iCount

In partial response to Cactus's post, Megan McArdle offers the "look at those low air fares" defense of airline deregulation, going so far as to suggest:

I think it's telling that complaints about deregulation of the airlines come almost entirely from three groups of people:



1) People who have no idea what they are talking about

2) Affluent people

3) People who fly a lot for work

The story being that (2) and (3) aren't price-sensitive and other critics of deregulation are just know-nothings or whiners (or both).



Not so fast.



The conceptually correct comparison is not with 1978 airfares, but rather with whatever current airfares would be under a reasonable forecast of airfares absent deregulation but with whatever other changes would have happened anyway. Recall, Robert William Fogel was given his share of the Bank of Sweden prize in significant part for cementing this "counterfactual" (or ceteris paribus) analysis as the standard methodology of economic history.



This is a non-trivial matter for airfares as deregulation was implemented during an oil price spike, and its subsequent golden age to roughly 9/11/01 was a period marked by a very long decline in the real price of oil — not to mention cost-reducing technological change from sources such as cockpit automation and the deployment of high-bypass-ratio turbofans to the single-aisle airliners that are the workhorses of the U.S. domestic fleet. So not all of the secular airfare decline (or what's left of it) is properly attributed to deregulation.



One source [PDF] suggests that deregulation accounted for around 60% of the observed fare-level decline to 1993 using the old CAB pricing formula as the benchmark, and that 30% of flyers paid higher fares under deregulation. Don't get me wrong, this isn't bad, and the liberal in me can't help but say that taking money from airline investors and corporate travel budgets and turning it into air transportation for the middle- to upper-middle classes beats many other deregulatory outcomes (at until the system blows up). Still, it isn't Pareto-improving, and by the standards of, say, repeal of the upper-income Bush tax cuts, the disaffected class is pretty big, though. We aren't just talking about the "affluent" and ultra-frequent flyers.



Moreover, would-be Fogels looking for an icon-smashing result that may also be true could try to figure out whether modern systems of rate regulation would perform better than the late CAB. So once we consider what Barry Ritholtz amusingly calls "dedonics" (*) issues like service levels and qualities, the need to keep the industry somewhat stable until alternative modes of fast intercity travel are (re)developed, and so on, I submit that the true benefits of deregulation are at least a matter for careful study.





(*) It's amusing even though it isn't true that all quality adjustments in CPI are for quality improvements.

by Tom Bozzo (noreply@blogger.com) on July 25, 2008 03:32 PM

Mark Perry presents some interesting data:

Then considering that average hourly earnings have increased by almolst [sic] 40% over the last ten years, the real prices of those products have fallen by an even greater amount, a HUGE amount. In other words, there are many, many products like computers, cameras, new cars, clothing, TVs, appliances, electronics, software, etc. that are significantly cheaper today than ten years ago, especially after adjusting for increases in earnings.

The increase in nominal earnings over the past decade was 38.6% while the reported increase in the CPI was 33.5% so by this data, real earnings have increased by only 3.8% over the past decade. This is not a HUGE increase. Unless you don’t eat consume a lot of electronic products and have figured out how to drive that new car without buying gasoline.

by PGL (noreply@blogger.com) on July 25, 2008 03:20 PM

The phrasing of these projections read just like Social Security crisis projections. I hope some of our friends see the irony of such claims about Social Security if they dislike these statements.

The CBO has released a report detailing the effects of indexing the the AMT to inflation (i.e. "patching" it so that fewer households would pay it than otherwise anticipated) and extending the 2001-2003 Bush tax cuts without offsetting the revenue loss.



If the Bush tax cuts are allowed to expire and if the AMT continues its ever-deepening reach into the middle class, the federal debt held by the public will increase from today's 37 percent of GDP to 115 percent in 2050. If AMT is indexed for inflation to limit its impact on the middle class, that debt figure becomes 115 percent in 2050. If the AMT is indexed for inflation and the Bush tax cuts are extended, federal debt held by the public jumps to 190 percent in 2050.

(Source: Congressional Budget Office)



Deficit financing of these tax cuts has a pernicious effect, reducing per capita income by 13 percent in 2050. But, "[b]eyond 2073, projected deficits under those tax policies would become so large and unsustainable that CBO's model cannot calculate their effects."

by rdan (noreply@blogger.com) on July 25, 2008 10:08 AM

by jsalvati

What economics would you teach kids?



Rdan points to a ‘National Budget Simulation’ program that is apparently part of Massachusetts economics education for grades 4-12. I was surprised when I clicked on the link because the federal budget seems like a really strange place to start economics education.



It seems important to start economics education with the economics concepts that kids can actually use in their lives. If I had control over what economics some kids learned in school, I think this would be my list:



Opportunity cost

Gains from trade

Incentives

Importance of trade offs

Emphasis on the idea that everything has value (time, money, lack of garbage, etc.)

At a more advanced level



Marginal thinking

Efficiency of markets

Interest rates, Net Present Value

Consumption smoothing

I also think it would be useful to teach Utility and Expected Utility, but I don’t think it is possible to get to those topics.



Arnold Kling had post on a similar topic a while back.



As a side note, I think I would like to replace most of pre-calculus with basic probability theory from a Bayesian perspective with some heuristics and biases thrown in. Probability theory is a useful abrstraction for all sorts of problems, and it would also make that optional statistics class a lot less difficult if you could teach it from a bayesian perspective.

I was a little surprised myself to see the link, and pleased. I was planning to write a post on kids and must have left the link on 'scheduled' and jsalvati delightfully picked it up. He and a friend are undergraduates who started Good Morning Economics.



As jsalvati noted, Arnold Kling at EconLog wrote that after eliminating things from the high school curriculum:

With all that said, here is what I wish every high school student would learn about economics:



--the concept of opportunity cost

--how economic incentives affect behavior

--the gains from trade

--how prices allocate resources

--how entrepreneurs introduce innovation



If every citizen understood those things, the level of debate over economic policy could be much higher.

The link is to a section of Thinkfinity MA series sponsored by Verizon. I will be a part of of a state based team that provides an opportunity to develop curriculum materials for kids elementary to high school.



I am on a "validation of resources team" scheduled for this Aug. 7 to find out what is expected and to meet both state educators (curriculum and technology sectors) and those doing the validating.



As I gather information I will update and link to other sites that are interesting.

by rdan (noreply@blogger.com) on July 25, 2008 10:05 AM

Man, I thought the Brewers’ bullpen was bad. But Egad! I guess it could always be worse.

Meanwhile, pardon me while I revel in pulling out the broom…

UPDATE: Channeling my inner Red Sox fan, however, I feel compelled to say that despite the sweep, there’s a lot to be concerned about. Apart from another blown save by the Brewers’ bull pen, the team left 39 runners on base in the four-game set (almost ten a game!), including 19 left in scoring position. With a little bit of follow-through and clutch hitting, we crush the Cardinals, instead of needing late comebacks in three of the four games. Still, I’ll take it.

by tgirsch on July 25, 2008 03:36 AM

Brad DeLong asks:

Here's what NetNewsWire throws up as tops in attention in the "economics" category:



Mark Thoma's Economist's View http://economistsview.typepad.com/economistsview/



Alex Tabarrok and Tyler Cowen's Marginal Revolution http://www.marginalrevolution.com/marginalrevolution/



Justin Fox's Curious Capitalist http://time-blog.com/curious_capitalist/



Barry Ritholtz's The Big Picture http://bigpicture.typepad.com/comments/



James Hamilton's and Menzie Chinn's Econbrowser http://www.econbrowser.com/



Angry Bear http://angrybear.blogspot.com/



WSJ Real Time Economics http://blogs.wsj.com/economics/



Paul Krugman http://krugman.blogs.nytimes.com/



Felix Salmon's Market Movers http://www.portfolio.com/views/blogs/market-movers/



Paul Kedrosky's Infectious Greed http://paul.kedrosky.com/



How should we use judgment to alter this list as spit out automatically by NetNewsWire? What's missing? What's erroneously included? What's out of place

Update: Seeking Alpha also makes a resource list of blogs with descriptions. Any changes to this description? We need a concise one.

by rdan (noreply@blogger.com) on July 25, 2008 03:11 AM

Have you ever noticed that, when considering the economic performance of different countries, people often just report the GDP growth rate without any corrections for e.g. initial GDP ? It's as if they thought that countries generally have about the same growth rate and any deviation from the world average is interesting.



This is very odd as most growth models imply that growth rates should be very different for different countries so such a simple measure is not a reasonable assessment of performance.



It's as if people think that there is a lot of heterogeneity in GDP levels but not so much in GDP growth rates. Marco Alfò, Giovanni Trovato and I, decided to ask a computer if that's what it saw in the Heston and Summers data set. The computer (on Gianni's desk top) said "absolutely". The paper is here (subscription required for download. If you are using a work IP address or mirror you can hope to get it without paying (please try if you are interested)).





update: Greg in comments has kindly translated the post into English. I pull his comment up here.



[snip]

Perhaps an English summary:

a) Standard Economic Theory, the shibboleth we will be destroying today, says that GDP levels will converge, that is, poor countries will get richer, and rich countries will get richer ... slower than the poor countries. (Apocalyptic Econ allows for us all converging at some substantially lower level, of course). This will result in all countries being smarter than average.



b) We've run some Fancy Number Analysis that shows this is not true. The Usual Analysis says this because two things confuse the numbers: i) within groups of similarly poor (rich) countries, there is some convergence, and ii) this within-group convergence tends to look like overall convergence.



c) This is Real Important because lots of analysis doesn't correct for this, and hence draws conclusions that are, um, stupid.



d) Using a short-form analysis (asking your neighbour) may have been more accurate by being less clever ("it's a fine line between clever and stupid").



Of course, one might best avoid using Shibboleth in the simplified version.



Grateful comments/clarification if I've gotten anything fundamentally wrong.

Greg | 07.24.08 - 5:15 pm |

Thank you Greg.



All of my F-fort to right plane English is now below the jump (jump at your own risk).









The idea is to take a minimal model for GDP levels or Growth (basically the Mankiw Romer and Weil equation for levels applied to growth too by Bernanke (yes that Bernanke) and Gürkaynak and to allow the computer to look for remaining heterogeneity in levels and/or growth rates with minimal parametric restrictions. We used a semi parametric finite mixture random effects model in which the distribution of the unobserved disturbance to the growth and/or level of per capita GDP is drawn from a finite number of points. As the number of such points goes to the number of countries in the sample, all heterogeneity can be explained, so the approach is, in some sense stressed by Heckman, non-parametric. Like everyone we used information criteria (including Akaike they all agreed) to choose the number of points (results are not too sensitive to the number).



The result is that the computer decides that there is huge unobserved heterogeneity in levels and virtually no heterogeneity in growth rates (the unobserved points in level growth rate space have extremely different levels and the similar growth rates). There is no hint of convergence in GDP per capita levels of the different groups of countries which are, therefore, convergence clubs.



So why has every variable and it's cousin (except for tax rates) proven to be significant in at least one cross country growth regression ? The initial GDP per capita level is always included in these regressions. It has a negative coefficient because of convergence within convergence clubs. Thus the silly computer is convinced that countries in different convergence clubs should converge (that is the one in the poorer club should have higher growth). The other variables help to explain growth by undoing this error. Regressions of just the growth rate on variables *not* including initial per capita GDP are much less likely to be significant.



The bottom line is that a computer with no hints as to the conventional wisdom very firmly told us that there is a huge amount of heterogeniety in per capital GDP levels and very little heterogeneity in growth rates of per capita GDP, just as everyone who doesn't run regressions tends to assume.



Now the whole experience reminds me of something Zvi Griliches said long long ago (in a presidential address to the AEA I think). To understand economies better we need more information as in data not new and fancy analysis of the same old data. This was a very popular line in the Harvard ec department back when I was there. In particular, he said there was not point in the zillions analysis of the Heston and Summers data set no matter how econometrically rigorous and original. Back at the time I nodded my head and wispered the un-religious analogue of "amen". Irony of ironies I find my most recent publication to be ... the ten zillionth analysis of the Heston and Summers data set and I honestly think it adds something new. I maintain my almost perfect 0% record as a prognosticator.

by Robert (noreply@blogger.com) on July 24, 2008 09:22 PM

Hat tip to CoRev, who sent this two weeks ago. I owe you one sheesh.



Update: Link to map is at IMF.(link fixed) The map is a rough sort of picture to consider the impact of bio-fuel development on food supplies. But then Jib in comments reminds us of additional complexities of trade in food.

by rdan (noreply@blogger.com) on July 24, 2008 05:42 PM

reader Laurie sends this great comment (lifted cactus style):

My sister-in-law ***************************(director of a system in the US). Here's the Q I sent her:



How do taxpayer subsidies for private transportation (roads etc)

compare to subsidies for public?



Here's her answer:

Good question. Local roads and highways get much more than transit; the question is how much more.



It's a hard question to answer because most funds that go toward local streets and roads are not fully accounted for; they are buried in City budgets, whereas public transit funds are fully accounted for and transparent. Also, highway funds are usually allocated to the state and sometimes are used for local freeway maintenance or for local roads or even for some transit. Consequently, it is often hard to even account for all the subsidies that go toward local streets and roads and highways.



However, when you think about all subsidies that go toward local streets and roads, it's not hard to see. Even private funds pay for roads that go places like shopping centers. And municipal bonds that pay for the city hall also pay for the new parking lot and the road leading up to it. Or the water treatment plant and the access roads. Or any other public or private buiding.



It's very rare that municipal bonds pay for transit but it does happen--we recently passed prop 1b which included transit capital funds. But even there, 70% went to streets and 30% went to transit.

Laurie

Update: Identification made more anonymous

by rdan (noreply@blogger.com) on July 24, 2008 04:02 PM

by tgirsch on July 24, 2008 02:12 PM

Don Pedro reports:

I spent my lunch hour at the Urban Institute today, listening to Obama econ advisor Austan Goolsbee debate McCain econ advisor Doug Holtz-Eakin on the candidates' tax plans ... He framed his presentation by saying that there were three problems with the Bush tax program:

1. It was fiscally irresponsible, creating a huge sea of red ink.

2. It was sold using budget gimmickry.

3. It was massively tilted toward the rich.

On all three points, he showed that the McCain program is worse. In his words, it would create deficits that are twice as big and is twice as regressive. One of his strongest points was when he said (paraphrasing), if we take McCain at his word and accept that he's going to implement all the tax cuts he's calling for AND his promise to balance the budget by 2013, the only possible conclusion is that he will have to cut Social Security and Medicare by 60%, all but dismantling the programs. He also highlighted the fact that the headline analysis by the TPC, which is based on Holtz-Eakin's representation of McCain's proposals, doesn't even include another $2.8 trillion of lost revenue (over four years) for the policies that McCain has in his stump speech. During the Q&A, Holtz-Eakin objected to this figure, until Goolsbee showed him that it appears in an addendum table (R4) to the TPC analysis. Goolsbee practically begged the assembled crowd of policy geeks and journalists to call out the campaign on the complete insanity of the McCain proposals. He said (paraphrasing again) that if the ludicrous McCain proposals are accepted as a serious plan, no one will offer a meaningful campaign tax proposal ever again.

So what was the rebuttal to this devastating critique:

Holtz-Eakin said, well, "Taxes aren't everything" (actual quote, at a debate on tax policy) and talked up McCain's proposals on the environment and renewable energy. Rather than make any attempt to rebut Goolsbee's takedown, he argued that reducing taxes increases growth and that the spending side needs to be considered as well. Of course it was pointed out that there is no evidence that tax cuts financed by deficits do anything for growth, and that McCain hasn't identified any major spending cuts beyond some pocket change from earmarks and vague "entitlement reform." Somehow, Holtz-Eakin managed to get away without offering any counter to Goolsbee's critique.

by PGL (noreply@blogger.com) on July 24, 2008 11:04 AM

Your house in your eyes...





Your house in the buyer's eyes...



Your house in your lender's eyes 2005





Your house in your lender's eyes 2008...





Your house shortly before foreclosure...

by rdan (noreply@blogger.com) on July 24, 2008 10:00 AM

Dated picture, yes, but the sentiment is there, as the campaign talking points heat up.

by rdan (noreply@blogger.com) on July 24, 2008 09:20 AM

hat tip reader coberly



Fresh Air from WHYY



IraqIn Iraq, Tactical Theory Put Into Practice



Lt. Col. John Nagl wrote the textbook on counterinsurgency — literally. Nagl was part of the team that drafted a U.S. Army field manual on counterinsurgency. Having completed his tour in Iraq, Nagl talks about how military theory was put into practice in the region.

Web Extra: Read an Excerpt





PoetrySoldier-Poet Brian Turner, Framing War In Verse



For soldier Brian Turner, words have the impact of bullets. His poems provide a first- person account of war; The New York Times praised their "attention to both the terrors and the beauty he found among Iraq's ruins."

Web Extra: Read Brian Turner's Poetry

by rdan (noreply@blogger.com) on July 24, 2008 09:17 AM

UPDATED 23 July 2008: Add Huntsville Stars (AA)

UPDATED 25 June 2008: Add Boston Red Sox, New York Yankees, and New York Mets

UPDATED 27 April 2008: Add Kansas City Royals.

UPDATED 20 May 2007: Add Philadelphia Phillies.

I’m a sports fan, and I “collect” stadiums (stadia?). Especially major league baseball, NFL football, and NHL hockey. My goal, before I die, is to see a baseball game in the home stadium of every MLB team. It would be an added bonus if I could do the NHL and NFL venues, but right now, I’m focusing primarily on baseball.

Problem is, I keep forgetting where I’ve been, and losing count. Therefore, mostly for my own reference (and because I expect few others to be interested), I’m posting a list of venues attended below the fold. I’ve ordered them in roughly the order in which I first visited them, to the best of my ability to recall.

However, if you have comments concerning favorite (or least favorite) venues, feel free to leave them.

MLB: (20 venues in 15 cities for 17 home teams [one since moved]; 16 of current 30 teams, 53% complete)

1. Milwaukee County Stadium, Milwaukee Brewers (Defunct)
2. New Comiskey Park, Chicago White Sox
3. Riverfront Stadium, Cincinnati Reds (Defunct)
4. Bank One Ballpark, Arizona Diamondbacks
5. Olympic Stadium, Montreal (Defunct)
6. Miller Park, Milwaukee Brewers
7. Coors Field, Colorado Rockies
8. Great American Ball Park, Cincinnati Reds
9. (Old) Busch Stadium, St. Louis Cardinals (Defunct)
10. Wrigley Field, Chicago Cubs
11. Tropicana Field, Tampa Bay Devil Rays (Shithole)
12. Ameriquest Field, Texas Rangers
13. (New) Busch Stadium, St. Louis Cardinals
14. AT&T Park, San Francisco Giants
15. McAfee Coliseum, Oakland A’s
16. Citizens Bank Park, Philadelphia, Phillies
17. Kaufman Stadium, Kansas City, Royals
18. Fenway Park, Boston, Red Sox
19. Yankees Stadium, New York (Bronx), Yankees
20. Shea Stadium, New York (Queens), Mets

NHL: (6 venues in 6 cities, 6 home teams, 20% complete)

1. The Arena, Carolina Hurricanes
2. United Center, Chicago Blackhawks
3. Fleet Center, Boston Bruins
4. Gaylord Entertainment Center, Nashville Predators
5. Air Canada Centre, Toronto Maple Leafs
6. HP Pavilion, San Jose Sharks (Playoff game)

NFL: (6 venues in 5 cities, 4 home teams)

1. Louisiana Superdome, New Orleans Saints (Pre-season)
2. Milwaukee County Stadium, Green Bay Packers (Defunct)
3. Tampa Stadium, Tampa Bay Buccaneers (Defunct)
4. Lambeau Field, Green Bay Packers
5. Riverfront Stadium, Cincinnati Bengals (Defunct)
6. Paul Brown Stadium, Cincinnati Bengals (Pre-season)

NBA: (1 venue)

1. Bradley Center, Milwaukee Bucks

IHL/AHL: (2 venues in 2 cities)

1. Bradley Center, Milwaukee Admirals
2. Riverfront Coliseum, Cincinnati Cyclones

PCL (AAA): (1 venue)

1. Autozone Park, Memphis Redbirds

Southern League (AA): (1 venue)

1. Joe Davis Stadium, Huntsville Stars

NCAAF Div 1: (1 venue, 0 home teams)

1. Liberty Bowl (Southern Miss vs. Utah, and Boise State vs. Louisville)

NCAAF Div 3: (1 venue, 1 home team)

1. Van Male Field, Carroll Pioneers

by tgirsch on July 24, 2008 04:50 AM

by Robert



Brad DeLong has a hot tip from Jason Furman





I quote a bit of Brad's quote of Furman

Today, the Tax Policy Center released a new analysis of the McCain and Obama tax plans, which provides a comparison between what each of the candidates says on taxes (their actual plans) and what their campaign advisors claim. It finds that the true cost [over 10 years] of Senator McCain’s tax proposals is $2.8 trillion larger than what his advisors have acknowledged. And most of that $2.8 trillion is the cost of yet more tax cuts for corporations and the wealthy. The plan still offers very little for ordinary Americans.

I think the key bit of the tax policy center report is (emphasis mine)

In several important ways, the candidates’ speeches and web sites differ from the plans as we’ve outlined them above, and, in several cases, descriptions of proposals provided by campaign advisors strike us as implausible. Senator McCain has said repeatedly that he would repeal the

individual AMT, allow businesses to expense all investments in equipment immediately, double the deduction for dependents, and give individuals the option to pay tax under a simplified alternative tax system. The campaign advisers say that the AMT will be patched but not eliminated except under the simplified alternative system, that only short-lived investments (for which expensing is not worth much) would qualify for immediate deduction, that the larger deduction for dependents would phase in slowly (and never equal twice the current-law deduction), and that the simplified alternative tax system would be revenue neutral. The last assertion is particularly questionable: few taxpayers will choose to pay an alternative tax if it does not reduce their tax bill, so an optional alternative is only revenue neutral if almost nobody elects it, which is probably not what the candidate has in mind. We estimated the cost of Senator McCain’s plan as described on the stump, assuming that all the provisions are fully effective immediately and that the optional alternative tax system is similar to the one proposed by the Republican Study Committee. Under those assumptions, the revenue loss attributable to the Senator’s plan increases to almost $7 trillion over the 10-year budget window.

I think that Len Burman Surachai Khitatrakun Greg Leiserson Jeff Rohaly Eric Toder

Bob Williams are heroes. I also think that this line about how an alternative tax option would be revenue neutral help provoked them into calling the McCain campaign out. That is not just a lie, it is an insult to their intelligence.



Below their thoughts on what Obama really has in mind.

Senator Obama’s proposal to exempt seniors with income below $50,000 from income tax but continue full taxation starting at $50,001 also strikes us as impractical and undesirable. Any actual legislation would have some kind of phaseout to avoid a “cliff” at $50,000. Also, Senator Obama has spoken often about subjecting high-income taxpayers to additional taxes to help shore up Social Security, although his campaign advisers insist that there is no specific proposal. We estimated the cost of Senator Obama’s proposals assuming all of the provisions are fully effective immediately, that the seniors’ exemption would phase out over a $10,000 income range, and that the Social Security proposal would impose a 2 percent income tax surtax on adjusted gross incomes over $250,000 and a 2 percent payroll tax paid by employers on employees’ earnings above that threshold. Under those assumptions, the Senator’s proposals would reduce revenues by $2.4 trillion over 10 years, or about $367 billion less than the proposals as described by his campaign advisers.

I really have no idea what Obama's advisers "insist" that there is no such plan. I think a tax increase on the very rich dedicated to the social security trust fund would be very popular. I certainly love it and have bitterly criticized the TPC for leaving it out of their earlier analysis. I note that the Obama campaign has talked about a tax from 2 to 4% so the amount raised could be much more than $ 367 billion over ten years. I guessed that it was designed to roughly balance the making work pay tax cut (still might be at the higher level) here (search for Waldmann).





Also recall the appalling L.A. Times article which claimed that Obama's numbers don't add up (and barely mentioned the fact that McCain refuses to release numbers and that his mumblings aren't in the ball park ... or the solar system). At the time Kevin Drum noted that, according Peter Nicholas of the the LA Times Obama was only a few tens of billions short of adding up counting the expiry of the Bush cuts for families with income over $200,000 and the end of the Iraq war (Nicholas actually said that Obama was vague about how fast he proposed getting out of Iraq). The math: Nicholas claims $130 billion/year of spending increases (mostly health care reform) and $ 80 billion/year in tax cuts vs $100 billion in letting Bush's tax cuts for those making over $200,000 lapse and maybe $ 90 billion/year saved by leaving Iraq. Oh with at least $30 billion/year with the donut plan, Obama's proposals are revenue neutral. I guessed so at the time in a comment on Drum's post.

by Robert (noreply@blogger.com) on July 24, 2008 03:40 AM

by rdan



The federal Appeals Court in Richmond, Virginia, ruled 5-4 on July 15 that Bush had the right, while prosecuting the “war on terror,” to hold Qatari citizen (and Peoria, Illinois, resident) Ali al-Marri indefinitely as an “enemy combatant.”

.....

"A citizen, no less than an alien, can be an enemy combatant,” administration lawyer David B. Salmons told the Appeals Court in oral arguments on Feb. 1, 2007, adding that the courts cannot interfere with the President’s wartime judgments on such matters.



Salmons insisted that Bush is not interested in using this power too broadly, but argued that the judgment on whom is deemed an “enemy combatant” must solely be at the discretion of President Bush. [NYT, Feb. 2, 2007]

Did we miss something in the press and the election campaign? What is your stance?



Update:

WAPO reports on another aspect and example of reporting suspected activities:

Also included in the 46 pages of documents, obtained by the Maryland chapter of the American Civil Liberties Union through a Freedom of Information Act lawsuit, is an account of an activist's name being entered into a federally funded database designed to share information among state, local and federal law-enforcement agencies on terrorist and drug trafficking suspects.



ACLU attorney David Rocah said state police violated federal laws prohibiting departments that receive federal funds from maintaining databases with information about political activities and affiliations.



The activist was identified as Max Obuszewski. His "primary crime" was entered into the database as "terrorism - anti govern(ment)." His "secondary crime" was listed as "terrorism - anti-war protestors." The database is known as the Washington-Baltimore High Intensity Drug Trafficking Area, or HIDTA

...

Still, information about the protesters and their activities was sent to seven agencies, including the National Security Agency and an unnamed military intelligence official.



"Americans have the right to peaceably assemble with others of a like mind and speak out about what they believe in," Mr. Rocah said. "For state agencies to spend hundreds of hours entering information about lawful and peaceful political activities into a criminal database is beyond unconscionable.

As mentioned in comments, the issue is the quote of the government lawyer supporting the case, and reveals intent and expectation to me. The decision was made on narrower ground but the supporting comment has not been removed.



Then we still have the expanding TLO training of first responders looking for terrorists and suspicious activity in training in Colorado as a beginning of new Homeland Security efforts.

by rdan (noreply@blogger.com) on July 24, 2008 03:33 AM

Hat tip to MG





CBS - Senator Obama video and interview transcript

July 22, 2008



CBS - Senator McCain video and interview transcript

July 22, 2008

by rdan (noreply@blogger.com) on July 24, 2008 03:22 AM

Did I get the title wrong – isn’t this Post Hoc Ergo Propter Hoc:

The Post Hoc fallacy derives its name from the Latin phrase "Post hoc, ergo propter hoc." This has been traditionally interpreted as "After this, therefore because of this." This fallacy is committed when it is concluded that one event causes another simply because the proposed cause occurred before the proposed effect. More formally, the fallacy involves concluding that A causes or caused B because A occurs before B and there is not sufficient evidence to actually warrant such a claim. It is evident in many cases that the mere fact that A occurs before B in no way indicates a causal relationship.

The good folks at Talking Points Memo are having fun with this:

Republican presidential candidate John McCain says Democrat Barack Obama is wrong about the Iraq war. But Obama's campaign says McCain was wrong about the war's timeline during a nationally televised interview Tuesday. Asked about Obama's contention that a Sunni revolt against al-Qaida combined with the addition of thousands of U.S. combat troops that were sent to Iraq contributed to the improved security situation there, McCain scoffed. "I don't know how you respond to something that is such a false depiction of what actually happened," McCain told "CBS Evening News," adding that Col. Sean MacFarland was contacted by a major Sunni sheik. "Because of the surge we were able to go out and protect that sheik and others. And it began the Anbar awakening," McCain said, referring to the U.S.-backed revolt of Sunni sheiks against al-Qaida in Anbar province. "I mean, that's just a matter of history." The problem with McCain's statement — as Obama's campaign quickly noted — was that the awakening got under way before President Bush announced in January 2007 his decision to flood Iraq with tens of thousands of additional U.S. troops to help combat violence.

So what if the Anbar Awakening occurred before The Surge? Couldn’t the subsequent surge still have been the cause of this Sunni revolt against Al Qaida under this Pre Hoc Ergo Propter Hoc fuzzy logic being employed by John McCain? After all – under similar fuzzy logic, more defense spending and less tax revenues is the recipe to reduce the deficit!



Update: (rdan here:



Robert sends this link to the youtube video. CBS has the whole interview uncut on the web (I don't know when they

put it up -- that is before or after Olberman called them on editing)

by PGL (noreply@blogger.com) on July 23, 2008 09:33 PM

Mass. econ ed for grade 4-12.

by rdan (noreply@blogger.com) on July 23, 2008 09:20 PM

By: Divorced one like Bush



Yes, you read that correctly. The right is reporting there is money to be found in wind. Sacrilege in their church of oil. In an article, May 17, 2008 we learn about a Bush administration report on wind.



A little back ground first:

With major government investments in wind in the 1970s, the U.S. was poised to be a dominant player in what was clearly going to be one of the biggest job-creating industries of the next 100 years. As late as the mid 1980s, we had over 85 percent of the world's global installed capacity, and U.S. companies possessed the most critical knowledge about how to develop wind farms cost-effectively.

President Reagan cut the renewable energy budget more than 80 percent after he took office, and eliminated the wind investment tax credit in 1986.



Since the turn of this century, wind has been growing explosively. From 2000 to 2007, the industry increased fivefold in size. Last year, $36 billion in wind investments were made around the world, with $9 billion invested in U.S.-based projects. In 10 years, it is expected to nearly quadruple in size.



In fact, because the new wind turbines are tall, and don't interfere significantly with grazing or farming, they have become popular in the central U.S., where the wind resource is best in the country. Some ranchers make half a million dollars a year by leasing only a fraction of their land for turbines.



From 2004 to 2007, the company's wind turbine production has grown 500 percent, and the division brought GE revenues exceeding $4 billion in 2007.



While the multi-decade drop in wind prices has stalled temporarily, prices for the competition have gone up the smokestack. New nuclear plants, for instance, have tripled in price. Analysis for the California Public Utility Commission puts the cost of power from new nuclear plants at 15 cents per kWh. It also puts the cost of coal (without carbon capture and storage) at more than 10 cents/kWh. That's a major reason why, since 2000, Europe has added 47 GW of new wind energy, but only 9.6 GW of coal and a mere 1.2 GW of nuclear.

The report:

...the recent Department of Energy report, called "20% Wind Energy by 2030." With improved efficiency and a decrease in capital cost, the report found that wind power should cost 6 to 8.5 cents/kWh, unsubsidized, even including the cost of transmission to access existing power lines. And the cost of integrating the power into the U.S. grid would be under 0.5 cents per kWh. This effort would only add about 50 cents per month per household, or under 2 cents a day.



The study notes that "few realize that electricity generation accounts for nearly half of all water withdrawals in the nation." By 2030, wind would be cutting water consumption by 450 billion gallons a year, of which 150 billion gallons a year would be saved in the arid Western states, where water is relatively scarce -- and poised to get even scarcer thanks to climate change. And on top of that, we get half a million jobs, of which nearly a third are high-wage workers directly employed in the industry.

So, this is what could be. Being that we are a “global economy”, our companies need to be able to compete, correct? Here is the competition environment:

By 2020, many European wind farms will be generating electricity at 2¢ per kilowatt-hour, making it cheaper than all other sources of electricity.



Wind-generating capacity worldwide is growing at over 30% per year and has jumped from less than 5,000 megawatts in 1995 to 39,000 megawatts in 2003—an increase of nearly eight-fold. The fossil fuel with the highest growth rate—natural gas—grew at just over 2% annually during the same period. Oil grew at less than 2% annually, and coal at less than 1%. Nuclear generating capacity expanded by 2% annually.

One would think that an industry growing at 30% would be far more inviting to the “free market” entrepreneur than one growing at 2%. But, that is not where we are seeing money flow. No, we felt it was wiser to spend it creating a democracy in an oil rich country. Then again, in 8 years of neocon election policy and 50 plus 1 strategy, we have not seen any major news organization go after the 49% not being ideologically serviced. Think that might have something to do with the policies we vote for?



But, back to the environment to be competing in:

With wind-generated electricity, the principal production cost is the capital outlay for initial construction. Since wind is a free fuel, the only ongoing cost is for maintenance.

Many countries in Europe are pushing hard to bring in more wind power. Here are a few examples.



The United Kingdom is requiring an investment of over $12 billion in off-shore wind farms that should satisfy the residential electricity needs of 10 million of the country's 60 million people.

Tiny Denmark, which led Europe into the wind era with the development of its own wind resources, now gets an impressive 20 percent of its electricity from wind.

Germany overtook the United States in terms of wind-based generating capacity in 1997. Now Spain is close to overtaking the United States as well.

As to investments being made, it is just as we are seeing in beer:

Regulatory issues do not appear to have deterred energy companies from making US acquisitions. Energias de Portugal paid nearly $3 billion to acquire Horizon Wind Energy from the Goldman Sachs Group. The purchase doubled the amount of wind power operations in the Portuguese company's portfolio. German utility E.On has agreed to acquire the North American assets of Irish wind power company Airtricity Inc. for $1.4 billion. Acciona Energia has acquired the wind farm development rights of EcoEnergy, a company based in Illinois. Spanish energy giant Iberdrola has acquired Oregon wind development company PPM Energy, as well as Community Energy of Pennsylvania, and more recently US wind farm companies Greenlight Energy and Orion Energy.

But get this, Fox News titles their article: Denmark Points Way in Alternative Energy Sources

Fancy that. Fox News says we can learn from the foreigners.

...most of the Western world was subjected to an Arab-led oil embargo. The crisis forced Denmark, which was 99-percent dependent on foreign oil at the time, to develop an alternative-energy policy.

In the 30 years since, Denmark has worked tirelessly to develop new technology and new policies.

Twenty percent of Denmark's energy needs are now met by electricity generated by wind turbines, and the proportion is steadily increasing. Thanks to advances in technology and turbine design, the cost ofwind power has been reduced by 75 percent since 1970, when the programs began.

The Danish attitude toward energy conservation means "people don't have as many appliances, or gizmos," said Griswold, a frequent visitor to Denmark. "Also, there are stringent requirements for insulation when building new homes. Every individual mandate like that means the nation uses less energy."

A major part of that success is the Danish commitment to and attitude toward its energy policies, Griswold said.



"After the [1973-74 oil] embargo, Denmark had the attitude that they were going to become less dependent on the outside world and more self-sufficient," he said. "And upon making this commitment, they've gained benefits, including lower national debt, cleaner air and less dependency on other countries."

Let me repeat the important part of that last sentence: "And upon making this commitment, they've gained benefits, including lower national debt, cleaner air and less dependency on other countries."



One final point Fox News wants us to learn: "Danes would say, 'Thank goodness we have a government that plans so well that we are only minimally impacted.'" he said. "The average Dane isn't terribly conscious of being in an energy-saving environment because it's so natural to [him or her]."



Now there is a message I would have never expected Fox News to promote.

by Divorced one like Bush (noreply@blogger.com) on July 23, 2008 04:28 PM

The reason some of us note that Robert Samuelson is not a relative of Paul Samuelson has to do with his tendency to write this kind of nonsense:

The specter of depression stalks America.

I have heard lots of talk about whether we are in a recession but none of what I have seen says we are reliving the 1930’s. This opening is akin to seeing a friend involved in a bad car accident and saying – “see you’re not dead, so cheer up”. Samuelson continues:

In June, unemployment was 5.5 percent, slightly below the average since 1960 of 5.8 percent … As yet, the present economic slowdown does not even approach the harshest post-World War II slump. The back-to-back recessions of 1980 and 1981-82 (as dated by the National Bureau of Economic Research) constituted, for most people, one prolonged downturn. Unemployment peaked at 10.8 percent in late 1982.

Oh good grief. At the risk of repeating myself, no one is saying that 2008 is as bad as 1982. OK, my friend neither died in the car accident nor he was paralyzed for life - just several broken bones - so Samuelson would tell him to cheer up and walk it off. And this average unemployment rate over the past 50 years or whatever is the standard GOP talking point whenever economists note that the employment to population ratio has declined. It is nice to see that Samuelson would rather rehash discredited GOP spin than inform his readers. Then again, Samuelson has to include this:

The paradoxical thing about today's economy is its strength. No kidding. Consider all the hand grenades lobbed at it. Higher oil prices. The housing implosion. Large layoffs in affected industries: autos, airlines, construction, mortgage banking. The "credit squeeze" triggered by losses on "subprime" mortgages. Despite all that, the economy hasn't collapsed. It's merely weakened. Output in the first quarter of 2008 was actually 2.5 percent higher than a year earlier.

It is true that growth rates were decent for 2007QII and 2007QIII but that followed weak growth rates for the previous three quarters and was followed by weak growth rates for the next two quarters. But hey – as long as Robert Samuelson can cherry pick some spin for the GOP, we should all be very happy. So stop your whining!

by PGL (noreply@blogger.com) on July 23, 2008 04:03 PM

Via commenter Ted:

This is the guy whose endorsement McCain actively sought out.

by tgirsch on July 23, 2008 02:56 PM

We now have so many attempts to blame Democrats for high oil prices and even the McCain campaign is trying to tar Obama with this charge.



But this looks like the simple answer to those charges.

by spencer (noreply@blogger.com) on July 23, 2008 01:16 PM

I grew up in the South but I never remembered what Paul Krugman noted with this:

DRIVE 70 AND FREEZE A YANKEE. That popular Texas bumper sticker epitomized the bitter regional rivalry of the 1970s, when rising energy prices impoverished the Snow Belt and enriched the Sunbelt.

I recently sold my car and moved to NYC where I take the subway so I’m not as adversely affected by these high gasoline prices. Paul also points us to this:

Drivers in the South have been hit hardest by soaring U.S. gasoline costs and state governments there should take more steps to help cut fuel consumption, said a report released on Tuesday. Average motorists in Mississippi spent nearly 8 percent of their incomes on gasoline in 2007 and drivers in South Carolina and Georgia spent more than 7 percent, according to the report released on Tuesday by environmental group the Natural Resources Defense Council. Meanwhile, drivers in the Northeast spent the least amount of their incomes on fuel with Connecticut motorists paying just over 3 percent. Drivers in New York spent about 3.3 percent and motorists in Massachusetts spent about 3.5 percent ... The report, called "Fighting Oil Addiction: Ranking States' Oil Vulnerability and Solutions for Change," ranked the states for their setting of fuel conservation measures like incentives for buying fuel-efficient hybrid vehicles, slowing suburban sprawl, and targets for reducing driving ... California, New York and Connecticut ranked highest in the report in the number of steps taken to fight consumption.

California is leading the way in reducing gasoline prices? If Los Angeles ever gets a real public transportation system – that would be great news!



The report can be found here and it lists how some states have taken steps to reduce gasoline consumption. Contrary to the comments from some of our rightwing friends, the Democrats have been pushing similar policy measures. Alas, we are not seeing enough support for these measures from the Republican politicians.

by PGL (noreply@blogger.com) on July 23, 2008 09:45 AM

King over at SCSU Scholars wants to tell me and the EIA that our comparative statics analysis of the impact on world oil prices from the opening ANWR is flawed. As I understand his argument, it has two components. The main is as follows:

Stein's Law, "If something cannot go on forever, it will stop," came to mind to me today while reading a post on Angry Bear about ANWR ... These very same people are the ones who contend peak oil will drive the price of oil ever higher ...

I’m not making any prediction as to the price of oil prices in 20 years so this appeal to Stein’s Law is just odd. Future oil prices will depend on a host of factors other than whether ANWR is opened up so expecting EIA to be right about their forecast that the price of oil will be around $65 a barrel is not material as to their comparative static exercise that I have appealed to.



King also seems to have a problem with EIA including a discussion that OPEC would likely reduce their supply if other supplies come on board. He seems to argue that OPEC is less than effective cartel, which is true. But even if the OPEC members follow the textbook competitive model, an increase in other forms of supply will tend to reduce their supply to the degree that the world price declines by even a small amount. Would King have us believe there would be no OPEC supply response? What kind of economics are they teaching in St. Cloud? Oh wait – we get this:

Something that adds 10-20% more to our own production and reduces imports of oil by 6% (both figures for 2025, again if you beleive EIA), certainly seems a reasonable first step, lest that economy be ours.

Fine – we reduce imports but the topic of the day here was the world market price. I see nothing in King’s post to lead me to question the EIA analysis.

by PGL (noreply@blogger.com) on July 23, 2008 09:21 AM

Knock knock.

UPDATE: I don’t know what’s gotten into Bill Hall lately, but I like it!

by tgirsch on July 22, 2008 09:01 PM

Congresswoman Michele Bachman follows the tried and true method of getting published at the National Review – she lied to her readers (over and over):

Like I knew it would, the American Energy Tour unveiled the truth about the Arctic National Wildlife Refuge (ANWR) — what Democrats in Washington don’t want the American people to know: This is a treasure trove of energy that will yield a lot with only minimal intrusion ... The Energy Information Administration (EIA) estimates that there are 10.4 billion barrels of recoverable oil in ANWR ... It gets better; the EIA has also stated that the production of this oil would create an estimated as many as 750,000 American jobs. At a time when our nation is hurting because of rising food and gas costs, more domestic energy and new jobs would give the economy a much needed boost. The fact of the matter is that Congress is standing in the way of $2-a-gallon gas.

Bachman failed to tell her readers that this same EIA noted the extra production would occur in about a generation – not today. She also failed to note that this same EIA predicted that the effect on oil prices would be a mere $0.75 a barrel, which translates into about $0.02 per gallon. Now I suspect most people know the difference between 2 cents and 2 dollars – but not the editors of the National Review.



Update: Eric Kleefeld has an excellent discussion of the National Review nonsense including a summary of the EIA analysis.

by PGL (noreply@blogger.com) on July 22, 2008 03:30 PM

by cactus



So we're moving into a new apartment and given its past 1994, we want/need internet access. We called Time Warner. They gave us an appointment for Saturday, from 8 to 10. At 10:30, after sitting in the new and still empty apartment for 2.5 hours, I called. They told me the appointment was actually for Friday from 8 to 10. I noted politely that we wouldn't have made the appointment for Friday from 8 to 10 for a number of reasons, not the least of which was that we hadn't signed a lease then. I also noted that nobody called us to ask us why we weren't there, which presumably would have been done had the appointment been the day earlier.



So they gave me another appointment - from 2 to 4. At 4:30 I called to ask if/when someone was coming. I was told to stick around. We finally left at five minutes to 6. Put another way, I waited five minutes shy of six hours for no reason at all. That's six hours of my Saturday I'm not getting back.



Which got me to thinking about deregulation in the phone industry. Its been twelve years since the 1996 Telecom Act. I remember how it used to be when you wanted to get phone and internet service back in the day. I called the local phone company, got a two hour window, and someone showed up during that two hour window. Now, with deregulation, we have competition - now I can't get phone and internet service not just from one but rather from two companies that won't show up to provide me with that service. One company that provides the service, even if its a monopoly, beats two that do not in my book.



Now, before someone points out that the service is better now - internet is faster - well, technology advances. My guess is that the improvement in technology available to the consumer from 1984 to 1996 is more significant than the improvement from 1996 to 2008. (Anyone remember using a BBS?) And the improvements on the cell phone side of the business seem to come mostly on the manufactured hand-unit, which was never regulated because it isn't a natural monopoly. The rest comes from the switch, and that isn't manufactured by the former natural monopoly either.



So I thought a bit about deregulation, and realized its not just in the phone industry that service has gone to heck. How about them airlines? And I understand that there were a whole bunch of people waiting out front of IndyMac the other day. The fact is, in a lot of industries, deregulation has not lived up to expectations. Not for consumers, but not for the companies either. How many airlines went out of business in order to provide lousy service with a nickel-and-dime attitude today? How many phone companies? I'm sure its been a success story in some industries, but maybe it behooves us to think about how to do it so that it truly lives up to the many promises we heard.



And BTW, one more thing about Time Warner. We called to find out when we could another appointment. It seems the earliest they'll be able to not show up again is July 27. I bet this isn't how the National Review, the Weekly Standard, or the Wall Street Journal describe deregulation in the telecom indutstry.

by rdan (noreply@blogger.com) on July 22, 2008 10:10 AM

Hat tip to ataxingmatter on paying a fair share for services provided in the land of the free and brave:

The Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations will hold a hearing tomorrow on the way foreign banks have facilitated US taxpayers' tax avoidance through structuring accounts offshore to avoid IRS notice. Senators Levin and Coleman released late today (Wednesday) a 109-page staff report that details their investigation into Swiss banking giant UBS and Liechtenstein bank LGT. See Bradley Klapper, UBS, LGT aided US Tax Cheats, Forbes.com (July 16, 2008). The report estimates that approximately $100 billion a year has been lost in offshore tax abuses. For various links to stories on the Liechtenstein matter, see this TaxProf Blog posting.

Makes you want to run out and trust these guys some more with our well being.

by rdan (noreply@blogger.com) on July 22, 2008 05:49 AM

UPDATE: I’ve added some baseball-related humor here.

OK, I’m confused. Consider the following inning:

• First batter gets a base hit; advances to second on a balk. Runner on first, nobody out.
• Second batter lays down a sac bunt, advancing the runner to third. One out.
• Third batter grounds out to third, runner stays put. Two out.
• Fourth batter gets a base hit, first batter scores. One run in, runner on first, two out.
• Fifth batter hits a triple, fourth batter scores. Two runs in, runner on third, still two out.
• While sixth batter is up, pitcher throws a wild pitch, fifth batter scores. Three runs in, two out.
• Sixth batter grounds out to second. Three outs.

For that inning, how would you score the pitcher’s line, in terms of runs, earned runs, hits, and errors?

Now consider another inning, same pitcher throwing:

• First batter gets a base hit. Runner on first, nobody out.
• Second batter is hit by a pitch. Runners on first and second, nobody out.
• Third batter lays down a sac bunt to third, runners advance. The first baseman drops the throw from third, and the ball rolls behind him. First batter scores. Runners on first and second, nobody out.
• Fourth batter pops out foul to the catcher. First and second, one out.
• Fifth batter strikes out looking. First and second, two out.
• Sixth batter flies out to deep center. Inning over.

How would you score the line for that inning?

Here’s how I did it:

First hypothetical inning: 1.0 IP, 3R, 3ER, 3H, 0K, 0BB

Second hypothetical inning: 1.0 IP, 1R, 0ER, 1H, 1HK, 0BB, 1HB

Why do I ask? Because these examples a real game, and the official scorekeeper differed from me. His final score showed the pitcher with 4R (which I had) and 2 ER, one fewer than I had. I’m looking all over the place for the second unearned run, and I can’t find it. Digg?

For reference, here’s the box score and the play-by-play. I’m concerned with the bottom of the fifth and the bottom of the sixth.

by tgirsch on July 21, 2008 10:04 PM

According to Newsweek’s Fareed Zakaria, Obama is the “conservative” when it comes to foreign policy, and McCain is the “liberal”:

Over the course of the campaign against Hillary Clinton and now McCain, Obama has elaborated more and more the ideas that would undergird his foreign policy as president. What emerges is a world view that is far from that of a typical liberal, much closer to that of a traditional realist. It is interesting to note that, at least in terms of the historical schools of foreign policy, Obama seems to be the cool conservative and McCain the exuberant idealist.

…snip…

Obama rarely speaks in the moralistic tones of the current Bush administration. He doesn’t divide the world into good and evil even when speaking about terrorism. He sees countries and even extremist groups as complex, motivated by power, greed and fear as much as by pure ideology. His interest in diplomacy seems motivated by the sense that one can probe, learn and possibly divide and influence countries and movements precisely because they are not monoliths. When speaking to me about Islamic extremism, for example, he repeatedly emphasized the diversity within the Islamic world, speaking of Arabs, Persians, Africans, Southeast Asians, Shiites and Sunnis, all of whom have their own interests and agendas.

Obama never uses the soaring language of Bush’s freedom agenda, preferring instead to talk about enhancing people’s economic prospects, civil society and—his key word—”dignity.” He rejects Bush’s obsession with elections and political rights, and argues that people’s aspirations are broader and more basic—including food, shelter, jobs. “Once these aspirations are met,” he told The New York Times’s James Traub, “it opens up space for the kind of democratic regimes we want.” This is a view of democratic development that is slow, organic and incremental, usually held by conservatives.

Obama talks admiringly of men like Dean Acheson, George Kennan and Reinhold Niebuhr, all of whom were imbued with a sense of the limits of idealism and American power to transform the world. “In his view of history, in his respect for tradition, in his skepticism that the world can be changed any way but very, very slowly, Obama is deeply conservative,” wrote Larissa MacFarquhar in her profile of him for The New Yorker. “There are moments when he sounds almost Burkean. He distrusts abstractions, generalizations, extrapolations, projections. It’s not just that he thinks revolutions are unlikely: he values continuity and stability for their own sake, sometimes even more than he values change for the good.”

…snip…

Ironically, the Republicans now seem to be the foreign-policy idealists, labeling countries as either good or evil, refusing to deal with nasty regimes, fixating on spreading democracy throughout the world and refusing to think in more historical and complex ways. “I don’t do nuance,” George W. Bush told many visitors to the White House in the years after 9/11. John McCain has had his differences with Bush, but not on this broad thrust of policy. Indeed it is McCain, the Republican, who has put forward some fanciful plans, arguing that America should establish a “League of Democracies,” expel Russia from the Group of Eight industrialized countries and exclude China from both groups as well.

The whole thing is worth the read. Cross-posted at SayUncle and TennesseeFree.

by tgirsch on July 21, 2008 07:19 PM

Glenn Hubbard joins the National Review in endorsing tax cuts but at least Glenn tries to offer some reasoning:

The combination of eye-popping headline inflation of 5% year over year and dramatic expansions of the Federal Reserve's lending activities to limit the credit crunch raise a key question: Are we asking too much of monetary policy? The simple answer is yes. The expansion of the Fed's lending has been extraordinary in scale and scope. But it is not the best response to the present credit crunch, and may bring unwelcome side effects. To assess the Fed's role as firefighter in the current financial turmoil, it is useful to start with the roots of the problem. Shocks to financial institutions' net worth affected the supply of credit from those institutions. Such credit restrictions reduced consumption and investment -- otherwise known as a "credit crunch." The Fed's interventions have, of course, aimed at liquidity -- the ability to fund increases in assets and meet obligations as they become due.

Glenn continues with a very good discussion of risk management and the role of the Federal Reserve but then he returns to this inflation theme:

It is worrisome that the Fed's own 2008 projections have risen over the year both for headline inflation (by about 1.5 percentage points) and core inflation (by about 0.2 percentage points). Furthermore, the Fed's projections of receding inflation in 2009 and 2010 coming true will almost surely require increases in the federal funds rate. A continuation of a negative real federal funds rate and the increase in money growth accompanying it raises the risk of increasing inflationary expectations, a costly mistake to fix. It is asking a lot for monetary policy alone to carry the burden of supporting aggregate demand. Fiscal policy can play a role. Congress and President Bush did pass an economic stimulus package centered on tax rebates. But clarity about a positive future for the 2001 and 2003 tax cuts which bolster collateral values -- along with a cut in corporate tax rates to promote investment -- would offer a much more potent tonic.

Mark Thoma weighs in by saying tax policy is not the only part of the fiscal policy tool kit:

I agree that Fed policy alone may not be enough to get the economy back on track, I've argued that for a long time. But tax cuts are not the only option for stimulating the economy, government spending can also be used, and in theory on short-run stabilization policy, a one dollar increase in government spending has a bigger impact on GDP than a one dollar tax cut. Infrastructure is an obvious target for spending, it's surely needed, but there are other areas that could use help as well.

If Glenn and Mark are concerned about easier monetary policy increasing inflation – then how can they be supporting fiscal stimulus? In at least the closed economy version of the standard Keynesian model, the Phillips curve is the same for both forms of aggregate demand policies. OK, easier monetary policy may lead to more dollar devaluation than easier fiscal policy but given our current account deficit, wouldn’t increasing net exports be a good thing? I trust neither Glenn nor Mark are in the McCain-National Review camp of hoping a strong dollar will boost net exports!

by PGL (noreply@blogger.com) on July 21, 2008 05:23 PM

Shall I try another cyclical chart of one of the variables that the the dating committee gives heavy weighting to in determining the official dates of recession. Real manufacturing and trade sales includes sales at all three level, manufacturing, wholesale and retail so it is reasonable to think of this as a proxy for real goods GDP.



Note that the peak for this indicator was November, two months before the January peak in industrial production. This data series is showing a decline that looks fairly normal for the last few recessions. The drop in industrial production has not been as steep largely for two reasons. One, the inventory build has not been as bad this cycle. But the second reason is the most important factor in my opinion and that is because more of the adjustment to weak sales is showing up in the form of weak imports rather than weak domestic output and employment this cycle. .

by spencer (noreply@blogger.com) on July 21, 2008 04:34 PM

by rdan

During 2006 and 2007, DOI reported millions of dollars in contracts to Fortune 500 corporations such as Dell, GTSI, Home Depot, John Deere, McGraw-Hill, Ricoh, Sherwin Williams, Starwood Hotels, Waste Management Incorporated, Weyerhaeuser, World Wide Technology and Xerox Corporation as small business contracts.



The DOI Office of Inspector General's report is the latest investigation to contradict two Small Business Administration (SBA) press releases, which claimed that it was a "myth" that large businesses received federal small business contracts.



The General Accounting Office (GAO) first uncovered the diversion of federal small business contracts to Fortune 500 corporations in 2002. Since then, there have been approximately a dozen federal investigations that have all found Fortune 500 firms and other large corporations were the actual recipients of billions of dollars in federal small business contracts every year. Despite the series of federal investigations and over 400 stories in the press since 2002, no legislation has been passed to address the problem.



As opposed to adopting policies to stop the flow of federal small business contracts to Fortune 500 firms, former SBA Administer Steven Preston adopted a SBA policy in June of 2007 that will allow Fortune 500 firms to continue to receive federal small business contracts until the year 2012. Preston also removed all information from the government's Central Contractor Registration (CCR) database that could be used to determine if a firm was small or large. Additionally, Preston refused to release the specific names of all firms that received government small business contracts.

An SBA news release states:

Since 2006, SBA has initiated reforms that have significantly reduced the large company/small business contracting issue. Those reforms include:

• Clean Data – SBA, in conjunction with the Office of Federal Procurement Policy, ordered the federal contracting database scrubbed last year to bring much greater integrity to the data. This removed $4.6 billion from the contract database.

• Recertification – SBA tightened the definition of small business in the federal database. We estimate an additional $5 billion-$10 billion will be removed this year and that with these steps, the quality of data will increase measurably over time.

• Scorecard – Last year we inaugurated an important tool to hold agencies publicly accountable for their small business contracting achievements. This public scrutiny has greatly improved SBA's ability to improve small business contracting.

• Public data – The data on all contracts has long been open to the public. However, new Web resources such as usaspending.gov further improve the public's visibility into the matter. Additionally, SBA provides a snapshot of the small business data annually through its Goaling Report.

Barbara Boxer has introduced legislation to prevent the mis-use of funds and hopefully the expunging of real data from public sources maintained by government agancies.

by rdan (noreply@blogger.com) on July 21, 2008 12:07 PM

NRO’s Editors:

The economy is less in need of stimulus and more in need of a Congress that understands its strengths. Two sectors in particular are proving their resilience: Export-oriented businesses are thriving, because the dollar’s relative weakness is making U.S. products a good buy overseas, and small businesses are still creating jobs even amidst the broader economic slowdown. But rather than opening new markets for our exporters, this Congress has demonstrated its hostility to trade by passing a bloated farm bill that has enraged our World Trade Organization partners, with whom we are trying to negotiate a new market-opening deal. This is to say nothing of the U.S.-Colombia Free Trade Agreement, which continues to languish in congressional limbo. U.S. exporters to Colombia have paid over $1 billion in tariffs since the administration inked the deal over 18 months ago. As for small businesses, Obama’s plan to raise the top two tax rates would affect hundreds of thousands whose proprietors file as individual rate-payers. If the Democrats were serious about passing legislation that would stimulate the economy, then they would be pledging to keep taxes low, cut the corporate rate, remove barriers to energy exploration, and pursue market-opening trade agreements.

Net exports are the strength of this economy that has witnessed its employment-population ratio decline to 62.4%? Look – I’m all in favor of expenditure-switching policies such as allowing the currency to devalue. Oh wait – NRO’s Lawrence Kudlow and John McCain wants dollar appreciation. Never mind! But this notion that more free trade agreements will lead to aggregate demand expansion is absurd. While reducing foreign tariffs may help boost exports, reducing our tariffs on foreign goods tends to increase imports. So I guess the National Review is left with endorsing more fiscal irresponsibility!

by PGL (noreply@blogger.com) on July 21, 2008 10:14 AM

by ilsm



This week I expand upon my response to 2Slugbaits' comments to the excellent post Army navy air force Marines Budget; Peace in our Times

by Robert Waldmann

.

2Slugbaits' comment revolves around the fact that the Army, a situation common to the other services, is in a contractor trap. The result is despite spending huge, budget busting, sums for contractor support the weapons are not meeting the readiness nor reliability needs of the soldiers.



Check a couple of GAO reports:



The GAO 04-715 was about enhancing implementaion of Performance Based Logistics.



The second, DoD needs to show any benefit from Performance Based Logistic (PBL) contracts.



To my knowledge GAO stopped looking after 2005, the results are too dismal. The two reports said:

PBL does not deliver required support outcomes and is always far more expensive than planned. Does the thought they "buy in" come to mind?

PBL is a product management concept, including a design and system engineering approach, which requires that an integrated support "package" be designed to minimize long term support costs while delivering specified levels of reliability and weapon system capabilities. For PBL to be delivered you had to have a "quality" design. A design which delivered a reliable product with resources, a "package" to provide repairs in the operating world to keep the equipment running to do the job for the soldiers depending on it.

The problem with PBL is the "package". Traditionally, the "package" was soldier support in the field and governemnt arsenals or depots in the US or rear arears. The "package" created by the acquisition manager included not only designing and producing the system with qualities like reliability and maintenance, but delivering efficient repair instructions, supply lists, tools, trained manpower and facilities to repair things. Often in the acquisition wars the "package" is not bought because cost over runs elsewhere take the programmed money. Redoing shoddy work in one area always is more important than delivering the "package" to sustain the weapons..

From my observations contractor supplied PBL was a band-aid developed because weapons bought during the Reagan build up, and the few in the Clinton administration, were poor quality, failed to meet their reliability and no one had any money left to develop the "package". It does not appear to be any better in this build up.



PBL, as criticized by GAO, was used to give the consequences of living with the trashy "package" back to the prime contractor. This reflects the trend toward using the contractor rather than the government's sustainment systems, as reflected in 2Slugbaits comment.



The band-aid failed as the contractors who did not develop the "package" in the first place were attempting to provide the "package" and profiting from their shoddy work. The underlying problem is that the contractors did not have workable "packages" in their pockets when they signed up for PBL. With no "packages" GAO found they failed to deliver cost savings or weapons that worked in the field.



A further cause of this waste was the drawdown in the 90's meant fewer weapons were going to be built so the contractor facilities would become vacant and should be used for repairs.



Wrongfully, DoD expected to save money by not developing repair processes and avoiding acquiring government repair facilities and depots.



The cost of those savings were.....



Lost capability and huge overruns for the shoddy work.



May as well hire whittlers to sustain the Army.

-----------------

This one by ilsm

by rdan (noreply@blogger.com) on July 21, 2008 10:00 AM

Today at Readercon, my wife participated on a Necrology panel. ("Those we've lost this year...")



An audience member mentioned that Tom Disch wrote an episode of Miami Vice, featuring James Brown.



Also appearing was Chris Rock, four years before New Jack City made him a movie star.



Anyone who can tell me about the episode? If not, consider this an open thread.

by Ken Houghton (noreply@blogger.com) on July 21, 2008 02:57 AM

It's still not "free trade" in a sense anyone but the self-delusional Greg Mankiw could describe it, but there are some gains accruing to China.



As the Chinese economy moves from agriculture to producing more goods and services, two things have happened. Energy demand has gone up:

And people have been able to afford services they could not before:

It's not much, but it's a start, and we would be disingenuous to deny that.



(All data from the World Bank)

by Ken Houghton (noreply@blogger.com) on July 21, 2008 02:44 AM

It is very interesting to go to conservative and/or libertarian blogs and encounter the comments on public education. So often you run across the statements about how the cost of education is rising and that they take some quote about rising real cost as absolute proof of their beliefs that politicians and the teachers unions are destroying the education system. As far as they seem to believe this is an argument stopper and that all they have to do is quote the numbers.



The numbers they quote are generally accurate. Education is an interesting industry. Despite all the advances of the computer revolution no one seems to have improved on the age-old system of the teacher sitting on one end of the log and the pupil on the other end. There has been no improvement or growth in productivity in public education. As a matter of fact one of the major metrics defining good education is a lower student-teacher ratio. But a lower teacher-student ratio means the the teachers productivity has fallen.



So we have a basic problem of having to pay teachers competitive salaries that are always rising in todays world while teacher productivity is flat to declining. The economic consequence has to be rising education cost. the best data on this I've been able to find is from the National Education Statistics published by the Department of Education. They report that since 1981 that nominal expenditures per student have grown at an annual rate of 5.9%.



Libertarians and/or conservatives seem to find this nearly 6% growth in expenditures per student to be proof that the politicians and teachers unions are destroying the system.



Maybe. But you need to put this number in perspective. If the public schools are doing so badly, how are the private schools doing? It turns out that we have a very good source of data on tuition and fees in private elementary and high schools. It is an individual line item in the CPI.

This shows that since 1981 tuition and fees at private elementary and high schools has been growing at an average annual rate of 7.7%, or about 30% faster than expenditures per pupil at

public elementary and high schools. Over this period the CPI reports that prices for college tuition and fees had almost an identical pattern as private elementary and high schools.



So I always take great pleasure of asking those citing rising education cost as proof of their position what does it mean that prices are rising about 30% faster in the private sector. The responses are always amusing.



About the only responsible and/or intelligence response I've seen is that private schools are cheaper than public schools. Again that is a maybe.



According to the Department of Education in the 1999-2000 school year spending per pupil in public schools was $8,033 while the average tuition & fees at private elementary and high schools was $6,770. Since this is only 85% of public spending they are right. But if you look at the details you find:

TUTITION & FEES 1999	( $)	% of PUBLIC
Total ...............	$6,779	84.4%
Catholic .................	6,780	84.4%
Other religious ...........	4,260	53.0%
Non-sectarian .............	12,363	153.9%

So religious schools are cheaper, but tuition and fees at non-sectarian schools were 154% of public expenditures per student. The churches often subsidize their schools by providing the capital cost of the building and finding highly motivated individuals to volunteer and other ways.



As an aside, their was a CATO study in the mid 1990s that pointed out that the data on public spending per student did not include the capital cost of school. The Department of Education recognized this as a valid criticism and corrected their data, so the data I'm citing does include capital cost.



So we really come down to the bottom line that comparing elementary and high school cost between public and private schools is that the private schools do significantly worse than the public schools. I wonder what their equivalent of the teachers unions are?

by spencer (noreply@blogger.com) on July 20, 2008 10:38 PM

Hat tip to The Tiny Revolution

CARTER: Point one: I am tonight setting a clear goal for the energy policy of the United States. Beginning this moment, this nation will never use more foreign oil than we did in 1977 -- never...



Point two: To ensure that we meet these targets, I will use my presidential authority to set import quotas...



Point three: To give us energy security, I am asking for the most massive peacetime commitment of funds and resources in our nation's history to develop America's own alternative sources of fuel...



I will soon submit legislation to Congress calling for the creation of this nation's first solar bank, which will help us achieve the crucial goal of 20 percent of our energy coming from solar power by the year 2000.



These efforts will cost money, a lot of money, and that is why Congress must enact the windfall profits tax without delay...



Point four: I'm asking Congress to mandate, to require as a matter of law, that our nation's utility companies cut their massive use of oil by 50 percent within the next decade and switch to other fuels, especially coal, our most abundant energy source...



Point five: To make absolutely certain that nothing stands in the way of achieving these goals, I will urge Congress to create an energy mobilization board...



Point six: I'm proposing a bold conservation program to involve every state, county, and city and every average American in our energy battle. This effort will permit you to build conservation into your homes and your lives at a cost you can afford.



To further conserve energy, I'm proposing tonight an extra $10 billion over the next decade to strengthen our public transportation systems...



Our nation must be fair to the poorest among us, so we will increase aid to needy Americans to cope with rising energy prices. We often think of conservation only in terms of sacrifice. In fact, it is the most painless and immediate way of rebuilding our nation's strength. Every gallon of oil each one of us saves is a new form of production. It gives us more freedom, more confidence, that much more control over our own lives...



I do not promise you that this struggle for freedom will be easy. I do not promise a quick way out of our nation's problems, when the truth is that the only way out is an all-out effort. What I do promise you is that I will lead our fight, and I will enforce fairness in our struggle, and I will ensure honesty. And above all, I will act. We can manage the short-term shortages more effectively and we will, but there are no short-term solutions to our long-range problems. There is simply no way to avoid sacrifice.

(The speech can be watched here.)

by rdan (noreply@blogger.com) on July 20, 2008 09:06 PM

Here at Angry Bear we regularly report on the poor economic performance of the economy under the Bush administration.



But it now looks like we have a first.



The Environmental Protection Agency has lowered its estimate of the the statistical value of a human life from about $8.04 million to $7.22 million, about an 11% drop. The Washington Post reports that this is the first time a government agency has ever lowered the estimated value of a human life



-- way to go Team Bush.



We knew the economy was doing poorly, but I had no idea it was this bad.

by spencer (noreply@blogger.com) on July 20, 2008 01:21 PM

I don't claim to have studied Medicare in depth. They send me the Reports in the same envelope with the Social Security Reports and I browse through them, but that is pretty much it. So this post is more of a call for people more informed on aspects of Medicare to chip in. But I want to throw out some basics. For those who want to follow along the 2008 Report can be found here:





First while there is no such thing as MedicareMedicaidSocial Security and while I firmly believe that the deliberate lumping of them together as 'entitlements' is mostly a weasel-word effort that allows attacks on SS via the backdoor, there is a certain structural overlap. All six Social Security Trustees serve on the seven member Medicare Trustees board where they are joined by the Administrator of the Centers for Medicare & Medicaid Services. Which means when we score the outlook for Social Security we are also in part scoring the outlook for Medicare crisis because the Medicare Trustees not surprisingly adopt the Intermediate Cost assumptions of the Social Security Trustees, after all they are not schizoids. This has some implications which I will get to after laying down a couple more basics.



First Medicare is not a single program with a single funding source, instead it is made up of Medicare Parts A, B, C & D.



Medicare Part A is Hospital Insurance and is paid for through payroll tax deductions, 3.01% in 2006. This tax differs from that of Social Security in one respect: it is not capped. But for the most part the better Social Security performs on the revenue side, the better Part A and its HI Trust Fund do, in short they track and overall we have seen the same progress in pushing out dates of Trust Fund Depletion. Somebody can fact check me on this but I believe that when Clinton entered office HI Trust Fund depletion was scheduled for 1999 or about seven years of cushion. By the 2007 Report that date had been pushed back to 2019, which was an increase of a full year over 2006. Why the improvement? Well the Trustees tell us it was "due to slightly higher projected payroll tax income and slightly lower benefits than previously estimated". In other words their revenue model was too pessimistic, they used Intermediate Cost. Now the 2008 Report reports that Trust Fund Depletion is still scheduled for 2019 but several months earlier in the year than the 2007. Why the slight deterioration? "due to slightly lower projected payroll tax income and slightly higher projected benefits than previously estimated