Wednesday, August 24, 2011

A New York Times Columnist Fesses Up: Democrats Cost Jobs

Joe Nociera, a New York Times, columnist has had enough. He cannot really believe that Obama’s National Labor Relations Board shut down Boeing’s new South Carolina plant, with its 5,000 jobs on charges that Boeing retaliated unfairly against labor.

Let me give some quotes from his “Democrats Cost Jobs, August 22, 2100:

“As companies have moved manufacturing offshore, Boeing has remained steadfast in maintaining a large manufacturing presence in America. It is America’s biggest exporter of manufactured products.”

“The N.L.R.B.’s proposed solution, believe it or not,(my emphasis) is to move all the Dreamliner production back to Puget Sound, leaving those 5,000 workers in South Carolina twiddling their thumbs.”

“Seriously, when has a government agency ever tried to dictate where a company makes its products? I can’t ever remember it happening.”

“Boeing’s general counsel …has also said that it was a disservice to a country that is ‘in desperate need of economic growth and the concomitant job creation.’ He’s right. That’s also why I’ve become mildly obsessed with the Boeing affair. Nothing matters more right now than job creation.”

“The word “retaliation” suggests direct payback….. Boeing did nothing like that. It not only hasn’t laid off a single worker in Washington State, it has added around 3,000 new ones. Seven out of every 10 Dreamliners will be assembled in Puget Sound.”

“That is what is so jarring about this case — and not just for Boeing. Without any warning, the rules have changed. Uncertainty has replaced certainty. Other companies have to start wondering what other rules could soon change. It becomes a reason to hold back on hiring.”

“When he was asked about the Boeing case earlier this summer, President Obama said that the N.L.R.B. is an independent agency and that his hands were tied. That may be true, though it’s worth pointing out that most of its top executives are his appointees.
But when he gets back from vacation, he might do well looking at his own administration, instead of simply blaming the lack of jobs on the Republicans.”

I agree with columnist Nociera. I imagine his bosses do not.

Tuesday, August 23, 2011

More Fuzzy-Headed Economics from the New York Times

“Congress and the White House have yet to figure out that the economy will not recover until housing recovers.” “Homeowners Need Help,” NYT Editorial, August 22, 2011

To use NYT-like claims of consensus, I would say that “everyone” knows that the recession and financial crisis began with the dramatic overexpansion of housing. We built more houses than people could afford to buy. The housing bubble was made possible by federally-guaranteed loans and federal government pressure to sell to low-income home buyers. The financial sector then kicked in by creating a murky market in toxic mortgages.

The contraction began when we recognized that we had a housing bubble. Housing sales and prices collapsed and so did the financial system.

Now the NYT tells us that we will not have an economic recovery until housing recovers! We do not need a recovery of the overbuilt housing sector. If we build more planes, cars, or TV sets than the market is prepared to buy, we cut back on their production. We should not conduct policy to keep resources in a sector that has become artificially too large.

Only when resources are transferred out of housing into more productive activities will we have a real recovery. There is no reason why construction workers cannot build oil and gas pipelines or work in offshore drilling rigs, if only government restrictions on these industries could be eased. To keep resources frozen in housing by artificial means (such as curbing foreclosures and forcing banks to modify mortgages) does nothing but delay the recovery. (By the way, what bank would lend to new customers after being forced to renegotiate loans in borrowers’ favor?)

I wish the editorial writers of the NYT would rely on some basic economics, not emotion, when they take pen in hand.

Monday, August 22, 2011

Will the NYT Publish These Results?

"NEW YORK -- The majority of economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced only or primarily through spending cuts.
The survey out Monday found that 56 percent of the NABE members surveyed felt that way, while 37 percent said they favor equal parts spending cuts and tax increases. The remaining 7 percent believe it should be done only or mostly through tax increases."

Where is the Keynesian consensus the mainstream press writes about?

On the day this survey was released, the New York Times published two interviews with fund managers (I guess they represent everyone) saying we need to spend more now and save later.

Sunday, August 21, 2011

Obama’s Broken Record: Spend Now, Cut Later and Only Fools Disagree

The BEA’s downward revision of GDP revealed that we have yet to recover back to pre-recession levels. Rather than taking this bad news as evidence we need to cut government spending and deficits, the Obama administration sees an opportunity to spend more now and cut later. Maybe we won’t even need the cuts if business activity picks up, he says.

Obama’s liberal mouthpiece, the New York Times, reveals Obama’s new political strategy without apology:

“The President spent this week combining his pitch for deficit reduction with a renewed emphasis on the need for further temporary spending and tax cuts to encourage businesses to hire and consumers to spend.”

Note the “bait and switch:” We spend now temporarily and cut in the distant future, if at all. We have heard this “Let’s spend more now and save later” too often. The elder Bush actually fell for it, and it cost him his reelection.

The NYT’s second drumbeat is that all “reasonable” economists agree that we should spend now and save later. After all, we all know the first Obama stimulus worked:

“Contrary to Republicans’ claims, economists generally judged his 2009-10 stimulus program to have helped, but to have been insufficient to overcome the deep downturn.”

The NYT has at least the decency to say instead of “all” economists that:

“many economists argue that while temporary spending and tax cuts [e.g., a second stimulus] add to deficits initially, such measures can increase tax collections, reduce costs for safety-net programs and ultimately keep deficits smaller than otherwise by spurring business activity and lowering unemployment.”

What is this? Lower taxes raise revenue by promoting economic activity? Is this not “voodoo economics”? I guess as long as the tax cuts are not for the rich, the NYT can embrace voodoo economics.

President Obama reminds me of an inept magician who attempts to misdirect his audience from the rabbit up his sleeve (more spending and deficits) to a beautiful bikini –clad female assistant (spending cuts and deficit reduction). No matter, how often he is caught, he tries it again.

I am becoming like a broken record too. This is at least the third post I have written on the lack of consensus on Keynesian economics and stimulus spending.

Sunday, August 7, 2011

The NYT Says What Obama Cannot Say: Raise Everyone’s Taxes

The New York Times Sunday editorial reveals point blank the liberal agenda. According its the editorial writers, we cannot cut spending in any significant way without curtailing core liberal programs. Hence, “there is no economically sensible or politically honest way to address the deficit without also increasing revenues and reforming the tax code.”

Even more remarkable is their candor with respect to taxes. Contrary to Obama’s promise not to raise taxes on the middle class, the NYT calls for raising taxes on just about everyone.

I supply their blueprint for taxation during the second Obama administration without comments:

1). Let the Bush tax cuts expire at the end of 2012 for those making $250,000 and above. The other tax cuts could expire at the end of 2013. The middle class should keep their tax cuts for a year to prop up consumer demand. The expiration of all the tax cuts would “save” $3.8 trillion over the next decade.

2) Tax reform should not touch breaks for home ownership and retirement saving, but they should be targeted only to help low and middle-income tax payers. Capital gains should be taxed at 35 percent. Tax breaks that subsidize profitable industries like oil must be ended. If the ending of tax breaks permits, tax rates could be lowered generally.

3) We should use a value-added tax or carbon taxes to raise “needed revenue for deficit reduction, and for what government provides” so that all additional tax revenue need not be squeezed from income taxes.

The NYT ends with its reading of public sentiment: “The public is open to new taxes, and the economic facts are clear. Until tax increases are considered in equal measure to spending cuts, there will be no budget fix.”

I imagine this editorial is not being greeted with enthusiasm in the White House. It lays bare the fact that Obama’s core supporters do not want to cut spending. Instead, they propose massive tax increases on middle- and low-income families.

If Obama were to publicly embrace these proposals in his upcoming campaign, his chances of reelection would shrink virtually to zero. Republican candidates should keep this editorial ready for use.

Saturday, July 23, 2011

Media Slant: Guess Which Newspaper Ran Which Story: Wall Street Journal or New York Times?

1. "Grand Bargain Talks Collapse"

WASHINGTON—A high-stakes effort by President Barack Obama and House Speaker John Boehner to hatch a landmark deficit reduction deal collapsed in anger Friday, sending Washington into a weekend of negotiations over how the world's top financial power can make good on its debt obligations.
In a letter to his colleagues, Mr. Boehner said he called off talks with the president. He informed Mr. Obama Friday night he planned to start negotiations with the Senate to seek what would likely be a smaller deal.
"In the end we couldn't connect. Not because of different personalities, but because of different visions for our country,

2. "Debt Ceiling Talks Collapse as Boehner Walks Out"

WASHINGTON — Negotiations over a broad deficit reduction plan collapsed in acrimony on Friday after Speaker John A. Boehner suddenly broke off talks with President Obama, raising the risk of an economy-shaking default.
A visibly angry President Obama, in a hastily scheduled White House news conference, demanded that Congressional leaders come to the White House on Saturday morning. “I want them here at 11 a.m. tomorrow,” he said. “They are going to have to explain to me how it is that we are going to avoid default.”

Answer (if you need an answer: WSJ =1, NYT =2)

Saturday, July 2, 2011

Has the New York Times Aided and Abetted A Crime? Environmentalists, Goat Farmers, and Market Manipulators

When I posted my June 30 article: “Why the NYT-Liberal Assault on Shale Gas? How About the Volt?”, I interpreted the NYT’s attack on natural gas fracking as a political diversion. It was time to hit “Big energy” again, only this time, it was “Big Gas.” I wondered why the NYT was so worried about investors in oil shale projects, in low energy prices, and black churches that had been duped by promoters. I took the series of NYT articles seriously, read the e-mails quoted, and wrote about the natural uncertainty associated with new technologies.

I was shocked, to say the least, to read Jon Entine’s article, “Natural Gas ‘Bubble’ Report: Market Tinkering or Shoddy Reporting?”

In a real example of investigative journalism, Entine discovered that, of the two “named” NYT sources, one is an investment advisor (and long-time critic of gas fracking), listed as a “geologist,” whose firm and clients possibly stood to gain from speculation against shale oil stocks.

The other quoted sources, who the NYT lists as an “Advisor” to the Dallas Fed, is a goat dairy farmer (on some citizen advisory board of the Dallas Fed) who has tangled with a natural gas company, accusing it of causing environmental damage to her farm. The NYT failed to report this as well as her membership on the steering committee of the Oil and Gas Accountability Project at Earthworks, an anti-shale-gas advocacy group. It appears she lectures against gas fracking around the country.

The NYT’s sources are unnamed, but judging from their excerpted e-mails, they are simply stating the obvious, that this is a new technology and we do not know what the future will bring. I address in my post the e-mails that speak to the difficulty of estimating reserves in the presence of a new technology. We cannot know economically-recoverable reserves without knowing future prices, which we do not. Anti-gas fracking democrat members of Congress have called for hearings. With the disclosures in Entine’s article, it now appears that hearings are necessary. The New York Times should be one of the first witnesses to testify given the possibility of market manipulation.

For Entine’s article, see:

For my earlier post, see:

Thursday, June 30, 2011


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Why the NYT-Liberal Assault on Shale Gas? How About the Volt?

The New York Times has devoted more than four thousand words to the impending crisis of shale gas over the past four days. The attack began with a full-page investigative report in its Sunday edition. The barrage continued and Wednesday’s edition featured calls by Democrats for Congressional investigations.

You would think the NYT and its Congressional supporters would welcome a new technology that increases domestic energy, lowers the price of a clean fuel, turns us from an importer to an exporter, and creates new jobs.

Why this all-out assault? They need to rub “Big Energy’s” face in the mud in the mainstream press and the halls of Congress to divert attention from real problems.

What is the beef? According to the NYT and Congressional Democrats, the evil energy giants have hatched another nefarious plot to dupe the gullible Federal Energy Information Agency, uninformed investors, and the general public into accepting an “irrationally exuberant” picture of the industry.

E-mails obtained through open-records worry that gas “may not be as easy and cheap to extract from shale formations, and that companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves.” The NYT praises skeptics “who question endorsing shale gas without understanding its economics.” They even complain “that dozens of black churches in Fort Worth signed leases on the promise of big money,” risking their tax exempt status.

This frontal assault on shale gas shows a profound lack of understanding of technology, economics, business, and energy.

Extracting gas from shale is a new technology that combines two established technologies – horizontal drilling and water flooding (which has been used at least since the 1950s). As a new technology, we have no history to predict the future. Even with the best and most honest of efforts, we do not know how to extrapolate reserves from existing wells, and what the eventual extraction costs will be. With such uncertainty, there will be a wide variety of estimates of reserves, some optimistic, some pessimistic. No one knows the truth at this point. There is nothing sinister on the part of those who choose to be optimists. All major innovations are made by optimists, not pessimists.

The reserves of any underground resources that can be economically extracted depend on prices now and in the future. If gold rises to $5,000 per ounce, there will be a new gold rush in the United States. The problem is that we do not know the future prices of natural gas. All we know is that it has fallen dramatically since shale oil extraction began. As long as we do not know the future price, there is no way to know the amount of reserves that can be extracted at a profit.

Presumably investors worth their salt know these two facts. They also know enough not to rely on a federal bureaucracy to make their investment decisions. After all, shale gas companies are not selling shares at Wal-Mart. Investors who are optimists will invest. Pessimists will not. Technology and market forces will decide who is right, not the NYT or Congress.

The NYT attack ends with a truism: “If natural gas ultimately proves more expensive to extract from the ground than has been predicted, landowners, investors and lenders could see their investments falter, while consumers will pay a price in higher electricity and home heating bills.” Yes, if shale gas is a bust, investors will lose and prices will be higher, but what’s new? Why all the fuss? Why should this be Congress’s business?

My two pieces of advice:

First, to the natural gas industry: Avoid at all costs federal subsidies of cars powered by natural gas. This will give the federal government the right to stick its nose into your business.

Second, to the NYT and democratic members of Congress: Obtain e mails of internal discussions of the Volt or of lithium battery manufacturers to see whether investors, taxpayers, and consumers are being sold an “irrationally exuberant” picture. I may have to wait a long time before the NYT takes me up.

Tuesday, June 28, 2011

Thomas Friedman’s Shock Therapy (Insight into the Liberal Mind)

Thomas Friedman’s friends appear to be disgusted with American politics. They have concluded that the two parties think only of reelection and their special-interest constituencies. They cannot imperil their chances of reelection by doing the four things -- spend, cut, tax and invest -- that must be done simultaneously “if we have any hope of maintaining American greatness.”

Friedman’s disgusted friends are looking for a serious Third Party candidate to “deliver shock therapy to the corrupt, encrusted, two-party duopoly now running the show in America.”

In my vocabulary “shock therapy” describes a rapid course of transition from planned socialism to capitalism. Therefore, I expected more than I got from Friedman’s shock therapy, which consists of the following four points:

1) More stimulus to keep the economy from slipping back into recession.

2) An accompanying credible long-term plan for spending and deficit reduction — e.g., the Simpson-Bowles deficit-reduction plan.

3) New revenues (a gas tax and a carbon tax) to “reinvest” in education, infrastructure and government-funded research to push out the boundaries of knowledge.

4) Assorted other things like “shrinking” our presence in Afghanistan and raising mandated mileage standards on new cars.

Friedman opines that his hypothetical “spend, cut, tax and invest” platform is sure to attract his reasonable, sophisticated, and intelligent friends from both sides of the aisle.

I interpret it as a platform that elected liberals are too cowardly to pass for fear of voter backlash.

Why is this program the liberal Holy Grail?

Friedman’s “spend, cut, tax and invest” raises government spending now (bigger government), despite the failure of the massive fiscal and monetary stimulus of the past few years. (If once you do not succeed, try, try again). In return, Congress adopts Simpson-Bowles, which cuts spending and deficits over the long run (and perhaps never) by a combination of spending cuts and, yes, TAX increases.

But wait: Friedman is talking about cuts in “spending” not in “investment.” Government spending on research, infrastructure, green technology and other fads in liberal favor can boom because of new dedicated revenue from national gas and carbon taxes. No, the gusher of new tax revenue will not go into deficit reduction but into new windmills, bullet trains, and studies of the sex habits of mice, without which our economy cannot survive in the twenty-first century. I guess, in Friedman’s mind, we will have no innovation, no technological progress unless it is ordered and paid for by the state.

Friedman’s “spend, cut, tax and invest” is nothing more than a stealth program for ever larger and more intrusive government, in which the liberal state can pass out favors to its crony capitalists and labor allies.

A truly bold Friedmanian Third Party candidate could set the gas and carbon taxes high enough to raise total government spending to half the economy. With this accomplishment, we can at last join the genteel European brotherhood of enlightened welfare states, and Thomas Friedman can return to foreign affairs, where he belongs.

Thomas Friedman’s friends appear to be disgusted with American politics. They have concluded that the two parties think only of reelection and their special-interest constituencies. They cannot imperil their chances of reelection by doing the four things -- spend, cut, tax and invest -- that must be done simultaneously “if we have any hope of maintaining American greatness.”

Friedman’s disgusted friends are looking for a serious Third Party candidate to “deliver shock therapy to the corrupt, encrusted, two-party duopoly now running the show in America.”

In my vocabulary “shock therapy” describes a rapid course of transition from planned socialism to capitalism. Therefore, I expected more than I got from Friedman’s shock therapy, which consists of the following four points:

5) More stimulus to keep the economy from slipping back into recession.

6) An accompanying credible long-term plan for spending and deficit reduction — e.g., the Simpson-Bowles deficit-reduction plan.

7) New revenues (a gas tax and a carbon tax) to “reinvest” in education, infrastructure and government-funded research to push out the boundaries of knowledge.

8) Assorted other things like “shrinking” our presence in Afghanistan and raising mandated mileage standards on new cars.

Friedman opines that his hypothetical “spend, cut, tax and invest” platform is sure to attract his reasonable, sophisticated, and intelligent friends from both sides of the aisle.

I interpret it as a platform that elected liberals are too cowardly to pass for fear of voter backlash.

Why is this program the liberal Holy Grail?

Friedman’s “spend, cut, tax and invest” raises government spending now (bigger government), despite the failure of the massive fiscal and monetary stimulus of the past few years. (If once you do not succeed, try, try again). In return, Congress adopts Simpson-Bowles, which cuts spending and deficits over the long run (and perhaps never) by a combination of spending cuts and, yes, TAX increases.

But wait: Friedman is talking about cuts in “spending” not in “investment.” Government spending on research, infrastructure, green technology and other fads in liberal favor can boom because of new dedicated revenue from national gas and carbon taxes. No, the gusher of new tax revenue will not go into deficit reduction but into new windmills, bullet trains, and studies of the sex habits of mice, without which our economy cannot survive in the twenty-first century. I guess, in Friedman’s mind, we will have no innovation, no technological progress unless it is ordered and paid for by the state.

Friedman’s “spend, cut, tax and invest” is nothing more than a stealth program for ever larger and more intrusive government, in which the liberal state can pass out favors to its crony capitalists and labor allies.

A truly bold Friedmanian Third Party candidate could set the gas and carbon taxes high enough to raise total government spending to half the economy. With this accomplishment, we can at last join the genteel European brotherhood of enlightened welfare states, and Thomas Friedman can return to foreign affairs, where he belongs

Thursday, June 2, 2011

David Brooks’ Country-Club Valedictory: It Is About You (More Drivel)

“Conservative” David Brooks’ column “It’s Not About You” (NYT May 30) is incomprehensible fluff until you realize its audience.

Let me quote some key passages to illustrate:

“This year’s graduates are members of the most supervised generation in American history… they have been monitored, tutored, coached and honed to an unprecedented degree. Most will spend a decade wandering from job to job and clique to clique, searching for a role. No one would design a system of extreme supervision to prepare people for a decade of extreme openness.”

So we learn from Brooks that today’s graduates, the “most supervised in American history,” are being thrust into a “decade of extreme openness.” My own impression is that today’s latch-key, single parent, web-surfing, text-messaging graduates are among the least supervised in history. I must admit I do not understand Brooks’ “decade of extreme openness.” Graduates, it appears to me, are just entering the uncertain job market characteristic of a weak economy.

After some serious thought about who might read this column, it began to make more sense. By “graduates,” Brooks has in mind graduates of elite institutions, not college graduates in general. It is they who have been “monitored, tutored, coached and honed to an unprecedented degree.” Their mothers competed for slots in elite toddler academies in Manhattan or Cambridge. It is they who have been coached and tutored in preparatory academies and by SAT coaches. They have been “honed” for admission to Stanford or Harvard. Graduates of state schools and, even worse, junior colleges do not fit into Brooks’ picture of the country-club elite. I guess they are not the ones who count.

Now these “supervised” graduates are being thrown into a cruel world of job insecurity and, gasp, “team work.” No longer does a secure spot in Daddy’s Lehman Brothers await them.

Brooks’ advice: Instead of focusing on “finding yourself,” find a cause – a problem to solve. “It’s the things they did to court unhappiness — the things they did that were arduous and miserable, which sometimes cost them friends and aroused hatred. It’s excellence, not happiness, that we admire most.” So the greats of the past succeeded because they were willing to be miserable and friendless. They did not become great through the joy of discovery, invention or entrepreneurship.

If I had taken out student loans to graduate from a good university with a meaningful degree and David Brooks delivered this as the commencement address, I would have asked for my money back.

Saturday, May 28, 2011

At Last, Peggy Noonan Says Something Interesting: “We Don’t Accept That Card Anymore.”

I rarely make it through a Peggy Noonan article. Her WSJ column soars into the stratosphere, high above the political fray. She muses in rhetorical flourishes about the human condition. She offers little advice or analysis that I consider of practical use.

Enter the mainstream media and their newfound consensus: The Republican Ryan plan to change Medicare from a card guaranteeing senior citizens medical care to a voucher to buy private insurance will hand the 2012 election to the Democrats.

I suggest that the Republicans offer a prize for the shortest and clearest explanation of why senior citizens are better off with the Ryan voucher. This task is not easy. It requires that voters understand that “there is no such thing as a free lunch.” (I offered a parable in my posting of yesterday).

Noonan, so far, is my nominee for the prize. She notes the great political appeal of Medicare as it is currently constituted:

“Here's the great thing about Medicare: You turn 65 and it's there. They give you a card and the nurse takes it. Supporters of Mr. Ryan's Medicare plan must talk very specifically about how this would all work, and why it would make your life better, not worse.”

And here is the nugget buried in her column:

“They also have to make two things clearer. One is that if nothing is done to change Medicare, the system will collapse. You'll give the card to the nurse and she'll laugh: ‘We don't take that anymore.’ This already happens in doctors offices. Without reform it will happen more often.”

“Sorry, we do not take that card anymore” should be the Republican rallying cry.

I can imagine the 20-second commercial: A timid elderly couple walks into the doctor’s office to be told by a frosty receptionist: “Oh, you want to see the doctor. We haven’t taken that card for years. I’d tell you to go at the cash clinic at Walmart but they have been on strike every since they unionized.”

In confusion and tears, the elderly couple stumbles out of the office.

Thursday, May 19, 2011

Stunning Announcement: Global Warming Caused by the Sun! (Imagine the following news report, NYT December 15, 2015)

After a ten year study of satellite data, the U.S. National Scientific Council announced that the increase in average temperatures over the past half century is the result of increasing intensity of cosmic rays from the sun. The satellite study shows that increasing CO2 concentrations actually held down temperatures by increasing cloud cover. A peer review of this study by the authoritative Academy of the Academy of National Sciences confirmed the authenticity of these findings. Trading on the Chicago carbon cap-and-trade board was halted as the price of carbon futures fell by 99 percent.

This stunning news evoked angry responses from a spokesperson of the Allied Council for Climate Defense. Spokesman E. Everit Leverit questioned the timing of the release of the study’s results: “We at the Allied Council were not given adequate time to find a new threat to mankind’s existence. We are extremely upset by the release of these results at such an inopportune time.” Off the record, Leverith disclosed that the Allied Council would switch its attention to the proliferation of microwaves in the atmosphere, which pose an existential threat and require urgent international governmental action.

Universities and research labs throughout the country face a loss of more than $10 billion in climate research funding from the federal government and from charitable foundations. A spokesperson (who asked for anonymity) stated: “Mankind is not out of the woods yet; there must be hundreds of other existential threats out there. Just give us the money and we’ll find them.”

A spokesperson of the JcPierpont Charitable Trust declared that they were tipped off by insiders to the study. Given their charter of saving mankind, they are exploring new frontiers of existential dangers that we have not yet heard of. Dangers from meteors or threats from extra-terrestrials do not fall under their charter because they are not caused by humans.

It should the noted that climate scientists themselves are not affected by the results of this study. They are still needed to study the effects of the sun and finding clues to how long this warming is going to last. Most endangered are policy and legal specialists, whose task it had been to translate global warming into public policy and new taxes.

Saturday, May 14, 2011

A Banner Day for Media Bias: The NYT’s Friday the 13th On Global Warming

The New York Times outdid itself in media bias on Friday the 13th. It reported that “the nation’s scientific establishment” as represented by the National Research Council has reaffirmed that “global warming is real” and that “its effects are already becoming serious.” The NYT warns that we must act now because “adverse changes in the climate system…may be impossible to undo.”

The NYT regrets that “the answer comes at a time when efforts to adopt a climate-change policy have stalled in Washington, with many of the Republicans who control the House expressing open skepticism about the science of climate change. Other legislators, including some Democrats, worry that any new law would translate into higher energy prices and hurt the economy.”

For those few and uninformed skeptics, the NYT assures us that “Not only is the science behind the climate-change forecast solid, but the risks to future generations from further inaction are profound.” Already, “the sea level is rising in many American towns” and the average United States air temperature has increased by two degrees in the last 50 years.

The only skeptic cited is Texas Representative Joe Barton, who “swiftly dismissed the council’s findings.” But pay no attention to Barton. We are informed he is “leading the charge against further regulating carbon emissions,” presumably a stooge for Texas’s “Big Oil.” (A photo of a scowling Barton is attached to the article).

According to the NYT, the committee itself “is an unusual combination of climate scientists, businessmen and politicians,” and even includes “non scientist, Jim Geringer, a conservative Republican.” Such a committee would clearly bend over backwards to be fair.

The report ends on an unsurprising note. America’s greatest scientists recommend that the federal government spend a gazillion dollars on scientific and engineering research before it is too late.

Well, anyone can read the summary of the Research Council’s report on line, which I did. Here is what I found in a few minutes of research:

1) On the Committee:
Of the first eight names, only one appears to be a climate scientist. The others are engineers, lawyers, and public policy types. There are other names, but I did not want to waste my time. I presume the pattern holds. No top climate change skeptic, like MIT’s Richard Lindzen, is included. This report was not written by climate scientists but by public policy wonks.

2) On the certainty of the science:
The report tells us, contrary to the NYT account, that the science is far from certain. I quote: “How will the climate system respond to increased greenhouse gases? The exact value of ‘climate sensitivity’—that is, how much temperature rise will occur for a given increase in atmospheric greenhouse gas concentration—is uncertain due to incomplete understanding of some elements of the earth’s climate system.” Note the wobbly use of language, such as “exact” or “some elements,” to signal that the science is “almost certain.” I can imagine the illustrious committee members searching for appropriate qualifiers that would not let the cat out of the bag.

3) If the science is uncertain, why act now?
The report, which is not a study of climate science but of risk management, argues that the potential environmental damage from temperature increases (which the committee admits we really do not understand) is so large that we cannot afford to wait until we understand the science. (With this argument, we should wipe North Korean and Iran off the map now because of the future risk of their future nuclear weapons).

4) How about the NYT’s claim of “rising sea levels in many American towns?”
Not surprisingly, I could not find this is in the report (perhaps it is hidden some where). There is only a general reference to risks to coastal areas from future rises in sea levels. The NYT’s claim is puzzling. How can sea levels be higher in one coastal town and lower in another nearby town? I’d like the NYT writer (Leslie Kaufman) to explain that one. (I do recall an earlier NYT report with “Rising Sea Levels and Global Warming” in the headline, but it turned out to be subsidence. The earth was inconveniently dropping not the sea level rising).

The NYT is again trying to tell us that the science is certain and that anyone who disagrees is a stooge or an idiot. If global warming alarmism is so scientifically proven, why is it that respected top scientists at institutions such as M.I.T., Princeton, Harvard, Pennsylvania, Virginia and Wisconsin say there is no scientific evidence to support it? Has the Times ever tried to answer this question? Global warming alarmism should not be taken seriously until and unless the question is satisfactorily answered.

Why should a layman give global warming alarmism any credence if these scientists do not? There is never such certainty in science, as the Research Council’s own report confirms.

Drivel from David Brooks: Let Future Congresses Make Future Spending Cuts!

“Conservative” NYT columnist, David Brooks, has suddenly turned optimist. He opines that the upcoming vote on the debt ceiling will force Congress into a real compromise on spending cuts. He assures us: “Something good is about to happen.” The Republicans have leverage because “the debt-ceiling limit has to pass.” This is their chance to really stick it to the free spending Democrats.

Wait a minute. In reading further, I am less optimistic: “Congress won’t be able to produce specific program cuts and policy reform in the next few weeks, but it can come up with structural rules that will obligate future Congresses to make cuts and reforms for years ahead.”

It is all clear now. We won’t make significant cuts now but future Congresses will. As Brooks notes: “The important argument now is over what kind of restrictions to impose on future Congresses.”

Last I heard, future Congresses tax and spend as they see fit in the future. Our history is littered with the carcasses of “pay as you go” agreements and promises to spend less “next year.” Republicans, who have fallen for this line, deserve what they get. George H. W. Bush might have had a second term if he had not fallen for this, the oldest of tricks.

Here is what Brooks wants: A bill that would cap federal spending at 20.6 percent of GDP, the recent historic average. If spending rose above that, automatic cuts would ensue. Well, let’s pass that one and see how long it is honored by future Congresses. The only thing that counts is what we do now. Not what we say we will do later.

Brooks seems to have great faith in rules that bind future Congresses. He credits pay-as-you-go rules “for restraining spending and debt in the 1990s.” How long did they last? Was the remarkable spending restraint of the 1990s not the result of a strong Republican majority and a Democratic president who decided to make a strong move to the center?

Rules for future Congresses mean next to nothing. The only thing that counts is who wins the 2012 elections. If the Republicans gain a strong Congressional majority, the “rules” might be followed. If not, forget about the,

My advice: If the Republicans have leverage now, they must use it to cut now.

As far as the Republicans are concerned, with David Brooks as a friend, who needs enemies?

Wednesday, May 11, 2011

Reading David Brooks and Missing William Safire

David Brooks’ “The Missing Fifth” (NYT, May 10) sent me to Google to confirm that Brooks is really the token conservative in the NYT’s stable of liberal columnists. Yes, the internet chatter says it is true.

I try to read Brooks’s columns, but I am hard pressed to find anything conservative in what he writes. Am I alone in this assessment?

Take Brooks’ “Missing Fifth.” In this column, he asks why America has lost its “energy” as reflected in the fact that only eighty percent of American men aged 25-54 work today versus 96 percent back in 1954. According to Brooks’ source (the OECD), the American “Missing Fifth” is the highest among the G-7 countries. I suspect this is because almost 3 percent of US males in this age group are in jail. Three percentage points of Brooks’ twenty percent have lost “energy” because they are sitting in jail. If so, this brings us down to the “Missing Seventeen Percent.”

Any conservative thinker, when confronted with the question of non-working adult males, would consider the incentives and human motivations underlying the “Missing Seventeen Percent.” Brooks mentions the increase in Americans on permanent disability, but he does not ask why. It is doubtful that we collectively became less healthy in the last three decades. Nor does he ask whether there are incentives to qualify for disability that were not present earlier. Consideration of disabilities is a diversion, however. Unlike the Netherlands where at one time some ten percent of the work force was on permanent disability, our numbers are small.

Brooks does not ask whether the costs of “not working” have dropped. In 1954, unemployed men had a small percentage of their lost earnings replaced and only for a short time. Today, it is a much different story. Nor is he curious about other countries, such as Germany, where unemployment benefits have become an entitlement. With growing political pressure to extend unemployment benefits, we are only a few steps behind Germany (which is trying to correct its earlier mistake).

A glance at the latest BLS statistics shows a 9 percent unemployment rate for adult males and another three percent or more for “discouraged workers ” or workers marginally attached to the labor force. Thus, Brooks’ “Missing Fifth/Seventeen Percent” is explained mostly by unemployment and tenuous attachment to the labor force.

Brooks does not ask whether food stamps, AFDC, or more generous and extended unemployment benefits have anything to do with this. I do not know the answer, but these questions should be asked.

Instead, Brooks goes into a rambling discussion of human capital and the rise of services and other structural issues and commits the old Marxian fallacy about machines replacing men. At least Brooks concedes that Keynesian solutions are not the answer.

His proposed solution to the “Missing Fifth” is that we (meaning the government) must spend more on community colleges, wage subsidies, and extending unemployment benefits to potential entrepreneurs. Brooks’ knee-jerk reaction is: If there is a problem, the government must fix it. There is no curiosity about whether the government has caused the problem.

Brooks’ writings evoke in me nostalgia for William Safire. How about the venerable NYT hiring a real conservative columnist?

Tuesday, May 10, 2011

The NYT Reveals the Real Reason For a Flat Tax: If Congress Can Mug Big Oil, It Can Mug Anyone

When Robert Hall and Alvin Rabushka proposed the flat tax more than a quarter century ago, they justified it on the grounds of economic efficiency and tax simplification. We now understand their real reason we need a flat tax.

Under our current federal tax system, everyone pays different tax rates depending on their lobbying clout, political donations, or interest group. Differences in realized tax rates are brought about by exemptions, loopholes, and preferences, most justified as promoting the common good. If you are in good with Congress or the administration (like GE or Hollywood), your breaks are secure and you get new ones. If you cross them or are a convenient target (like “Big Oil”), they take them away. Many have learned the bitter lesson: “What one hand giveth, the other taketh away.”

Our tax code has become a blunt instrument for political mugging, shakedowns, and intimidation. It insures a steady flow of political contributions. Anyone can find themselves a target. But everyone should remember that tomorrow the shoe can be on the other foot.

Our federal tax code is not a rule of law, but a rule of the political jungle.

The New York Times, Monday May 9, provides a case in point: “Senate Democrats say they will move forward this week with a plan that would eliminate tax breaks for big oil companies…..As currently written, the bill would apply only to what Democrats have identified as the five largest and most profitable oil companies.”

The long-forgotten Article 1, Section 9 of the U.S. Constitution forbids Bill of Attainders – legislation that punishes specific persons or groups without judicial review. But the NYT declares that the proposed Democrat legislation is written specifically to deprive BP, Exxon Mobil, Shell, Chevron, and Conoco Phillips of tax advantages that other companies enjoy. These five oil companies are not named specifically, but the legislation is written to apply only to companies that meet their profile.

What would the framers of the Constitution think about this?

A concern expressed in the NYT article is that the recent drop in oil prices will reduce prices at the pump, and there will less support for this legislation. I guess this means that we should base tax regulations on good or bad fortune. If doctors are doing well, let’s take away their home mortgage deduction. Those who aren’t doing so well can keep it. If people are paying more for movie tickets, let’s take away subsidies for film producers. If unions succeed in obtaining higher fringe benefits, let’s tax them as regular income, but only for union members. This is where the logic leads us.

The flat tax has been adopted with the least difficulty in the new countries of Eastern Europe. They have been free to choose optimal institutions before powerful interest groups form. We have reached a point of no return. Too many politicians, companies, and individuals benefit from our crazy system. They have too much to lose if we move to a rational system.

Monday, April 25, 2011

NYT: More Nonsense on Bashar Assad

In today’s “Clock Ticking Against Assad,” another NYT analyst equates “studied abroad, elegant British-born wife, French speaking, and widely-read” with a desire “to reform the repressive police state he inherited from his father, given time and opportunity.” We are told that Bashar, unlike his stern father “seems quiet, almost meek.” The press’s treatment of Assad reminds me of the foolish optimism that greeted the appointment of the “sophisticated” Yury Andropov. (Andropov must be a reformer; he loves classical music and speaks foreign languages. Bashar must be a reformer he studied medicine in Britain).

Apparently Assad’s brutal crackdown of his own people has dashed our expectations. The Obama administration’s bet that Assad, the closet reformer, will democratize and broker a real peace with Israel appears to be lost. But, we learn from the article that this is not Basher’s fault. He is surrounded by sinister relatives and security forces, who stymie his benevolent impulses. His fault (according to an anonymous diplomat) is that “doesn’t have the courage to do what he needs to do for the sake of the country.”

Somehow we are supposed to believe that one of the world’s tightest and most brutal dictatorships is made up of “good” and “bad” factions, where the bad guys do bad things behind the back of the “good” head of state. We are supposed to believe that Syrian security forces assassinated a leading Lebanese politician without Bashar knowing. Bashar must also be blissfully unaware of Syria’s support of Hezbollah mischief, or of the clandestine attempt to build nuclear weapons.

We are told that Basher’s salvation is meaningful reform. The Baath regime will survive if it allows freedom of assembly and press and opposition political parties! For Bashar’s sake, let us hope he does read such pieces. Basher’s survival chances are near zero if he offers “meaningful reforms.” They will only show weakness and intensify the demonstrations (now without fear of being shot dead). The only “reform” the outraged Syrian population will accept is the removal of Bashar and his entire regime. Bashar Assad, like Qadaffi in Libya and the Mullahs in Iran, can only survive by the sword. That is their best chance, and they are likely to win.

Our diplomats and journalists must learn that dictatorships operate according to specific dynamics that do not depend on the education, background, or humanistic orientation of their leaders. Stalin was extremely well read; was kind to his daughter, and made a great impression on Roosevelt. Hitler had excellent table manners. Bashar speaks French and reads good books. These things make little difference. They are a foundation of sand upon which to base foreign policy.

Monday, April 18, 2011

The NYT Lets the Cat Out of the Bag: Reduce the Deficit By Raising Taxes on the Middle-Class Without Doing Anything

Picture the five year-old who blurts out at a family gathering: “Grandpa has bad breath.” Grandpa may indeed have bad breath, but this is not something said in polite company.

A veteran NYT journalist has committed the indiscretion of the five year old. (See Ross Douthat, “The Middle Class Tax Trap”, April 18). He sweeps away the smoke and mirrors for a fleeting moment. We learn that Obama has an alternative to his strategy of “soak the rich and then just keep going deeper into the red.” The CBO’s “current law baseline” reveals that, if the Bush tax rates are not renewed in 2012, inflation and the alternative minimum tax will raise middle-class marginal tax rates from 29 to 38 percent (Welcome to the “tax rates for the rich”), and federal tax revenues will rise from 18 to 23 percent of GDP.

Just by doing nothing in 2012, the Obama administration can set the country on course to “afford” a European style welfare state. As more and more of our vast middle class are pushed into higher tax brackets, federal, state, and local revenues rise to some forty percent of GDP. Add a harmless two to three percent deficit on top of that, and we have reached the low to mid forty percents in terms of government spending. We can miraculously pay for our entitlements without breaking a sweat. And we have done this without a value added tax, no less.

The CBO warns that their “current law baseline” could “tend to discourage some economic activity” and could “harm the economy through the impact on peoples’ decisions on how much to work and save.” We do not really know how our middle class would react to European levels of taxation. Some of us hope we’ll never test this proposition.

President Obama warned that the Republican budget proposals would lead to “a fundamentally different America.” But in a burst of candor, the NYT writer admits that the “current law baseline” scenario would lead to a “more stagnant and balkanized society in which our promise to the elderly crowds out the fundamental promise of America itself.”

Remarkable words from our newspaper of record.

The NYT Passed on the Tea Party; Now Its Passing on Atlas Shrugged

One pleasure in reading the New York Times is its movie reviews. They leave few stones unturned, covering everything from major releases to obscure foreign films. The New York Times has passed on Ayn Rand’s Atlas Shrugged (unless I missed something). This reminds me that NYT was the last mainstream-media newspaper to deign to mention the rascally and radical Tea Party.

Atlas’s only NYT mention appears to be Maureen Dowd’s “Atlas Without Angelina” in her Sunday, April 17 Op-Ed section. Dowd tells us that Obama’s “we’re all in this together, that we look after each other” philosophy would be “antithetical to Rand’s idea man,” that Paul Ryan’s “pushing the cost of Medicare and Medicaid onto the old, the sick and the disabled while rewarding insurance companies with bigger profits, would be more up her alley,” and that she need not waste her time on Atlas Shrugged because P. J O’Rouke (that noted film critic!) had already panned it.

Rand, Dowd tells us, was dead wrong. She failed to see that capitalism would “evolve into a vampire casino where you could bet against investments you sold to your clients, and make money off something you didn’t own or that existed only on paper.” She then goes on to rehash the NYT 2007 story about a Democrat movie producer, who failed to get Rand’s permission to make Atlas into a movie because she wanted artistic control. Rand made a good decision, in my view. Dowd ends with the implication that Atlas Shrugged is a waste of time because it is supported by the Tea Party and Sean Hannity.

A NYT film critic would indeed be troubled by Atlas Shrugged’s cheerleading for unfettered capitalism and individualistic entrepreneurs and its railing against Washington. He or she would, at long last, share conservative discomfort with the standard Hollywood rendition of a caring liberal President protecting us from snarling Republican killers of the poor, weak, and infirm.

Ayn Rand was the first and only major writer to spin readable stories about the rent-seeking society. Dowd believes that the “fiscal meltdown” proved Rand false. Viewers of Atlas Shrugged, however, will see that Rand’s half-century-old account captures dead-on today’s suppression of (evil, greedy, and unpatriotic) entrepreneurs, the private-government “partnerships” (GE and the federal government), and the buying and selling of political influence that characterize our world today.

The NYT may choose to ignore an Atlas Shrugged as beneath their dignity, but it may turn out to be a rallying cry in the 2012 election. If so, the venerable NYT has again missed the boat.

Friday, April 15, 2011

Mafia in Pinstripe: The Real GE Scandal

The transition from street thug to state mafia took a decade in Russia. I was an eyewitness to the Russian process: In 1992, I saw businesses being shaken down by bullies in jogging suits and shaved heads. Six years later, I talked with business owners harassed by crooked tax, sanitation, police, and fire inspectors. Under Putin, these petty thugs were replaced by officials in pinstripes, politely shaking down businesses in meetings in government offices and swank hotels. It has become civilized, but the outcome is still the same.

What does the Russian story have to do with GE?

GE is unique among American corporations. Since its founding, it has been consistently in Fortune’s Top 10 – the only long-term survivor of Schumpeter’s creative destruction. GE adapted better than others to changing tastes and technology under executives like Gerard Swope, Charles Wilson, and John Welch Jr., who wrote the book on the art of corporate management.

GE is still in the top ten under CEO Jeffrey Immelt, but it is a different GE. Instead of adapting to the marketplace, GE structures its businesses to harvest government subsidies, tax preferences, and bailout money. GE fits Schumpeter’s pessimistic forecast of bureaucratized, influence-peddling capitalism, which he had the temerity to call socialism.

A casual glance at GE’s annual report shows that most of GE’s businesses depend on favor with the government. Energy generating windmill turbines make money because of government subsidies and state orders. Nuclear power requires government licenses. Energy-saving turbines receive subsidies. GE’s lending arm may again need a quiet $140 billion bailout. Its huge medical services division must receive favorable treatment under a new health care law. Even its competitive jet engines could use a diplomatic boost when foreign airlines buy new aircraft. Its NBC division needs broadcast licenses and other forms of protection.

The GE scandal is not that it paid no U.S. taxes. It was simply following the social-engineering instructions of our tax code, which its tax department is able to nudge at times. The true scandal is that the once mighty GE has become a crony capitalist in its “partnership” with Washington. The hundred million or so in campaign contributions is chump change compared to the cost of its lobbying behemoth and its vaunted tax department.

The new winners in creative destruction at first naively think they have no need of government. The Microsofts, Apples, Googles, and Facebooks create products no one had ever dreamed of. They can outstrip the competition on their own. They are then baptized by fire. Government agencies politely worry that they have grown too big; an anti-trust suit may be in the works. Revenue-hungry politicians may decide that taxing the internet is a good idea. Facing this reality, the creative-destructors open expensive offices on K-Street and join the crowd. An ounce of protection is worth a pound of cure, they reluctantly conclude.

There is an invisible cost to all this that few of us notice or understand. The mighty GE has been diverted from innovating and developing products that stand on their own to producing those things that its Washington partners want for the “good of society.”

Wednesday, April 13, 2011

NYT: Blatant Headline Bias

I was taught in junior high journalism that headlines are guide to the content of the article. If the reader skips the article, the headline constitutes the information that the reader takes away. The headline should strive to honestly capture what the article is about.

“Budget Cuts Raise Doubt On the Course of Recover” (NYT, Business section, April 12) blatantly violate this basic rule. The headline warns that experts (not the writer) think that the $38 billion budget cut (and cuts to follow) will harm the recovery. “The budget deal is a bet by the Obama administration that the loss of $38 billion in federal spending will not be the straw that breaks the back of the fragile economic recovery.”

We then learn that the straw is lighter than the lightest of feathers. The $38 billion equals one quarter of one percent of GDP and “joins a growing list of minor problems impeding growth, economists (which ones?) said.”

To underscore the impeding danger, the author tells us that a chief economist of a Chicago investment firm has reduced her growth forecast from 4.2 percent to 3.3 percent. There is no corollary statement her move was prompted by the budget cut. If it were, I imagine she would be laughed out of the investment community.

The article changes tone. We learn that things are looking up. The Fed and private forecasters predict that growth will accelerate. Even more surprising (in light of the dire headline), there are experts who think budget cuts will stimulate economic activity, but one such expert is dismissed as belonging to “a libertarian think tank.” However, other economists (in addition to the libertarian) opine that budgets cuts will have immediate economic benefits “by soothing the nerves of foreign investors.”

The NYT writer saves his strongest ammunition for last: an IMF warning that “the cuts proposed by the Obama administration will be challenging to implement in an environment of weak growth and high unemployment.” As I read this, the IMF is concerned that the administration cannot carry through on the proposed budget because of political considerations, not because of the economic consequences. I cannot really tell from the information in the article.

An accurate headline from an unbiased writer would have been: “$38 billion budget cut no threat to recovery, experts say.”

Saturday, April 9, 2011

The NYT and BP Still Do Not Get it?

The NYT’s “Misreading the Enigma” gets one thing right: BP has lacked “geopolitical acumen” in its Russian dealings. BP’s proposed share swap with Rossneft (the State oil giant) is on permanent hold. The Stockholm arbitration court says BP may have violated its shareholder agreement with its billionaire AAR partners in their private BP-TNK Russian oil venture.

It now turns out (according to confidential NYT sources within BP) that BP had disclosed the potential conflict to the Kremlin but thought that the Kremlin “would resolve any difficulties with the local shareholders” because the BP deal coincided with the Russian national interest. BP failed to understand that in the Russian KGB state, no one (including Putin) really cares about the “national interest.” The confidential BP source went on to state the obvious: “It hasn’t happened yet. It has to happen now.”

It also turns out that the presumed patron of the deal, Putin, was aware of the conflict and remarked at the signing that the AAR partners were “litigious.” Putin now claims he was “completely in the dark.” BP “didn’t say a word about this.”

Here is the proper interpretation of what is going on: When BP struck its deal in January, the Russian treasury was empty. It needed investment in arctic oil, and the world price of oil was low. Russia needed BP. BP, thinking Putting was on their side, assumed that Putin would “pull a Khodorkovsky” on the AAR billionaires. If they want to kick up a fuss against the deal, Putin had a steel cage ready for them in a Moscow courtroom, BP thought.

Putin did not put the squeeze on the AAR billionaires for any of a number of reasons: First, AAR had already bought him off to help them in their plan to get half of BP’s half of the Rossneft deal. (Putin might need a few billion more for his portfolio). Second, Putin can take on a single Oligarch (such as Khodorkovsky), but can’t take on three at once. If this is the reason, Putin is less powerful than we think. Third, Putin fears he faces a real challenge from Medvedev in the 2012 presidential election and needs the AAR billionaires and their media empires on his side.

Whatever the interpretation, things do not look good for BP, which is now looking for a “reasonable commercial solution.” That solution is the one I have been predicting for quite a while: AAR gets one quarter of the Rossneft drilling venture, “Russia” get a half, and BP is reduced from a half to a quarter.

Such is the price of misreading the geopolitical tea leaves.

Sunday, March 27, 2011

NYT’s Expose: But GE Is Doing Exactly What is Expected of Them

President Obama’s appointment of GE CEO Jeffrey Immelt as his job czar signaled his “move to the center.” The pro-business President declared a “government-business partnership” to create jobs, green technology, and other good things. Now a NYT investigation reports that GE paid no U.S. taxes, aggressively lobbied Congress for subsidies and sweetheart deals, and spends millions (billions?) to minimize its tax bill. The NYT was shocked, as was Claude Rains in Casablanca, to find such skullduggery, from GE, no less. The NYT concludes that one of the most striking advantages of GE is not its jet engines and washing machines but “its ability to lobby for, win and take advantage of tax breaks.”

A more realistic interpretation is that GE is faithfully pursuing Obama’s vision of, what is called in other countries, crony capitalism. Under this philosophy, “crony corporations” should follow where government incentives lead them. If Obama wants green jobs, they will build windmills, with healthy subsidies of course. If the government wants more lending, crony corporations will lend with a bailout if the loans go bad. A “green car” should be no problem. The government will pick up most of the price tag for leery consumers. Insofar as crony corporations, like GE, can “negotiate” their tax bill with Congress, they are a ready source of campaign contributions or other perquisites.

Such crony capitalism changes the normal rules of economics. Those who play the “business-government partnership game” better than others win. Those who do not play well lose, even if they are superior entrepreneurs or innovators.
From an economic perspective, it is not even clear that GE is a real “winner.” In pursuing subsidies and tax advantages, GE engages in activities that yield lower returns than other alternatives. The government payoff compensates them for making otherwise unwise economic decisions. The GEs of the world also have to waste enormous resources on the lobbying game. If we factor in all these economic costs and losses, GE may have been better off not playing the crony capitalism game after all.

The NYT’s disclosures, coupled with Obama’s appointment of Immelt, are an embarrassment, but they offer a rare backroom glimpse of crony capitalism in action. Our crony capitalism takes place, respectably and legally, in board rooms, in congressional and executive offices, or “on bended knee” before Charles Rangel. In other less civilized countries, it takes the form of shakedowns, threats of violence, and arbitrary prosecutions, but the game is played with the same results.

In Russia, it is called State-Mafia capitalism. In the U.S., it is corporate welfare.

Thursday, March 17, 2011

Private Editor, No. 5: Media, Chernobyl, Japan Nuclear Disaster, and Mental Health

I have no scientific expertise on nuclear power plants. I followed closely at the time the Chernobyl disaster of 1986 and listened to accounts of a Russian nuclear scientist-friend who worked on the damaged roof of the Chernobyl plant the day after the explosion. He suffered no known health consequences, although he still has to be checked each year. I also know many young Ukrainians who were evacuated from Kiev and whose thyroids had to be monitored through their young adulthood. I also know that the Chernobyl accident, the worst nuclear-power plant disaster in history, claimed (according to the authoritative report issued in 2005 by the Chernobyl Forum) “fewer than 50 deaths directly attributed to radiation from the disaster, almost all being highly exposed rescue workers, many who died within months of the accident but others who died as late as 2004.” In the future, The Chernobyl Forum speculates there may be an additional 4,000 deaths from cancer. They do not explain this estimate, but a quarter century has already passed since the accident with relatively few deaths.

Strikingly, the report labels the mental health impact of Chernobyl as “the largest public health problem created by the accident” and partially attributes this damaging psychological impact to a lack of accurate information. These problems manifest as negative self-assessments of health, belief in a shortened life expectancy, lack of initiative, and dependency on assistance from the state.

The current hysterical press and TV reports are indeed creating a “mental health impact” as large as or larger than that of Chernobyl, despite the free flow of information in this case and Gorbachev’s attempted cover up of Chernobyl. The press feeds upon irresponsible statements, such as from the European Union's energy chief, Guenther Oettinger, who characterized the situation as out of control. "We are somewhere between a disaster and a major disaster…There is talk of an apocalypse, and I think the word is particularly well chosen." The media also pounce on pronouncements like radiation “twenty times normal,” where “normal” is usual background radiation. No one bothers to explain what 20 times more than about zero actually means in terms of health risks.

The scientists whom I found in my own search of the web agree that there is no nuclear fission inside the plants (the fuel rods have been withdrawn) and the problem is the heating up of spent fuel. According to one expert: “We could not have a …nuclear explosion. It's physically impossible in this kind of system."

The worst case scenario would occur if the cooling efforts fail and the fuel rods melt down and break through the thick concrete structure, leading to what today’s New York Times calls “an uncontrolled release of radioactivity.” The New York Times stops at that point and does not explain further. As I understand it, such an uncontained meltdown would place the Japanese disaster somewhere between Three Mile Island and Chernobyl, but closer to Three Mile Island because there has been no Chernobyl-like full-scale explosion and Chernobyl did not even have a containment structure. Those most threatened by this worst case scenario would be plant and rescue workers and residents within a thirty-mile or so radius of the plants.

The media and press have indeed created a “mental health impact” that will likely be greater and more long-lasting than Chernobyl, no matter how benign the eventual outcome. This morning at breakfast, my wife (who watches a lot of television news) asked me if we should leave California! Consumers throughout the world will now fear Japanese products. The Japanese people will conclude that they face a life of poor health, in a suicide-prone society. There may be a rash of abortions, such as in the wake of Chernobyl, as expectant parents fear birth defects. Countries like Germany, confronted with a politically powerful anti-nuclear power lobby, will shut down their nuclear power plants at huge costs. Given that we do not have the “green” technology to replace coal-fired plants, we will use more coal-fired plants which have health and mortality costs likely in excess of the health risks of radiation.

I think it is the responsibility of the media and press to present a balanced picture of risks to let their consumers draw reasoned conclusions of their own. Stories of unimaginable catastrophe draw more customers than reasoned accounts. Consumers of media and press should not have to go to the internet (as I did) to find the information needed to draw informed conclusions.

Saturday, March 12, 2011

The Private Editor No. 4; The News Not Fit for the NYT to Print: NPR and Anti-Semitism

The NYT has not shied away from reporting on the National Public Radio scandal, which resulted in the resignation of its CEO and former NYT executive. In its four articles on this subject, the NYT focuses on the NPR fundraisers’ disparaging remarks about the Tea Party and their statement that NPR would be better off without public money. The NYT coverage sweeps under the rug the NPR fundraisers nodding in agreement and laughing in response to the anti-Semitic remarks of the scammers (“Jews do kind of control the media”). One of the NPR fundraisers responds: “That’s good, I like that” after one of the scammers says: “we used to call it [NPR] National Palestine Radio.”

In my view, the NPR fundraisers’ apparent condoning of anti-Semitic remarks is the real story of the NPR scandal, not the Tea Party. If such remarks had come out of the mouth of a right-wing militia member, that would have been the headline, but not if the perpetrator is the genteel NPR.

I guess this was too hot for the NYT to print as well.

Wednesday, March 2, 2011

How To Distort Polls: The NYT/CBS Poll on Public Sector Workers

The big surprises of yesterday’s NYT/CBS national poll on public sector unions were that 61 percent of adult Americans think that public employee salaries and benefits are “too low” or “about right,” 56 percent oppose cutting public employee salaries and benefits to reduce state deficits, and 40 percent prefer increasing taxes to decreasing spending on other things, among them public employee salaries and benefits. (The poll reports that even a slight majority of Republicans said public employee wages and benefits were “too low” or “just about right.”).

These results raise eyebrows. They seem to contradict the November election results. Perhaps the fickle electorate has changed its mind since November? Last night’s political talk shows were abuzz.

These poll results are so out of line with conventional thinking that they require careful scrutiny. My own (admittedly non-expert) examination raises three red flags:

FIRST: Why are there so many public-employee and union households in the sample?

The NYT/CBS pollsters conducted telephone interviews with 984 respondents using procedures that “in theory, in 19 cases out of 20”will “differ by no more than three percentage points” from an interview of all American adults. Their procedures include adjusting for under- or oversampling of various demographic characteristics. There are no adjustments for public employment, labor union membership, or political identification.

Twenty five percent of the NYT/CBS respondents are from households that had a public employee (versus 17 percent for the U.S.) and twenty percent had a union member in the household (versus 13 percent for the US). If we combine the two (while avoiding double counting as best we can), some 34 percent of the sample are either public employees or union members (versus 23 percent for the US population).

If we assume (rightly or wrongly) that all public employees and union members responded in the most pro-public-employee way to the survey questions, the pro-public-employee majorities wither away without them. The survey therefore shows that Americans who do not have a union member or public employee in the household think public-employee wages and benefits are too high, oppose raising taxes to cover deficits, and favor reduction of collective-bargaining rights.

(To adjust for the oversampling of public employees and union members alone, one should subtract some eleven percentage points from the more favorable public-employee response rates, as I see it).

SECOND: Are Republicans underrepresented?

The NYT/CBS poll asks questions about today’s most politically heated issue. It would therefore seem appropriate to weight the sample to make it 29 percent Republican, 31 percent Democrat, and 38 percent independent (according to recent Gallup reports) before reporting results that are supposed to capture the “national” mood. At a minimum, the NYT/CBS pollsters should provide the breakdowns of their respondents by political affiliations so that users can make their own adjustments if one group is underrepresented. The high public employee and labor union share already suggests an oversampling of Democrats. There is also the fact that Republican response rates to telephone surveys tend to be lower, requiring that their share be adjusted upwards for this reason alone.

Let the NYT/CBS pollsters release these results. I went to and failed to find any of these details.

THIRD: Why are results not broken down by political affiliation?

The NTYT/CBS pollsters clearly have results in their hands broken down by political affiliation. They proudly report that “61 percent of those polled — including just over half of Republicans — said they thought the salaries and benefits of most public employees were either “about right” or “too low” for the work they do.” Later they report “there was also strong opposition from independents: 62 percent of them said they opposed taking bargaining rights away from public employee unions.”

If we have the results and respondent shares broken down by political affiliation, we can calculate ourselves the “national” responses adjusted for political affiliation.

The NYT/CBS poll is an example of the not-so-subtle use of polling to support a political cause. This practice is not limited to the left. My suggestion is that next time, NYT/CBS put much more detail on their website (including the cross tabulations that I find sorely missing). Skeptics can therefore examine the results for themselves so that they can draw proper conclusions from the survey.

Sunday, February 27, 2011

The Private Editor, No. 3: A Study in Contrasts

Wisconsin Assembly Passes Anti-Union Bill (NYT February 26, 2011) Excerpts

Over shouts of protest from Democrats, the Republican-controlled Wisconsin State Assembly passed a bill in the early morning hours Friday that would strip state employees of most of their collective bargaining rights. But there was no sign that a stalemate over the proposal would end, as Democrats in the Senate remained out of the state after fleeing to prevent their own vote on the proposal. The 51-to-17 vote just after at 1 a.m. drew boos and shouts of “Shame! Shame!” from Democrats who said that leaders had abruptly cut off debate and prevented more than a quarter of the legislators from casting votes… Democrats said the early-morning vote showed that Republicans had little interest in negotiating. They “rushed a vote in seconds, cheating Democratic representatives of the opportunity to vote against this horrible legislation” …“Then they fled the chamber surrounded by armed law enforcement agents.” Republicans said the Assembly debated the bill long enough during a three-day Democratic filibuster. Mr. Walker said in a statement, “The 14 Senate Democrats need to come home and do their jobs, just like the Assembly Democrats did.”

Final Votes in Congress Cap Battle on Health Bill (NYT March 25, 2010) Excerpts

Congress on Thursday gave final approval to a package of changes to the Democrats’ sweeping health care overhaul, capping a bitter partisan battle over the most far-reaching social legislation in nearly half a century…The Senate voted after running through an obstacle course of Republican amendments and procedural objections, which kept lawmakers working through Wednesday night until 3:30 a.m. Thursday…Republicans, raising procedural challenges, identified small flaws that struck out two minor provisions. Those changes forced the bill to be sent back to the House one more time…The Senate approved the measure shortly after 2 p.m. Senators cast their votes standing individually at their desks, a ceremonial gesture reserved for historic occasions….The vote came after Senate Democrats defeated more than 40 Republican amendments intended to delay or derail the legislation…Exuberant Democrats celebrated the vote in the corridors of the Capitol. Republicans, reacting somberly, said they would carry their opposition to the bill into the fall campaign….In a floor speech, the House Republican leader, Representative John A. Boehner of Ohio, derided the legislation as “a sloppy mess that the majority of the American people believe should be repealed and replaced.”

I find these two accounts a study in contrasts.

The Wisconsin account draws a picture of beleaguered Democrats denied their right to cast votes (symbolic given their small numbers) after the Republicans abruptly cut off debate (after a three –day filibuster, no less.) and rushed a vote in seconds. The cowardly Republicans then fled the chamber (unlike the heroic Democrat senators who fled the state) protected by armed guards. The article simply states that the Democrat senators fled the state “to avoid a vote” without commenting on the unusual anti-democratic nature of such an action, other than to report the Governor’s call for them to return and do their jobs.

The account of the passage of the “historic” health care legislation shows House and Senate democrats fulfilling a historic mission navigating the “obstacle course” of minor Republican amendments and procedural objections designed to delay or derail the legislation. The article admits the historic nature of the legislation (Senators standing in a gesture “reserved for historic occasions”) without noting the questionable procedural gyrations used to pass it using budget reconciliation. The House Republican leader’s characterization of the legislation as “a sloppy mess” is reserved for the end of the piece.

Wednesday, February 23, 2011

The Private Editor No. 1: Wisconsin Demonstrations

I get my news from a limited number of sources. I read the New York Times, the Wall Street Journal, and the weekly edition of the Economist. I do not have time for anything else. I do not watch TV news with the exception of The Panel on Fox News.

I intend to use this series to report on news items that I personally regard as slanted or biased. I will not engage in any analysis. I’ll just report the facts.

Today’s NYT lead article “Wisconsin Leads Way as Workers Fight State Cuts” gives a one-sided picture of the Wisconsin demonstrations. The article consistently describes the protesters as “under assault” and “under attack” by Republican governors, who are “taking aim not only at union wages but at union power.” Wisconsin is described as a state not facing serious budget problems. The governor is acting ideologically rather than out of fiscal concerns. The protests are not orchestrated but “erupt” and parallel democracy demonstrations in the Middle East. The reporters ask: “Is Wisconsin the Tunisia of collective bargaining rights?” There is no mention of coordination by the Democrat party; all quotes are from union officials, who are described as running the show. The article twice notes that the Tea Party is organizing its activists to “cut the power of unions” in a number of states and informs readers that the Tea Party turned out 300 to 500 counter demonstrations in Columbus, Ohio.

The Private Editor: The World According to the NYT No. 2: The Secretive Koch Brothers

The New York Times employs a public editor to police its articles. I have found this self policing (usually on Sundays) by two different public editors lacking to say the least. I have therefore appointed myself to the post of “private editor,” to comment on pieces that I find slanted or biased. This is my second report.

In today’s NYT, page-one readers are directed to the page A17 article: “Billionaire Backers” about the brothers, Charles and David Koch, who are described as “leading the fight against unions,” who, according to a Democrat representative, are “proof of the expanding role played by nonprofit groups with murky ties to wealthy corporate executives as they push a decidedly conservative agenda.”

The article points out that the Koch brothers and their employees contributed $2 million in the last election cycle and that their Americans for Prosperity, with 70,000 donors, has a budget of $40 million.

The account quotes the “well-funded” Tim Phillips, president of Americans for Prosperity, that the cuts “represent the start of a much-needed nationwide move to slash public-sector union benefits,” but goes on to add that he did not mention that his non-profit group “was created and financed in part by the secretive Koch brothers.”

The article quotes the president of Common Cause: “It is not that these folks don’t have a right to participate in politics. But they are moving democracy into the control of more wealthy corporate hands.” Phillips rejoinder is found near the end: “For the last two decades, government unions have used their power to drive pensions and benefits and salaries well beyond anything that can be sustained. We are just trying to change that.”

My objections to the article:

First, the Americans for Prosperity speak quite openly about their goals and activities in Wisconsin, contrary to the article’s subliminal message imparted by the adjectives “secretive” and “murky.” There is a clear statement that the Koch brothers have no direct financial interest in the outcome.

Second, the political contributions of the Koch brothers and employees ($2 million) and of the Americans for Prosperity (a $40 million budget) are thrown out as exceptionally large numbers without a frame of reference (The AFSCME made political contributions of $20 million, and organized labor combined contributed $400 million).

Third, only in the last lines are readers told begrudgingly by the authors: “Just as unions organize to fight for their priorities, conservatives are entitled to a voice of their own.”

The media slant in this article is quite subtle. It imparts the message that sinister billionaires are calling the shots behind the scenes with political contributions that overwhelm good people who stand on the side of what is right.