Man Without Qualities

Saturday, August 23, 2003

Davis Descending XXXV: Simon Out

The Man Without Qualities gets results! It seems that Bill Simon has finally responded to my several messages left on his campaign headquarters voice mail system pleading with him to salvage my reputation as a political pundit by promptly and selflessly withdrawing from the recall race. I carefully explained in each voice message that my request had absolutely nothing to do with the subsidiary question of whether he would make the best governor of California.

And now it has happened. God, what took so long? Doesn't this guy listen to his voice mail? And what's with the statement of his campaign spokesman: "There was absolutely no pressure, no phone calls — this was a decision made by Bill Simon based on rational conclusions." Square with the people, Bill!

And what's with McClintock and Ueberroth? Don't they listen to their voice mail? Time is running out!

Thank goodness I took that correspondence course from the Paul Krugman School of Obfuscatory Prediction Writing (expensive, but worth it!) and carefully scribed my prediction in the pseudo-precise form that allows me maximum wiggle room: Simon, McClintock and Ueberroth will throw their support to Arnold Schwarzenegger within days.

"Within days!" What a clever boy am I! The "days" are not up - it's still "within days." My prediction is looking pretty good.

Thank you, Herr Doktorprofessor!


POSTSCRIPT: I continue to expect Messrs. McClintock and Ueberroth to withdraw, and soon. The race cannot be conducted with three Republicans in it without substantial cannibalism effects, and that's going to tick off seriously a lot of Republicans if a candidate has no realistic chance of winning. Mr. McClintock is a professional politician and current office holder, and will incur huge animosity in the Republican Party if he is even arguably the reason Cruz Bustamante becomes governor. Also, Mr. McClintock cannot win and has little money. So what's the real point, at least if Arnold Schwarzenegger stops trying to sound like a Rockefeller Republican so much - which he has been trying to do.

Mr. Ueberroth would have to spend a lot of his own money to fail. He didn't get rich that way - and he won't make any friends that way, either. I cannot see Mr.Ueberroth inflaming the bulk of the Republican establishment just to run a failing, expensive campaign. Vanity has its limits.

It may be too bad, because if there is real or invented "dirt" released against Arnold Schwarzenegger, I expect Mr. Mulhulland will do it in his customary campaign fashion: at the last minute. That's how Bruce Hershenson was slimed as a porno fan on behalf of Barbara Boxer. But that will likely be long after Messrs. McClintock and Ueberroth withdraw.

I expect pressure on Messrs. McClintock and Ueberroth to withdraw to become rapidly unbearable, especially given the results of a new poll, as reported by the Los Angeles Times:

As the sole major Democrat running to replace Davis — should the incumbent be ousted Oct. 7 — Bustamante enjoys the support of 35% of likely voters, the poll found.

Schwarzenegger received 22% support, followed by three fellow Republicans: state Sen. Tom McClintock of Thousand Oaks with 12%, businessman Peter V. Ueberroth with 7% and Bill Simon Jr. — the GOP's 2002 gubernatorial nominee — with 6%.

Those poll results suggest that if Messrs. McClintock and Ueberroth now withdrew, Mr. Schwarzenegger's support might be as high as 47% - far ahead of Mr. Bustamante. Of course, such support transfers are not automatic. But that leaves a pretty nasty situation for Messrs. McClintock and Ueberroth.
(0) comments

Davis Descending XXXIV: He's Still, Still Not Dead, Yet

The Los Angeles Times says that the poll results described below indicating support for the recall at only 50% already assume a disproportionate Republican turnout. That adjustment to the raw polling data was made by the pollsters because Republicans seem more "eneregized" at the moment and more likely to go to the polls. That's a perfectly appropriate adjustment for a pollster to make. But is is also something a good campaign by the Governor can change - if he can "energize" his support by, say, demonizing his opponent. Interestingly, although Mr. Davis is widely reported to have alienated the liberal wing of his own party, the Times reports: Only the liberal wing of the Democratic party is overwhelmingly against the recall. Nearly nine out of ten of that group plan to vote to allow the Governor to finish his term.

Most strikingly: If this poll is accurate but there were not disproportionate Republican turnout, then the recall might not pass, because even with the assumption of disproportionate Republican turnout, only 50% of voters favor the recall. So relaxing that "disproportionate Republican turnout assumption or allowing for Davis' campaign changing even a relatively tiny number of minds, might well mean that he survives. Cautions are in order: The Times does not say how big an adjustment was made by the pollster on the basis of this assumption - although the Times rhetoric suggests it was a fairly big adjustment. And that 50% translates into slighly more than 50% of voters who say they have made up their minds, since 5% are still undecided.

It also is worth recalling that there are other measures on the ballot which could affect turnout - most notably Ward Connerly's measure that would ban collection of racial data by the state and therefore potentially affect affirmative action calculations. Oddly, the Times' poll and article don't explore any of that. Many people have suggested that minorities would flock to the polls to defeat this measure - although the last time I looked it was favored by 3-to-2.

(1) comments

Friday, August 22, 2003

Davis Descending XXXIII: He's Still Not Dead, Yet

The Los Angeles Times reports on a new poll:

Overall, 50% of likely voters said they supported the effort to turn Davis out of office, while 45% were opposed.

But, wait, wasn't the recall favored by 58% just a day or so ago!? Doesn't that mean Gray Davis may have gained eight percentage point in just a few days? (Well, probably not that much.) And Mr. Davis hasn't yet turned on his campaign, or yet really tried hard to demonize Arnold Schwarzenegger.

Isn't poll momentum supposed to be the key to this recall election? Doesn't the Governor have that momentum?

This campaign looks like it's just getting started. Gray Davis is far from lying in his grave.
(0) comments

It's Hypocrisy Time!

Dennis Miller just made one of what seems to be a series of regular appearances on Fox News' Hannity & Colmes with comments on the California recall, addressing himself especially to the supposed hypocrisies of Arianna Huffington. He wasn't very insightful or amusing - at least compared to Mickey Kaus, for example. But what was striking was that his spot was introduced as an installment of "Miller Time."

Now "Miller Time" is a registered trademark owned by the Miller Brewing Company, which defends this famous trademark vigorously. Fox News mentions no license or permit from the Miller Brewing Company.

By captioning Dennis Miller's spot as "Miller Time," isn't Fox News infringing on the "Miller Time" trademark rights of the Miller Brewing Company in a manner vastly more real and dilutive than anything Al Franken may be doing to infringe on Fox News' rights in "Fair and Balanced?"

Unlike Fox News' preposterous claim against Franken, the Miller Brewing Company really would have a case against Fox News for "Miller Time" absent a license from the Miller Brewing Company. In fact, it's pretty clear that Fox News is deliberately alluding to the Miller Brewing Company mark in a manner which might well create consumer confusion and dilution of the mark - and which, unlike Franken, is anything but parody or satire.
(0) comments

A Guide To The Lesser Husseins

A friend e-mails:

Apart from Uday & Qusay, a lot of the lesser-known family members are coming to the attention of American authorities.

Among the brothers:
Sooflay ..................the restauranteur
Guday................... the half-Australian brother
Huray.................... the sports fanatic
Kuntay & Kintay.......the twins from the African mother
Ojay......................the stalker / murderer
Ebay.....................the internet czar
Biliray......................the country music star
Ecksray...................the radiologist
Puray.......................the blender factory owner
Regay......................the half-Jamaican brother
Tupay......................the one with bad hair

Among the sisters:
Lattay........................the coffee shop owner
Bufay.........................the 300 pound sister
Dushay......................the clean sister
Ollay..........................the cosmetics shop owner
Gudlay........................the prostitute

More will no doubt be discovered.

(0) comments

Davis Descending XXXII: Interactive For Those Who Are Interested

Is the California recall just "a right-wing power grab" as Gov. Gray Davis (D) stated in his Tuesday night address to voters? Will Arnold Schwarzenegger's new 60-second television commercial help boost his popularity? Can Lt. Gov. Cruz M. Bustamante's "Tough Love for California" plan rally supporters?

George "Duf" Sundheim, chairman of the California Republican Party, will take your questions and comments on the recall.

Submit your questions and comments before or during the discussion.

(0) comments

Collision Course

The Supreme Court of Mississippi has held that a fetus is a "person" under the state's wrongful death statute. The Mississippi Court says it's holding is consistent with Roe v. Wade. Unsurprisingly, other people such as the ACLU see this as a threat to the open abortion rights of Roe v. Wade.

Those other people are correct - but so is the Mississippi Court. In 1983, Justice Sandra Day O'Connor observed that Roe was "on a collision course with itself." She seems to have meant that in a scientific sense, based on the ability of doctors to make ever-younger fetuses "viable." But this Mississippi decision shows another "collission course:" Roe v. Wade is on a collission course with the very "due process" clauses that gave it life.

Specifically, once a fetus is established as a "person" under state law, it is but a small step to concluding that a fetus has due process rights under various federal and state constitutional provisions. That doesn't mean abortion becomes murder or that a fetus' due process rights are the same as an already-born human - but it does mean, for example, that a public hospital or public employee performing an abortion may be required to hold first some kind of hearing to balance the rights of the fetus against the rights of the mother, the same way a public school board considering dismissing a teacher in some cases has to hold some kind of hearing before the dismissal.

And once a fetus has a right to such a hearing (if that happens), it may have to be represented at that hearing by some court-approved spokesperson to argue its case - since the fetus can't do that for itself. The procedural aspects of abortion could become very significant over time.
(0) comments

Bring Out Your Dead, But Not Before We're Back from The Beach

The New York Times reports on the 10,000 heat-related deaths in France:

[M]any elderly people were left behind by vacationing [French] families. Some, ... informed of the death of relatives, postponed funerals so as not to interrupt the Aug. 15 holiday weekend, leaving the bodies in the refrigerated hall.

Oddly, the entire Times article fails to mention that the French government is claiming that the state-mandated 35-hour work week has contributed much to hospital shortstaffing, and therefore to the death toll.

(0) comments

Krugman The Comedian ...

... or maybe he's only "The Ironist," because it surely takes a whopping sense of irony for today's column, Conan the Deceiver, to condemn Arnold Schwarzenegger for his comment that "The public doesn't care about figures," and then provide only inches later exactly the kind of manipulative figures that are the very reason why the public doesn't care about the figures politicians bandy about in campaigns:

One look at the numbers tells you that his story is fiction. Since the mid-1990's California has added jobs considerably faster than the nation as a whole. And while the state has been hit hard by the technology slump, it has done no worse than other parts of the country. A recent study found that California's tech sector had actually weathered the slump better than its counterpart in Texas. Meanwhile, California isn't a high-tax state: through the 1990's, state and local taxes as a share of personal income more or less matched the national average, and with the recent plunge in revenue they're now probably below average. What is true is that California's taxes are highly inequitable: thanks to Proposition 13, some people pay ridiculously low property taxes.

Herr Doktorprofessor gives "California dreaming" a whole new meaning! The fact is that California is in big trouble - and Herr Doktorprofessor is trying to obscure it with his figures. For example, in recent years California state spending has grown 50% faster than the California economy. Forbes magazine recently ranked the "Best Cities for Business" and California shows up in clear decline relative to the rest of the country. In 2002 the two best cities in the U.S. for business were both in California (San Diego and Santa Rosa) and six of the top ten cities were from this state. Now, just one year later, California's highest-ranking city, Santa Rosa, is 23rd. Los Angeles is not even in the top 125 - falling from number 100 in 2002 to 126 this year. Ventura sank from 4th to 67th. But it's amusing - even amazing - to take his sentences one at a time. [UPDATE: Alan Reynolds does a great job of unpacking the mess California has become. His figures are worth considering. Link via Don Luskin.]

Since the mid-1990's California has added jobs considerably faster than the nation as a whole. That's a nice, airy way of dismissing California's unemployment rate, which has recently been consistently higher than the nation's unemployment rate, and the state's recent possibly disastrous employment picture. A simple review of the California unemployment rate since, say, 1983, clearly indicates why Herr Doktorprofessor chose his faux-arbitrary "since the mid-1990's" base - it is exactly the base that obscures the problematic nature of California employment most, because unemployment had a peak around 1995 - and then declined until 2001. The overall number of non-farm jobs in the California economy reached a peak of 14,724,800 in early 2001 and has since declined by about 263,000 jobs (April 2003). Does Herr Doktorprofessor expect his readers to forget that the recession - and California's current fiscal crisis - started with the end of the problematic tech-boom in 2000? His formulation also obscures the shift in the type of jobs available. The Wall Street Journal, for example, notes: A new Census report says that were it not for Latino immigration, California's population would be falling. Between 1995 and 2000, more than 600,000 of its residents moved out of what was once America's promised land. Between late 2000 and April 2003, the number of manufacturing jobs in the state declined from 1,878,500 to 1,591,400; the number of jobs in professional and business services fell from 2,295,400 to 2,113,700; and the number of jobs in the information industries (publishing, motion pictures, television and radio, and a variety of telecommunications and internet industries) fell from 565,000 to 472,400. Even worse, there is strong evidence that lost high-paying California jobs are not being replaced by national corporations with new California hires once the company again needs to fill the position.

In fact, California's unemployment rate is substantially higher than the nation's - despite the loss of all those high-end job-seekers, and there are many indications that the employment situation in California is becoming worse relative to the nation as a whole: California's statewide unemployment rate was an estimated 6.6 percent in July, down from a revised 6.8 percent in June, the Employment Development Department reported. A year ago, in July 2002, California's unemployment rate was 6.7 percent. The rate for the United States was 6.2 percent in July. But the reduction in the state rate was attributable to more people abandoning their search for work. Payroll employment fell by 21,800 jobs during the month, leaving 14,431,700 statewide. That drop represents nearly half of all the jobs cut nationwide during the month, according to government reports.

This all seems rather fast and loose for someone who characterized making jobs "easier to find" as "what matters most" in an economy only a week ago. Are jobs "easier to find" in a state with an unemployment rate a full 40 to 50 basis points above the national average? Can President Bush tell everyone that they shouldn't worry about the unemployment rate because what really matters this week is how many jobs the US has created since the mid 1990's? If Mr. Bush did that, would his aides start brushing up on the 25th Amendment?

Keep in mind that all this discussion of California compared to other states ignores the generally believed consideration that California has many natural advantages over those other states - so these comparison-against-the-average games implicit in Herr Doktorprofessor's figures further obscure the degree to which California's advantages and resources are being mismanaged.

And while the state has been hit hard by the technology slump, it has done no worse than other parts of the country. A recent study found that California's tech sector had actually weathered the slump better than its counterpart in Texas. It really is risible to read Herr Doktorprofessor refer to an unidentified "recent study." Who can argue with a nameless study apparently produced without benefit of an author or identifiable institution or publication (A local Fed branch? Some other Princeton economist? A big consulting firm? A division of the Labor Department? A fancy journal?) Does he really think that with his record people won't find that study? And, when they do, is "weathered the slump" a technical term? Or is it just one of those condescending faux-casual formulations that allow Herr Doktorprofessor so much wiggle room in later denying that he misrepresented his source? In the mean time, one might keep in mind that California's state budget deficit is greater than the combined budget deficits of every other state. [UPDATE: And, with no offense intended to Austin (which is certainly a pleasant, cultured and energetic place with a fine university) isn't it more than passing strange that the economy of Northern California - with it's global business and financial ambitions (some would say pretensions), nearby mountains and oceans, gorgeous scenery, two top universities, storied fairy-tale city, massive technology infrastructure and networking culture - is now to count itself a relative success because it compares marginally well in limited respects to Austin, Texas? Could there be more striking evidence of big trouble for California tech than the fact that such arguments can and must now be made?]

[UPDATE: Tom Maguire e-mails a report on what is very likely that "recent study,"a summary of the study by the outfit that did it (the Center for Continuing Study of the California Economy (CCSCE), and the CCSCE home page. While I have not had time to review the CCSCE study in detail, it appears to focus exclusively on employment and job loss and creation. Those are important factors, but they are the same employment factors already discussed. Herr Doktorprofessor says his unidentified "recent study" found that California's tech sector had actually weathered the slump better, which that study does not appear to do at all. That the study focused on employment and not on the general condition of the tech sector is evident, for example, from Stephen Levy, director of the CCSCE, saying "The current downturn is primarily caused by three factors: a very weak national recovery, weakness in the economies of our export partners and very high productivity growth in high tech." Very high productivity growth in high tech can have bad effects on high tech employment in the short run, but very high productivity growth in high tech is not bad for the tech sector in general. For example, to the extent there have been fewer job losses in California because firms here are not making productivity-enhancing investments - as a result of a bad business climate or whatever - the relatively "good" California employment picture suggests that the California tech sector has not weathered the slump better than Texas. In any event, it's unclear why Herr Doktorprofessor even makes this reference, since Texas has avoided imposing a tax burden nearly as high as California's even though Herr Doktorprofessor says the California tech sector has weathered the slump better than that of Texas. ]

California isn't a high-tax state: through the 1990's, state and local taxes as a share of personal income more or less matched the national average, and with the recent plunge in revenue they're now probably below average. This is a real howler when you remember than California has a revenue shortfall of $38 Billion dollars out of about $213 Billion in total state spending - but the states Herr Doktorprofessor compares it to are for the most part balancing their budgets. He isn't in favor of spending cuts, so that means he wants essentially the entire deficit financed by tax increases - where even the California Budget Project beloved by Herr Doktorprofessor concedes that California ranked 11th in the nation with state and local taxes for 1999-00 as a percentage of personal income total (actually, California's tax revenue per capita ranks as "only" the sixth-highest in the nation). Is that "average" - as he claims? What would happen to that already non-average ranking if taxes were raised by an additional $38 Billion, or anything like that number? He writes, Although news reports continue, inexplicably, to talk about a $38 billion deficit, the projected gap for next year is only $8 billion. In fact, next year's deficit could easily top $20 Billion even with the existing cuts, which were, of course, opposed by Herr Doktorprofessor. Matters get much worse if the recently raised and odious car registration tax is reduced as Governor Davis, Cruz Bustamante and many others now say they desire. And that doesn't even take into account proposed local tax increases. Does it even occur to Herr Doktorprofessor that California's corporate tax is above 8.8 percent but the corporate tax in Washington State and Nevada is zero?

Herr Doktorprofessor is also being cute by focusing on state and local taxes as a share of personal income, instead of gross per capita taxation. The cost of living in California is high compared to national averages. A taxpayer has to meet that cost of living after state and local taxes have been stripped from personal income. Remember Warren Buffett's $4 Million house in California and his $500,000 house in Nebraska? That's a factor of eight - and principal payments on a home mortgage aren't deductible. But when it suits his purposes, Herr Doktorprofessor is perfectly happy to stick to per capita numbers - as with his (in)famous: As analysts at the nonpartisan California Budget Project point out, real state spending per capita was only 10 percent higher in 2002-03 than it was in 1989-90 — that is, most of the spending growth was simply a matter of keeping up with the population and inflation. Ooops! Make that 13%, not 10%.

What is true is that California's taxes are highly inequitable: thanks to Proposition 13, some people pay ridiculously low property taxes. So Herr Doktorprofessor, who has railed against the very existence of a public discussion of the effects of a federal income tax reduction on payers of income taxes (why, he says it's just a "lie" if one doesn't talk about all federal taxes and all federal taxpayers every time) thinks nothing of "proving" that California's taxes are highly inequitable by reference to a single tax whose very existence is highly problematic, since it is assessed where there is no cash-flow to be taxed in the first place and (absent Prop 13) on the basis of property values determined by developments completely unrelated to any action of the property owner. Why is it "more equitable" to tax real property annually on the basis of appraised valuation and not original purchase price - especially where the owner may not have money to pay the tax? Why should real property be taxed at all except when it is sold? Stocks and other valuable assets aren't taxed that way, and nobody argues they should be. And didn't Herr Doktorprofessor himself just get done focusing on the importance of considering state and local taxes as a share of personal income - where real property taxes are assessed regardless of personal income? And, as Alan Reynolds points out: The assessed value of California property rose 4.8 percent a year from 1990 to 2002, virtually identical to the 4.9 percent annual growth of personal income.

Having in this way demonstrated conclusively that the public should not pay attention to figures, Herr Doktorprofessor then assails Mr. Schwarzenegger for being no more obscure on the details of his fiscal plan than politicians usually are. Indeed, one reason Gray Davis is facing recall is that he is widely believed to have misrepresented the state's fiscal condition during the past election. But what really disturbs Herr Doktorprofessor is not that Mr. Schwarzenegger hasn't provided details, it's that Mr. Schwarzenegger's promises mean that he must come up with large spending cuts, [but] he refuses to say what he will cut. Herr Doktorprofessor doesn't think anything should be substantially cut - but Mr. Schwarzenegger doesn't agree. The column is mostly just another example of the increasingly common tendency of some on the left to characterize as "lies" what are really policy differences.

Of course, there is still the lingering issue of Mr. Schwarzenegger and possible new taxes. Some conservatives are highly miffed that the tax door remains somewhat ajar. But Herr Doktorprofessor doesn't get into that - although raising taxes is what a scientist would call the "trivial" solution to Herr Doktorprofessor's conundrums and the alleged inconsistencies he sees with Mr. Schwarzenegger's proposals. And, curiously, that's clearly the solution Herr Doktorprofessor wants.

STILL MORE: And check out this terrifc Don Luskin, with terrific links to Hogberg and Hinderaker and lots more.

(0) comments

Thursday, August 21, 2003

America’s Most Trusted

It is curious that Fox News' use of the slogan "Fair and Balanced" and "We report, you decide" irritates so many people on the left so intensely.

Of course, Fox News' preposterous suit against Al Franken brought the matter to a head - with many leftist blogs (and some not-so-leftist blogs) answering the call to include the slogan in their blog's name. It's a cute idea. But the eagerness with which it has been embraced seems to betoken an underlying anger and resentment at the use of the slogan by Fox News in the first place.

The whole thing is all the more remarkable because slogans like the "Most Trusted Name in News" and "America’s most trusted source for news and information" - which are routinely employed by CNN - are at least as absurd. That CNN explains its use of such slogans by reference to nothing more substantial than Pew Polls is disingenuous in pretending that a response to a pollster is a more reliable indicator of public trust that the responder's actual choice of network to watch - especially given CNN's rather spectacular decline in ratings compared to Fox News.

Apparently CNN expects the public to believe that almost twice as many people now watch Fox News, and that the gap continues to widen rapidly, but CNN is still the more "trusted." But isn't the better conclusion that people may be telling pollsters that they trust CNN when, in fact, their actions say otherwise?

Trust in God, but tie up your camel?

Should other blogs start including "Most Trusted Name in News" in their headings? Of course, CNN hasn't launched any silly lawsuits over its slogan, which was the final straw with "Fair and Balanced."
(0) comments

Davis Descending XXXI: Getting Arianna - Muddle Instead Of Politics

Who is Arianna Huffington? Anyone who thinks he knows that she is some megalomaniacal author, syndicated columnist, Picasso-basher, reborn-progressive political chameleon just doesn't understand who she really is.

Arianna Huffington really seems to be Ralph Nader in the year 2000 - the worst kind of spoiler. Polls indicate that this could be a very close race between Messrs. Bustamante and Schwarzenegger - which means that fringe candidates on the left like Ms. Huffington are now a big problem for the Democrats.

Or at least that's one way of construing the emerging intense animosity towards Ms. Huffington in parts of the left. Of course, it's no big deal that deranged leftist columnist and putative Huffington friend Robert Scheer trashes her in his Los Angeles Times column. That could happen to anybody. Is there much doubt that Robert Scheer would dearly love to sleep with a gun under his pillow, but his wife absolutely forbids it because she knows what he's like when he wakes in those fevered midnight sweats? Of course not.

But when the apparatchiki like Susan Estrich turn quill to paper, you know you've become a non-person of the left, especially because Estrich is coming after your children:

Arianna Huffington has been recalled as a mother.

Her children have voted with their feet. They didn't want her to run for governor of California. She ran anyway. On the day she announced her candidacy at "A Place Called Home," in South Central Los Angeles, her children moved out of hers in Brentwood and into their father's. "Our oldest daughter has been devastated by it," her dad said.

"A Place Called Home," according to its Web site, was created to give inner-city kids somewhere to go after school to do their homework, watch TV, play with their friends and "be with people that care about them -- basic rights that all kids should have." That's what most kids get from their mothers. ....
Huffington has no chance of winning. Never did. The only reason to run was her ego, self-aggrandizement, attention -- at the expense of her kids.

She is running on a platform she didn't even believe in a few years ago. Nor is it one she lives by.

How could she do that to her children? my own children ask. .... In truth, I find her charming .... It is the people supporting her whom I find utterly inexplicable -- or, rather, indefensible. She doesn't pretend to have principles. But don't they? .... But when it costs you your kids, when the kids ask you not to do it, when they move out . . . whew.

If you don't get that right, Jackie Kennedy used to say, what difference does anything else make? You're only as happy as your least happy kid, one of my friends always says.

I guess that's not true of Arianna Huffington. She looks pretty happy these days.

Is that hate? Isn't it only Mafia dons who pointedly allude to the well-being of the children of people whose cooperation is needed? Of course not - this is business. Alright, alright - the reader is probably asking right now: So what? Why should anyone care what Susan Estrich says - or, worse, writes on commission? Isn't she one of those people who humiliated themselves in public by arguing that California law did not allow voters to choose a new governor - only to turn out Gray Davis - with his successor automatically being Cruz Bustamante?

Yes, yes, of course she is. That's the point. Susan Estrich is a willing apparatchik. She provided support to Mr. Bustamante's ascension because someone told her to do it. Ms. Estrich never believed such pap - and when she now writes of Ms. Huffington: Don't people care that just 10 minutes ago, she railed against everything and everyone she now embraces? - one can sense that Ms. Estrich is speaking from personal experience. When the apparatchiki turn against you in public - when your opera is poorly reviewed in the Leningrad papers - you're on your way to non-personhood.

(1) comments

Wednesday, August 20, 2003

Davis Descending XXX: Schwarzenegger Understands?

The Los Angeles Times reports:

"I will not raise taxes," Schwarzenegger said in his remarks to reporters after the meeting with his advisors. "Economic recovery depends on reform." .... The former actor, who came under fire last week after Buffett suggested that Californians pay too little in property taxes, today distanced himself even further from those comments, coming out as a serious opponent to any increase in taxes. But when questioned by reporters, he conceded that he could "never say never - but I am in principle against taxing." Schwarzenegger attacked Sacramento legislators, saying that it is "not a problem of Californians being undertaxed, it's that politicians have overspent." .... The candidate said that Californians are taxed from the minute they get up in the morning and "flush their toilets."

"Additional taxes are the last thing we need to put on the books of the citizens and businesses of California," he said.

Cuts are necessary, Schwarzenegger added, but only because money is not being spent wisely -but in the same breath, he reiterated his commitment to education, saying that it would not be on the table for these cuts.

In other recall news, the federal court hearing the ACLU's effort to stall the election said "no thank you."
(0) comments

Modus Morons

USA Today breathlessly reports:

Two sweeping studies ... focusing on different populations totaling about half a million people, indicate that about 90% of people with severe heart disease have one or more of four classic risk factors: smoking, diabetes, high cholesterol and high blood pressure.

That means the vast majority of the 650,000 new heart attacks each year could be prevented or delayed for decades by quitting smoking, reducing cholesterol and controlling hypertension and diabetes.

Gee, who knew it was that simple? And the principle can be applied all over! For example, I remember reading that almost all automobile accidents occur withing 100 miles of the addresses where the cars involved are registered. So - following the logic of this article - we can eliminate almost all car accidents by passing a law requiring everyone to register their cars at an address at least 100 miles from where the owners lives and drives it.
(0) comments

Herr Doktorprofessor In Spite Of Himself II

Kiesling and Vernon Smith point out that price and contracts could be used to ration power through new technology and simple regulatory reform, and describe what releasing a fuller measure of the free market might include:

Many technologies are available that provide a dual benefit -- empowering consumers to control both energy costs and usage while also stabilizing the national energy system. The simplest and cheapest is a signal controlled switch installed on an electrical appliance, such as an air conditioner, coupled with a contract that pays the customer for the right to cut off the appliance for specified limited periods during peak consumption times of the day. Another relatively inexpensive option is to install a second, watt-hour meter that measures nighttime consumption, when energy usage is low, coupled with a day rate and a cheaper night rate. More costly is a time-of-use meter that measures consumption in intervals over all hours of the day, and the price is varied with delivery cost throughout the day. Finally, a load management system unit can be installed in your house or business that programs appliances on or off depending on price, according to consumer preferences.

More important, better and cheaper technologies will be invented once retail energy is subject to free entry and exit. No one knows what combination of technology, cost and consumer preferences will be selected. And that is why the process must be exposed to the trial-and-error experiment called free entry, exit and pricing. As in other industries, investors will risk their own capital -- not your tax dollars or a charge on your utility bill -- for investments that fail. Also, as in other industries with dynamically changing product demand, competition will force prices to be slashed off-peak, and increased on-peak to better utilize capacity.

Together with demand response technologies, a simple regulatory fix can give new entrants the incentive to provide customers with attractive retail demand options. Local regulated distribution utilities have always had the legally and jealously protected right to tie in the rental of the wires with the sale of the energy delivered over those wires. But these are distinctly separable activities.

Such Smith/Kiesling technologies, regulatory reforms and the contracts through which they might operate are intriguing. Of course, there is no guaranty they will work as planned the first time out without refinements - and their imperfections might be revealed only in spectacular fashion, such as a blackout or other power crisis. We don't know. But what they suggest is surely worth the risk.

To Herr Doktorprofessor, it is likely that even modest problems with such Smith/Kiesling technologies and regulatory reforms would be deemed a "failure" of the experiment - in the same way he has recently railed against privatization of some military functions with little basis. In this respect, Herr Doktorprofessor has become quite the reactionary - and seems to be getting worse.

But many of the biggest obstacles to Smith/Kiesling reforms can be seen by understanding that these reforms essentially propose a program of congestion pricing - similar to proposals that would charge drivers more to use highways during congested periods. Congestion pricing has been resisted - and has terrified even the brightest politicians. For example, former Los Angeles mayor Richard Riordan was said by some of his closest aids (in private conversation) to be a big fan of congestion pricing as a method of relieving Los Angeles freeways. But he never even dared to publicly endorse an experimental program for fear of the political repercussions.

Consider the effects of a Los Angeles traffic jam on two drivers. Suppose driver A earns $10 per hour and driver B earns $1,000 per hour. Suppose further (for simplicity - the analysis does not depend on this point) than time in traffic is income completely lost to both driver - that is, no cell phone or lap top use, and no profitable thinking about business on the road. Then the cost of an hour delay in traffic to drivers A and B will be $10 and $1,000 respectively. In other words, the less economically productive a driver is, the less that driver is disadvantaged by congestion - at least in terms of gross dollars of income lost. Of course, as the roads approach totally impassability, driver A could not earn a living at all. But within wide parameters short of total impassability, the present structure in which road use is paid for only through gas taxes (which correspond only crudely to congestion) results in roads used increasingly by ever-less-productive drivers, just as present electricity pricing results in too many porch lights burning all night.

Economic rationalists argue that if drivers A and B could dicker, driver B might pay a lot of drivers like driver A to stay off the road - and that it only makes sense to let drivers bid to use the road through some congestion pricing mechanism. So why doesn't that fly politically - especially in congested California, which is desperate for new sources of revenue? The failure of California to consider congestion pricing on highways is all the more striking because it is a case in which an additional levy would actually increase overall economic efficiency and wealth while directly increasing state revenues. Why has no major politician even suggested such a source of revenue - even as the state has raised the odious car registration tax and worthies such as Warren Buffett walk into buzz saws by suggesting increased real property taxes? Why is congestion pricing resisted to the point of not even being brought up seriously in political campaigns in times of financial crisis even in places like New York and Boston - where there is supposedly no love affair with the automobile?

The details of the answers to such questions are complex, but the larger conclusion that follows from those answers is not hard to understand:

The current pricing of electricity and roads uses the political/regulatory mechanism to subsidize some people by allowing them to use resources that they would not be able to use if those resources had free market prices.

That means that receptivity to congestion pricing schemes is likely to increase only when the system - electrical or roadway - approaches total impassability. The Eastern blackout and the California power crisis are evidence that we are approaching that point.

UPDATE: Mark Byron remembers California in 2000 without Krugmanian revisionism:

First of all, environmental issues did contribute to the crisis, for a combination of regulations and nimbyitis led to few, if any, plants build in the southern half of California in the last two decades. ... Secondly, the electrical grid had a limited capacity to bring juice from the north ... Thirdly, the half-aseled deregulation plan that was put in place allowed wholesale prices to float while fixing retail prices via state utility regulators. When demand spiked and costs went up due to high natural gas and oil prices, you quickly saw the cost of energy get higher than the price they were earning. [Part] of the market manipulation was likely the fear that power suppliers would be selling to soon-to-be-bankrupt firms that might not pay for their power for a long time, if ever.

All very true. But, I'm still in the dark as to what role Herr Doktorprofessor's California detour is suppose to play in his analysis of the Eastern blackout - except as an attempt to distract his readers and himself from the incoherency of the column and generally smear power companies.

MORE: Excellent item by Luskin. Interesting reader comments on Kiesling's blog.

STILL MORE: Thoughtful musings from Ben Muse.

AND STILL MORE: Samuelson and Miller.

(0) comments

Tuesday, August 19, 2003

Herr Doktorprofessor In Spite Of Himself

Paul Krugman should be fulsomely praised, in the hope that positive reinforcement may help, for not yet fixating on a Washington Post report that [t]he top two executives of FirstEnergy Corp., the Ohio-based utility that is a focus of investigations into last week's cascading blackouts, are key financial supporters of President Bush, according to campaign records. If he was aware of the Washington Post report, then it must have been an epic internal struggle not to seize on it as the basis of insinuations that the recent Eastern blackout was the result of some shadowy, Bush Administration conspiracy. But perhaps he simply didn't know about the report, or will relapse, in which case we will see him experiencing such fixation in the near future - and he does lapse into Bush-bashing when he turns to considering the power grid investments needed for the future. He should also be commended for not alleging that the energy task force headed by Vice President Cheney was somehow responsible. Once again, we are with you, Paul!

As it happens, the only effort Herr Doktorprofessor makes in his current column to insinuate that Bush Administration policies were somehow responsible is a weird assertion that neglect of the power grid is a result of faith-based deregulation, where "faith-based" is, of course, strongly associated with Bush Administration policies. [And where did Herr Doktorprofessor pick up this entertaining barb? Why, he lifted it from one of Don Luskin's recent criticisms of Herr Doktorprofessor himself: The United Nations is to liberals what faith-based institutions are to conservatives -- the answer to all difficult problems. At least Herr Doktorprofessor knows to steal only from the most effective and best, even if his use of Luskin's barb is inappropriate and awkward in this context, unlike Luskin's original.]

But while the paranoia quotient is below average in this column, the adult attention deficit disorder symptoms are sadly prominent as Herr Doktorprofessor leaps from California to New York and back again, but without the redeeming poetry of Woody Guthrie.

He begins his analysis:

Then came the deregulation movement. It argued that a competitive market could be created in power generation (though not in transmission and distribution), and in much of the country utilities were forced to sell off their power plants.

So far, so good. Herr Doktorprofessor wants us to remember that power transmission companies do not own as many generating plants today as they used to - and tells us that his analysis will make this assumption. The recent Eastern blackout was caused by a transmission breakdown - not a generation shortage. OK. Off we go!

But, what's this? We go off to an irrelevant and confusing detour to California and its power crisis, a crisis which - unlike the recent blackout - was triggered by lack of generating capacity! Anyway, he never does tie up this loose end - except as a general smear to the effect that the California experience is evidence that the power companies will get you if you don't watch out - so the Man Without Qualities redacts the California digression. Which means we arrive at this charming passage:

[E]nergy experts have long warned that deregulation would lead to neglect of the grid. Under the old regulatory system, power companies had strong incentives to ensure the integrity of power transmission — they would catch the flak if something went wrong. But those incentives went away with deregulation: because effective competition in transmission wasn't possible, the companies providing transmission still had to be regulated. But because regulation limited their profits, they had little financial incentive to invest in maintaining and upgrading the system. And because of deregulation elsewhere, responsibility was diffused: nobody had a strong stake in keeping the system reliable. The result was a failure not just to add capacity, but to maintain and upgrade capacity that already existed.

These experts didn't necessarily oppose deregulation; their point was that deregulation could lead to disaster unless accompanied by policies not just to keep the grid reliable, but to expand it. (To make competition possible, a deregulated system needs considerably more transmission capacity than one based on regulated monopolies.) But their warnings weren't taken seriously; politicians and deregulation enthusiasts simply had faith that somehow "the market" would take care of the problem.

Of course, the deregulation to which he refers occurred mostly during the Clintonian Era - which makes his faith-based deregulation allusion even more peculiar and distracting.

Truly huge investments are needed to update the power grid - and Herr Doktorprofessor is correct that it is not easy to structure transmission facilities to approximate an efficient, competitive market. But he obscures the key point: Government regulation has limited returns to investors on transmission facilities - generally to 10% - 11% annually. Such returns are trivial considering the immense investment transmission facility investors must be incentivized to make, and the even more immense risks they are asked to accept. Regulation continues to treat transmission facilities absurdly, as if they were a coupon-clipping business. That's making for true disasters, of which the recent blackout is probably just an early sample.

Unfortunately, Herr Doktorprofessor's closing remarks indicate that he simply cannot bring himself to admit that huge rates of returns on transmission facility investments are both appropriate and efficient:

This nation needs to invest billions in its power grid, yet given recent history, it's crucial that this investment not be simply another occasion for energy-industry profiteering. Somehow, I'm not optimistic.

Somehow, I'm not optomistic that Herr Doktorprofessor can accept the high rates of return needed - way north of 11% annually - as something other than energy-industry profiteering. For example, to counter President Bush's obvious claim that "our grid needs to be modernized . . . and I've said so all along," Herr Doktorprofessor argues that:

Two years ago Tom DeLay blocked a modest Democratic plan for loan guarantees for system upgrades, calling it "pure demagoguery." And press reports say that despite the blackout, the administration will bow to pressure from Senate Republicans and drop the only part of its energy plan that had any relevance to the blackout, a FERC proposal for expanded oversight of the transmission system.

The power grid needs huge investments - probably more than $50 billion in the near term. That is, to be restored and updated, the grid requires the full creative energy of the free market - not some government loan guarantees for system upgrades or some bloated energy bill that essentially leaves intact the status quo. Herr Doktorprofessor may also be correct to endorse the FERC plan (although it has some serious problem) - but, as is his custom, contrives to obscure that the FERC is reflective of the Administration's position.

The entire subject is dealt with much more efficiently and transparently by this Wall Street Journal opinion piece:

Why not build more transmission lines? Well, people don't want hideous lines running through their back yards, and the 50 states, which have jurisdiction over siting, aren't eager to force lines on communities if the power those lines carry is going elsewhere. Second, new lines are expensive and firms don't want to make huge investments because of the political uncertainty of electricity deregulation. Third, utilities say the rate of return allowed on transmission lines is too low.

And, as an aside, one might ask why Herr Doktorprofessor keeps presenting (as here) FERC findings that a small portion of the California power costs run-up was attributable to rule breaking by power companies, where there was no FERC analysis of whether the rules enhanced the market or efficiency, as non-existent findings by the FERC that the bulk of the California run-up was caused by the power companies engaging in inefficient, market-power dependent activities.

MORE: Tom Maguire and Lynne Kiesling and Don Luskin (with lots of great links). More Kiesling - and more Luskin.

(0) comments

Monday, August 18, 2003

Davis Descending XXIX: At Home With Warren Buffett!

A few days ago the Wall Street Journal reported:

Warren Buffett , the billionaire financial adviser to Arnold Schwarzenegger's campaign for California governor, strongly suggested in an interview that the state's property taxes need to be higher. Mr. Buffett, the chairman of Berkshire Hathaway Inc., took on California's famous Proposition 13, which has limited property taxes there since 1978. As an example, he pointed out the difference between his own property-tax bills for homes he owns in California and Nebraska. His home in Omaha, he said, is valued at roughly $500,000. His current yearly property tax bill on that home: $14,401. In California, he owns a Laguna Beach home valued at $4 million, or eight times as much. The annual property taxes on that home are just $2,264 -- a fraction of what he pays in Omaha. More to the point, said Mr. Buffett, the taxes on his Omaha home rose $1,920 this year, compared with $23 on the Laguna Beach home.

One of Warren Buffett's more annoying recurring devices in his political activities is to cite selectively to his personal financial situation, especially regarding taxes, without offering to actually disclose the entire picture. He continually and famously points to his $100,000 per year salary - but how many people who make $100,000 a year own a home in Omaha valued at roughly $500,000, never mind a home in Laguna Beach valued at $4 million? Where does the money come from and how much tax does he really pay?

Mr. Buffett often uses his carefully chosen personal factoids to propose populist-sounding "reforms" that actually threaten other people much more than himself - and that's the case with California real property taxes. For the vast majority of home owners, their house is by far their most expensive asset - and taxes on that asset are a substantial annual consideration. Indeed, what led to the passage of Proposition 13 were the dreadful and all-too-common consequences of making every California homeowner wonder from year to year if their incomes would be enough to pay taxes on a home value repeatedly determined by assessors working off whatever real property boom was then convulsing the state. But to Warren Buffett the real property taxes on that $4 Million Laguna Beach property is hardly a rounding error in his $30 Billion checkbook - indeed, the entire $4 Million is hardly a rounding error. Then there is the question of that $4,000,000 valuation. Laguna Beach is not cheap and real property values there have soared very high for very long. Does Warren Buffet really live in a $4,000,000 Laguna Beach house - or is that number the official appraised value, which is kept low by the workings of Proposition 13? $4 Million buys a nice house on the beach but so close to its neighbor that one could almost pass a cup of sugar across the shared staircase. Wouldn't that kind of house pose a security risk to a man worth $30 Billion, for example? Doesn't he need some privacy and distance - if not for mere luxury, then for safety? Thirteen Million Dollars buys a house on the water with just 6 Bedrooms, 4.5 Bath and 3,909 Sq. Ft.

To an ordinary - or ordinarily wealthy - person working in California, the real property taxes are just another form of taxation, to be added to the state income tax as a cost of living in this state. But it is unlikely that Mr. Buffett pays a dime of California income tax. That's because uber-wealthy, uber-mobile people like Mr. Buffett can choose to "earn" their income and "reside" just about anywhere they want - and they generally choose to "reside" and "earn" in states with no income taxes. But most people with $500,000 and even $4,000,000 homes have to work in the state where that house is located. And that means they will try to avoid living in California that much more if the taxes go up. And a lot of them have already left, as noted in this Wall Street Journal editorial: A new Census report says that were it not for Latino immigration, California's population would be falling. Between 1995 and 2000, more than 600,000 of its residents moved out of what was once America's promised land.

I am not suggesting here that Mr. Buffett values his marginal dollars less than others do. In fact, Mr. Buffett has something of a reputation as a personal tightwad, a man who is especially reluctant to provide luxuries for many of his closest relatives, for example. That is his right, of course. No, it is not that Mr. Buffett values his marginal dollars less than less-wealthy people do. Quite the contrary: Mr. Buffett generally seems to reveal these little bits of his personal financial situation exactly when he thinks it is worth his while financially to do so, especially when that means supporting some pro-tax, pro-regulatory politician whose favor he desires. I have noted in prior posts that Mr. Buffett's company, Berkshire-Hathaway, owns vast state-regulated insurance and natural gas interests in California - a state in which the pro-tax politicians who are dying to discard Proposition 13 are generally in the ascendancy. No doubt they appreciate Mr. Buffett's help in breaking down whatever barriers remain to ever-more-rapacious levies.

Similarly, Mr. Buffett has never, to my knowledge, indicated any particular interest in leaving substantial wealth to his living relatives upon his death - and there are considerable expectations among many close to the Great Man that he intends to leave essentially his entire estate to foundations and charities. If that expectation is true, then what is the significance of his opposition to the repeal of the estate/death tax? Well, his opposition to the repeal was certainly appreciated by Democrats in Congress.

I admire his cheek and his ability to shamelessly manipulate the media this way for personal benefit - I really do. I especially admire the fact that he gets away with it almost every time.

But there is still no excuse for the media not demanding to see tax returns and more general financial information from a man who is now continually attempting to effect huge political changes through the artifice of selectively releasing bits and pieces of his financial status. Nor is there any excuse for the media not subjecting Mr. Buffett to the same kind of political scrutiny to which other special-interest players in the political scene are subjected. But in both cases, the media don't.

UPDATE: This Los Angeles Times article reports:

Buffett bought his first home at Emerald Bay in 1971 for less than $100,000. He's seen the value of that home skyrocket to an estimated market value of $4.5 million. .... — he bought a second one on an adjacent lot later on...

Ah, ... breathing room!
(0) comments

Krugmandammerung: The Twilight Of Herr Doktorprofessor

The French government says that long French vacations and short French working weeks caused many of the 5,000 heat-related deaths in that country during the recent European/Mediterranean heat wave. The government says that a law enacted by the Socialists limiting France's working week to 35 hours caused many of the French heat-related deaths because that law left medical centers and hospitals short-staffed at the height of the crisis. Many elderly people died at home when family members left on their August holiday.

So it was with great anticipation that I awaited the Paul Krugman's effort on Friday. He occupied most of his week publicly embarrassing himself with his ridiculous claims that the handful of heat-related deaths of US troops in Iraq were caused by deranged Bush Administration privatization policies and ersatz thrift - especially in regards to water distribution. Naturally I hoped that on Friday Herr Doktorprofessor would hold true to his principles and argue just as ridiculously that the 5,000 French heat-wave-related deaths had been caused by deranged Chirac/Raffarin Administration's water privatization policies - especially since fully 85 percent of French customers get their water through privately owned or operated water utilities which have deprived the French people of a publicly-financed Evian water patrimony and are spearheading the global drive to privatize water everywhere! Surely Herr Doktorprofessor will argue that this is a global crisis - and detect a "pattern" involving oligopolistic businessmen that would surely lead back - as only Herr Doktorprofessor can detect - to Bush Administration oilmen! After all, anti-globalizationists are arguing: Water will be to the 21st century what oil was to the last - vast fortunes will be made by controlling it and nations will go to war to preserve access to it.

Alas, it was not to be. Instead, Herr Doktorprofessor retreated from the blazing Iraqi sun to what he terms "Twilight Zone Economics 101." There is some satisfaction here, because Friday's column is nothing less than Herr Doktorprofessor's long-awaited explanation of why all the recent positive economic news is meaningless! And it turns out that Herr Doktorprofessor's entire column can be reduced to one sentence:

I, Herr Doktorprofessor Paul Krugman, think that all the positive news that has been appearing is meaningless because the economy's rate of growth in the near past has been, is now, and in the near future will be, too low to generate a lot of new jobs, meaning, in other words, in terms of what matters most, the economy will continue to deteriorate.

There. Wasn't that easy?

Of course, a lot of people just don't agree with Herr Doktorprofessor - probably including a good many of the people who today bid the stock market to a 14-month high. Those people seem to see a sunny future, not a twilit Krugmanian demi-monde stretching like some wintry Greenland across the economic map.

Herr Doktorprofessor's entire "analysis" of why the economy will in his opinion essentially continue on in the twilight zone is as follows:

So is a real, unambiguous recovery just around the corner? Recent economic reports have had a "good news"-"bad news" feel to them. Businesses are starting to buy some equipment; that's good. But they seem to be engaging in replacement investment, not capacity expansion; that's bad. Consumers are spending; that's good. But rising interest rates seem to have ended the refinancing boom that put cash in consumers' pockets; that's bad. And so on.

But there's a bit more to it than that - as the Wall Street Journal reported recently:

The secret weapon this time: corporate profits, which appear to be solidly on the rise. The 1,336 companies included in the Dow Jones Total Market Index that had posted second-quarter earnings as of Wednesday reported combined net income of $115.87 billion, up from $74.12 billion a year earlier. An overwhelming 92% of economists in the survey said they believe the rise in profits will prompt companies to boost capital spending and investment in the next six months. Such investment will be key to sustaining a meaningful recovery.

And the effects of technology on this cycle's employment picture is also extraordinary, as others have pointed out, including Bruce Bartlett and Arnold Kling and the Federal Reserve Bank of Richmond and the Federal Reserve Bank of San Francisco and Steve Antler - where Mr. Bartlett noted:

The higher productivity going in [to the recent recession] meant that fewer workers were needed coming out of the recession. Now, in the current recession, which ended in the fourth quarter of 2001, we have seen even higher productivity on either side. The latest data show an increase in productivity of 4 percent in the six quarters before and 6.5 percent in the six quarters after. That is why employment growth and hiring levels remain weak. Employers are raising output without adding much new labor. It is important to remember that this is a short-run phenomenon. In the long run, higher productivity increases employment, a fact documented in two new studies from the Federal Reserve Bank of Richmond and the Federal Reserve Bank of San Francisco. But in the meantime, employment growth may still be slow for a couple more months.

Now, nothing requires Herr Doktorprofessor to agree with any of the people cited above. But one might have hoped for a bit more understanding of factors such as rapidly rising corporate profits, viewed by the experts consulted in the Journal article as "key." Don't they warrant more than undifferentiated, nameless absorption into Herr Doktorprofessor's "And so on?" And why is it that Herr Doktorprofessor's analysis of the job market is limited to a brief allusion to population growth - with no mention at all given to the effects of technology?

Looking at the bigger picture, it seems odd that Herr Doktorprofessor's historical overview omits to mention that the late Clintonian era was marked by very large - and often very problematic - capital expenditures on technology. Telecommunications technology projects at that time, for example, were often based on assumptions that internet use would double every three months - where, in fact, use is doubling every year or so. That sector of the economy got considerably ahead of itself. Other large, bad investments were made. Many people have observed that the ensuing "capital expenditure driven recession" was of a type that one should expect to be very long and very severe. Comparisions with Japan were common - although the Man Without Qualities was never charmed by such comparisions, Herr Doktorprofessor, for example, has periodically likened the United States retraction to Japan's. Then there was the matter of 9-11 and it's economic consequences, which somehow warrant no mention in Friday's screed.

Yet, despite everything, the recession was neither long nor severe - and Herr Doktorprofessor can only condemn it's aftermath as mere "twilight" - not black. Sometimes, it seems, even a period of twilight following a capital expenditure technology boom and a terrorist disaster of unprecedented scale must still serve as an indictment of our economic policy. And now many people claim to see the sun.

Not very much time will be sufficient to tell. In the mean time, Herr Doktorprofessor's economics lecture on Friday doesn't inspire confidence as complete or insightful either as history of the near past or as a prediction of the near future. He still doesn't seem to be spending enough time preparing for his classes.

MORE From Don Luskin.

UPDATE: The Wall Street Journal publishes a column by Lance Cpl. John R. Guardiano, a Marine serving in Iraq. Guardiano's experience is contrary to what most of the mainstream media - and especially Herr Doktorprofessor Krugman - present as "fact." Definitely worth the read.

(0) comments