Mathematician John Allen Paulos, in his most recent book (A Mathematician Plays the Stock Market, Basic Books, 2003) coined a term which I had hoped would catch on throughout the finance community. He describes under-researched puff pieces on personal finance (e.g. Five Hot Stocks to Pump Up your 401k NOW!) as “financial pornography.”
One of the biggest purveyors of financial pornography online is the MSN.com website, and this column doesn’t disappoint: Seven Signs a Stock is Ready to Soar. The author purports to explain how to locate ‘hot’ stocks, those that are about to appreciate rapidly in price, by reviewing some research on what types of conditions most often preceded (notice I did not say caused, and neither did the research) a price increase.
It should not take a Wharton MBA to figure out what is wrong with the premise of the article. The cited research identifies the seven conditions that most often preceded a big run-up in the price of a particular stock, but nowhere does it suggest that these conditions were sufficient (or even necessary) to cause a stock price to take off.
Obviously, all of the conditions that make up the ‘CANSLIM’ acronym are desirable things for a corporation — for its management and for its ownership. But that doesn’t mean that the stock in question is about to outperform the market. I’m not a hard-and-fast believer in the semi-strong efficient market hypothesis — I think a few super-stud investors can outperform the market — but for the average investor reading MSN’s Money Insight column, the CANSLIM approach is not going to turn those people into super-stud investors. EMH is still going to apply to those investors; there are just too many other investors who have the same type of information and insights at their fingertips.
In his 1974 commencement address to Cal Tech, the late Richard Feynman described what he called “cargo cult science:”
In the South Seas there is a cargo cult of people. During [World War II] they saw airplanes with lots of good materials, and they want the same thing to happen now. So they’ve arranged to make things like runways, to put fires along the sides of the runways, to make a wooden hut for a man to sit in, with two wooden pieces on his head to headphones and bars of bamboo sticking out like antennas — he’s the controller — and they wait for the airplanes to land.
Feynman (about whom I will have much more to say in an upcoming post) was using the term to deride psychics and ‘paranormal’ advocates like Uri Geller. But the MSN piece is urging investors to do exactly what Feynman describes the naive south island natives as doing: falling hook, line and sinker for a post hoc fallacy.
Bruce Bartlett has one of the most thought-provoking columns on economic history that I’ve seen in a while. In recent months, we’ve seen a number of lame attempts to compare Bush to Hitler. (Blogger Stephen Green is doing a good job of documenting these things.) I’ve seen a number of sites that display a series of Bush photos, each juxtaposed with a photo of Hitler in a similar pose … Bush is seen here eating a ham sandwich, and here’s Hitler eating a ham sandwich in 1937. Here’s Bush talking to some children, and here’s Hitler doing the same. See? Bush = Hitler! QED. Self-indulgent celebrities and hard-left ideologues have picked up on this tiresome Bush = Hitler meme, and the wave of moral equivalence crested with the recent controversy over MoveOn.org’s anti-Bush ad contest.
Meanwhile, Bartlett is seizing on this theme to take issue with some, both on the left and on the right, who want to compare Keynes to Hitler. He starts with Alexander Cockburn, quoting his most recent effort in The Nation:
Hitler, genocidal monster that he was, was also the first practicing Keynesian leader. … There were vast public works, such as the autobahns. He paid little attention to the deficit or to the protests of the bankers about his policies. … By 1936, unemployment had sunk to 1 percent …
Then, to pick an example from the opposite end of the spectrum, he points to an August 2003 column by Llewellyn Rockwell, longtime chairman of the Mises Institute. Here is the full text of the Rockwell piece that Bartlett is citing.
While I admire the Mises Institute and enjoyed the time that I spent at the Mises annual seminar in ’96, my take on Rockwell is that his writing style often loses focus due to its underlying anger. This is a classic example. And note that even he can’t help but juxtapose images of Keynes and Hitler, striking similar poses, just as those sophomoric “Bush = Hitler” websites do.
The money quote from the Rockwell piece, which Bartlett cites in his column, is this non sequitur:
Keynes himself admired the Nazi economic program, writing in the foreword to the German edition to the General Theory: “[T]he theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under the conditions of free competition and a large measure of laissez-faire.”
I don’t see how the quote from Keynes is tantamount to “admiration of the Nazi economic program.” Taken in full context, Keynes is just pointing out that it would be much easier to implement an activist fiscal policy in a state that is already centralized and forceful than in a state that was characterized by decentralization and federalism, a point that I would take to be obviously true. How this is supposed to represent Keynes’ “admiration” of the Third Reich is not clear.
Yes, Nazi Germany, in a roundabout way, did employ policies that Keynes would have prescribed if he had been running Germany at the time. This does NOT mean that Keynes’ idea of “public works” was building prison camps. Bartlett is correct in concluding that there are enough substantive problems with Keynesianism that we don’t need to resort to ad hominem criticisms of the man himself — just as there are plenty of ways that one can oppose the policies of Bush without resorting to the same. I disagree with a lot of the policies of the Bush administration (campaign finance reform, Medicare “reform”, on and on) but I have better things to do than try to fit this opposition into some tortured “Bush = Hitler” framework.
To put the shoe on the other foot — Rockwell was against the war in Iraq, and so was Noam Chomsky, but that doesn’t mean that “Rockwell = Chomsky!” or anything close to it. It doesn’t mean that Rockwell “is an admirer of” Chomsky, or that Rockwell also agrees with Chomsky’s denial of the holocaust, or even that Rockwell would use his brakes if Chomsky was crossing the street in front of his car.
Now, when are we going to see the article that says, “Bush used Keynesian fiscal policy, and so did Hitler, therefore Bush = Hitler!”
Boston-area conservative talk show host and syndicated columnist Howie Carr (presumably unrelated to our own David Carr) wrote a column accusing Bernard Cardinal Law, archbishop of the beleaguered Archdiocese of Boston, of hypocrisy. In Carr’s words:
Until the recent unraveling of his corrupt empire, the sanctimonious prince of the church annually went to Beacon Hill to bang his tin cup on the State House steps, demanding ever more generous handouts for the shiftless, the indigent and the promiscuous. But now that it’s finally Law’s turn to buy a round, he’s tipping over tables in his unseemly rush to get out of the room. Money for sodomized altar boys? Don’t push me, pal. Ever hear of Chapter 11?
Now, this is a little off the mark. After all, bankruptcy laws don’t exist to help debtors weasel out of their obligations; they exist to provide for orderly payment of creditors. The point of filing under Chapter 11 isn’t to avoid paying out potentially massive liabilities; it is to ensure that you will be able to continue operating — and paying your creditors — under a worst-case scenario.
(For a quick refresher on US bankruptcy law, here is a nice little e-pamphlet from the Securities and Exchange Commission.)
But Mr. Carr may have tapped into a richer vein of thought here. (Even a blind squirrel finds a few acorns.) This is what I want to know: when did morality stop being about how you conduct your own affairs, and turn into a referendum on your political views?
Maybe there’s some of that in Rand — who wrote at great length about the moral superiority of capitalism and individualism, etc., and who remained a stern moralist in this arena despite a personal life marked by marital infidelity and other peccadilloes. But I think that Carr is correct in hanging this one largely on the liberal left. → Continue reading: Who would Jesus vote for?
If you are anything like me, then you missed out on the annual Socially Responsible Investors in the Rockies Conference, which commenced this past weekend. Luckily, Reuters told us all about it.
Socially Responsible Investing, as we will see shortly, has become a big business in and of itself. But what to make of this concept? You might expect me to ridicule the whole movement, but I am not going to. Libertarians believe that the “responsibilities” of a corporation boil down to maximizing shareholder value while complying with the law, but I can find a lot of common ground with the SRI crowd. The problem is that an investor who tries to incoporate SRI principles into his portfolio will be led down any number of blind alleys.
In theory, I think that SRI is a great idea. If progressive types feel the need to bathe themselves in self-congratulatory rhetoric before participating in the capitalist system, that is fine with me. We would all be better off if environmentalists and consumer advocates used their own actual money to try to make things better, rather than pester the rest of us with their demands for more burdensome regulatory restrictions. Under the right conditions, even the most avowed socialists are willing to play — as his financial disclosure for the 2000 presidential race makes clear, Ralph Nader invests heavily in corporate equities (PDF file, requires Adobe Acrobat Reader or similar). (Heh heh, OpenSecrets.org strikes again!)
Unfortunately, determining which companies are “socially responsible” quickly degenerates into a Sisyphean task. What will be the next “politically incorrect” technology or product? Fast food? Cell phones? Tanning salons? Big Chocolate? What will be the next country to face a Chomsky-approved “divestment campaign” a la Israel? I have some very recent finance textbooks that celebrate the exemplary corporate citizenship of… Enron. → Continue reading: Socially Indifferent Investing
In response to a recent Bruce Bartlett column identifying the top forty “conservative” pop songs of all time, blogger Radley “The Agitator” Balko comes up with his own list in a column for TechCentralStation.
My first reaction to Bartlett’s column was: “Ugh! This list reads like Dave Barry’s ‘Book of Bad Songs’.” How can the list be so overwhelmingly dominated by soulless, ham-fisted schlock? Even the handful of great songs seem out of place — James Brown’s “It’s a Man’s, Man’s, Man’s World” is an all-time R&B masterpiece, but was the Godfather really proffering a conservative worldview, or is Bartlett reading way too much into it? Could it be that statists are just better rockers than us pro-market types? There have to be more hip tunes that carry a conservative message.
Radley Balko’s list is better and fresher, with songs by the Kinks, Vernon Reid and Bob Marley. He also acknowledges the Canadian rock trio Rush, which built an entire concept album around Ayn Rand’s “Anthem”. Good choices, Radley — but there are a handful of classics that both Bartlett and Balko have overlooked.
The finest “conservative” rock song of all time is “Trouble Every Day” by Frank Zappa and the Mothers of Invention. Now, Zappa wasn’t exactly a Goldwater / Reagan conservative, but remember — pro-democracy, pro-capitalism demonstrators in Czechoslovakia made Zappa’s “Plastic People” their anthem.
“Trouble Every Day” originally appeared on the Mothers’ double LP “Freak Out!” in 1965. Written in reaction to television coverage of the Watts riots in Los Angeles, this tune manages to savage the news media, ridicule the “root cause” mantra of left-liberals, and even take a timely swipe at LBJ’s Great Society. Over a bed of wailing harmonica and Frank’s own razor-sharp blues guitar, he ridicules local press coverage of the riot:
You know I watched that rotten box
until my head began to hurt
From checkin’ out the way
the newsmen say they get the dirt
Before the guys on channel so-and-so,
and further they are certain
That any show they’ll interrupt
to bring ya news if it comes up
If the place blows up,
they’ll be the first to tell
Because the boys they got downtown
are workin’ hard and doin’ swell
And if anybody gets the news
before it hits the street
They say that no one blabs it faster!
Their coverage can’t be beat!
Next, he captures the hypocrisy of the rioters (and their apologists) with startling conviction:
Well, I saw the market burning
and the local people turning
On the merchants and the shops
that used to sell their brooms and mops
And every other household item,
watched a mob just turn and bite ‘em
And they say it serves ‘em right,
because a few of them were white
And it’s the same across the nation,
black and white discrimination
Yelling “you can’t understand me”
and all that other jive they hand me
On the papers and TV,
and all that mass stupidity
That seems to grow more every day …
Finally, Zappa has a few choice words for would-be revolutionaries, three years before John Lennon excoriated those “minds that hate”:
You know we’ve got to sit around at home
and watch this thing begin
But I bet there won’t be many
who live to see it really end
Because a fire in the street
ain’t like a fire in the heart
And in the eyes of all these people,
don’t you know that this could start
On any street, in any town,
in any state, if any clown
Decides that now’s the time to fight
for some ideal he thinks is right
And if a million more agree,
there ain’t no Great Society
As it applies to you and me,
the country isn’t free
This is a conservative jam if ever there was one. Do I have more? Of course I do. How about Leonard Cohen’s “The Future,” a nightmare vision of totalitarianism and the destruction of western culture? How about Ben Harper’s “Oppression,” a stirring reminder that we all hold the power to overthrow tyranny? How about CCR’s “Keep on Chooglin'”? Okay, maybe not that last one.
I am now officially sick and tired of hearing about how the pending players’ strike is going to kill Major League Baseball. The general manager of the Cincinnati franchise took some heat for a statement in which he basically argued that a players’ strike would be the 9/11 of baseball. Dave Campbell of ESPN also invoked 9/11 in describing the consequences of a player strike. For you incurably hysterical types out there, let me offer the following words of reason:
Pro baseball will survive because it is played in a capitalist country.
As long as there are athletes who want to play, and entrepreneurs who are willing to organize it, professional baseball will exist in some form. There has not been a lack of either of these elements in the United States since the 1870s. Every time I have made this claim, among family, coworkers, students, etc., it has been met with howls of derision. The counter-arguments boil down to:
(1) what about the fans? the game is for the fans; what if the fans get fed up and leave? and:
(2) baseball has now gotten itself into problems that are unprecedented in its history, and it cannot possibly hope to survive, as the deck is stacked against it. Both these claims are lacking in merit, as we shall see.
If you look at MLB’s attendance history (which of course I did), you will see that there is NO evidence that past strikes have had a long-term impact on baseball attendance. None. In 1972, a strike cut about ten games off the front of the season. Attendance per game dipped in 1972 — but attendance was higher in 1973 than it was in 1971, and has not since fallen below 1973 levels. A similar pattern emerged around the longer 1981 strike — attendance was higher in 1982 than in 1980, and grew from 1982 into the 1990s.
In 1994, the players again struck, this time in August, and the season came to an abrupt end. This time, it looks like baseball paid a price — attendance in 1993 peaked at 30,979 fans per game, and has not risen to that level since the strike. But 1993 is a poor year to use as a baseline, because two new teams joined the National League that year, and first-year expansion teams draw exceptionally well. One of those teams, the Colorado Rockies, set an attendance record that still stands. If you use 1992 as the baseline, or just throw those expansion teams’ totals out of the league average for 1993, baseball had fully recovered its attendance base within about two seasons of the end of the strike.
But let’s suppose the doomsayers are right, and baseball loses half its fan base. Let’s say MLB attendance falls from 30,000 per game to 15,000 per game as a result of the pending strike. Can we put that into some historical context?
There used to be a time that insufferable sportswriters called the “golden era” in MLB history. Roughly defined as the years 1947-57, these are the seasons that sportswriters like Roger Kahn, in hushed and reverent tones, describe as the greatest ever. Ted Williams, Joe DiMaggio, Willie Mays and Mickey Mantle played during part or all of The Golden Era. Baseball was the only well-established pro sport. Baseball was The National Pastime, a huge part of our popular culture. Right?
Well, guess what? The average major league paid attendance during The Golden Era was 14,010 per game. Yes, baseball is in danger, the doomsayers tell us, of having its attendance fall all the way back to … essentially what it was during The Golden Era, when baseball was allegedly pure as the driven snow and beloved by all Americans.
What about those organized labor problems? Look, these issues are as old as baseball. The threat of the union striking is nothing compared to what players used to do when they didn’t like the way the owners treated them — they used to FORM RIVAL LEAGUES! The Federal League, to name just one, played in 1914-15; future Hall of Famers like Eddie Plank, Chief Bender, Joe Tinker and Mordecai “Three-Finger” Brown defected to the upstart league. The Federal League didn’t last, but it was a major wakeup call for the AL and NL. The AL itself started as a rebel league too, except that it survived. If the pampered players of today had the cojones to pull off something like THAT, the owners would have a lot more to fear than they do in Donald Fehr, the morose players’ union chairman.
So rest easy, fans. Baseball is here to stay. How do I know this? Because capitalism is alive and well.
Remember Clinton’s “Don’t Ask, Don’t Tell” policy for admitting gays into the US military? It appears that Big Media has adopted a “Don’t Know, Don’t Care” approach to covering the tumultuous stock market. Cal-Berkeley journalism prof Orville Schell says that Big Media’s obliviousness to the looming financial scandals stemmed in part from the fact that they are part of the corporate world too.
Maybe that’s why Big Media failed on the investigative side, but that still doesn’t explain how it is that the largest and most reputable media outlets in the world are simply at a loss to tell their readers what is happening in the financial markets. Instead of providing answers, they rely on pop-culture cliches, psychobabble and a Rolodex full of self-serving “experts.” Here are three of the worst examples of the DK/DC mentality in recent days from three major news sources: MSNBC, the New York Times, and CNN.
Exhibit 1: MSNBC on Market timing
MSNBC wonders out loud whether it is possible to “time” the market — that is, can investors count on making extra money in the stock market by picking the optimal times to buy and sell? This is hardly a controversial issue in the finance community — the weakest version of the Efficient Market Hypothesis (EMH) says that you cannot forecast stock prices by extrapolating present trends or by overlaying historical cycles — that “market timing” is fool’s gold. Yet in an attempt to make the story “balanced,” MSNBC gives disproportionate weight to the crankish opinions of a “stock cycle” fetishist named Peter Eliades. The author of the story is totally unable to critically assess Eliades’ claims.
Never mind that stock cycle theory is the phrenology of the finance world — Peter Eliades is telling us that he can make money timing stocks. His “proof”: stock prices fluctuate, so it is critical to buy and sell at the right times. Gee, you mean I would make more money if I bought at a lower price and sold at a higher one? That is a tautology, not an argument; it is not proof that any valid strategy for forecasting the peaks and valleys of the market can be devised. The MSNBC author seems totally incapable of making this critical distinction.
As for Mr. Eliades, we are told that he “[has] his money in cash until the market shows clearer signs of its next move.” So he essentially concedes that he doesn’t know how to time the market either, but this point is also lost on the author of the piece. And why on earth is he in cash? Is cash the only alternative to corporate equities? But since MSNBC knows as much about securities markets as Mr. Eliades — next to nothing — he is their peer, and as such is taken at face value by clueless Big Media scribes.
If you are concerned about when to get out of the stock market, you can always hedge your bets by selling off your stock portfolio a little at a time, smoothing out the bumps in the ride. Market timing poses no crisis to smart, disciplined investors.
Exhibit 2: The NY Times on the recovery
I picked this next quote not because I felt like picking on the New York Times, but because I think that it is all too typical of pseudoscientific analysis of the stock market and the sheer pervasiveness of the DK/DC policy by Big Media in general. It could have come from any newspaper. This is how The Gray Lady attempts to explain Monday’s stock market rally:
Emboldened by the broad market’s ability last week to snap a three-week losing streak, investors jumped back into the market on Monday, scooping up stocks with beaten-down prices.
Stock prices rose because investors jumped back into the market? Hmmm … how did these investors “jump into” the stock market? By purchasing stocks from the Stock Market Fairy, right? No, they bought shares from willing sellers who were already in the market and wanted to reduce their exposure to those particular securities. Every share of stock that is traded on the NYSE is simultaneously bought and sold, by definition. Duh!
And what is with this psychobabble? In an absurd anthropomorphosis, the Times tells us that the market had the “ability” to snap a losing streak. Markets don’t have “abilities” — markets do not “struggle” to “find their level” or “seek to reverse their losses” or whatever other characteristics journalists assign; markets simply calculate the prices needed to avoid surplus or shortage conditions. If the buyers were “emboldened,” what does that say about the investors who sold their shares to the emboldened buyers? Are they wusses?
Exhibit 3: CNN on the scandals
This CNN piece is typical of the media’s DK/DC attitude toward the
corporate earnings scandals. Investors, we are told over and over again, have been “alarmed” and “shaken” by various scandals in which senior management “cooked the books” to overstate profits. Well, maybe rank amateurs and ham-fisted day traders allow measures like “earnings per share” drive their investment decisions, but as they tell you in accounting courses — profit is opinion, cash flow is fact.
If I am a CFO, which would I rather do: report higher earnings or lower earnings? Suppose that I have the option of valuing inventory in two ways, one of which would result in a higher cost of goods sold; or suppose that I can choose from two depreciation schedules for my fixed assets, one of which would cause me to take more depreciation expense sooner in the life of the asset. In either case, I’ll take the option that depresses current earnings, thus minimizing current tax liability and giving me more cash sooner. Tax reforms such as accelerated depreciation and LIFO (last in, first out) inventory modelling would allow corporations to report LESS taxable income while INCREASING their cash flow by decreasing their tax liability. Investors value a stock for the company’s ability to generate cash to pay dividends, not for its ability to enrich Uncle Sam.
A healthy firm is going to try to err on the low side when reporting earnings. For a struggling, nearly insolvent firm like MCI WorldCom or Enron, the incentives might be reversed if, for example, reporting very low or negative earnings would cause the firm’s bond rating to fall substantially. WorldCom and Enron were highly leveraged, which means (1) that they are extremely sensitive to the cost of financing their debt and (2) that they are extremely sensitive to downturns in the business cycle. Firms that are fighting for survival, and management that is trying to hold on to power, might try anything. But it is fatuous to treat every business as the exception to the rule.
Here is something that Big Media is not going to tell you: the outright majority of the value of the US stock market is owned by financial institutions (e.g. investing intermediaries such as mutual funds, and contractual intermediaries such as pension funds and life insurance.) Households are net sellers of individual stocks, but they are net buyers of mutual funds. In other words, households are still heavily vested in the stock market, but they are investing indirectly through professionally managed mutual funds and pension funds, etc. A pension fund manager is not going to be swayed by a cash flow statement that tries to shift $4 billion from operating activities to financing activities (as WorldCom did) — these people are just not duped that easily.
So is “shattered investor confidence” the reason the stock market is falling? Call me a heretic, but I think the scandals have relatively little to do with the declining US stock market. I think it has more to do with the EU Savings Tax Directive, which Perry has discussed below. The US stock market was fueled in the ’90s by massive foreign investment in American equities (British Petroleum buying Amoco, Daimler-Benz buying Chrysler, etc.) Europeans prefer to set up American holding companies to invest in the US, earning income on their investments that is taxed at (comparably low) American corporate tax rates.
The US attracts massive amounts of foreign investment (another way to say this is that the US has a massive current account deficit) because the US has relatively low tax rates, and relatively light regulatory burdens. But the EU considers this “unfair tax competition” and is trying to establish a tax cartel that would tax receipts of income earned in the US by Europeans at higher European rates. To the extent that such a thing would make investment in the US less profitable, it has reduced the global demand for American corporate equities. It’s just a theory, but at least it is a theory backed by some evidence, not just a bunch of tiresome cliches pastiched together into a jejune news story.
In a recent post, Stephen “VodkaPundit” Green managed to assign an innovative moniker to New York Times columnist Nicholas Kristof. Mr. Green objected to Kristof’s claim that domestic terrorists like the militias are just as much a threat as foreign terrorists such as al-Qaeda. After carefully weighing the evidence, Green dismissed the notion as the ramblings of a f—tard.
Kristof’s latest offering will do nothing to help him live down his new nickname. He is asking us to believe that the US is complicit in Islamic nations’ institutionalized abuse of women by refusing to sign the Convention on the Elimination of All Forms of Discrimination against Women, a document that is now 22 years old but which Kristof finds fit to recycle as cutting edge news.
The CEDAW treaty, according to Kristof, “simply helps third-world women gain their barest human rights. In Pakistan, for example, women who become pregnant after being raped are often prosecuted for adultery and sentenced to death by stoning. But this treaty has helped them escape execution.” See? Pakistan has to tone down the misogyny because they signed the treaty. Since the US has not ratified the treaty, US judges are free to sentence adultresses to death by stoning. Clearly, the problem here is with the US, not with Pakistan and the others who signed the treaty, right? Well, actually, it isn’t America’s fault, says Kristof. It is John Ashcroft’s fault.
If only the US Congress would ratify the treaty, Pakistani and Saudi and Iranian men would stop abusing women! Besides, everyone knows that even if these men are abusing women, it is just their way of expressing outrage over America’s support of Israel and opposition to Palestinian statehood. In fact, every evil in the world is America’s fault, even when foreigners are perpetrating the evil against America.
Kristof insists that there is no political agenda behind the CEDAW treaty, and that conservative objections to the treaty are misguided. However, the treaty openly embraces affirmative action:
Article 4.1: Adoption by States Parties of temporary special measures aimed at accelerating de facto equality between men and women shall not be considered discrimination as defined in the present Convention, but shall in no way entail as a consequence the maintenance of unequal or separate standards; these measures shall be discontinued when the objectives of equality of opportunity and treatment have been achieved.
… and asserts that a wide variety of welfare-state entitlements such as “access to health care”, paid maternity leave, free education, agricultural loans, public pensions, etc. are actually fundamental rights. Sure, no political grandstanding there.
If Kristof wants to live down his new nickname, he is going to have to do better than this. Perhaps Kristof will even join Robert Fisk in having his very name immortalized as a blogosphere synonym for, well, f—tard.
Blogger N.Z. Bear has a cool feature on his blog “The Truth Laid Bear,” in which he attempts to quantify the flow of blog-to-blog links within the blogosphere. He identifies the blogs that are most often referenced by other blogs, and he also identifies the blogs that most frequently link to other blogs.
You can probably guess who is #1 on both lists. Where does Samizdata rank? We are tied for 18th place on the list of blogs most cited by other bloggers. However, we are way, way down there in terms of linking to other blogs, tied for 96th place. So, here is a link to HappyFunPundit, which is on a roll with its last two entries. HFP’s “music industry suckage report” is one of those pieces where you realize that someone else has just articulated what you thought all along but couldn’t quite express yourself. And while the Kevin Richardson vs. George Voinovich flap is funny enough as a straight news story, HappyFunPundit’s take is even funnier. Well done, Dan and Steve.
In the 1990s, Paul Krugman was one of the most respected economists in America. He wrote for a popular audience as well as for the scholarly community, and although I didn’t always agree with the contents of his books, he at least pursued his subjects with rigor, and occasionally turned out a real gem (1995’s Pop Internationalism is a great book). He was seen by many on the left as their Great White Hope, the one cutting-edge liberal economist who was raising objections to the more conservative University of Chicago crowd that was dominating the debate (and the Nobel Prizes) at the time.
Like those before him, though (Jean-Paul Sartre, Bertrand Russell, Noam Chomsky) Krugman has done irreparable damage to his academic credibility by choosing to become a political hack — that’s what I mean by the title. Krugman’s latest NY Times op-ed (link requires registration) serves up one howler after another. He offers precious little support for his thesis — that the Bush administration has given “energy companies” carte blanche to dictate environmental policy because the energy companies bankrolled the Bush campaign — because, well, that claim just won’t stand up to scrutiny, no matter how good a sound bite it makes. So in that great Blogosphere tradition, let us now fact-check Krugman’s ass and see where he comes up short.
Whopper #1: In the case of energy policy, the administration still won’t release information about Dick Cheney’s energy task force. But it’s clear that energy companies, and only energy companies, had access to top officials. The result was that during the California power crisis — which, it is increasingly apparent, was largely engineered by Enron and other companies that had the administration’s ear — the administration did nothing.
Enron did some sinister things. They lied to the investment community, covered up their lies and committed securities fraud on a grand scale. This does not mean, however, that Enron is responsible for every crisis that comes down the pike. Enron engineered the California power crisis? This simply strains credulity. The electricity that Enron did sell to the California ISO (the power-sourcing agency for the state) came at a lower price than the market average in California, and at a lower price than the LA Dept. of Power and Water was charging the state for its electricity. Moreover, Enron accepted credit from electric power distributors and from the state of California during the worst part of the crisis, and the state of California ended up reneging on millions of dollars of obligations to Enron. If anything, Enron helped relieve the California electricity shortages of 2001.
Whopper #2: When scientists discovered that industrial chemicals were depleting the earth’s protective ozone layer, [Reagan-era Interior Secretary James] Watt suggested that people wear hats, sunscreen and dark glasses. Luckily for the planet, he was overruled; the United States joined other countries in curbing production of ozone-depleting chemicals. The ozone hole is still growing, but disaster has at least been postponed.
The US banned CFC’s (the principal group of industrial chemicals linked to ozone depletion) from use as an aerosol propellant in 1979. The treaty Krugman referred to, the Montreal Protocol, was signed by the US delegation in 1987, and was ratified in the spring of 1988. All of this was going on during the Reagan administration.
Krugman then resorts to damnation by faint praise, congratulating the Republicans for “at least postponing” ultraviolet disaster. According to the United Nations Environmental Programme (UNEP) 1999 publication on the Montreal Protocol, global CFC production is presently lower than in 1960, and the bureaucracy predicts that the ozone layer will stage a recovery over the next 50 years, even if no further action is taken. As Bjørn Lomborg points out in The Skeptical Environmentalist, the additional exposure to ultraviolet light from the ozone depletion we have already experienced is roughly what would be experienced in moving 100 to 200 miles closer to the equator, say from Manchester to London.
Whopper #3: … the E.P.A.’s Christie Whitman assured the public that Mr. Bush would honor his pledge to control carbon dioxide emissions — only to be betrayed when the coal and oil industries weighed in on the subject. So the administration learned nothing from the California crisis; it still takes its advice from the energy companies that financed its campaign (and made many administration officials, including Mr. Bush and Mr. Cheney, rich).
Big corporations financed the Bush campaign! This assertion is totally preposterous on its face. The last US election in which corporations of any kind were permitted to make any contribution to a presidential candidate was the hotly contested Theodore Roosevelt vs. Alton Parker race of 1904. Direct corporate contributions have been illegal in federal elections for nearly 100 years. Of course, corporations can set up Political Action Committees and have the PAC make a donation to a candidate, but this is limited to $5,000 per PAC per candidate per election. GWB raised a total of $193.1 million for his 2000 presidential bid (including a federal subsidy of $67.6 million.) Just over $2 million, or 1.2% of Bush’s campaign funds, came from all PACs. Maybe that $2 million came from 400 energy company PACs that donated $5,000 each … or maybe not. (Rather than muddling through the FEC’s website for data, check out this handy thumbnail of the Bush Campaign’s sources and uses of funds at OpenSecrets.org).
Whopper #4: And it’s one thing to reward your friends with subsidies and lax regulation. It’s something quite different to let them dictate policy on climate change.
First, Krugman says that the administration is bound to energy companies such as Enron. Then he says that the energy companies are dictating policy on climate change. So it stands to reason that Enron opposed action on the climate change front, right? Wrong. Enron lobbied heavily for greenhouse emissions caps a la Kyoto, and also for subsidies for renewable electric energy, the exact opposite of what the administration wants.
All in all, this was a thoroughly disappointing effort by Krugman, a man whom I used to have a great deal of respect for. Paul Krugman is a brilliant man, and he is capable of much better work than this. Come on, Dr. Krugman, stick to economics, and leave this sort of political sloganeering to the Carvilles and the Begalas of the world.
Now, there is a headline that you don’t see too often. The sports sites here in the US, such as ESPN.com and SportingNews.com made note of the American team’s 3-2 triumph over the favored Portuguese, but didn’t make it the day’s top story — after all, the NBA and NHL finals are now underway. Plus they understood that this was a preliminary-round game, that the US might not advance out of their group and that Portugal could still win the World Cup despite this loss (although it is difficult to see how they would beat Argentina or England when they can’t beat the US, it is still possible.)
No such restraint was shown by America’s news dailies. While American sports fans yawned, American journalists fawned, comparing the win to the “miracle on ice” at the Lake Placid Olympics in 1980, in which the US hockey team beat the Soviet Union in the semifinal round. So why is the World Cup getting so much coverage here in the US? I have a theory: finally, the press has found something that America really, really sucks at.
We used to suck at the Winter Olympics, but this time around we dominated. The American economy continues to grow while Europe has stagnated; Mississippi, the poorest American state, would be midpack among European nations in per-capita income. The fourth estate desperately wanted to believe that we would not be able to hold our ground in Afghanistan, and ran “quagmire” stories right up to — and even beyond — the fall of Kabul. Now the World Cup rolls around, and FINALLY, the press has something to report on that America does not dominate. And they love it.
It’s just a theory, but I suspect that’s what’s going on. It’s not as though America is suddenly in the throes of soccer fever. I am a bigger soccer fan than 99.9% of Americans, and soccer is maybe my 5th or 6th favorite spectator sport. If you pressed me, I could probably name all the teams in the English Premier League or the Italian Series A, but I cannot name a single player on the US World Cup team. So what does that tell you?
Imagine life at the Quindlen household. Say they are pondering what to make for breakfast on a leisurely Sunday morning … someone suggests pancakes, while Anna retorts that “it is impossible to believe that anyone who does not want waffles has a proper sense of our place in history.” This is Anna Quindlen’s M.O. — she takes her own (often perfectly reasonable) prejudices / preferences on a given subject and elevates them to the level of an absolute moral imperative. Just as OxBlog proposes the four laws of Maureen Dowd, we can isolate the First Law of Quindlen: There is no need to provide evidence for my argument, because it is impossible to believe that you could disagree with me.
Anna thinks that we ought to turn the remains of the WTC site into an austere memorial instead of entertaining designs for new commercial real estate. “The demands of democracy should not be confused with those of capitalism,” she solemnly intones. And you didn’t even know that you were confused! Why the institute of democracy “demands” that this particular corner of southwest Manhattan remain eternally undeveloped, Ms. Quindlen never quite gets around to explaining, except by offering the official post-911 cliche: otherwise, the terrorists will have won.
Japan rebuilt Nagasaki and Hiroshima. The Germans rebuilt Dresden. The United States reconstructed Atlanta. (Which reminds me — wasn’t the Civil War, not Vietnam, the most corrosive war in US history? Or did US history begin on the day Anna Quindlen was born?) Why do we rebuild our war wounds? As the anti-Quindlen, Virginia Postrel, would put it, because we are a dynamic society, with the few stasists like Quindlen serving as the exceptions that prove the rule. Most of us do not believe that we have already achieved all the greatness we will ever claim. Or as Oscar Wilde said, “we’re all of us in the gutter, but some of us are looking up at the stars.”
There is nothing inherently wrong with what Anna Quindlen is proposing, but there is something wrong with her insistence that her vision is the only one that passes muster from an ethical perspective. If she wants the space to remain vacant, then she ought to organize a consortium of like-minded individuals to purchase the vacant land, and leave it perfectly barren, or erect some weird new age memorial with nondenominational angels playing Enya music on their harps, or whatever floats her boat. Until she is willing to take such action, however, her opinion of what ought to go on the WTC site counts no more than mine, which is to say, not in the slightest.
Now, if Anna Quindlen really wanted to do something nice for Manhattan, I can think of about eight blocks of choice midtown real estate, right there on the East River, that developers would love to get their hands on. That’s right, the US could hand the United Nations an eviction notice and sell the property to the highest bidder. If, by even suggesting this, it proves that I have no sense of America’s place in history, well, I guess in Anna’s world I am already guilty as charged.