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Tuesday, August 31, 2004

UPDATE: Soros Heeds the Call!

Yesterday, I wrote, "Can't someone--the DNC, MoveOn, a 527--take up the righteous cause of just vengeance" against the right-wing slime machine?

Today, George Soros, the financier and 527 angel, may have heard the call. He was recently slimed by House Speaker Denny Hastert, who said "I don't know where George Soros gets his money. I don't know where - if it comes overseas or from drug groups or where it comes from," and continued on in this vein, implying that Soros was some kind of drug kingpin.

Soros has struck back, sending a letter to Hastert demanding an apology. He doesn't specifically mention legal action, but seems to hint at it, using what sound like legal code-phrases to me. Soros charges Hastert with "slander" and demands that he "publicly apologize for attempting to defame my character and damage my reputation."

I wonder how much damage to a multi-billionaire's reputation is worth? A hundred million? A billion? Sue him George!


It's been clear for many years that there's a vast right-wing conspiracy willing to lie and slander to achieve their political ends: the charges that Clinton killed Vince Foster, that Kerry cheated to win his Vietnam medals. On a smaller scale, we have Luskin making criticisms of Krugman and DeLong that probably meet the legal definition of slander. And on and on.

The right-wing conspiracy tosses out slanderous charges right and left, but never seems to suffer for their lies, even though slander is a civil offense. I'm glad to see that some freelancers are filing state bar ethics complaints against the Swift Boat Liars. But payback for slander is a classic public good, and like all public goods, without collective action there won't be enough of it. From Kerry's perspective, there's not much point in going after these guys. The damage is already done, Kerry risks being dragged through courtroom mud, and he has better things to do with his time.

From the point of view of liberals, progressives, and Democrats as a whole, payback is a public good: it will deter future members of the vast right-wing conspiracy from signing up. The Bush administration knows this. Just look at what happened to John DiIulio after he revealed that the White House was run by "Mayberry Machiavellis." Or Valerie Plame.

Can't someone--the DNC, MoveOn, a 527--take up the righteous cause of just vengeance?

"I do not think Nasser wanted war"

A commentator quotes Israel General Rabin as saying, "I do not think Nasser wanted war. The two divisions he sent to the Sinai on 14 May [1967] would not have been sufficient to launch an offensive against Israel. He knew it and we knew it."

According to the anonymous commentator, and numerous web sites, this quote proves that Israel sought war in 1967. However, it does no such thing. The crucial point is the date: May 14, several weeks before the June 5 beginning of the 1967 War. The quote linked to by my commentator omits the date, as do many, but not all, of the web pages I found touting this quote.

Many things happened between May 14 and June 5. Egypt ordered the UN peacekeepers to leave, Egypt blockaded Israel's Red Sea Port. Egypt moved another 5 divisions to the Israeli Border, 100,000 troops in all. Egyptian dictator Nasser threatened Israel with genocide. Indeed, every provocation I mentioned in my previous post happened after May 14.

Even without more context, it's fairly clear what Rabin is saying here. He's saying that Nasser may not have initially wanted war, but eventually found himself in a situation where he couldn't back down without losing face. He may have hoped that the UN peacekeepers would refuse to leave. He may have been goaded by the Soviets, who falsely told him that Israel was planning to attack Syria. The histories I've read say that the war was probably a miscalculation on Nasser's part, but certainly do not suggest that the war was provoked by Israel.

Here's some context that I found on a discussion board. I don't know if it's an accurate transcription of the interview with Rabin, but it seems credible to me.

Source is Le Monde, 29 February 1968. The interview begins on page 1 and continues on page 4.


General Rabin does not think that Nasser wanted war

... Q. Do you think that Nasser pretended to believe in your threats because he was seeking to provoke war?

A. I do not think that Nasser wanted war. The two divisions which he sent to the Sinai, on May 14, would not have been sufficient to start an offensive against Israel. He knew it, and we knew it. This fact shows, in my view, that Nasser did not really believe that we were going to attack Syria. He was bluffing; he wanted to present himself, at low cost, as the savior of Syria and to thus gain broad sympathy in the Arab world. We were familiar with this strategem since he had already used it in 1960.... But, eight years ago, he had not demanded the withdrawal of the UN forces. This time, he felt the need to give more credibility to his bluff. Indeed, the propaganda of the anti-Nasser Arab states had pushed him by constantly accusing him of "hiding behind the international forces".

Q. Did he intend, in your view, to close the Gulf of Aqaba to Israeli shipping?

A. Initially, he demanded the withdrawal of the "blue helmets" only from the portion of the borders from Rafah to [illegible], and he suggested that the UN soldiers be regrouped in Gaza and Sharm-el-Sheikh (which commands the entrance to the Gulf of Aqaba). Unhappily, Mr. Thant obliged him to choose: keep the international forces in all their positions or, on the contrary, demand their total and definitive withdrawal. I believe that the UN General Secretary even made this requirement public before it had reached President Nasser. Nasser, in order not to lose face, chose to start the crisis of Aqaba.

Q. Why did he do this if he did not want war and if he knew, in addition, that your army was superior to his?

A. This is where our logic does not correspond to that of the Arabs. The latter rarely make the distinction between realities and desires. Nasser was intoxicated by the explosion of popular enthusiasm in the Arab world, as well as by his own propaganda. He finally believed that the Egyptian army was not defeated in 1956 by Israel, but only by the French-English intervention. He constructed an entire system of thought, according to which Israel would not initiate hostilities in 1967 because it could not count, as in 1956, on the support of foreign powers. However, judging by the seven divisions which he sent to Sinai after the closure of Aqaba, he knew that we would consider his gesture to be a casus belli.

Here is the original in French


Le generale Rabin ne pense pas que Nasser voulait la guerre

... Q. Penser-vous que Nasser a fait semblait de croire a vos menaces parce qu'il cherchait a provoquer la guerre?

A. Je ne pense pas que Nasser voulait la guerre. Les deux divisions qu'il envoya dans le Sinai, le 14 mai, n'aurient pas suffi pour declencher une offensive contre Israel. Il le savait, et nous le savions. Ce fait demontre, a mon sens, que Nasser ne croyait pas vraiment que nous allions attaquer la Syrie. Il bluffait; il voulait se presenter, a bon prix, comme le sauveur de la Syrie et se gagner ainsi de larges sympathies dans le monde arabe. Nous connaissons le stratageme puis qu'il l'avait deja utilise en 1960.... Mais, il y a huit ans, il n'avait pas demande le retrait des forces de l'O.N.U. Cette fois-ci, il a eprouve le besoin de donner plus de credibilite a son bluff. En effet, la propagande des Etats arabes antinasseriens l'avait pousse a bout en l'accusant constamment de "se refugier derriere les forces internationales".

Q. Avait-il, selon vous, l'intention de fermer le golfe d'Akaba a la navigation des bateaux israeliens?

A. Au debut, il avait demande le retrait des "casques bleues" seulement de la portion des frantieres allant de Rafah a [illegible], et il suggerait que les soldats a l'O.N.U. soient regroupes a Gaza et a Charm-El-Cheikh (qui commande l'entree du golfe d'Akaba). Malheureusement, M. Thant l'a oblige a choisir: maintenir les forces internationales sur tous ses positions ou, au contraire, demander leur retrait total et definitif. Je crois meme que le secretaire general de l'O.N.U. a rendu publique cette exigence avant meme qu'elle ne parvienne au president Nasser. Celui-ci, pour ne pas perdre la face, a choisi de declencher la crise d'Akaba.

Q. Pourquoi l'a-t-il fait puis qu'il ne voulait pas la guerre et qu'il savait,
de surcroit, que votre armee etait superieure a la sienne?

A. C'est la ou notre logique ne correspond pas a celle des Arabes. Ces derniers font rarement la distinction entre les realities et les reves. Nasser a ete intoxique par la flambee d'enthousiasme populaire dans le monde arabe, ainsi que par sa propre propagande. Il a fini par croire que l'armee egyptienne n'a pas battue en 1956 par Israel, mais uniquement par l'intervention franco-anglaise. Il a alors edifie tout un systeme de pensee, selon lequel Israel ne prendrait l'initiative des hostilities en 1967 puisqu'il ne pouvait compter, comme en 1956, sur le soutien de puissances etrangeres. A en juger par les sept divisions qu'il envoya dans le Sinai, apres le fermiture d'Akaba, il savait pourtant que nous considererions son geste comme un casus belli.


Saturday, August 28, 2004

Cole: Israel to Blame for 1956 and 1967 Wars

Middle East expert Juan Cole, who usually makes a lot of sense, and is certainly very knowledgeable, seems to have a blind spot about Israel. Perhaps this is because the Arab-Israeli conflict isn't his specialty. Perhaps it's because he's heard the Arab interpretation of events too many times. Whatever the reason, his writings come across as misleading propaganda:
The United States should protect Israel from aggressive attack, if necessary. United Nations members are pledged to collective security, i.e. to protecting any member nation from aggression at the hands of another. But given that Israel is a nuclear power with a vast arsenal of weapons of mass destruction; given that Egypt and Jordan have long-lived peace treaties with Israel; and given that Syria and Lebanon are small weak powers, there is not in fact any serious military threat to Israel in its immediate neighborhood. In contrast, Israel launched wars against neighbors in 1956, 1967, and 1982 (all of which it won so easily as to bring into question the necessity for the wars in the first place if they were defensive).
How generous of Cole to concede that these wars might possibly have been defensive, even while doubting their necessity. Let's review the causes of the 1956 and 1967 wars. I'll ignore the 1982 war, since there Cole has the strongest case.

Israel's 1956 invasion of Egypt was provoked by two major acts of war on the part of the Egyptians. First, Egypt had been launching cross-border terrorist attacks on Israel that killed dozens each year. Second, Egypt blockaded Israel's Red Sea port.

Israel's 1967 war with Egypt, Syria, and Jordan was provoked when Egypt again blockaded Israel's Red Sea port, Egypt moved large number of troops to the Israeli border, Arab leaders called for a genocidal war with Israel, and when Egypt expelled UN peacekeepers. Provocations from Syria and Jordan were fewer, excepting calls for genocide, but these countries were closely allied. For example, in the build up to the war, an Egyptian general was placed in command of Jordan's army.

So Cole doubts the necessity of these wars? Israel had tolerated Egypt's terrorist attacks for years. I suppose they could have continued to do so, but the attacks had been escalating since 1949, from theft and sabotage, to rape and murder by irregulars, to raids by Egyptian army units. In 1967, Israel could have tolerated the blockade, although it violated the international law that Cole is always invoking. They could have hoped that the expulsion of UN peacekeepers, hostile troop movements, and calls for a genocidal war were just a bluff. But waiting for the Arabs to attack on their own terms would have been foolishly suicidal.

I don't think that Cole necessarily means to deny that Israel has a right to defend itself, but by questioning the necessity and defensive nature of the 1956 and 1967 wars, that's exactly what's he's doing.

Too strong? Notice that Cole, in dismissing threats against Israel, doesn't acknowledge the two most important threats: from Iran and from Palestinian terrorism. Notice the charge that Israel "is a nuclear power with a vast arsenal of weapons of mass destruction." A nuclear power yes, but I'm not aware that Israel has any other WMDs: chemical or biological weapons. Perhaps Cole has in mind conventional weapons, but that is not the usual meaning of "weapons of mass destruction." Finally, notice the irony Cole's invocation of the 1967 war in calling on Israel to act less aggressively against terrorist attacks, relying instead on US and UN assistance. In 1967, the US didn't live up to its commitments to maintain Israel's access to international waterways, and UN peacekeepers fled.


It's instructive to review Arab leaders' calls for genocide against Israel just before the 1967 War.
In Israel, which could not but be influenced by the hourly radio reports of Arab war frenzy and announcements of Israel's impending demise, there was a feeling of a noose tightening around the nation's neck--especially among Holocaust survivors. Damascus Radio told its listeners on May 23: "Arab masses, this is your day. Rush to the battlefield...Let them know that we shall hang the last imperialist soldier with the entrails of the last Zionist." The director of the Voice of the Arabs (Cairo), Ahmed Said, chimed in: "The Zionist barracks in Palestine is about to collapse and be destroyed...Every...Arab has been living for the past 19 years on one hope--...to see the day Israel is liquidated." The prime minister of Iraq spoke of "a rendezvous with our brothers in Tel Aviv," and [PLO leader] Shukeiry declared: "[T]here will be practically no Jewish survivors." [Source: Benny Morris, "Righteous Victims," pp. 309-310.]
Egyptian dictator Nasser declared a week before the war that it wasn't Israel's Red Sea port but Israel's "existence" was at issue. A few days earlier he had declared, "If Israel wants war--well then, Israel will be destroyed!" [Morris, pp. 306 & 308.]

Thursday, August 26, 2004

10 Nobel Winners Endorse Kerry

10 Nobel Prize winning economists issued a statement endorsing John Kerry yesterday.
The differences between President Bush and John Kerry with respect to leadership on the economy are wider than in any other Presidential election in our experience ... President Bush's fiscal irresponsibility threatens the long-term economic security and prosperity of our nation.
They join the 48 nobel prize winners in the hard sciences who endorsed Kerry a few months ago. The full statement of the ten economists is here.

Unless I'm badly mistaken, Kerry is now ahead in the crucial Nobel Prize race by 58-0.

Rising Health Costs: Short Run Job Loss, Long Run Wage Cuts

A while back, I criticized Hillary Clinton for arguing that national health insurance would create jobs. She wrote:
American companies are outsourcing jobs to countries where the price of labor does not include health coverage, which costs Americans jobs and puts pressure on employers who continue to cover their employees at home.
I pointed out that standard economic theory says that falling health costs will just lead to an offsetting rise in wages. There are lots of reasons to support national health insurance, but creating jobs isn't one of them.

So I was dismayed to see the NY Times and the Kerry campaign making a similar argument last week, in an article titled "Rising Cost of Health Benefits Cited as Factor in Slump of Jobs."

It turns out, though, that Kerry advisor Laura Tyson and her co-author Sarah Reber are making a much more sensible argument than Hillary's. They agree that health costs don't affect hiring in the long run, but argue that they do in the short run, since it takes time for firms to pass higher insurance costs on to workers. Here's their thesis:

Economic theory predicts that employers can respond to these rising costs in three ways:

* First, the employer can pass on more of the cost of health insurance to employees. This has happened: the average worker contribution for a family plan rose by 49 percent between 2000 and 2003, even faster than the growth in the total premium.

* Second, the employer can reduce wages or wage growth in order to pay for the higher benefit costs without raising total employee compensation. This also appears to have happened: wage growth has fallen steadily for several years and real wage growth has been negative for several years.

* Third, the employer can respond to the higher cost of labor by reducing employment or slowing its rate of increase. This is likely to occur if the employer cannot pass on the higher cost of health care to employees in the form of higher employee contributions to health insurance premiums or lower wages, because wages and other terms of employment are fixed in the short run.

Tyson and Reber take a simple but fairly convincing look at the data, and find that soaring health costs have indeed been prolonging the recession:

Rising health costs are consistent with the pattern of job losses, with the largest job losses occurring in industries with the highest benefits. Furthermore, rising health costs are consistent with evidence that the quality of jobs has deteriorated, with higher-paying jobs contracting and lower-paying jobs expanding.


Wednesday, August 25, 2004

Add it Up: Bush Promises $3 Trillion More in Debt

Jonathan Weisman, writing in the Washington Post today, reports that Kerry's plan won't balance the budget.
Sen. John F. Kerry's pledge to reduce record federal budget deficits is colliding with an obstacle that may be growing higher by the week: his own campaign commitments.
This is true enough. The credibility of Kerry's pledge to cut the deficit rests on his promise to return to "pay-as-you-go" budgeting, his promise to jettison new programs that can't be paid for, his reliance on a fiscally responsible economic team, and his own history of deficit-fighting. He hasn't really made sufficient specific pledges to cut spending or raise taxes.

But it is emphatically not true that Kerry's proposals are as fiscally irresponsible as Bush's, which is what Weisman asserts:
A Washington Post review of Kerry's tax cuts and spending plans, in addition to interviews with campaign staff members and analyses by conservative and liberal experts, suggests that they could worsen the federal budget deficit by nearly as much as President Bush's agenda.
The problem is that Kerry's campaign pledges are being compared to Bush's budget. For a normal administration, a budget proposal would be a stronger commitment than a campaign promise. But Bush is no normal president, and his budgets can't really be considered promises or commitments.

Let's compare Kerry's pledge to repeal Bush's tax cuts on the rich to Bush's past budgetary promises. If Kerry is elected, and instead proposes making tax cuts for the rich permanent, he will rightly be accused of breaking a campaign promise. But if Bush's budget is a promise, then Bush has also promised to eliminate his tax cuts for the rich, and indeed pretty much all his other tax cuts too. In his first and third budgets, these tax cuts were slated to expire at various points over the next decade. Now, in his forth budget, Bush proposes making the tax cuts permanent. Nobody has yet accused him of flip-flopping or breaking a promise. His budgets never really constituted promises: everyone knew he intended to break these commitments if he could.

The same is true of the Bush budget that's being compared to Kerry's proposals. It's not worth the paper it's printed on either. There are numerous examples of expensive promises Bush has made, that the Post ignores because they aren't in his budget.

Bush has repeatedly pledged to partially privatize social security. The transition costs of this are in the trillion plus range, but it's not in his budget. Bush has endorsed permanent Alternative Minimum Tax relief, a $376 billion dollar item over the next ten years. But only the first of the the ten years is in his budget. The Bush administration has also endorsed the grab bag of corporate tax breaks currently being considered in Congress. The CBPP estimates that these giveaways will cost $225 billion over ten years. But it's not in his budget either.

According to the Post's "Bottom Line" table, Kerry would increase the deficit by $1.306 trillion, and Bush by $1.352 trillion. But that's if you trust Bush's budget and not his promises. Even a casual analysis of three big items on Bush's current list of goodies for the corporations and the wealthy shows that Bush's plans would put us at least another $3 trillion in the hole.

So sure, President Kerry may to back away from some of his spending proposals. He's already said he will if he has to. But Bush has already backed away from the "promises" made in his budget, just as he has backed away from numerous commitments made in earlier budgets. Nobody else in the country takes Bush's budgets seriously. Why does the Post?

Botulism: Don't Worry, Be Happy

Once upon a time, Russell Baker, the former NY Times columnist (who was sort of the the Maureen Dowd of his day, except that he was often funny and insightful) was stuck, and didn't know what to write for his column. He went for a walk, and, fortunately, a potato fell out of a window onto his head. Presto! A column.

Like Baker, I too didn't know what to blog about, when, Presto! I opened a years-old can of tomato paste, and it exploded, spurting tomato-infused oil all over my shirt. Ah-hah, I cried, this must be one of those bulging cans I've been warned about. Botulism! I discarded the can.

I was all set to write about how wonderful it is to live in the 21st century, when we've at last wiped out the scourge of botulism. A little googling, however, reveals that botulism has been pretty much eliminated from commercial canning since at least the early 1900s. It's long been known how long to heat canned foods to kill botulism spores and commercial canners do it. (It turns out to take hours of heating to eliminate the spores in canned foods, but 10 minutes of boiling before eating will kill the toxic bacteria, making food safe to eat). For the last 100 years, botulism has been very rare, even in home-canned foods.

You might want to avoid traditional native Alaskan preservation methods, and beached whales aren't that safe either: Botulism is now so rare that these are significant causes in adults. About a sixth of all botulism outbreaks occur in Alaska, which is to say, about 4 or 5 cases a year.

Botulism is actually a serious issue for infants (who shouldn't be fed honey) and can infect wounds (avoid smoking black-tar heroin). Check out the CDC guidelines, the CDC epidemiological manual, or this historical review.

But I'm not so sure I should have discarded the tomato paste can. I want my 59 cents back.


Tuesday, August 24, 2004

Latest Ragout Content, Only on Angry Bear!

Today, Ragout is devoted to WWI: it's called Ragout for a reason, folks. If you want more, there's a lively discussion of the Great War (two discussions, even) at Brad DeLong's blog.

If WWI is not to your taste, you can find today's Ragout Economics at the Angry Bear (two posts, even).

Regular posting will resume tomorrow.


Monday, August 23, 2004

The New Yorker on World War I

For several years now, I've been fascinated with the Great War: it's been so influential on subsequent history, it's so unknown, and it was so full of misery and stupidity. The New Yorker's Adam Gopnik has an excellent article reviewing several recent books about the First World War. More accurately, the first half, which covers political and cultural issues, is terrific. The second half, on military issues, is crap.

Here's an example of the terrific part, where Gopnik points out that recent scholarship has shown that WWI wasn't an accident, the result of escalation and alliances run amok. Instead, many of the actors in Germany and Austria-Hungary longed for war and schemed to bring it about. To a lesser extent, the Russians and the French also looked forward to the prospect.

[One interpretation], made famous by Barbara Tuchman in "The Guns of August" and later given a memorable name in her book "The March of Folly," is that the war was made inescapable by a Laoco�n-like entanglement of treaties and alliances and military mobilization plans. In addition, the workings of the German "Schlieffen" plan have long been thought to have swept everyone up into battle before anyone had entirely decided to go to war. The plans called for so many men to be mobilized in such specific stages that, once the trains began to roll (and the defensive troop trains began to roll in reaction), nothing could have been done to stop them. The rulers of Europe went away on absent-minded July holidays to their old familiar spas, but the troops and trains kept on rolling in the background. The serpents were around the throat of liberal civilization before anyone had clearly imagined what might happen.

This most famous inevitablism has been revised so thoroughly that it, too, is essentially defunct. In part, this is the result of a 1961 study by the great German historian Fritz Fischer, who, moved by a desire for Germans to face the hard facts of a militarism that did not begin in 1933, insisted that the directly guilty parties were the German chief of general staff, Helmuth von Moltke, and the Austro-Hungarian chief of general staff, Franz Conrad von H�tzendorff. They were determined to have the war, Fischer insisted, and deliberately manipulated the situation, including encouraging all those holidays, on the German side, to prevent anyone from acting decisively to stop them. Fromkin's [recent] book is, essentially, Fischer's view put into lively, popular English.

I think this is basically right, and Gopnik's review is full of fascinating details about the march to war. For example, Gopnik, describing the yearning of European intellectuals for a "cleansing" war, reports this passage from a Sherlock Holmes story:
In "His Last Bow," Holmes's last adventure, which is set in the summer of 1914, Holmes says to Watson, "It will be cold and bitter, Watson, and a good many of us may wither before its blast. But it's God's own wind none the less, and a cleaner, better, stronger land will lie in the sunshine when the storm has cleared."

In general, Gopnik gets the military issues entirely wrong. Most egregiously, he confuses deaths with casualties (the total killed, wounded, or captured), reporting that 260,000 French were killed during the first month of the war, and 50,000 killed in a single day at the Somme. The actual figures are 75,000 and 20,000.* The New Yorker's stellar reputation for fact-checking may be somewhat overblown.

But even the passage about the "march of folly" quoted above falls down when it comes to the military details. Before WWI, all the continental Great Powers had war plans that were essentially detailed train schedules. They literally spent years developing plans to mobilize a million reservists, and load them onto trains along with their horse, equipment, and other supplies, for the trip to the front. The recent scholarship that downplays the German "Schlieffen" war plan that Gopkin cites is talking about what would happen after the troops got off the trains and started marching, it's not denying that the Great Powers had put together 1000s of pages of railroad timetables.

If nothing else, this elaborate plan -- and each country only had one or at most two -- made it hard for civilian authorities to overrule the military. At one point in the march to war, the Kaiser thought that France might remain neutral, and Germany could attack only Russia. Moltke, the German military chief of staff, told the Kaiser it was impossible: the plan was to send most troops against France, and there was only one plan. Similarly, the Czar at one point proposed mobilizing only against Austria-Hungary, and not against Germany. Had this been done, there might have been no world war: the war might have been limited to Russia, Austria-Hungary, and Serbia. But Russian military leaders told him too that modifying the plan was impossible. And the military leaders were not spinning tales. Austria-Hungary did modify its mobilization plan at the last minute, sending more forces against Russia at Germany's insistence. This change led to chaos, with troops languishing in rail depots for weeks.

Gopkin also misunderstands the role of the Americans, claiming that their entry was not a "turning point," and that recent writers have been "unimpressed" with their contribution. Absurdly, he says that instead the "war wound down from exhaustion," as if this somehow contradicts the importance of the American army. It is true that the American contribution to the fighting was minor, less than 100,000 dead, a pittance by the standards of the Great War. But by the end of the war, the American army was about half the size of the French or British, would have doubled in 1919, and consisted of fresh troops, while the other combatents were scraping the bottom of the barrel. The Germans could see perfectly well that they would be overwhelmed in 1919, and so they rolled the dice and launched a series of costly attacks in early 1918, hoping to win before the Americans arrived in large numbers. When the German attacks failed, their troops were demoralized, their generals lost their nerve, and the German army soon collapsed.

* See Strachan "To Arms," p. 230 for the 75,000 figure. The number killed during the first day of the Somme (20,000) is extremely well known and can be found in almost any book about WWI.

Sunday, August 22, 2004

NY Times Claims Oil Shock is an "Economic Stimulus"

The NY Times' Eduardo Porter asks a bunch of economists about the impact of the oil price shock on the economy. The bottom line turns out to be:

Undoubtedly, the recent price surge will hurt.
But maybe not that much.

Most economists have only shaved their growth forecasts slightly. The 30 analysts polled by the Federal Reserve Bank of Philadelphia reduced their forecast for growth in the second half of the year to 3.8 percent from 4.1 percent, and they sliced their growth forecast for 2005 by 0.2 of a percentage point -- to 3.7 percent.
Porter mostly quotes economic forecasters working for investment banks and such, but also talks to the right academic economist, James Hamilton. Hamilton is mainly known for his highly technical work in time series econometrics, but also happens to do a lot of more applied work on oil prices. He agrees that the oil price shock is bad but not that bad:

The price is high enough now that it can reduce the growth rate of the economy...But I'm not predicting a recession.
Hamilton has a nice web page devoted to his research on oil shocks, which includes a one-page summary of his current predictions.

Given all these pretty clear forecasts, it's more than a little strange that the article is headlined, "An Oil Price Shock That Could Be an Economic Stimulus in Disguise." Huh? How can something that slows the economy be an economic stimulus?

As best I can make out, the problem seems to be that the financial sector economists are focused on the very short term. And the recent news is not so much the oil rise, as it is changes in investors' expectations. "Investors have concluded that higher energy costs are likely to slow the Fed's hand in raising interest rates."

This is all well and good if you want to know what's going to happen to the stock market next week. But if you want to know what's going to happen to the economy in the next year, the answer is that the oil price shock will modestly slow economic growth, but not by enough to start a new recession, and that the effects will be somewhat offset by the Fed.


Friday, August 20, 2004

Angry Bear

I'll be co-blogging this week over at the fine economics group blog, Angry Bear, filling in for the Bear himself. I'll be cross-posting most of my blogging here, but there will be some exclusive Angry Bear content too. So if you aren't already reading AB (and most of my readers probably are) that's one more reason to check it out.

Lighter Tax Burdens for the Rich: Novak vs. Bush

Supply-side cheerleader Bob Novak complained yesterday that the Congressional Budget Office had produced "political fodder for Democrats" by reporting how Bush's tax cuts have reduced the share of taxes paid by the rich. Novak offered a surprisingly accurate description of the CBO report:
That study concluded that President Bush's cuts had shifted more of the tax burden from the nation's rich to the middle class, though everyone enjoyed an income tax reduction.
Naturally the Bush campaign was upset, Novak writes, and they offered a different interpretation, emphasizing a different set of figures from the CBO report:
Taken by surprise last week, the Bush-Cheney campaign tried to recover by putting together a conference call for journalists and trying to beat the Democrats at the class warfare game with this message: Had no tax cuts been enacted, the top 20 percent of federal income-tax payers would have paid 78.4 percent, but the actual figure, because of the cuts, amounted to 82.1 percent.
So, the Bush campaign says the CBO report is favorable to the Republicans, and shows that the tax system has gotten more progressive. Novak says the CBO report is favorable to the Democrats, and shows that the tax system has become less progressive. I think I may see a contradiction there.

Novak being Novak, he ignores the contradiction. Instead he calls for the CBO to produce numbers more favorable to the Republicans!

The Bush campaign is just adopting their usual tiresome spin, spouting figures that are technically true, but calculated to be misleading. They speak about federal income taxes, and hope that listeners will assume they're talking about total federal taxes. The Bush campaign's selective figures ignore all the rest of federal taxes including corporate income taxes, excise taxes, and payroll taxes. They ignore estate taxes too (but so does the CBO).

If you look at all federal taxes, the CBO finds, the upper middle class is paying a bigger share of taxes because of Bush. The 60th to 80th percentiles are bearing an additional seven tenths of a percentage point of the federal tax burden (see the table at the end of this post). There hasn't been much of a change for those in the bottom 60%. The top 20% did pretty well, paying a share six tenths of a percentage point smaller after Bush's tax cuts.

The big action, though, is in Bush's "base," the very wealthy. The top 1%, with incomes averaging about a million dollars per year, saw their share of federal taxes fall from 21.9 percent to 20.1 percent, a drop of 1.8 percentage points. They've certainly been getting their money's worth.

Share of Total Federal Tax Liabilities, 2004

Income Average 2000 Current
Category Income Tax Law Law Change
---------- -------- ------- ------ ------

Lowest 20% 14,900 1.3 1.1 -0.1
34,200 5.4 5.2 -0.2
51,500 10.4 10.5 0.2
75,600 18.8 19.5 0.7
Highest 20% 182,700 64.0 63.5 -0.6

Top 10% 259,000 48.7 47.6 -1.1
Top 5% 379,800 37.4 35.9 -1.5
Top 1% 1,050,100 21.9 20.1 -1.8

Source: CBO.

UPDATE: A commenter points out that I misstated the list of taxes included
in the CBO study. I've corrected this.

Wednesday, August 18, 2004

Enrollment Caps: Cruel, but Smart Politics

Ever since the recession began, progressives have urged Bush and the Congress to increase aid to the states, both to address urgent local needs and as a pump-priming measure to stimulate the economy. Bush and the Congress, of course, have chosen to focus on tax cuts for the rich instead.

So what's been happening in the states in the meantime? A recent report from the Urban Institute says,
...States were dealing with their most serious fiscal crises since World War II. The pressures facing states were particularly acute as they enacted their fiscal 2003 budgets. Conditions were, in most states, just as severe if not worse as they prepared their fiscal 2004 budgets...
Although economic conditions have somewhat improved, states have largely used up rainy-day funds and various one-shot revenue measures (such as borrowing against tobacco settlement money). Besides raising taxes, states have been cutting higher education, aid to localities, medical programs, and laying off workers. In particular, the study notes that "In the past year, states had responded to rising Medicaid expenditures much more aggressively than they had in the past."

For example, Florida's compassionate governor Jeb Bush has been cutting medical care for poor kids:
Enrollment in [Florida's SCHIP program, Health Kids] was capped with spending limited to the appropriation...Outreach was eliminated, and a waiting list was established, which, by November 2003, had over 44,000 names.
Cutting outreach and capping enrollment seems to me particularly cynical and unfair, but politically smart. There are many fairer alternative ways to cut spending, such as increasing premiums across the board, or for those with the highest incomes. Coverage of certain medical procedures could be eliminated. Florida is doing both (no more coverage of circumcision, for example) but is aiming the largest cuts at kids poor enough to be eligible but not currently enrolled. Enrollment caps are the largest cuts possible per child affected, keeping the unlucky ones entirely out of the program.

Across the board increases in premiums affect a lot of people in a very visible way. But eliminating outreach means that many will never hear about the program in the first place, so they can hardly be upset about cuts. People are generally loss averse -- much more upset about losses than happy about gains -- so the public would probably be angrier about small cuts to everybody than they would be happy about increasing the number of kids enrolled. And since everybody only gets one vote, it's probably politically wisest to concentrate the pain on as small a group as possible.

In all, six states -- Alabama, Colorado, Florida, Maryland, Montana and Utah -- have frozen enrollment in children's health insurance programs.


Tuesday, August 17, 2004

Rustic Republicans

Garance Franke-Ruta, writing in TAPPED, mocks the Republicans, who are planning a party at Le Cirque 2000 for top top fundraisers during the Republican Convention, where the guests will chow down on "Pieds de Porc Far�is aux Truffes Noire."

I don't get it. What could be more down home, fundraiser-of-the-people kind of food than pig's feet?


UPDATE: Indian Defense Minister Strip-Searched?

A commenter expresses some skepticism that Indian Defense Minister Fernandes was really strip searched in a U.S. airport, as reported in the article I linked to yesterday, and has been headline news in dozens of Indian newspaper articles. And indeed, Fernandes has recently tried to downplay the incident as little more than a "wanding."

But Fernandes has a strong motive to lie. The incident happened a year ago, and only came to light in a recently published book by former State Department official Strobe Talbott. Fernandes has been widely criticized in India for "compromising India's dignity" by failing to protest the incident. So he has every reason to play down the incident now.

In his book, Talbott says
"Fernandes regaled us with the story of how he had been strip-searched by officers of the US Immigration and Naturalization Service at Dulles Airport when he arrived for an official visit in early 2002, and again, in mid-2003, when he was passing through the US on his way to Brazil. He seemed to enjoy our stupefaction at this tale. He and other Indians who later referred to the incident clearly regarded it as more than merely a lapse of protocol or just another example of the post 9/11 excesses and indignities that air travellers had to endure for the sake of security."

Fernandes has since vowed never to return to the U.S. again.

Now, it's possible that Fernandes was just way over-reacting. But I think it's more plausible that he's now denying the strip search ever happened because of the criticism. Either way, the Indian press has been full of strip search headlines, which aren't doing our reputation much good. If I were in charge, I would encourage homeland security guards to to treat the high officials of a nuclear power with kid gloves, but I guess I'm just being too "sensitive."

U.S. to World: Keep Out

On the Washington Post Op-Ed page, Fulbright scholar Tim Dorsett reported yesterday on Bush's latest effort to boost foreign investment, increase tourism, and improve relations with other countries.
Last month Zhao Yan, a 37-year-old Chinese businesswoman, was beaten and doused with pepper spray by a homeland security inspector while on a tourist visit to Niagara Falls. The inspector later said he thought she was part of a drug deal and that she resisted arrest.

The homeland security guard who attacked her has been indicted, but not before Zhao's beating was front page news in China for days. The story hasn't played so well in India either. They compare Zhao to the Indian Defense Minister, who was twice strip searched at Dulles Airport in DC.

I guess this is what Cheney means when he says we won't win the war on terrorism by being "sensitive."

The State Tax Squeeze

One of the points Howard Dean made during the primaries was that the Bush tax cuts were just resulting in state tax increases, as the federal government cut aid to the states. Progressive journalist David Sirota has been making this point too, as have Jonathan Weisman and Neil Irwin, writing in the Washington Post. Sirota also points out that four times as many people (49%) report that their overall taxes (federal state and local) have gone up, as report that their taxes have gone down (13%).

According to the National Association of State Budget Officers (report: big pdf), Dean's analysis was reasonably accurate. In 2001, seven consecutive years of state tax cuts came to an end. Since then, state taxes have gone up $18.2 billion dollars, on net, and are slated to rise another $5.4 billion next year. So state taxes have gone up about $165 per household on average.

How does this compare to the Bush tax cuts? According the the CBO, the middle 60% got a federal tax cut of about 2% of their income, which would be about $840 for a household at the median income of $42,000. So state tax increases offset a good chunk of the Bush tax cuts, about a fifth. Of course, property taxes have gone up too, as the states in turn cut aid to local governments.


Thursday, August 12, 2004

Krugman vs. O'Reilly: Luskin Helps Referee

Last week, Paul Krugman debated Fox's Bill "Factor" O'Reilly on Tim Russert's CNBC show. During the debate, O'Reilly distorted Krugman's columns:
Mr. O'REILLY: Well, I don't buy that all. And, you know, Mr. Krugman is a smart guy, but Mr. Krugman was absolutely dead 100 percent wrong in his columns two years ago when he predicted the Bush tax cuts would lead to a deeper recession. You can read his book and see how wrong he was.

Prof. KRUGMAN: Actually, you can read it. I never said that.

Mr. O'REILLY: Sure you did...

Prof. KRUGMAN: I said that it would lead to a lousy job creation...

O'Reilly: Column after column after column. You made the point, in your book, okay, that these cuts, these tax cuts were going to be disastrous for the economy.

Krugman: Nope!

O'Reilly: They haven?t been.

Krugman: Uh, uh, I'm sorry. That's a lie. Let me just say, that's a lie.
So who's right? One way to find out is to read all of Krugman's columns. I've read them all and I have no doubt that Krugman is accurately representing what he wrote and O'Reilly isn't.

A faster way is to read the blog of Krugman-stalker Donald Luskin. Yesterday, Luskin scoured Krugman's columns for us, looking for someplace where Krugman had incorrectly predicted that Bush's tax cuts would lead to a "deeper recession" over the last two years. Here's three of the four items on his list (the forth item is just as silly, but it's silly in a different way, so I've cut it in the interests of brevity):
So Krugman predicted a "fiscal crisis" and a "fiscal train wreck" due to huge tax cuts for the rich in the face of record deficits. Sounds pretty bad, and recessions are pretty bad, so Luskin and O'Reilly think that Krugman must have predicted a recession!

Well, no. As you can tell from Luskin's quotes, without even looking at the complete articles, Krugman wasn't talking about the short term. He's wasn't making predictions of a prolonged recession, a prediction that could have been proven wrong over the past two years, as O'Reilly claims. Krugman is predicting something that will begin to bite in 10-15 years, "once the baby boomers retire in large numbers." He's predicting something that will be dealt with by a "future administration," as he wrote in the March 11, 2003 column.

In these column, Krugman is justifiably worried about long-term budget problems: "fiscal" just means relating to the federal budget. He's worried that when the Social Security system has to start withdrawing from the trust fund, and Medicare costs soar, there won't be enough tax revenue to pay the bills. Since Krugman has repeatedly charged that Bush aims to "starve the beast," to provoke a crisis where there's no choice but to drastically slash Social Security, Medicare, and the rest of the welfare state, one would think this point would be hard to misunderstand.

So why did O'Reilly and Luskin both think they could get away with distorting Krugman's writings? I think Krugman has O'Reilly's number when he complained post-debate about "how hard it is to argue with a pathological liar. Because the problem is in real time, as it's happening, you can't fact check everything."

Luskin's strategy is different. He's blogging, where links and quotations are expected, so it's harder for him to flat-out lie. Instead, he just strips out the context. The first four sentences in the Krugman-O'Reilly exchange above, with their names in caps, aren't included in Luskin's account of the debate. So Luskin makes it seem as if O'Reilly didn't make the foolish charge that Krugman predicted a "deeper recession" in the short run. He wants the reader to think that Krugman is denying that he predicted that the tax cuts would be "disastrous." Krugman has certainly warned that we may be heading for disaster, but he's been talking about a decade or two down the road, not in the last few years.


Wednesday, August 11, 2004

Exploding Budget Deficit, Exploding Trade Deficit

An issue that hasn't gotten enough attention is the exploding U.S. trade deficit, which rose to a record-breaking 4.8 percent of GDP last year, and currently on pace to break another record this year. The CBO has a new report laying out the situation:

The current-account balance summarizes a country's current transactions with the rest of the world, which include trade, income from international investments, and transfers. After rising briefly to be roughly in balance in 1991, the U.S. current account returned to a deficit soon afterwards. After 1997, the balance began to fall markedly, reaching a record deficit of 4.8 percent of gross domestic product (GDP) in 2003, considerably larger than the pre-1990s record deficit of 3.4 percent of GDP in 1987.
The CBO says the "primary causes" of the sinking U.S. trade balance are:
So a big trade deficit can be either a good sign or a bad sign. More rapid growth is nice, and a "surge in demand" for U.S. assets means that foreigners see the U.S. as a good place to invest. But a trade deficit can also be driven by falling savings, which isn't so great.

If you're wondering why "declining competitiveness" or some such isn't one of the factors, and why savings and investment are emphasized, you might take a look at the CBO report, which is a helpful introduction to the economics of trade. One answer is that a trade deficit means that we're consuming more than we produce, and to do that, we have to borrow from abroad. Similarly, if we decide to borrow more from abroad, say in order for the government to finance tax cuts for the rich, that means that we're getting stuff from foreigners and paying for it not in goods and services, but in stocks and bonds: and that's a trade deficit.

The important point is that under Clinton, the trade deficit increased mainly for positive reasons: the U.S. was growing more rapidly than our trading partners, and the foreigners were eager to invest in the U.S. tech boom and to find a safe haven from the financial crises in much of the developing world (Southeast Asia, Russia, Brazil). That is, it's a plus for the U.S. to be viewed as a "safe haven" for investment; the crises weren' t so great for the developing world.

Under Bush, trade deficit has continued to balloon, but now mainly for unfortunate reasons. True, the U.S. has continued to grow faster than other wealthy countries, though less so than under Clinton. But the factor that's really taken a turn for the worse under Bush is the national savings rate. And that's because the government budget deficit is part of national savings, and, as everybody knows, it's been exploding.

The graph below shows what's been happening. Under Clinton, foreign purchases of Treasury securities fell to zero. After all, we were running a surplus, not issuing debt. But foreign investment in U.S. firms boomed. Under Bush, both trends have reversed. Foreigners are now lending the U.S. government over 3 percent of GDP a year, which means they're financing the majority of the budget deficit.

Foreigners are also investing a lot less in U.S. companies, presumably because they're not so confident about these firms' future prospects (at least compared to investment opportunities in other countries). I also suspect that increased border security and decreased civil liberties are driving out foreign investment. After all, you'd hardly want to build a factory in Cleveland if you're worried about your executives being detained at the border, expelled for technical violations, or arrested as a "material witnesss" because of a confusion over names.

Remember, these investment numbers are just the flip side of the trade deficit. Along with some financial flows that aren't in the graph, mainly U.S. investment overseas, they add up to exactly the trade deficit.

One could argue that these figures aren't that alarming. After all, we've just gone back to the situation of 1996, which was a pretty good year. But in 1996, the trend was positive. What's worrisome is that now the trend is in the wrong direction.

Posted by Hello

Source: Capital flows data: BEA. GDP data: BEA.

Sherman in Falluja

Bakho, in comments, praises Sherman's Special Field Order #143 (regarding the administration of occupied Savannah, Georgia during the U.S. Civil War) as a model we ought to follow in occupying Iraq. His point, I think, is that Sherman relied mainly on local institutions:
The Mayor and City Council of Savannah will continue to exercise their functions, and will, in concert with the commanding officer of the post and the chief-quartermaster, see that the fire-companies are kept in organization, the streets cleaned and lighted, and keep up a good understanding between the citizens and soldiers.
In Iraq, on the other hand, we've relied mainly on an imported bunch of unskilled ideological hacks holed up in the Green Zone. This seems like a point that's hard to dispute. So I'm just going to ramble on for a while, and hopefully come to some point. But no promises.

In general, there's probably a lot to be gained from studying Sherman's campaigns. Among other things, he was trying to suppress guerilla resistance from people who he also wanted to get along with after the war.

On the other hand, it's easy to imagine Sherman ordering Falluja evacuated and then burned. There definitely are some people who think this is the policy we ought to be pursuing in Iraq and probably other countries too. For example, the anonymous intelligent agent who recently wrote Imperial Hubris. (In fairness to Bakho, I'm not claiming he advocates this).

Overall, I'm fairly sympathetic to Sherman. After all, his total war policies worked: the North won the war, freed the slaves, and eventually reconciled with white Southerners too. And destroying civilian's property, which is mainly what Sherman is vilified for by his critics, isn't the same as killing people. So I think Sherman was pretty justified, as were the Allies in WW II, who engaged in Sherman-like practices, and a whole lot more too.

On another hand, I don't see total war policies as justified in Iraq. It's not like our goal ought to be to subjugate Iraq and turn it into the 51st state, as Sherman wanted to drag the South back into the Union.

Anyway, to get back to the original point: would Sherman's hands-off policies towards administration have worked if they weren't backed by the threat of harsh retaliation, a whole lot harsher than anything the U.S. has done in Iraq? Maybe hands-off policies would work in Iraq if they were accompanied by getting the hell out.


Libertarian Babble about Drug Patents and Reimportation

Via blogger prodigy Matthew Yglesias, I learn that the libertarian Cato Institute favors allowing drug reimportation. I favor it too, as a way of sticking it to the wealthy countries with national health insurance systems. These countries free ride on R&D financed by U.S. consumers of high cost drugs. Widespread drug reimportation would make it harder for pharmaceutical companies to sell cut-rate drugs to national marketing boards, since price cuts overseas would result in cheap drugs in the U.S. too. The result would be cheaper drugs for us, and more expensive drugs for them. Allowing reimportation might even increase drug company profits, by strengthening their bargaining position relative to national drug purchasing boards in Canada and Europe. So drug companies would have more funds and more incentives for drug development.

So I read the Cato report, assuming that it would support my position, and expecting to grudgingly praise it. It turns out, though, that Cato doesn't really support drug reimportation. They just don't want the government to ban it. It's fine with them if pharmaceutical companies ban reimportation or resale. (The report acknowledges that this would require changing U.S. law and the laws of dozens of foreign countries to allow such bans, so it's hard to see what Cato's point is, other than wishful thinking about increasing corporate power).

Worse, Cato's report is incredibly shoddy: it veers back and forth between loopy libertarian arguments (abolish the FDA, allow all "voluntary contracts," etc.) and economically illiterate arguments. The silliest economic argument is that lengthening the life of a patent will lower the cost of drugs:
"The shorter the time the company has to recoup its extraordinary R&D costs, the more it will need to charge per unit sold," asserts Cato analyst Roger Pilon, hence longer patents "would enable the company to recoup those costs over a longer period of time, and, presumably, charge less per unit sold during that period." [pp. 3-4]
Patents were lengthened, from 14 to 20 years, not so long ago. So one might think Cato would offer some evidence. But of course they don't.

The report provides no serious answer to the obvious objection: profit-maximizing firms should ignore sunk costs. The R&D costs are in the past: setting a low price today doesn't affect past costs, so R&D costs don't affect pricing decisions. The cost of production affects pricing decisions, but sunk costs don't.

Assuming production costs are small and constant, companies just look at demand and choose the revenue-maximizing price. If that price doesn't recoup the investment, firms aren't going to raise the price and reduce their revenue! If that price earns them terrifically high profits, way above R&D costs, most firms will happily bank the excess profit. They aren't going to reduce prices so that they just barely cover their R&D costs, as Cato seems to imagine. Really, this kind of analysis is a staple of introductory economics: it's pretty pathetic that Cato's "vice president for legal affairs" doesn't understand it.


Mmmm, Peach Butter

Peach Butter Recipe
So simple it hardly qualifies as a recipe, but the results are good.

* Pick 5 pounds of peaches.
* Ripen in a paper bag if necessary.
* Skin peaches: Plunge into boiling water for a minute and remove skin when cool.
* Cut into pieces and remove pit.
* Add 1 tbs. cinnamon.
* Simmer, uncovered, 3-5 hours, occasionally stirring and mashing peaches with the spoon, until all the liquid is boiled off. It's done when the peaches have turned into a stringy-looking mass with chunks of peaches.
* Makes 1 pint.


Monday, August 09, 2004

Draft the CEOs!

An old military saying has it, "Amateurs talk strategy; professionals talk logistics." In other words, the key to warfare is supplying soldiers at the front with enough ammunition, medical supplies, gasoline, food, water, and so on. Logistics are vital enough that a few key supply lines of past wars have taken on mythic stature: the "Cracker Line" at Chattanooga during the Civil War, the "Voie Sacree" (Sacred Road) at Verdun in World War I, the "Red Ball Express" in France during World War II.

And yet, the best private sector expertise is rarely available to the military. The only corporate executive I can think of in a position of high authority in the U.S. military was General McClellan during the Civil War. Although often criticized as overly cautious, few deny that he was a brilliant organizer and manager.

There are a number of former corporate executives in Bush's Defense Department, but these guys seem to have been hired as rainmakers, mainly for their contacts. In any event, the GAO [big pdf] and the Army have documented numerous logistics problems confronting U.S. troops even during the brief march to Baghdad. For example, shortages of spare parts forced troops to cannibalize parts from one vehicle to repair others. General Stratman, who ran the Army's supply operations seems to have had a pretty typical military career, jumping from commanding a division to working in the training bureaucracy to a staff position in Bosnia. No doubt he's pretty talented, but his biography doesn't make him sound like a career logistician. The U.S. military seems to do pretty well, but it's no FedEx.

So how about drafting some executives from FedEx? Admittedly, FedEx CEO Fred Smith has done his time in the military. But I bet our forces in Iraq could make good use of the services of Doug Witt, President and CEO of FedEx Supply Chain Services.


Tuesday, August 03, 2004

Kerry's Health Plan in 100 Words or Less

Paul Krugman recently pointed out that TV news has hardly mentioned Kerry's health plan, the domestic policy centerpiece of his campaign. And my mother -- who's well-educated, smart, and knowledgeable about health care -- tells me that she doesn't know much about Kerry's proposals.

So, here's my attempt to boil it down in less than 100 words, and still provide some specific information. I have it down to about 120 words. Almost short enough for TV!

Kerry's Health Insurance Plan

Make health insurance more affordable by

Insure the uninsured by

Pay for it by

More details can be found on Kerry's web site, in this leaflet, or in Kerry's new campaign book.

More Margin of Error

Yesterday, I pointed out that the margin of error for the difference between, say, Bush and Kerry in a single poll is double the margin of error reported in the newspaper, while the margin of error for the gain from poll to poll is 1.4 (the square root of 2) times the "newspaper margin of error." So if the newspaper reports that Kerry is ahead 53 to 47, with margin of error +/- 3, that really means Kerry has a lead of 6, +/- 6. If Bush increases his percentage to 53 in the next poll, that's a gain of 6 +/- 4.2.

Confirmation that this is not a trivial point comes from the respected polling firm ARG, whose Ballot Lead Calculator produces different results, and who replied to my criticism with an email defending their calculations. Who should you believe? If you have PhD in statistics, you can read both my argument and ARG's, and you'll see that I'm right.

If you don't have a PhD, I also provided an argument from authority: a link to the Online Statistics Course at Rice University. The professors at Rice provide a clever argument showing that the margin of error for the lead is double the "newspaper margin of error," which is the point I assert and ARG denies. The Rice U. argument seems too simple to be correct, but that's what makes it clever.

As far as I'm concerned, my previous post was enough to show that I'm right, and I found nothing in ARG's reply to be at all persuasive. I don't mean to bash ARG: I never see polling firms report anything but the most basic confidence interval, so I give ARG credit for trying to do better, even if they've messed up a tricky point.

In any event, here's a new argument from authority, and a new logical argument.

I tried making up some data, simulating 600 respondents, 53% of whom support Kerry and 47% Bush. Then I asked the widely used Stata statistical package to report the confidence interval for Kerry's lead. The manufactured data turned out to have Kerry with 52 percent and Bush with 48 percent. Stata reports that the "newspaper confidence interval" for Kerry runs from 48 to 56, or 52 +/- 4. The confidence interval for Kerry's lead runs from -4 to 12, or 4 +/- 8, according to Stata, double the margin of error for Kerry's percentage alone. If you type these same numbers into ARG's Ballot Lead Calculator, you get the wrong answer: a confidence interval for Kerry's lead from -1.7 to 9.7, or 4 +/- 5.7.

Here's the Stata log:
. set obs 600

obs was 0, now 600

. gen Bush=uniform()<.47
. gen Kerry = 1-Bush
. ttest Kerry==Bush

Paired t test

Variable | Obs Mean Std. Err. Std. Dev. [95% Conf. Interval]
Kerry | 600 .52 .0204131 .5000167 .4799101 .5600899
Bush | 600 .48 .0204131 .5000167 .4399101 .5200899
diff | 600 .04 .0408262 1.000033 -.0401799 .1201799

Here's a mathematical argument:

Let K be the percentage of the poll sample planning to vote for Kerry. Then the percentage planning to vote for Bush is 1-K (there are no undecideds or other candidates). So, Kerry's lead is K - (1-K) = 2K-1. Let s stand for the standard error of K, so the "newspaper margin of error" about K is +/- 1.96*s. The margin of error for Kerry's lead is +/- 1.96*SE(2K-1) = 1.96*2s. QED.

UPDATE: Former economist-for-Dean Kautilyan weighs in with some harsh criticism of ARG (though, like me, he thinks ARG is typical of most pollsters, not necessarily any worse).

ARG Defends their "Ballot Lead Calculator"

Yesterday, I emailed the polling firm ARG, to let them know that their Ballot Lead Calculator was in error. Today they replied, arguing that they're right and I'm wrong. Here's their email; I'll reply in my next post.

ARG's Email

Thanks for your e-mail.

I believe you are confused about the calculation of the confidence interval of the difference when you write:
The confidence intervals overlap, so this is a "statistical tie."* To say this another way, the confidence interval for the difference is 8, so Kerry is ahead by 6 +/- 8: there's a 95% chance that he's somewhere between 14 points ahead and 2 points behind. The margin of error for Kerry's lead (+/- 8), is double that for his percentage of the vote (+/- 4).
The actual confidence interval for the difference is produced using the formula in the calculator, it is not correct to create the confidence interval for the difference simply by doubling the margin of error for the proportion as you (and the site you point to) suggest because you have to take into consideration the sampling error for both sample estimates (whether or not they are from the same sample or are from different samples - the calculator assumes same samples).

There is no difference in the formula for a point in time versus a gain over time as you imply. You may be confusing continuous and discrete measures as relating to time.

Also, it is incorrect when you write that "there's a 95% chance that he's somewhere between 14 points ahead and 2 points behind" because the population proportion is fixed and either the candidate is between 14 points ahead and 2 points behind or the candidate is not - there are no probabilities involved (that's why it is called a confidence interval and not a probability interval). This point is confusing to most people.

Without conducing a census, there is no way to determine the true extent of the sampling error for any sample. If, for example, the candidate is really 16 points ahead, your statement that "there's a 95% chance that he's somewhere between 14 points ahead and 2 points behind" is incorrect - there is no chance the candidate is between 14 ahead and 2 behind. When you write that the responses in a single poll "aren't independent" is incorrect for true random samples. Sampling error accounts for a sample that has more Kerry (or Bush) supporters than the actual population and it has nothing to do with "negative correlation." Again, the problem is there is no way to tell without a census. And that's another reason why it is not safe just to double the margin of error to determine the differences.

I hope this is helpful in showing you that the calculator does not get it wrong.

Dick Bennett
American Research Group, Inc.

When Confidence Intervals Overlap

Whenever I write about polls, I'm reminded of how tricky it is to interpret the margin of error. In particular, I never see a distinction made between the confidence interval for a politician's lead in the polls, and a politician's gain over time. But they're not the same. Not only that, but neither are what the newspaper reports as the confidence interval. Although it's tempting to bash the press, professional pollsters get this wrong too.

Suppose we take a poll of 600 people, and Kerry gets 53 to Bush's 47. Newspapers would report this as having a "margin of error" of +/- 4. (So, I'm thinking about a poll smaller than the 1000 person polls, with a margin of error of +/- 3, that we usually see reported.) The margin of error of 4 means means that Kerry's 95% confidence interval is 53 +/- 4, or between 49 and 57.

The confidence intervals overlap, so this is a "statistical tie."* To say this another way, the confidence interval for the difference is 8, so Kerry is ahead by 6 +/- 8: there's a 95% chance that he's somewhere between 14 points ahead and 2 points behind. The margin of error for Kerry's lead (+/- 8), is double that for his percentage of the vote (+/- 4).

Suppose we take another poll a week later, again with 600 people, and the results are reversed: Kerry gets 47 to Bush's 53, again +/-4. Can we say that Bush has gained? Yes, Bush's gain from 47 to 53 is outside the margin of error, even though the confidence intervals overlap. In fact, the confidence interval for the gain from last week is 6 +/- 5.7. The 5.7 percent margin of error is calculated as 1.4 (the square root of two) times 4 (the margin of error for Bush's percentage of the vote).

Why the difference? Because in a single poll of Bush vs. Kerry, the responses aren't independent. If the pollsters happen to speak with a sample that contains an unusually high number of Kerry supporters, by definition the sample will also have an unusually low number of Bush supporters. This negative correlation between Bush's and Kerry's percentage will tend to increase the difference between the two candidates. However two separate polls, taken a week apart, will be independent. If one sample overestimates Kerry's support by chance, there's no reason to think that next week's sample will also tend to overestimate or underestimate it.

Here's a good explanation for the case where we're calculating a politician's lead at a point in time. Here's a respected polling organization that gets it wrong. They use the formula for a gain over time, when they should be using the formula for a lead at a point in time.

*. If Kerry gets 53 to Bush's 47, it's obviously more likely that Kerry is ahead than behind. The "statistical tie" language is somewhat misleading. For example, you rarely see an 80% confidence interval reported, but it's 53 +/- 2.6, so with 80% confidence we can say that Kerry's ahead, even though we can't say that with 95% confidence.

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L’esprit d’escalier
A Level Gaze
Approximately Perfect

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