puts himself in a better position to pick up the pieces and claim the Democratic nomination in 2008. I think I must have missed the explanation the first time.

The argument seems to be bottomed on this claim: If Dean loses, Gore will be the rightful heir to the Dean apparatus; the single most impressive fund-raising and organizing operation in Democratic Party politics. But doesn't most of that "apparatus" depend on Dr. Dean's personality? Is that really transferable to Al Gore? And won't a big loss likely leave the "apparatus" more than a bit damaged? And couldn't all of Dr. Dean's technical devices - internet gimmicks, etc. - be copied functionally without actually endorsing Dr. Dean himself. I mean, isn't an endorsement rather a stiff price to pay for a campaign mailing list?

Another question: Exactly what were the "obvious reasons" Mr. Gore didn't run this time around?

I also didn't quite see how it was that Mr. Gore all but announced his candidacy for the 2008 Democratic Presidential nomination by endorsing Gov. Dean for president. If Dr. Dean actually wins in 2004, then Al Gore probably won't be able to run at all in 2008.

Is this whole Al Gore strategy supposed to be based on an assumption that Dr. Dean will lose the general election in 2004 - but not so badly that those closely associated with him are rendered radioactive?

If that's the case, Al Gore really is a refined thinker.

Help me out here, John. I'm in pain.

MORE: Good thoughts from Bill Quick.


John Ellis replies.
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Gored Again II

More people seem to be coming to the understanding expressed here that Al Gore's endorsement of Howard Dean is mostly a Gore uppercut to the Clintons.
But it's hard to know what to make of this bizarre observation rom the Daily News:

Behind the scenes, observers said the frosty response had more to do with 2008 - when both Gore and Hillary Clinton are projected as potential presidential contenders - than current affairs.

There are "observers" who think that there is a serious chance that Al Gore plans to be a contender in 2008? After completely passing up 2004? One is tempted to think that those must be the "observers" who stay behind the scenes because smoking dope in public is still illegal. But stranger things have happened - especially where Mr. Gore is involved.

Mr. Gore's endorsement does create a curious additional incentive for Senator Clinton. If Howard Dean is the nominee, then even if he is not elected he will have plenty of opportunity to rid the Democratic Party of lingering Clintonian influence - especially the egregious Terry McAuliffe and his flock. Mr, Gore's enthusiastic endorsement will make it all the easier for Dr. Dean to sweep out the Clintonian detritus.

Further, absent a complete Dean disaster in the general election (which is possible, even likely - but far from assured), Dean's influence in the Democratic Party establishment could long linger - just as the Clintons' influence has lingered. Worse, if Dean is nominated, Senator Clinton will have the unpleasant choice of (1) vigorously supporting Dr. Dean, thereby undermining her own institutional position and simultaneously associating herself more closely with a Dean disaster instead of positioning herself as the post-election-disaster savior, or (2) distancing herself from her party's candidate, thereby positioning herself as the post-election-disaster savior, but also undermining the candidate, giving herself a further reputation as a divisive figure in the party and making more and more intense enemies within the Party. Even if she evades all those rocks, Senator Clinton - who already controls much of the Democratic Party machinery - will be no better off than she is now following a Dean loss. And if he wins, she's finished forever as a Presidential possibility.

The conventional wisdom - and my opinion - has been that Senator Clinton is unlikely to run in 2004 because the conditions for a Democrat win are not good (especially on the economic front). But if she sees a Dean nomination - especially one coupled with the Clinton-hostile Gore endorsement - as reducing her chances in 2008 enough, she might well reconsider.

Does any of that help explain why her sock-puppet, Wesley Clark, is suggesting that Senator Clinton may be his running mate?

Or maybe it will just turn out to be the other way around.

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Tuesday, December 09, 2003

The Bad Economist? III: Of Hype And Hyperbole

As noted in a prior post, the most striking result of Herr Doktorprofessor Paul Von Krugman's entire academic career - his theory of the so-called "home market effect" - was dealt a severe but not fatal blow by Donald Davis, now the Chair of the Columbia economics department. Worse, the blow depended on Prof. Davis pointing out a serious problem that should and would have been disclosed by standard "sensitivity analysis" testing how much Herr Doktorprofessor's results would be affected by a failure of one or more of the "simplifying hypotheses" on which they were based. Herr Doktorprofessor appears to have conducted no such sensitivity analysis - or at least he does not disclose any prior to Prof. Davis' paper.

But Herr Doktorprofessor's status as a world class self promoter was cemented by his and his supporters (dependents?) recharacterization of this development as a great vindication of his work. Indeed, he went on to write a book with two co-authors: The Spatial Economy by Fujita, Krugman and Venables ("FKV"), a book that was, in turn, reviewed in a paper OF HYPE AND HYPERBOLAS: INTRODUCING THE NEW ECONOMIC GEOGRAPHY by J. Peter Neary of University College Dublin and CEPR. Some of the paper is rather technical - but many of his comments constitute interesting commentary on Herr Doktorprofessor's self-promotion and hyperbolic claims of his own importance:

[A]t times the authors risk getting carried away by their heady prose style. They find the predictions of one model so plausible that they call it "History of the World, Part I" (p. 253); they describe the pattern of world industrialisation implied by another as "a story of breathtaking scope" (p. 277); and on his website Krugman expresses the hope that economic geography will one day become as important a field as international trade. This sort of hype, even if tongue-in-cheek, is not to everyone?’s taste, especially when the results rely on special functional forms and all too often can only be derived by numerical methods. What next, the unconvinced reader may be tempted to ask? the tee-shirt? the movie?

Donald Davis (1998) criticize[d] [Krugman's original results] on two counts. He makes the empirical point that real-world transport costs appear to be at least as high for the latter, and he shows theoretically that this neutralises the home-market effect. Chapter 7 of the book derives similar results (without referring to Davis) but gives them a totally different spin. Whereas Davis concludes that there is "no compelling argument [...] that market size will matter for industrial structure", FKV note that a reduction of agricultural transport costs may trigger agglomeration. So, relatively low agricultural transport costs are either a necessary and implausible condition for agglomeration, or a source of yet more "stories of breathtaking scope": take your pick.

I have taken the appearance of FKV as an opportunity to review the "new" economic geography. It is not the only approach to location and agglomeration which economists have taken. Many authors such as Brian Arthur (1986) and Robert Lucas (1988) have theorised about the role of regions and cities in economic development. But no other body of work does quite the same thing as the new economic geography: explain agglomeration in a theoretical framework which is tractable, has solid micro foundations, and makes testable empirical predictions. So, to paraphrase Robert Solow (1962), everyone should read this book, or at least encourage their students to do so! Remember though that Solow?’s remark was made about the two-sector growth model, as emblematic of the 1960s as mini-skirts or the Beatles, though not as long-lasting. Will the new economic geography prove more durable? I suspect that it will, though maybe not as a distinct field. Instead, I am tempted to suggest that it will survive as "merely" another simple general equilibrium model, supplementing the trade theorist's tool-kit, to quote Solow 27 again, another "general equilibrium model of matchbox size" (since even a continuum of identical matchboxes arranged symmetrically around a circle is, well, just a matchbox). Saying this risks sounding disparaging (and falls short of the authors' ambitions). But it is high praise in my view. ... ([A]s Krugman (1999) notes, Ohlin himself gave an important role to increasing returns as a determinant of trade patterns.) In stressing the relevance to regional issues of models derived from trade theory, Krugman has not so much created a new sub-field as extended the applicability of an old one. So, hold on the tee-shirt, skip the movie, but do read this book, possibly the best on interregional and international trade and location since Ohlin.

So, Herr Doktorprofessor Paul Von Krugman's work will survive as "merely" another simple general equilibrium model, supplementing the trade theorist's tool-kit, and constitutes another "general equilibrium model of matchbox size" (since even a continuum of identical matchboxes arranged symmetrically around a circle is, well, just a matchbox) and Herr Doktorprofessor not so much creates a new sub-field as extended the applicability of an old one!

Does that read like the kind of summary of the work of an economist that might be found, for example, in the press release attendant to his winning the Nobel Prize?

Or the John Bates Clark Medal?

Ah! Immortality!
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Medicare Structure

President Bush has just signed a bill adding prescription drug benefits with an estimated 10-year cost of $400 Billion and other features to Medicare.

Many conservatives are lamenting this huge expansion of a government entitlement, and both conservatives and liberals are concerned at the effect on the federal budget and the "solvency" of Medicare.

Suppose one assumes that even before the new bill, the "solvency" of Medicare is already impossible to maintain without benefit cuts or tax rises (maybe even with some of both) and that Medicare's "solvency" will be adversely and substantially affected by the new bill. Could one still make an good argument in the bill's favor?

I think the answer is "yes." The reason is "structure." In fact, the new bill's threat to the "solvency" of Medicare may be exactly what may justify the new drug benefit.

One can attempt to justify Medicare on either economic principles (the program increases overall utility) or political principles (some such program is inevitable in any democracy, since the relevant interest groups will eventually come together and make it happen - even if the result decreases overall utility). It is hard to see how excluding prescription drugs across the board from plan coverage makes sense in either an economic or political analysis.

Consider the economic justification. Assume that Medicare has a maximum sustainable size (whatever that means) and that the program is already structured to go well beyond that size (in other words, its already heading towards "solvency"). If Medicare (or some program like it) can increase overall utility, then including some prescription drugs under the plan probably makes sense because some prescription drugs give a huge amount of value to the beneficiaries compared to services and products already covered. Adding a prescription drug benefit means defunding those lesser-value services and products once the "solvency" wall is actually hit, in favor of covered prescription drugs - then adding the prescription benefit should increase overall utility compared to what Medicare would have yielded in overall utility had the benefits not been added. Yes, the political pain of reducing overall Medicare from a higher

Consider the political justification. If adding the prescription drug benefit increases the aggregate utility of Medicare, then that alone is a big boost to justifying the new bill politically. But even if the economic justification for Medicare and/or the new bill is wholly incorrect, it still seems unlikely that a full exclusion of prescription drugs is the most defensible line politically. Wouldn't it be better as a matter of pure politics to define the structure of Medicare to include some prescription drug coverage for some people and then try to hold the line on the aggregate size of the restructured program?

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