Relevant and even prescient commentary on news, politics and the economy.

Another Blogging Economist

Ragout. I’m a bit late in noticing this blog (3.5 months old), but it looks like good stuff, check it out.


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David Frum violates Canada’s “Professional Political Punditry” Standards

Canada is having an election this week and Ira Basen is demanding better campaigns and commenting on “The Spin Cycle”. This piece is directed at former Bush speechwriter David Frum as he opines on the Canadian political scene. Rules #3 and #4 are speak simply to “staying within yourself”and speaking to issues of competence. Basen wrote this nine days before this Frum piece at NRO.

Frum notes that Federal revenues have risen by 45% over the past decade as GDP rose by 67% and then writes “the lion’s share of Canadian economic growth in the 1990s was pocketed by government”. Taxes rose by a lower percentage than GDP and he suggests the government is taking the lion’s share of growth? See Brad DeLong and Sadly No correct this silly error.

DeLong notes that the share of GDP taken by Federal revenues fell from 18% to less than 16%, which means the share not taken rose by almost 72% in nominal terms. Frum also talks about the more modest rise in after-tax income per capita, but never applies this same metric to GDP or Federal revenues. But why not factor in the increase in prices, which was just over 20% along with the approximately 10% increase in population to look at these growth rates in real per capita terms. Of course when one does this, we see real GDP per person rose by about 25% while real Federal revenues per capita rose by less than 10%.

Yes, Isa Basen standards make a lot of sense to me but then I don’t write for the National Review.

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A Symposium on Offshoring

Last week, the Brookings Institution held a day-long symposium on the offshoring of services to foreign countries. The list of invited speakers included many of the world’s top trade and labor economists. While the text of the presentations is not yet available, the symposium’s website does link to various excellent background sources that may be of interest.

One of the most informative general background pieces on the issue is one by Brookings’ well-known economist Charlie Schultze, “Offshoring, Import Competition, and the Jobless Recovery“. (Incidentally, Schultze, who was chair of the CEA during the Carter administration, is also the author of one of my favorite books explaining the basics of macroeconomic policy to the non-economist.)

The main conclusion of Schultze’s background paper, and seemingly of the symposium in general was simply this: there’s a fair amount of circumstantial evidence that the offshoring phenomenon has had a relatively small impact on the US labor market, but we lack the good data needed to really know for sure. Most people probably find the subject of data collection and analysis by government bureaucracies to be one of the most boring things in the world – it’s awfully hard to imagine the typical voter getting upset because they think budget for the Bureau of Economic Analysis is too small, for example – but this is an excellent example of exactly how the lack of good data can handicap policy debates, and why spending money on government data collection is so worthwhile.


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Sec. Powell Should Read Imperial Hubris

Condoleezza Rice refused to comment specifically on “Anonymous” because, “I don’t know who Anonymous is.” In an interview with Wolf Blitzer Secretary of State Colin Powell said:

I don’t know who he is. I haven’t read his book. I think what we are seeing are an insurgency in Iraq and terrorist activities elsewhere in the world. I think what we are also seeing is that the world is coming together in the clear understanding that we have to deal with these kinds of terrorist organizations and not just write it all off to Muslim extremism. There are some people here who just don’t want to see progress. They are not acting in the name of Muslim — of Islam. They are working against Islam. They are violating the basic tenants of Islam. And what we have to do is to continue to bring the world together in this effort to defeat this kind of thinking and to defeat these individuals. But I don’t know who Anonymous is, and I can’t really comment on his book because I haven’t read it.

Contrast this take on Al Qaeda, which appears to be pre-approved by the Office of Political Affairs with that of the man heading the very hard working staff at CIA dedicated to the Al Qaeda issue:

And the genius that lies behind it, because he’s not a man who rants against our freedoms, our liberties, our voting, our — the fact that our women go to school. He’s not the Ayatollah Khomeini; he really doesn’t care about all those things. To think that he’s trying to rob us of our liberties and freedom is, I think, a gross mistake. What he has done, his genius, is identify particular American foreign policies that are offensive to Muslims whether they support these martial actions or not — our support for Israel, our presence on the Arabian Peninsula, our activities in Afghanistan and Iraq, our support for governments that Muslims believe oppress Muslims, be it India, China, Russia, Uzbekistan. Bin Laden has focused the Muslim world on specific, tangible, visual American policies. And there seems to be very little opposition to him within the Muslim world, and that’s why I think that our assumption that he distorts Islam is just that, it’s analysis by assertion. I’m not sure it’s quite accurate.

Read the whole interview and note that Anonymous is frustrated that the insights of the analysts are being blocked by “senior bureaucrats”. Was this why Richard Clarke wanted to “shake the trees”? But Dr. Rice was not interested in shaking the trees. I have my doubts that the Office of Political Affairs would allow Sec. Powell to get a word in edge-wise as far as affecting White House decisions, but should not the Sec. of State read what the analysts are saying about what drives Al Qaeda’s support?

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Giblets on Gephardt

I can’t add anything to this (except approving laughter):

Dick Gephardt. Gephardt would have an amazing pull with loser voters, voters who like losing the House to opposing parties, voters who have a long history of being supported by decrepit and dying labor institutions in failing political campaigns, just people who generally like to lose. He could swing loser states, such as Wyoming or Rhode Island, or put states with a large loser population, such as Nevada or Alabama, into play. The upside to having a Kerry-Gephardt ticket is it would take all those people who go into shock in the voting booth thinkin’ “Oh dear god we nominated Kerry?!” and push them just far enough over the edge with “Oh dear god we nominated Kerry and Gephardt?!” that it would sort of jar them into a feeling of complacent somnambulism that would render them susceptible to voting for Kerry-Gephardt anyway. The downside to this is that such a hypthetical waking sleepstate could also get them to vote for Nader.

Read the full post for analysis of the rest of the field. (I opined against Gephardt in this post.)


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Fahrenheit 9/11

I Still haven’t seen it, but I plan to on Thursday or Friday. In any case, it already broke the record for a documentary and was the top-grossing film of the weekend. As I recall, some conservatives used the fact that Harry Potter and the Order of the Phoenix knocked Hillary Clinton’s Living History off the top of the bestseller list to put down Clinton’s book. Who will be the first blogger or pundit to do the same thing with Wednesday’s premier of Spider-Man II vis-a-vis Moore’s film?


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Bruce Bartlett says taxes must be increased

And asks an interesting question:

Taxes have to increase. Do you want Democrats at the helm when they do…The package will have to reduce the deficit by at least two percentage points of GDP annually to meaningfully affect financial markets and restore confidence, and it is unrealistic to think that this can all be done on the spending side. Therefore, taxes will be on the table. Voters need to ask themselves which party they prefer to manage this process when the time comes.

This op-ed is surprisingly honest coming from the NRO.

Let me suggest a voter’s guide as to how one might address this question. If one derives most of your income from capital, then re-electing Bush-Cheney means less of the tax burden will be placed on you. If one derives most of your income from labor, then re-electing Bush-Cheney means more of the tax burden will be placed on you.

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Speaking of Iraq…

As PGL notes below, the party line from the Republicans on Iraq has changed from “it will be easy and over with before you know it” to “no one ever said it would be easy.” Well, the same thing goes for prediction’s about Iraq’s oil production. Wolfowitz famously said that Iraq’s reconstruction would be largely self-financing: “We’re dealing with a country that can really finance its own reconstruction, and relatively soon.” Iraq’s oil would flow freely and quickly, the theory was, bringing prosperity to Iraq and lower oil prices to the US.

As in so many other respects, reality has been… ummm… a bit different from what the Bush administration predicted and planned for. In fact, we are now expected to be happy if Iraq’s oil production can even just get back to where it was right before the US invasion. From today’s news:

Iraq exports near pre-attack levels

Crude exports from a pair of terminals in the southern part of country approach 2 million bpd… Persistent attacks on Iraq’s oil infrastructure have held the country’s overseas sales well below a pre-war capacity of 2.2 million bpd.

At least it only took 15 months for Iraq’s oil industry to get back to where it started. But how long until it actually starts getting ahead?


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Have a Beer as You Watch the Video of the Iraq War

Newt Gingrich on Meet the Press Sunday after Tim Russert brought up Imperial Hubris:

If you read the whole book, he says this is harder–and I think this is the key point that you were driving at a minute ago, Tim. This is a mess, but somebody has to stand up and say, “You know, this a real war.” This is not just some game on television where the good guys get to go in and clean out the bad guys and it’s all done in 30 minutes and we all go home and have a beer. This is a real war with real enemies who genuinely want to kill us. They want to kill us in Saudi Arabia where they’re working. They want to kill us in Turkey. They want to kill us in Pakistan. They want to kill us in Afghanistan. They want to kill us in Iraq. And as they proved on 9/11, if they can find a way to get here, they’re going to try to kill us in the United States.

It’s not it’s all done in 30 minutes and we all go home and have a beer? Insightful or obvious? Maybe not so obvious to some conservatives. Read this Fred Barnes essay and Brad DeLong’s take on what Barnes seems to be saying.

He is writing not about taking part in a war, but about watching one on TV: sitting in one’s living room drinking beer and watching people die 10,000 miles away, rather than standing on the dusty plains of Ilium watching Akhilleus approach with bloody spear.

Of course, Barnes’s Weekly Standard colleague Bill Kristol predicted that the Iraq War might cost between $10 and $20 billion. As Newt seemed to defend the Bush Administration’s decision to invade Iraq earlier during the Meet the Press interview, his comments here really should have been directed at the same Administration before the Iraq invasion, which the White House literally did say would be quickly over so we could just go have a beer. Who was Newt directing his comments to if not the Bush Administration and its defenders at the Weekly Standard?

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Poetic Justice

Michael Moore deserves this:

The Political ‘Fahrenheit’ Sets Record at Box Office

LOS ANGELES, June 27 — Michael Moore’s anti-Bush “Fahrenheit 9/11” became the highest-grossing documentary of all time on its first weekend in release, taking in $21.8 million as it packed theaters across the country this weekend.

The movie, mocking President Bush and criticizing his decision to go to war in Iraq, was No. 1 at the box office, beating out the popular comedies “White Chicks” and “DodgeBall,” which were playing on almost triple the number of screens.

Theater owners in large cities and smaller towns reported sellout crowds over the weekend, with numerous theaters declaring house records.

Of course, the first wave of viewers that Moore is preaching to is the choir. It will be interesting to see if attendance at the movie can be sustained by some of the regular parishioners.

One thought about Moore’s “partisanship”: the standard talking point from the right about the movie is that Moore is just a partisan hack pushing his anti-Bush agenda, who just made the movie for propaganda purposes. I’d like to respond to them by turning the causation around. Moore has seen and thought about the things that he puts in his movies. He’s studied the Bush administration in painful detail. And that’s exactly why he’s partisan, and exactly why he has an anti-Bush agenda.


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