John Quiggin's Zombie Economics is Walking the Earth Hungry for Your Brain.

Buy it. Read it.

Clive Crook rewrites recent fiscal history.

I don't have much (useful) to add to this excellent Henry Farrel post on Clive Crook's hippy punching. Crook argues that Obama would be more popular if he had broken with the left. He wrote

He should have chosen centrism unreservedly – as many voters believed he had promised during his election campaign. Then he could have championed, as opposed to meekly accepting, centrist bills that maintained the role of private insurance in healthcare and a stimulus that included big tax cuts.

To compare the non-debate about including large tax cuts in the stimulus, with the public option debate is totally incorrect. Obama supported the public option and lost. Obama proposed tax cuts and won. IIRC, the tax cuts were almost exactly 80% of what Obama proposed (reduced from 500 per individual per year and 1000 per couple to 400 and 800). Far from meekly accepting the tax cuts, Obama proposed larger tax cuts and meekly accepted the reduction in the size of the tax cuts.

This is not some dark secret. The proposal of larger tax cuts was an offical public act.

Now Crook might think that Obama would be more popular if he had opposed the highly popular public option. I can't imagine any actual reasoning behind such a view, but, at least, he doesn't make a plainly false assertion on a simple matter of fact which is in the public record.

Crook also wrote on "Had he owned and campaigned for those centrist outcomes ..."
Crook is ranting. He thinks that Obama could have "owned" the tax cuts. In a poll 12 % of US adults correctly answered that under the Obama administration taxes have been cut for most US taxpayers. 12% ! Convincing people whose taxes were cut that there taxes were cut is a step prior to "owning" those cuts. Obama has been working on this for months. I note 1710 hits for "tax cuts" at www.whitehouse.gov. It should go without saying that you can't always own what you want.

Clive Crook is clearly blinded by ideology. He is not reality based.

I'm 12 hours late with this. I am in Silver Spring Maryland and about 12 hours ago, there was a very mild but noticeable earthquake. I was awake (it was 5 AM here). I waited to get the news flash reporting that it was a 3.5 with epicenter in Gaithersburg not a powerful quake far away. Then I went to sleep.

Washington Post Headline Writer part VII

post moved here

Robert's List of Reasonable and Reasonably Honest Conservatives fourth Update

Recall to avoid offending too many people, I restricted my list to bloggers, pundits and politicians. I count people who call themselves libertarians. I don't to list personal friends (friends -- I like to keep them).


Greg Mankiw
Tyler Cowen
Alex Tabbarock
,strike>Jim Henley (not really a conservative. I was cheating)
Bruce Bartlett
Eugene Volokh (not reasonable re appropriate punishment of an Iranian murderer)
David Brooks (not always honest)
Reihan Salaam
Arnold Kling (not really reasonable but very honest)
Richard Lugar
Charles Hagel
Olympia Snowe (not really conservative or honest but I'm getting desperate)
Mark McClellan
Scott McClellan (not really et. but gets extra points for near honesty in a press secretary)
Richard Clarke (oh you don't think he's conservative -- read "Against all Enemies")

Andrew Samwick
Julian Sanchez
Daniel Larison.

Conor Friedersdorf (I don't know if he is reasonable and I don't even really know that he is conservative but this sure is funny).

On a bet and with 7 minutes to spare, I post a model which has a business cycle due to inter-industry wage differentials. Aside from that the model is a standard Ramsey Cass Koopmans growth model without grown.

This is a Gauss program. It shows a dynamically stable steady state so eqilibrium is indeterminate. That is, a sunspot can affect real variables.

Over the cycle, employment, consumption and investment are positively correlated. There is a procyclical real wage even though technology is constant.

It's reasonably likely that if I try to translate this program from Gauss into English, I will find that I didn't program what I meant to program, so I will have to invent a new story to argue that it is what I meant. But it does have fun dynamics.

All parameter values are extremely unrealistic.

This is a model. Any similarities to actual business cycles in a real world economy are purely coincidental.


/* business cycles due to inter-industry wage differentials ?
Now with elastic labor supply. u=ln(c) -L, L supply based on average wage.
the lo function is to be viewed with extreme suspicion*/

bet = 2;
alpha1 = 0.69;
alpha2 = 0.7;
delta = 0.05;
sigma = 1;
rho = 0.05;
eps = 0.000001;

k1=1;
k = 2;



gam = bet*alpha2*(1-alpha1)/(alpha1*(1-alpha2));

/*three useful functions. lo is employment in the capital goods sector, kdot is growth of total capital
and l2 is employment in the consumption goods sector*/

theta = 1/(1-alpha2*(1-sigma));

fn l2(k1,k) = alpha2*(((bet*k1+gam*(k-k1))/(k1+gam*(k-k1)))^theta)*(k-k1)^(1-sigma*theta);
fn lo(k1,k) = l2(k1,k)*k1/((k-k1)*gam);


fn kdot(k1,k) = (lo(k1,k))^alpha1*k1^(1-alpha1)-delta*k;




/*find steady state*/

eta = ((rho+delta)/(1-alpha1))^(1/alpha1); /*l1ss/k1ss */
zeta = (rho+alpha1*delta)/(delta*(1-alpha1)); /*k2ss/k1ss */

k2ss = (((bet+gam*zeta)/(1+gam*zeta))^(1/sigma))*(eta*gam/alpha2)^(-1/(sigma*theta));
k1ss = k2ss/zeta;
kss = k1ss*(1+zeta);

"r u ok ?"

(lo(k1ss,kss)/k1ss)-eta "=0?";




/*I will do everything in ldot numerically as it is a hassle*/

fn dllodk1(k1,k) = (lo(k1+eps,k)-lo(k1,k))/(lo(k1,k)*eps);
fn dllodk(k1,k) = (lo(k1,k+eps)-lo(k1,k))/(lo(k1,k)*eps);
fn dll2dk1(k1,k) = (l2(k1+eps,k)-l2(k1,k))/(l2(k1,k)*eps);
fn dll2dk(k1,k) = (l2(k1,k+eps)-l2(k1,k))/(l2(k1,k)*eps);


"dllodk1 dllodk at steady state"
dllodk1(k1ss,kss) dllodk(k1ss,kss);



fn den(k1,k) =
(alpha2-alpha1)*((1/k1)-dllodk1(k1,k)) + sigma*(1-alpha2)/(k-k1)-sigma*alpha2*dll2dk1(k1,k);



fn num(k1,k) = delta+rho -
(1-alpha1)*(lo(k1,k)/k1)^alpha1+
((sigma*(1-alpha2)/(k-k1))-alpha2*sigma*dll2dk(k1,k)+(alpha2-alpha1)*dllodk(k1,k))*kdot(k1,k);

fn k1dot(k1,k) = num(k1,k)/den(k1,k);



/*check steady state k1dot and kdot should be 0*/
"k1dot" k1dot(k1ss,kss) "kdot" kdot(k1ss,kss);



/*make derivative matrix*/
dm=zeros(2,2);

dm[1,1] = k1dot(k1ss+eps,kss)/eps;
dm[1,2] = k1dot(k1ss,kss+eps)/eps;
dm[2,1] = kdot(k1ss+eps,kss)/eps;
dm[2,2] = kdot(k1ss,kss+eps)/eps;

"dm";
dm;

"det dm" det(dm);



"eigenvalues";
eig(dm);

"denominator in steady state" den(k1ss,kss);





"kss k1ss";
kss k1ss;

k1 = k1ss;
k = kss+150000*eps;

tser = (k|k1)';



"simulate";
step = 0.1;
ii=0;
"employment wage invest cons";
do while ii <100;
ii=ii+1;
k2 = k-k1;
l1 = lo(k1,k);
ltwo = l2(k1,k);

l = l1+ltwo;
w = (l1*bet + ltwo)*alpha2*((k2/ltwo)^(1-alpha2))/(l1+ltwo);
invest = (l1^alpha1)*k1^(1-alpha1);
c = (ltwo^alpha2)*k2^(1-alpha2);
l w invest c;

k1 = k1+step*k1dot(k1,k);
k = k+step*kdot(k1,k);
kk1 = (k|k1)';
tser = tser|kk1;
endo;

Teach a cook how to govern (in Italian)

Sin and the Business Cycle

Many people feel the need to describe suffering as the wages of sin. This includes the suffering of people without wages. So there are moralistic theories of the business cycle. I think that much work remains to be done in this field. The liquidationist view (google Andrew Mellon, Joseph Schumpeter and Friedrich von Hayek) ascribes recessions to Greed and Pride.

Straw man real business cycle theorists and maybe Casey Mulligan ascribe them to epidemics of sloth.

But what about anger, gluttony, envy and lust ? It seems to me that the moralistic modellers of the business cycle aren't even half done as they have only 3 of 7 deadly sins covered.

OK gluttony is easy if it is considered to be over-consumption in general and not food specific. One can say we are in recession because spendthrifty consumers spent beyond their means, are up to their chins in debt and must deleverage. Then the liquidationist logic is that if this isn't painful enough, they will just borrow again as soon as they can.

Envy has been managed. It is very obscure and unpublished, but Andrei Shleifer's first attempt to translate Schumpeter's story of the businenss cycle into math was based on fads. More generally, one can get over-consumption from keeping up with the Joneses. It doesn't matter why people went deep in debt, what matters is they are at their credit limit and jonesing.

Anger almost goes without saying. The liquidationist will not note this, but everyone else should be able to see that a large part of the business cycle is due to them. They get angry at sinful excess and smite the economy with tight money and fiscal austerity.

Hmm now lust. That is a tricky one. I think I have to turn to Andrei again and quote him (I think this is word for word)

"We have a new model of the business cycle. It starts with optimistic expectations and a rapid expansion, then there is a supply shock, followed by a period of involuntary unemployment." -- Andrei Shleifer 1983.

Needs work.

QOTD

One thing I have never fully understood is why conservatives, who believe that all the smart people in the world will go on strike if we raise the marginal tax rate by 1%, think that there is endless supply of geniuses ready to devote their lives to pointless, low-paying suicide missions.

Dear Mr McNeely

Welcome to the blogosphere. If you think it is nasty, petty, and pointless, I can provide some evidence which would tend to confirm your suspicions.

I suspect that you are under continental European influence. The clause

"One response is to simply minimize the problem" is not written completely in English.


In English to "minimize" something is to make it as small as possible. YOu use it as an exact translation of the Italian verb "minimizzare" which is correctly translated into English as "to downplay." That is you use a verb which means "to make it as small as possible" to mean "to claim it is small already." The distinction between assertions and reality is useful. It is worth being able to point out that hope is not a plan and that saying it is so does not make it so.

I will concede for the sake of argument that continental European languages are perfectly fine instruments of thought and communication, but a dogs lunch of English and (I suspect) French is a barrier to effective communication.


So to minimize the problem of cheating one would use "oversight measures." The English word for suggesting that a problem is small is "to downplay."

Your use "to minimize" as a translation of the Italian verb "minimizzare" which is a false friend. It means "to downplay" not "to minimize." This is just plain ordinary Italian and does not imply that Italians don't distinguish between claims of fact and facts. It doesn't mean that Italians have no idea what honesty is or that they don't believe in objective reality.

However, through misstranlation, this perfectly ordinary continental European verb becomes a jargon term and means of undermining the received view of language and truth. This is simply because sloppy translations are incorrect and English words are used with a meaning different from their standard English, because they sound like foreign words which do not translate the English word.

I don't speak French, but I strongly suspect that the incorrect use of "to minimize" comes from mistranslated French not mistranslated English.

I call this round of Obama vs Atrios for Obama

Atrios wrote

Demand


... the administration is pushing for Congress to support various tax breaks for new startups and small businesses so they can continue to try to sell products that people don't have any money to buy.

I think that the decline in employment by firm size shows that liquidity constraints on small firms matter. This policy will allow those small firms which could sell more to expand. There are more than 0 of them. The economy is complicated. There isn't a representative consumer and a representative firm. Even if most firms are demand limited, some are liquidity limited.

Also note that, if those firms expand output, they will hire people who will spend. Also note that the loan will be spent on some kind of investment which is part of aggregate demand.

There is a difference between the fact that the reason this year is different from 2007 is aggregate demand is lower and the false claim that therefore only aggregate consumption matters.

Finally, the main limit on policy is congress. Congress may feel differently about small business loans than about transfers to states or COBRA. The power of "small businesses" in political rhetoric can be used to get an additional stimulus which may not be the best stimulus but is better than no additional stimulus.

Dear Ben Demiero

In the future could you please refrain from mentioning Glenn Beck and hypothetical powerful "shape-shifting lizard people" in the same post ?

My impression is that Glenn Beck's impersonation of a human being is just good enough for uncanny valley. I do not want to think of the possibility that he is a shape shifting lizard.

Commenters, be nice to Glenn. I don't want any comments along the lines of "lizard-person sure, but exactly what shape shifting do you have in mind ?"

Sex and Drugs and Rock and Holes

is the perfect title for a post on the Minerals Management Service

Ahhh, the curse of a title that you like too much to throw away, but not enough to write a relevant post about.

21st Century Communism

"The Chinese government has ... even called on companies to treat workers with more dignity."

In a radical departure from communist principles, the Chinese Communist Party has dared to ask capitalists to be nicer to workers.

I recently felt forced to admit that Karl Marx may have had an (overstated) point there. It hurt. The thought of Karl spinning in his grave is some comefort.

If there is a God, He has a Sick and Twisted sense of Humor.

www.washingtonpost.com headline and abstract person strikes again

Budget looms in Calif.

Voters are more worried about a $20M gap than the national issues that impacted other states' races.

If it were 20M they wouldn't be worried.

Also, how can a 20B deficit forecast make the front page of www.washingtonpost.com ? I know a billion here a billion there and soon you're talking real money, but federalism is ridiculous.

Inconclusive !

I didn't know that lie detectors could tell if a one night stand was inconclusive.

In the last two days two major figures in the South Carolina Republican gubernatorial contest have taken lie detector tests. One was candidate Andre Bauer who took a lie detector test to prove he wasn't behind affair allegations against opponent Nikki Haley and another by accuser Larry Marchant to prove he had the one-night-stand with Haley he claims to have had. His came back "inconclusive."

Mr Marchant, next time you visit Salt Lake, pack some Viagra.

Robert's List of Reasonable and Reasonably Honest Conservatives Third Update

Recall to avoid offending too many people, I restricted my list to bloggers, pundits and politicians. I count people who call themselves libertarians. I don't to list personal friends (friends -- I like to keep them).


Greg Mankiw
Tyler Cowen*
Alex Tabbarock
Jim Henley
Bruce Bartlett
Eugene Volokh (not reasonable re appropriate punishment of an Iranian murderer)
David Brooks (not always honest)
Reihan Salaam
Arnold Kling (not really reasonable but very honest)
Richard Lugar
Charles Hagel
Olympia Snowe (not really conservative or honest but I'm getting desperate)
Mark McClellan
Scott McClellan (not really et. but gets extra points for near honesty in a press secretary)
Richard Clarke (oh you don't think he's conservative -- read "Against all Enemies")

Andrew Samwick
Julian Sanchez
Daniel Larison.

Conor Friedersdorf (I don't know if he is reasonable and I don't even really know that he is conservative but this sure is funny).

* sorry for temporary removal due to careless reading prof. Cohen Cowen

Digby Says Obama is following the teachings of Herbert Hoover.

Update: Score a big one for Digby. Obama is demanding agencies identify 5% of their spending which can be cut. There is no hint that cuts will be proposed only after we are out of the liquidity trap.

The Washington Post accepts Hoover as our guide and teacher. Lori Montgomery doesn't describe any economic rationale for the cuts and asserts, no doubt correctly, that the motivation is purely partisan politics. Also she quotes only administration sources, Republicans and pro-pain advocacy groups. The Hooverite advocates praise the Hooverite proposal. No sane commentators were consulted.

The only way to reconcile Obama's new approach with economic sanity is to assume that he believes that we will be out of the liquidity trap by the time the cuts are identified and implemented. The unemployment rate will certainly still be high when the cuts (if any) are actually implemented, but the effect of government spending on GDP depends on monetary policy. The zero nominal interest rate bound is binding only so long as the Fed wants monetary policy to be as expansionary as possible, and sanity in the White House would not cause Sanity on the FOMC. However, it is obvious that politics and neo-Hooverian ideology are causing the proposal.

end update.

Update II (last thing I will ever write on Digby vs the facts ever).

I apologise the the patient reader, if there is one, and promise that I won't write about Digby again. Ever. Just above, I conceded that the latest news from the Obama administration very much supported her view that they are Hoovering. Then I made a mistake. I read another post by Digby (good move I read all of them) and I decided to note, just for the record, that when she discusses US taxes and spending she is completely out of touch with reality.

Today she wrote "the government is having no problem telling people all over the country that they are just going to have to punt because we can't afford to pay them unemployment benefits."

Google news (obviously not a resourse which interests Digby) sent me here

Unemployment Extension Bill Set To Go Before Senate Today
By Audrey Howard on June 8, 2010, 5:26 am


On Monday the Senate Finance Chairman, Max Baucus, said that the committee had almost finished putting the final touches on HB 4213. Along with the much needed unemployment benefits extension that is on the bill there is also measures to stop pay cuts in the Medicare system, extend tax breaks that are needed to create jobs, and provide funding necessary to carry on with a summer jobs program

That was literally 5 seconds of googling. I searched news for "jobs" "bill" "2010" "june" and got proof that Digby's claim of fact is false on the very first try.

OK so the news is dated June 8 like Digby's post. However, it is news that a bill is moving to the Senate floor. The House has already passed a similar bill. The accurate statement is that the Government is having problems getting checks to the long term unemployed on time. The claims that the government has no problem cutting them off and that it is cutting them off because of a perceived lack of money and not the drunken slug maximum pace of Senate action are plainly false.

Digby's statements on simple matters of fact are often plainly false. She discusses government spending but ignores bills in Congress.

I think she has a lot to contribute to the national debate. However, I think it is clear that Dibgy's claims of fact are not reliable. Embarrassingly, in spite of reading her posts daily, I don't know if she has a narrow disinterest in Federal Government spending or a more general indifference to facts. I don't care. I classify her as "all claims of fact must be checked." Once I know that someone repeatedly makes false claims of fact, I will not seek limits to that persons unreliability. Unreliable is unreliable.

I suggest to my readers (if any) that they never trust any claim of fact made by Digby. Her ideas are interesting. Her "facts" are not all facts.

Sorry for wasting your time. I promise that the word "Digby" will not appear on this blog again.

end update II



Is noting that someone overlooked over $ 126 billion being picky picky picky ?

Does noting this fact imply that Obama is to the left of Digby ?

Digby, Bruce Wilder and an anonymous commenter are not interested in a fact and my noting that fact. They don't seem to have been interested in mere facts when posting and commenting recently. Wilder and anonymous do not recognise claims of fact when they see them. They assume that if I make of claim of fact, I must be arguing for the conclusion (which comes to their head) supported by that claim of fact. The commenters clearly assume that I am indifferent to mere facticity and only note facts because I find them convenient. There is no other explanation for their inference. I know there are people indifferent the difference between fact and falsehood. I am not one of them. I assume that, in spite of their comments, Bruce Wilder and anonymous aren't either.


Digby wrote "But aside from the inadequate stimulus, everything they have said up to now is in service of the hoary old Hooverite ideas about belt tightening and sacrifice"

Not only does Digby consider the ARRA a statement not an action (obviously she is unwilling to be distracted from words by mere actions for long) but she also asserted that there was one and only one stimulus. The topic of the post was international reluctance to enact more fiscal stimulus. In this context "the stimulus" can't refer to all of the five or more stimulus bills signed by Obama. I think that Digby asserted that they don't exist. She is not interested in the facts. She isn't interested in actual Federal spending. She is so focused on language and debate and tone that she doesn't bother keeping track of events.


The stimulus bills signed by Obama include

ARRA (the one even Digby noticed).

Cash for Clunkers signed June 25 2009


Tax breaks for homebuyers (dumb but a stimulus not austerity)


The HIRE act signed 18 March 2010.

Piddling but not zero. $17.5 billion If I read correctly.

HR4213. This is the significant additional stimulus bill (it was not tiny like the HIRE act) with over 102 billion more spending in fiscal 2010 and 2011 plus tax cuts of over 26 billion.

To Digby over 128 billion dollars are nothing.

There are other bills which are not exactly stimulus spending but Hooverian belt tightening either. They include the Health Care Reform bill which Digby doesn't bother to mention. Most of it is delayed until 2004, but not quite all of it.

Also

Veterans benefits increased Oct 22 2009

Note, yet another stimulus bill supported by Obama was passed by the House with huge cuts compared to a proposal and not yet taken up by the Senate.


As far as I know the house cuts were not supported by the Obama administration.
I note that Atrios has a clear idea who to blame
"Congress is encouraging 50 little Hoovers. It's going to work out so well."


Two commenters irritated me. One is anonymous. He or she wrote
"You owe Digby an apology." However, he or she equates the assertion that more stimulus is needed and not much more stimulus seems likely with the assertion that there has been only one stimulus bill. In support of his or her claim that I owe Digby an apology, anonymous presents proof that Digby's claim was false, just as I asserted. Anonymous quoted Brad Delong including
"We have an administration experiencing difficulty finding $23 billion to prevent additional teacher layoffs," The fact that the administration is attempting to find that money shows that its policy is not pure Hooverite belt tightening.

Anonymous is so incapable of understanding the concept of a fact that he or she thinks that this assertion, which proves that Digby's claim was false (the Obama administration proposed a bill to Congress and that is undoubtably a form of communication). To anonymous, the only thing that matters is what side you are on and you can't admit that Obama has signed more than one stimulus if you don't agree with the deficit commission on everything. This is teapartier level idiocy.

Facts are facts. A claim of fact is not contradicted by a claim of fact which proves that it is true. I can be appalled by Digby's indifference to the facts while agreeing with her on the general outlines of proper policy.

Bruce Wilder wrote "Of course, digby is more concerned about words -- words are what she does. Hers is a cultural and rhetorical critique. She tries to take economics seriously, but defers to others on that, as she should."

Look I am not demanding that she have a view on say economic theory. I am demanding that she not overlook over 128 billion dollars in stimulus spending and tax cuts due to a bill signed into law this Spring. I guess if it has to do with dollars it has something to do with economics, but if you are not at all interested in government taxing or spending, you shouldn't write about fiscal policy. I don't expect her to be an economist (or want it there are too many economists already). I do expect her to keep track of over a hundred billion dollars which was in the news in March. Writing about fiscal policy while ignoring actual fiscal policy does not seem to me to be a good idea.

Then Wilder wrote "There's nothing wrong with her appraisal of the politics of Obama's economics. Your attempt to portray it as factually or reality-challenged falls flat."

Now saying that a claim of fact "falls flat" is not a reality based response. I asserted that Digby made a false claim about stimulus bills enacted less than three months ago.

Then Wilder wrote "If Brad DeLong finds Obama drifting to his right, digby is certainly correct to see Obama to her right."

I did not in any way write suggest or ever think that Obama is not to the right of Digby. I claimed that, in her critique of Obama, Digby ignored the facts. There is no basis whatsoever for Wilder's apparent belief that I asserted that Obama is not to the right of Digby. I never said that and he insults me by suggesting I did. I think Wilder owes me an apology for criticizing a claim which I absolutely did not make.

Claims which are contradicted by facts in the public record are not OK even if one is part of the Democratic wing of the Democratic party.

My post was long, incoherent, rude, and angry. I was actually more appalled to Digby's unwillingness to think about the world outside of the USA, than by her plainly false claim about Obama and stimulus spending. I definitely did not say anything in any way contradicted by evidence presented by the commenters.

I seem to have been bannned over at Political Animal

For days, my comments have been rejected on the grounds that I am not allowed to comment.

Comment Submission Error
Your comment submission failed for the following reasons:

You are not allowed to post comments.

Please correct the error in the form below, then press Post to post your comment.

So here is a comment in reply to another comment.

Bill H wrote

"...The "buying oil from Iran" thing is a claim that is being made by "Vote Vets" in television commercials, so why are you not calling them on that as you do Kirk? ..."

and

"Well, I'm sure only a mental defective would make any link between "every gallon we use means money going to Iran" and "buying from Iran.""

Notice how "buying oil from Iran" has become a statement which has some link with "buying oil from Iran." Bill H asserts that his statement is to be accepted as true unless it has no link whatsoever with reality. I think this is the most generous possible interpretation of his second comment, since the only link is that the accurate quote and the innaccurate paraphrase include the word Iran and have something to do with money.

My reply follows. By the way, I have been assuming that I wasn't really banned and that this is some web bug, but I might actually have been banned for excessive rudeness.


Bill H, you are indeed right that only a mental defective would think that, since we don't buy oil from Iran, our purchases of oil don't cause Iran to get more dollars.

Let me clue you in to some really subtle liberal words "supply" and "demand." I'm sure you've heard of them, but just in case, the idea is that, other things equal, an increase in demand for a commodity causes its price to increase.

According to this flake called Adam Smith, other things equal, increased US demand for petroleum causes a higher world price of petroleum. This is good for petroleum exporters like Iran even if they don't sell petroleum to us.

The VoteVets claim is very plausible also given the fact that the US does not buy oil from Iran.

"Supply" and "demand" are useful words. You might want to look them up in the dictionary some day.

In the old days, they used to distort the meaning of text by removing context.

Now we have gotten to distorting the meaning of context by removing the text.

I think the current discussion includes one zombie removal of the main point on the order of "Al Gore claimed he invented the internet."

Here the admirable Frank Rich includes it in an excellent, outstanding, wonderful op-ed which is based on valid criticisms of Obama's excessive respect for experts and trust in capitalists and this canard "Lloyd Blankfein of Goldman Sachs was praised by the president as a “savvy” businessman two months before the Securities and Exchange Commission sued Goldman."

OK first of all, being savvy is perfectly consistent with being a crook. Savvy is one step from sly. Savviness does not imply public spirit or even honesty.

More importantly, the point of Obama's full statement was that CEO compensation should be reformed.

The full question and answer

Q Let's talk bonuses for a minute: Lloyd Blankfein, $9 million; Jamie Dimon, $17 million. Now, granted, those were in stock and less than what some had expected. But are those numbers okay?

THE PRESIDENT: Well, look, first of all, I know both those guys. They're very savvy businessmen. And I, like most of the American people, don't begrudge people success or wealth. That's part of the free market system. I do think that the compensation packages that we've seen over the last decade at least have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.

Note that Obama is clearly not saying that we shouldn't ever begrudge anyone success or wealth. In particular, he went on to say that some managers have received more wealth than they earned or would have gotten if the ownders of the firm decided their compensation (as in, you know, the capitalist system in theory). His position clearly is that we shouldn't begrudge everyone who is successful and wealthy their success and wealth.

The followup question and answer

Q Seventeen million dollars is a lot for Main Street to stomach.

THE PRESIDENT: Listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don't get to the World Series either. So I'm shocked by that as well. I guess the main principle we want to promote is a simple principle of "say on pay," that shareholders have a chance to actually scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay. The other thing we do think is the more that pay comes in the form of stock that requires proven performance over a certain period of time as opposed to quarterly earnings is a fairer way of measuring CEOs' success and ultimately will make the performance of American businesses better.

My bold on "as well" which logically implies that Obama is shocked by CEO pay. And note practical proposals for reform. That is the substance of the reply. The bits about "savvy" and "begrudge" are just niceness to soften the blow.

Yet the parts which are quoted are "They're very savvy businessmen", "And I, like most of the American people, don't begrudge people success or wealth" and "Of course, there are some baseball players who are making more than that"

Part of the problem is that the interview was first reported not with a transcript but with a Bloomberg story by Julianna Goldman and Ian Katz. They didn't suppress the policy proposals entirely, but they buried them quoting "begrudge" twice before they quoted "'say on pay'" or "in the form of stock." Once they quoted the word "begrudge" all by itself removing context and building a sentence around it. This is extreme journalism, but, as far as I can tell, everyone but me and Brad DeLong accepted the lede at face value.


The policy proposal was deleted by most people who quoted Obama (including Rich in his op-ed). Instead the polite introductory throat clearing was quoted.



"Style not substance" and "words are more important than actions." are the mottos.

Dibgy and Rich are outstanding compared to most commentators in the USA. However, I think they both accepted those mottos yesterday.