Tuesday, April 30, 2013

If You Want Gun Control Call Your Senator

     Particularly if he or she is one of the 5 Democrats who voted against or the Purple State Repubs like Ayotte, Jeff Flake,Lisa Murkoski and Dean Heller. There are some signs that those who voted against Manchin-Toomey are being hurt in the polls. A Gallup poll shows that Americans wanted that bill to pass by a 65%-29% margin.

     Still, there's no room for complacency. Greg Sargent is right that it's still a longshot-at least during this term.

     "All of this said, there are no indications that these Senators are prepared to change their votes, and there is not another vote on Manchin-Toomey scheduled for anytime soon. Such a vote won’t happen until there are genuine signs that one or two or three Senators are prepared to flip. While I’m told that there are still multiple conversations underway, there’s no sign that this is imminent."

    "It’s good that gun control advocates are beginning to bring pressure to bear that shows that a political price will perhaps be paid for this vote. That’s crucial, and it cuts a bit against the conventional wisdom which held that the effort would die completely after Manchin-Toomey’s defeat. That said, it’s still unclear whether any of it will end up mattering."
    My sense is that it will definitely end up mattering but the question is when? It may not break through during this term of Congress. The hope is we can get another vote on Manchin-Toomey at some point. The question is how quickly will it matter? The answer it's up to us-particularly if you're Senator is one of those who voted against it last time but is movable. 
    On the one hand, what we have here is the classic moment of the tail wagging the dog. The majority of Americans want commonsense gun control laws. A small minority are scorched earth opposition to any measures; my sense is they labor under the slippery slope theory. 
    Surely the minority can't continue to thwart the majority's will forever? This question applies not just to gun control but in general. After all, it's via two things that the GOP which represents a minority of citizens is able to frustrate the expressed desire of a majority of citizens:
   1. The Gerrymander
   2. The Filibuster
    Surely this can't go on forever? No it won't. However, the question is when. There's a case to be made that the gun lobby for example can hold out for a long time. What the NRA hangs its hat on is the idea that gun control opponents have the intensity and passion on their side. This view is not insubstantial. Heidi Heitkamp has revealed that the reason she voted against background checks is that she got more callers telling her to than urging her to vote for it:
    "Heidi Heitkamp’s office was flooded with calls from North Dakotans in the run-up to last week’s high-profile vote to expand background checks on gun purchasers."
    "The overwhelming consensus: Vote no."

     "In an interview in her office this week, the freshman Democrat defended the biggest vote of her young Senate career, when she joined with three other Democrats and most Senate Republicans to oppose expanding background checks during commercial gun sales."

  “I think I always had a reputation as somebody who will listen, somebody who is pretty independent-minded but also believes that at the end of the day, you got to listen to your constituents,” Heitkamp said. “In this office, the calls literally were before the last day at least 7 to 1 against that bill. This was after a series of very extensive ad campaigns done in my state saying call me and tell me to support it.”

    "Heitkamp’s opposition came after intense lobbying by President Barack Obama’s chief of staff, former Rep. Gabrielle Giffords and her husband, Mark Kelly — and families of the victims from the massacre at Sandy Hook Elementary School last year. The vote turned Heitkamp from an unexpected victor of a 2012 Senate race to a liberal punching bag, fielding a sharp jab from Obama’s former chief of staff, Bill Daley, who demanded a refund of his campaign donation."

     This would seem to be validation of the intensity gap theory. Until gun control advocates can at least go toe to toe on calls to Senators it won't get done. 

R-R Apologists and Sumner Still Smarting Over Krugman

    Wow! Today Sumner lashed out at me for pointing out that Hamilton is basically misleading in his allegedly exculpatory piece on R-R. I had written a piece which I linked to Sumner's blog post about R-R.

    Here's what Sumner had said about Hamilton:

    "I'’ve stayed out of the R&R kerfuffle.  This is partly because I haven’t read their paper, partly because James Hamilton points out that the mistakes were fairly minor, and partly because Matt Yglesias points out that the real issue is causality, which R&R’s study doesn’t resolve."

    Sumner is right that R-R's work doesn't resolve any casual issues, although I don't remember him complaining about this in the past. When R-R were be treated as economic seers in Congress and the EU would have been the time for that observation.

    This saw though about the mistake being 'fairly minor" is a major moment in R-R apologetics. I then left a comment where I was critical of both Hamilton and Sumner:

     "On Euro debt the difference that Krugman always emphasizes is that the EU countries have given away their printing press so it’s not surprising that countries trouble like Greece, Spain, et. al are seen by the market as having no out thereby spiking interest rates."

   "Krugman pointed out just yesterday that Italy’s interest rates have now come down. Why? Because Draghii credibly promised to do “what ever’s necessary” to save the euro."

    I  checked out Hamiltion. I think he totally minimizes what the mistake was. Listen that’s one issue but here he’s totally throwing up a red herring:"

  “So how does any of that cause us to discount or dismiss the contributions of This Time Is Different? You tell me.”

   "No one is trying to do that, certainly not Krugman who says that while the paper was sloppy the book remains a book of very high quality."

   This sets Sumner off:

   "Mike Sax, Isn’t it kind of silly to post comments on things you know nothing about? If you can refute Hamilton, do so."

    "If it’s “not surprising” that the eurocrisis happened, why did Krugman say it was unlikely to happen a few years back?"

    It's disappointing but not surprising that Sumner totally sidestepped my question-and resorted to a cheap shot; how can he claim Krugman is guilty of cheap shots?- as Tom Brown also pointed out. It's not at all tough to refute Hamilton who makes it sound as if Krugman has somehow used the errors of the R-R paper to discredit their paper. Yet Krugman has been very clear that the book is not discredited. Of course Sumner has no answer for it. Tom pointed this out:

    "@ssumner, I read the Hamilton piece, and your piece, and Mike Sax… and it looks like Mike did read the Hamilton piece as well (in his 2nd comment). I think you’re dismissing Sax’s point a little to flippantly: Hamilton IS saying “how can you say R&R’s book is bad based on the error in their paper!” … When nobody’s saying that actually (thus Sax’s “red herring” comment)."

   "Also I don’t see Hamilton’s point in minimizing R&R’s error. R&R may never have claimed there was causality concerning their erroneous “90% rule” in their paper… but it appears they did say it in testimony before congress."

    Of course, Sumner in true form, ignores the points that Tom makes:

    "Tom, Hamilton showed that the error had only small impact on their empirical findings. Do you deny that? Where is Hamilton wrong?"

     "You said;

     “Hamilton IS saying “how can you say R&R’s book is bad based on the error in their paper!””

     "Can you produce the exact quotation?"

     Yes, Scott we can as Tom did and you of course didn't answer:

     "How about Hamilton’s last sentence, for one:

     “So how does any of that cause us to discount or dismiss the contributions of This Time Is Different? You tell me.”

     "Huh? Who’s complaining about their book, “This Time Is Different?” The complaint has always been with their subsequent paper!"

     "In fact, it’s not just the last line, Hamilton spends over 50% of his post discussing their book."

    With as much as conservatives like Sumner are always whining about Krugman's alleged disrespect, he and Hamilton are proving out Krugman's recent complaint that these conservatives are mainly fools and/or knaves. 

      Regarding the excel error what Hamilton is doing-and Sumner is following him on-is trying to whitewash R-R's error. Basically to hear Hamilton tell it this is little more than a rounding error. Yet listen to what Miles Kimball who himself has been an R-R apologist says:

      "Ken Rogoff is an economist who has always been kind to me, and for whom I have deep respect. And I have no animus toward Carmen Reinhart. Nevertheless, I hope there has been a nightmarish quality to the last few days of what Quartz writer Matt Phillips called a “bone-crunching social media pile-on that Harvard economists Ken Rogoff and Carmen Reinhart received in recent days after some other researchers questioned their influential findings that high government debt is a drag on economic growth.” I say this because I know from my own experience as a researcher how powerfully the hint of such an embarrassment motivates economists and other researchers to sweat the details to get things right. Some errors will always slip through the cracks, but a researcher ought to live in mortal fear of a contretemps like that Reinhart and Rogoff have found themselves in this week.”

     “Reinhart and Rogoff have not only caused embarrassment for themselves, but also for all those who have in any way relied on their results. Those who made their case by overinterpreting the particular results that have now been discredited should be the most embarrassed. Quartz’s Tim Fernholz gives a rundown of politicians and other policy makers who relied heavily on Reinhart and Rogoff’s results in “How influential was the Reinhart and Rogoff study warning that high debt kills growth?”

     If the error is so trivial how does he explain Miles’ mea culpa?

    Even though Hamilton and Scott and a few other R-R apologists will try to whitewash this most economists aren’t buying it. They have a big black eye and Hamilton certainly won’t be able to save them.

David Glasner Jumps Into the Sumner-Krugman Debate

     As a Market Monetarist, himself, it's not hard to guess which side he's on, however, Glanser's analysis is often quite insightful. Here he is on Krugman-Sumner:

    "For some reason – maybe he is still annoyed with Scott Sumner – Paul Krugman decided to channel a post by Mike Konczal purporting to show that Market Monetarism has been refuted by the preliminary first quarter GDP numbers showing NGDP increasing at a 3.7% rate and real GDP increasing at a 2.5% rate in Q1. To Konczal and Krugman (hereinafter K&K) this shows that fiscal policy, not monetary policy, is what matters most for macroeconomic performance. Why is that? Because the Fed, since embarking on its latest splurge of bond purchasing last September, has failed to stimulate economic activity in the face of the increasingly contractionary stance of fiscal policy since them (the fiscal 2013 budget deficit recently being projected to be $775 billion, a mere 4.8% of GDP)."

     For some reason. In the 4 years that Scott has had his blog at Money Illusion how many times has Krugman called out Sumner compared to the reverse? Does Glasner ever wonder what reason it is that Sumner keeps tweaking Krugman and why he is sitll annoyed after all this time?

    Glasner does give us some interesting elaborations on the Sumner Critique-basically it amounts to that if monetary policy is done properly there's no role in demand stabalization for fiscal policy. He admits that it may not be operative here:

     "If we posit that we are still in something akin to a zero-lower-bound situation, there are perfectly respectable theoretical grounds on which to recommendboth fiscal and monetary stimulus. It is true that monetary policy, in principle, could stimulate a recovery even without fiscal stimulus — and even in the face of fiscal contraction — but for monetary policy to be able to be that effective, it would have to operate through the expectations channel, raising price-level expectations sufficiently to induce private spending. However, for good or ill, monetary policy is not aiming at more than a marginal change in inflation expectations. In that kind of policy environment, the potential effect of monetary policy is sharply constrained. Hence, the monetary theoretical case for fiscal stimulus. This is classic Hawtreyan credit deadlock (see here and here)."
     "If monetary policy can’t do all the work by itself, then the question is whether fiscal policy can help. In principle it could if the Fed is willing to monetize the added debt generated by the fiscal stimulus. But there’s the rub. If the Fed has to monetize the added debt created by the fiscal stimulus — which, for argument’s sake, let us assume is more stimulative than equivalent monetary expansion without the fiscal stimulus — what are we supposed to assume will happen to inflation and inflation expectations?"
     "Here is the internal contradiction – the Sumner critique, if you will – implicit in the Keynesian fiscal-policy prescription. Can fiscal policy work without increasing the rate of inflation or inflation expectations? If monetary policy alone cannot work, because it cannot break through the inflation targeting regime that traps us at the 2 percent inflation ceiling, how is fiscal policy supposed to work its way around the 2% inflation ceiling, except by absolving monetary policy of the obligation to keep inflation at or below the ceiling? But if we can allow the ceiling to be pierced by fiscal policy, why can’t we allow it to be pierced by monetary policy?"
     "Perhaps K&K can explain that one to us."
     Well, I hope they do as they're clearly asking for it. This is why I so welcomed Krugman's piece-he so seldom calls out Sumner. I really don't get the problem here. It seems to be that if we use fiscal policy here, the mechanism will be expectations which is just monetary policy so that the benefit in fiscal policy will actually have a monetary cause so that it will really be a fiscal policy. If fiscal stimulus is really monetary stimulus then why fight it?
      This is reminiscent of when Lucas said that fiscal policy can't help because if the government builds a new bridge, the stimulative aspect is not the bridge but the money spend for the bridge-ie, monetary stimulus. 
       At a minmium though it could be argued that fiscal policy is better able to fire up expectatons-as once the Treasury is pledged it can't renege on fiscal sitimulus. What's key though, I think is a comment by J.W. Mason who argues that fiscal stimulus doesn't need expectations to be effective. 
      Can fiscal policy work without increasing the rate of inflation or inflation expectations?
     "I can’t see why not. What do inflation expectations have to do with anything?"
    "The underlying assumption of the multiplier is that economic actors are NOT in general operating on anything like an intertemporal budget constraint, but instead that current expenditures are closely linked to current incomes. This could be because liquidity constraints are pervasive, or because expectations are adaptive or backward looking, or because there are multiple equilibria, or for some other reason. The important thing is that in a world where current expenditure is tightly bound to current income, fiscal policy doesn’t have to change anyone’s expectations of anything in order to be effective.
    "The beginning of wisdom here, IMO, is to remember that intertemporal optimizing and budget constraints are analytic tools that may (or may not) be useful tools for analyzing certain questions. They are not true facts about the world."
     What's not clear to me is why the Market Monetarists are so opposd to even trying fiscal stimulus. What could be the risk at this point? Why not let's just give it a try as it often seems they're arguing it's just monetary policy in another guise?

     HT: Tom Brown of course

Sumner and James Hamilton Speak on R-R's Behalf

     I would say that R-R have two more members of their peer group speak on their behalf though Sumner is very careful how he presents this defense. For more on the importance of Richard Rorty's peer group for economists please see here.

    Still he does say that their mistake is pretty trivial.

    "’I've stayed out of the R&R kerfuffle.  This is partly because I haven’t read their paper, partly because James Hamilton points out that the mistakes were fairly minor, and partly because Matt Yglesias points out that the real issue is causality, which R&R’s study doesn’t resolve."

    Ok, he doesn't so much say the mistakes were trivial as appeal to Hamilton saying that they were. He is right about causality not being solved-he throws it in here to make it clear it's not a defense of R-R-or at least not totally. 

   He claims that R-R were right and Krugman was wrong about EU debt spiking. Of course, he's still ticked at Krugman for his piece criticizing Market Monetarism.

   As to the claim, here it is:

   "Hamilton also noted that R&R have been far more accurate in their predictions of the eurozone debt crisis than Krugman, who pooh-poohed the notion of a widespread sovereign debt crisis in 2009.  I notice that Krugman has now begun using phrases like “garbage-in, garbage out” to describe the quality of Rogoff and Reinhart’s empirical research.  (OK, he doesn’t mention their name, but does anyone doubt which paper he is referring to."

    If R-R were right it wasn't for the right reasons. Krugman has long made the point that there's a difference with the periphery euro countries-Greece, Cyprus, Spain-in that they don't make their own monetary policy. Krugman also noted just yesterday that Italy's interest rates have now come down thanks to Draghii's credible promise to 'do whatever it takes" to save the euro.

     As to Hamilton, he's either being dishonest or is misinformed:

     "With all the heated discussions of the last two weeks, it is important to keep perspective on which issues are in dispute and which are not. Let me state plainly something on which I think we ought to be agreed: Carmen Reinhart and Ken Rogoff's 2009 book, This Time Is Different: Eight Centuries of Financial Folly, is a valuable work of scholarship that continues to deserve study and praise from any thinking person. Here I review some of my reasons for saying that."

       Fine but where did Krugman-or any other R-R critic suggest otherwise?

       "To briefly summarize the facts that you'll find developed more fully there, some researchers at the University of Massachusetts have challenged one tiny detail of one follow-up study by Reinhart and Rogoff having to do with an issue that I have yet to even mention so far in today's discussion. That dispute concerns a measure of the correlation between sovereign debt levels and GDP growth. I say it is a tiny detail, because the dispute is completely restricted to just one of six different summaries of three different data sets in that one particular paper. The Massachusetts researchers correctly noted that there is an error in the spreadsheet which, if corrected, would have changed the number Reinhart and Rogoff should have reported for that one statistic by a few tenths of a percent. Bigger changes in that one statistic could be obtained if one adds some additional data and makes what I regard as a questionable change in methodology, but even with all the changes they want to make, the results preferred by the University of Massachusetts researchers are in fact very similar to the other 5 dataset summaries that will be found in Reinhart and Rogoff's original paper, as well as a subsequent analysis of expanded data that Reinhart and Rogoff published in 2012 (which again the Massachusetts scholars did not mention or discuss)."

     "So how does any of that cause us to discount or dismiss the contributions of This Time Is Different? You tell me."
     The trouble is that he's basically doing Kabuki Theater here. He's pushing an open door as no one disagrees that R-R's book was of high quality, certainly not Krugman. It's the paper that is under fire and rightly so. 
     As no one is saying otherwise Hamilton's tact here doesn't make much sense. 

The NRA Posts Ads Praising Kelly Ayotte's Vote Against Background Checks

     There's clearly some disagreement as to whether this was a good vote for the Republican Senator from New Hampshire or not. The NRA believes so:

     "The National Rifle Association and the National Shooting Sports Foundation each began running radio ads Monday in New Hampshire commending and thanking Sen. Kelly Ayotte (R-NH) for her opposition to legislation that would have expanded background checks on gun buyers, the Washington Post reported."

     "In the NRA's spot, Ayotte is hailed as someone who "cares about protecting our kids."

      “She knows the only way to prevent tragedies like Sandy Hook is to fix our broken mental health system," the ad's narrator said. "That’s why Kelly Ayotte brought Republicans and Democrats together on a bipartisan solution. And it’s why Kelly had the courage to oppose misguided gun-control laws that would not have prevented Sandy Hook.”

    So the NRA thinks this is something that Ayotte benefits from bragging about. It also took a shot at Mayor Bloomberg for being a 'big city Mayor who thinks he knows what's best for the rest of us.'

   "The ad from NSSF, a national trade association for the firearms industry, took a thinly veiled shot at New York City Mayor Michael Bloomberg (I), whose group "Mayors Against Illegal Guns" had pressured Ayotte to vote in favor of the gun bill that fizzled in the Senate earlier this month."

   "Thank you for standing up to political pressure from a big city mayor who thinks he knows what’s best for the rest of us,” the ad's narrator said. “Thank you for protecting the rights of gun owners, hunters and all who cherish the freedoms of our Second Amendment.”

     Of course, Bloomberg's group thinks this hurts Ayotte and has already started running anti Ayotte ads in NH. Early poll numbers suggest it may actually be hurting her. 

     "A survey from Democratic-leaning Public Policy Polling released last week indicated that Ayotte had suffered a significant backlash in New Hampshire for her opposition to the background checks legislation, with half of her constituents saying they are now less likely to back her for re-election. On Monday, another PPP survey showed that five other senators who voted "no" were also taking heat from their constituents. "

     There are a few caveats with that poll; it does show that her approval rating has dropped a lot, but, the previous poll was last December so we can't know for sure how much of it is due to this vote. It's true that those other Senators mentioned were also hurt, however, I don't know that any of them can give you their numbers just prior to the vote till just after it. 

    However, a Gallup poll clearly shows that Americans wanted that bill passed by a 65%-29% margin. Democrats favored it by a 86%-12%, Independents by a 64%-30% margin; what's interesting is that while you would expect Republicans to support it's failure they do so only by a 50%-45% margin. 

    If the NRA wants to really help Ayotte are they doing it by continuing to remind people of this unpopular vote? 

    The counter theory that the NRA takes comfort in is that supposedly even if those who opposed background checks are in the minority there's overall they gun rights side has more passion an intensity on it's side. What this argument amounts to is the hope that the tail can continue to wag the dog in perpetuity. 

    That the minority will keep getting it's way as it wants it more strongly than the majority does. Yet, Mayor Bloomberg's group and others suggests this may be changing. I do think that Newtown was a game changer and that there is now a lot of intensity on the gun control side; more than we've seen in many years. 

    My guess is that the NRA may be ready to suffer for hubris soon. It's good for it if others fear it as much as some clearly do-the great NRA lobby which gave the Republicans Congress in 1994, as President Clinton himself believed. 

    At this point, however, maybe they're beginning to believe their own press even tough there's plenty of reason to believe that they're far from invincible-a number in Congress won while defying them in 2012. 

    Those who think this last vote shows that the NRA lobby is invincible after all, are buying into the hype. After all, 55 Senators supported the bill-which in anything but a totally dysfunctional body like the Senate is an impressive majority; Reagan had 54% of the vote in 1980 and that was a landslide. 

     Everything points to the fact that this was just the first round; as we've seen in previous posts, gun control usually passes only with a lag-even President Kennedy's assassination wasn't enough to get gun control measures passed; this required the assassination of his brother Robert Kennedy and Martin Luther King, to boot. 

     Clearly, the NRA knows this isn't the last gasp with it's new aggressive ad defending a Democrat, something it doesn't do too often. The Democrat in question is also interesting: Max Baucus of Montana who's retiring. The ad urges people to call his office and thank him for his no vote-suggesting his vote could be reachable in the future:

      "This is noteworthy, beyond the fact that the NRA — which usually reserves most of its firepower for use on behalf of Republicans — is aggressively propping up a Democrat. It suggests the NRA may still believe Baucus is gettable as a vote for Manchin-Toomey. Buzzfeed’s Ben Smith yesterday laid out an unlikely but possible scenario in which Baucus, who is retiring, gets won over after sustained pressure and flips a few red state Dems and even a Republican or two with him. As Smith puts it, “he has nothing to lose.”

     "What’s more, note the NRA’s call for constituents to continue flooding Baucus’ office with calls. This morning Politico published an interview with Heidi Heitkamp in which she confirmed she voted against Toomey-Manchin because more calls were coming into her office against it than for it. The NRA has long excelled at mobilizing an impassioned minority to cow lawmakers. And with gun control and liberal groups currently running ads hammering red state Dems over their vote, the NRA evidently recognizes the need to maintain the intensity gap in its favor going forward."
    “I think we’re going to bring this bill back before the end of the year and I think you may find some changes,” said Schumer. “I think you may find some changes out there in the public. Lots of senators who thought it was safe to vote against it because of the intensity are not so sure anymore.” Added McCain: “I do agree with Chuck that I think the issue is going to come back.”
    "Schumer’s quote strongly suggests negotiations are ongoing among Senators, which dovetails with what I’ve heard, too, and McCain remaining engaged is also key."
    Still, Sargent thinks gun control in this session is a long shot and the burden of proof is on advocates to prove they have the firepower. 
    "None of this is to say that the odds don’t remain very long against anything happening. Indeed, all of this suggests that it’s really on the gun control groups to prove, right now, that a real political price can be extracted from Senators for their No vote.

      P.S. The caveat is that Heitkamp got more anti background check calls than for. If you want this bill call your Senator-particularly if you're Senator is Hieitkamp. Baucus, or another Red State Dem or Purple State Repub. 

Monday, April 29, 2013

George W. Bush: Someone Has Second Thoughts

     Krugman is critical of the push last week to rehabilitate Bush in the public mind.

     "I’ve been focused on economic policy lately, so I sort of missed the big push to rehabilitate Bush’s image; also, as a premature anti-Bushist who pointed out how terrible a president he was back when everyone else was praising him as a Great Leader, I’m kind of worn out on the subject.
But it does need to be said: he was a terrible president, arguably the worst ever, and not just for the reasons many others are pointing out."
     "From what I’ve read, most of the pushback against revisionism focuses on just how bad Bush’s policies were, from the disaster in Iraq to the way he destroyed FEMA, from the way he squandered a budget surplus to the way he drove up Medicare’s costs. And all of that is fair."
     "But I think there was something even bigger, in some ways, than his policy failures: Bush brought an unprecedented level of systematic dishonesty to American political life, and we may never recover.
     "Think about his two main “achievements”, if you want to call them that: the tax cuts and the Iraq war, both of which continue to cast long shadows over our nation’s destiny. The key thing to remember is that both were sold with lies."
    "I suppose one could make an argument for the kind of tax cuts Bush rammed through — tax cuts that strongly favored the wealthy and significantly increased inequality. But we shouldn’t forget that Bush never admitted that his tax cuts did, in fact, favor the wealthy. Instead, his administration canceled the practice of making assessments of the distributional effects of tax changes, and in their selling of the cuts offered what amounted to an expert class in how to lie with statistics. Basically, every time the Bushies came out with a report, you knew that it was going to involve some kind of fraud, and the only question was which kind and where."
   "And no, this wasn’t standard practice before. Politics ain’t beanbag and all that, but the president as con man was a new character in American life."
   "Even more important, Bush lied us into war. Let’s repeat that: he lied us into war. I know, the apologists will say that “everyone” believed Saddam had WMD, but the truth is that even the category “WMD” was a con game, lumping together chemical weapons with nukes in an illegitimate way. And any appearance of an intelligence consensus before the invasion was manufactured: dissenting voices were suppressed, as anyone who was reading Knight-Ridder (now McClatchy) knew at the time."
   "Why did the Bush administration want war? There probably wasn’t a single reason, but can we really doubt at this point that it was in part about wagging the dog? And right there you have something that should block Bush from redemption of any kind, ever: he misled us into a war that probably killed hundreds of thousands of people, and he did it in part for political reasons."
   "There was a time when Americans expected their leaders to be more or less truthful. Nobody expected them to be saints, but we thought we could trust them not to lie about fundamental matters. That time is now behind us — and it was Bush who did it."

    I agree he was bad and he may have been the worst. On the other hand he's significantly to the Left of many Republicans currently in Congress and certainly to the Left of Romney during the election. 

   Bush was never one for self questioning, however, it's his Vice President who took the cake. He was a picture of pure arrogance in the Cheney documentary. Basically Cheney thinks he did the right thing and sees no reason to question if he could have been wrong about anything. 

   We are getting more information that underscores that Cheney really was Darth Vader and had an astonishing amount of power-totally unprecedented for a VP.. I have in mind in particular the new revelations about the secret War Council,, Greystone  led not by Bush but by Cheney-Bush was often deliberately kept out of the loop to keep plausible deniability-it's easier for him to deny something he really doesn't know anything about. 

     As I said in the link above, there are some things you can give Bush credit for-trying on immigration reform. Aids in Africa, and most importantly, apparently tuning out Cheney the last 2 years and ignoring Cheney's entreaties to pardon Scooter Libby. 

     However, it turns out someone is rethinking some things about the Bush Presidency, and she's a Republican: would you believe, Sandra Day O'Connor, the woman who made the Bush Administration possible in the first place. She now wonders if she and her fellow Supremes did the right thing:

      "Retired Justice Sandra Day O'Connor says she has second thoughts on whether the Supreme Court should have accepted Bush v. Gore -- the deeply controversial case that effectively decided the 2000 presidential election."

     "It took the case and decided it at a time when it was still a big election issue," O'Connor told the Chicago Tribune editorial board last Friday. "Maybe the court should have said, 'We're not going to take it, goodbye.'"

     "In a 5-4 decision at the time, O'Connor voted with the four other Republican-appointed justices to shut down the recount in Florida, the decisive state in the election."

     "Obviously the court did reach a decision and thought it had to reach a decision," the retired justice told the Tribune editorial board. "It turned out the election authorities in Florida hadn't done a real good job there and kind of messed it up. And probably the Supreme Court added to the problem at the end of the day."

     "O'Connor, the first woman Supreme Court justice who retired in 2006, lamented that the case "stirred up the public" and "gave the court a less-than-perfect reputation." Legal expertshave noted that the Court has not cited the decision even once since it was made, which some interpret as a testament to its soundness."

     Better late than never, I guess. Still if she could only have thought of We're not going to take it, goodbye 12 years ago. What a wonderful word this may have been. 

Public Debt: Krugman vs. Sumner

     Hopefully at least the reader Greg is happy, as this is my second Sumner post today. Here's the first.

     Krugman not only criticized Market Monetarism but actually named Sumner-though the two things are more or less synonymous. This lead Sumner to lash out at Krugman not just with a direct answer that begun with Krugman wrote a post that failed on every level but a second post that tried to draw a parallel between Krugman and Reinhart-Rogoff.

     So I'm certainly happy myself to write about a Sumner-Krugman smackdown. I'm actually glad Krugman went here because for the most part he seems to avoid tussles with Sumner-maybe he sees them as more trouble than they're worth?

      Yet we need Krugman to go here now and again, particularly all this Sumner talk about the zero fiscal multiplier. Krugman's obviously a major player in the econ establishment and no doubt that's why Sumner is so fired up: look I agree that it's ultimately about what you say but at times like these it really helps to have someone like Krugman say it; it sometimes does matter who says it too, let's face it.

     What I've often wondered is why Krugman doesn't call him on this? I mean why not write a post now and again that push back a little? What would be welcome would be for Krugman to get into theory a little here-go "wonkish" on this one by all means. I know he wants to write for the lay person. However, many of us lay people are now hungering for a little theory to push back on some of the false theory we get elsewhere.

   In his rejoinder to Krugman, Sumner used his usual tricks: why do fiscal stimulus when monetary stimulus is so much cheaper-no government debt?

   "But it’s even worse.  Fiscal stimulus is costly, as it increases the burden of future taxes, whereas monetary stimulus is free.  Indeed monetary stimulus actually reduces the burden of future taxes.  So it makes some sense to talk about the “effort” that fiscal policymakers put into stimulus, but no sense to talk about monetary policymakers “making an effort.”  The analogy for monetary stimulus is steering a ship.  It’s not “how hard should they try,” it’s “which direction do they want to go?” The Fed believes their policies will lead to roughly 5% NGDP growth; hence they don’t want to do more.  I think they overestimate the effect, and want them to do more.  But that difference of opinion has nothing to do with the validity of market monetarism."

     The usual canard of debt leading to higher taxes. While he tries to make this weak analogy between R-R and Krugman, Sumner misses the point of where R-R went wrong: for starters they confuse causality and correlation. What is clear is that debt is cyclical-it tends to increase during recessions and drop during booms. With such low interest rates now would be the time to use fiscal stimulus. 

     Actually, however, Krugman made another comment about debt today that's interesting. It was regarding the causes of Italy's high interest rates. He notes-and provides a chart-that Italy's interest rates have fallen to under 5% from over 7 early last year. As he suggests this is due to the ECB finally getting on the ball a little-Draghii's promise to do whatever is necessary-and we will succeed. 

     "What’s happened now is that the ECB sounds increasingly willing to act as the necessary lender, and that in general the softening of austerity rhetoric makes it seem less likely that Italy will be forced into default by sheer shortage of cash. Hence, falling yields and much-reduced pressure."

     "It also, to be a bit self-justifying, shows that back when I used to cite Italy in the 1990s as an example of how advanced countries can carry high debt loads, I wasn’t being naive. Back then Italy had its own currency, and debt denominated in that currency; yes, it was pegged to the Deutsche Mark, but there was always the option of unpegging. By joining the euro, Italy in effect turned itself, macroeconomically, into a third-world country with debts in someone else’s currency, and exposed itself to debt crisis; now, thanks to the Draghi put, it has stepped half way back into the first world."

     I wonder if Sumner-or Bob Murphy, or Tyler Cowen-go off about that one-debt loads are manageable if the country has it's own currency. Looking forward to what comes next. 



R-R's Peers Aren't Letting Them Get Away With So Much Anymore

     As discussed in previous posts, for economists like Rogoff and Reinhart nothing is more painful for a Rortian moment: when they lose the approval of their peers.

    As Miles Kimball describes it, there is nothing more that scholars fear than a negative Rorty moment:

     "Ken Rogoff is an economist who has always been kind to me, and for whom I have deep respect. And I have no animus toward Carmen Reinhart. Nevertheless, I hope there has been a nightmarish quality to the last few days of what Quartz writer Matt Phillips called a “bone-crunching social media pile-on that Harvard economists Ken Rogoff and Carmen Reinhart received in recent days after some other researchers questioned their influential findings that high government debt is a drag on economic growth.” I say this because I know from my own experience as a researcher how powerfully the hint of such an embarrassment motivates economists and other researchers to sweat the details to get things right.  Some errors will always slip through the cracks, but a researcher ought to live in mortal fear of a contretemps like that Reinhart and Rogoff have found themselves in this week."

       R-R themselves speak bitterly of the pummeling they've taken:

       "IN May 2010, we published an academic paper, “Growth in a Time of Debt.” Its main finding, drawing on data from 44 countries over 200 years, was that in both rich and developing countries, high levels of government debt — specifically, gross public debt equaling 90 percent or more of the nation’s annual economic output — was associated with notably lower rates of growth."

       Yet, as Marcus Nunes reminds us, they've been on the other side. Check out Rogoff's broadside against Stiglitz back in 2002:

       Back when he was IMF Chief-Economist, Rogoff strongly criticized Stiglitz´s ‘ arrogance’ in his book “Globalization and it´s discontents”.
1.  On the harm brought on by the 90% debt ratio ‘tipping point’:
Second, you put forth a blueprint for how you believe the IMF can radically improve its advice on macroeconomic policy. Your ideas are at best highly controversial, at worst, snake oil. This leads to my third and most important point. In your role as chief economist at the World Bank, you decided to become what you see as a heroic whistleblower, speaking out against macroeconomic policies adopted during the 1990s Asian crisis that you believed to be misguided. You were 100% sure of yourself, 100% sure that your policies were absolutely the right ones. In the middle of a global wave of speculative attacks, that you yourself labeled a crisis of confidence, you fueled the panic by undermining confidence in the very institutions you were working for. Did it ever occur to you for a moment that your actions might have hurt the poor and indigent people in Asia that you care about so deeply? Do you ever lose a night’s sleep thinking that just maybe, Alan Greenspan, Larry Summers, Bob Rubin, and Stan Fischer had it right—and that your impulsive actions might have deepened the downturn or delayed—even for a day—the recovery we now see in Asia?
2.  On the ‘causality issue’:
Joe, throughout your book, you condemn the IMF because everywhere it seems to be, countries are in trouble. Isn’t this a little like observing that where there are epidemics, one tends to find more doctors?
3. On ‘fact checking’
I haven’t had time, Joe, to check all the facts in your book, but I do have some doubts. On page 112, you have Larry Summers (then Deputy U.S. Treasury Secretary) giving a “verbal” tongue lashing to former World Bank Vice-President Jean-Michel Severino. But, Joe, these two have never met. How many conversations do you report that never happened? You give an example where an IMF Staff report was issued prior to the country visit. Joe, this isn’t done; I’d like to see your documentation.

     In this context how bad do you feel for them now? Marcus also suggests that R-R's peers aren't letting them get away with much of anything these days. See this piece, with the great title of The Beneficial Side Effects of R-R's Fall From Growth:

     The report:
With budget cuts blamed for a second straight year of recession, the EU’s top economics official Olli Rehn indicated over the weekend that more flexibility on tough economic targets was needed. His boss, European Commission President Jose Manuel Barroso, said on Monday that austerity had reached its natural limits of popular support.
“While I think this policy is fundamentally right, I think it has reached its limits,” he told a conference. “A policy to be successful not only has to be properly designed, it has to have the minimum of political and social support.”
As Wolfgang Munchau recounts, it was not too long ago that the same Olli Rehn stated:
“Carmen Reinhart and Kenneth Rogoff have coined the ‘90 per cent rule’,” he said. “That is, countries with public debt exceeding 90 per cent of annual economic output grow more slowly. High debt levels can crowd out economic activity and entrepreneurial dynamism, and thus hamper growth. This conclusion is particularly relevant at a time when debt levels in Europe are now approaching the 90 per cent threshold, which the US has already passed.”