WASHINGTON, 29 April 2004 — Officials from Saudi Arabia’s oil industry and the international petroleum organizations shocked a gathering of foreign policy experts in Washington yesterday with an announcement that the Kingdom’s previous estimate of 261 billion barrels of recoverable petroleum has now more than tripled, to 1.2 trillion barrels.

Additionally, Saudi Arabia’s key oil and finance ministers assured the audience — which included US Federal Reserve Chairman Alan Greenspan — that the Kingdom has the capability to quickly double its oil output and sustain such a production surge for as long as 50 years.

Russia’s proven oil reserves may be much higher than was previously thought, reported British Financial Times newspaper in reference to several market analysts.

In particular the newspaper pointed to the announcement of Yukos oil major which was made last month. On news of difficult political situation around the company and its imprisoned founder Mikhail Khodorkovsky, the announcement went virtually unnoticed, but was very important, because Yukos declared a considerable increase in proven reserves. Under the strict standards set by the U.S. Securities and Exchange Commission Yukos oil reserves increased from 11.2 billion barrels of oil equivalent at the end of 2002 to 13 billion barrels at the end of 2003.

TNK-BP oil giant also announced that its current reserves of 6.1 billion barrels could rise to 9 billion barrels in the short term and up to 30 billion barrels in the longer term.

The liberal Democrat misperception that the last recession began with Bush rather than Clinton reflects the situation which occurred after Reagan was elected. In July of '81, after Reagan was inaugurated on January 20th to begin his first term, the news media and others created the phrase "Reaganomics" attributing the recession to his administration. In reality, it began during Carter's last fiscal year in office and Reagan had no control over the economic situation.

Carter's last fiscal year in office was FY '81 which, by law had to be in place as of 1 October of 1980 and lasted until 30 September '81. Reagan was elected the following November and became President as of January 20 1981 for his first calendar year in office but with Carter's last fiscal year budget in place. FY'82 was Reagan's first FY in office, and the economy rebounded!

"Outsourcing of professional services is a prominent example of a new type of trade ... When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes."

And Mankiw duly noted that in the short run there can be painful dislocations, and that people affected must be helped in various ways.

But poor Mankiw was pilloried in the media for it. The very next day the liberal Washington Post wrote that Mankiw had made "laudatory statements on the movement of U.S. jobs abroad." John Kerry said Bush wants "to export more of our jobs overseas ... What in the world are they thinking?" Tom Daschle said, "This is actually now the position of the White House that they support outsourcing of jobs, jobs going abroad, saying that that's good for our country." Pete Stark said, "Bush stands idly by as jobs continue to take flight from the U.S., and now we know why. It's part of his economic plan."

Needless to say, no one in the Bush administration or in the Republican congress had the guts to say a word in Mankiw's defense.

And since then the volume has only gone up on the issue, with John Kerry talking about "Benedict Arnold CEOs" betraying American workers. There are any number of bills in congress to slap various restrictions, prohibitions and penalties on US companies that use overseas labor.

And what's so remarkable about all this is that it's all about a crisis that may not even exist.
What, after all, do we really know about offshore outsourcing?

There's an amazing scarcity of hard evidence. All the sensational numbers that are thrown around all the time in the media are nothing more than forecasts by various consultants.
Here are the ones you seem to hear all the time in the media.

The McKinsey Global Institute estimates that the volume of offshore outsourcing will increase by 30 to 40 percent a year for the next five years. Forrester Research estimates that 3.3 million white-collar jobs will move overseas by 2015. Gartner estimates that by the end of this year, 1 out of every 10 IT jobs will be outsourced overseas. Deloitte Research estimates the outsourcing of 2 million financial-sector jobs by 2009.

These aren't even really "estimates." They're forecasts. No, they're S.W.A.G.'s -- stupid wild-ass guesses.

Remember, these consultants are the same geniuses who said, four years ago, right about the time when the NASDAQ was at 5000, that Internet traffic would grow at 90% a year forever, and that by 2002 every American citizen would have digital video-on-demand beamed via low earth orbit satellite to his cell phone. Hey, if that were true I could be watching "Friends" right now.

Let's get real. Suppose Forrester is right, that 3.3 million white-collar jobs will move overseas by 2015. That's eleven years, folks. That's 300,000 jobs a year, or 25,000 a month. Today there are 130 million jobs in the United States.

So the cost is 2/100 of 1% of jobs each month. Don't worry about it. On average the US economy generates job growth 10 times that much every month.

But it's not just that even the wild-ass guesses are actually quite small in the grand scheme of things. The worst part of it is that these forecasts inevitably just look at costs, and never benefits.

When Forrester says that 3.3 million white-collar jobs will move overseas by 2015, not a single thought is given to any possible offsetting benefit of that in the US. The implicit assumption is that 3.3 million people who would have otherwise have jobs will instead be on food stamps. But it's hardly that simple.

Remember, those jobs would not be established overseas if there were not some compelling advantage to do it, probably cost savings. That means the employing company is more profitable. It can pay out those profits in dividends, which then get reinvested in other opportunities that create US jobs -- opportunities that wouldn't have existed otherwise.

Or it can reinvest those profits themselves in new US employment, at things that US workers do better. For example, Delta Airlines outsourced 1,000 call-center jobs to India in 2003, but the $25 million in savings allowed the airline to add 1,200 positions at home.

And if cheaper foreign labor translates into lower prices of US consumer goods, then US consumers will have money left over to buy other goods and services that they weren't buying before. And that will create new jobs.

Other offsetting advantages of outsourcing are less obvious, but just as compelling. Last time I was in San Diego, I attended a meeting with Dick Heckman, the CEO of K2, the sporting goods conglomerate that is moving most of its manufacturing to China. Heckman says that he can lower his labor costs by a factor of more than 20, compared to the US.

Okay, that's a smart arbitrage. But there's more to it than that. He's found that when labor is that much cheaper, he finds new things to do with labor that he couldn't have afforded to do before. When K2's major league baseball batters helmets were made in Missouri, labor was so expensive that all he could afford to do was pull the helmet off the injection molder, throw it in a box, and ship it to Walmart. But in China, he can afford to pay laborers to hand polish the helmet first, removing all the little mold artifacts and making it look and feel great.

Cheaper labor, then, means not only lower consumer prices and higher corporate profits back in the US, but also higher quality.

Consider this. China is currently building a steel factory that will be the largest in the world. When it is complete in two years, it will be the largest steel factory in the world. This single facility will be able to produce all the steel currently used in the United States.

When most people hear that, they become afraid. But I just think of the opportunities. It reminds me of Moore's Law -- the fact that silicon semiconductors effectively drop in price by 50% every 18 months. What if steel gets on its own version of Moore's Law?

Look at the wealth, the progress, and the jobs that have been created by silicon transistors becoming effectively free. Look at all the stuff we do with transistors that we couldn't even conceive of doing 20 years ago, but we can do now that transistors are free.

What will the world look like in 20 years when steel is free? I have no idea, but I know it will be a better world full of marvels that we can't even conceive right now. It will be a world full of US jobs in goods and services that don't even have names today.

Let's go back to what Greg Mankiw was talking about, that he took so much heat for. He was talking about a basic principle of economics that has been understood for about 200 years -- the idea of "comparative advantage." It's classic stuff, but it pays to review it because it's so relevant today.

Let's say you have an economy consisting of two self-sufficient people, and in this economy it takes a minimum of 1 pound of cheese every day in order to survive. So you spend as much time as you have to making a pound of cheese. After that, you devote your leftover time to making wine, which is a luxury.

The first guy is very productive. It takes him only a quarter of his day to make his pound of cheese, and then in the remaining three quarters he can make 12 bottles of wine.

The second guy's not so good. In fact, he's totally unskilled. It takes him half a day to make his pound of cheese, and in the leftover half day he can only make 2 bottles of wine.

Right off you wouldn't think the first guy has any reason to trade with the second guy -- he's got him beat in every way. But that's not the right way to look at it.

Suppose the second guy stops making wine altogether, and devotes his whole day to making cheese. He'll able to make 2 pounds -- one to eat, and one leftover to trade. If he trades his extra pound of cheese to the first guy, that would free up a quarter of the first guy's working day. That means the first guy would be free to make another four bottles of wine.

He gives three of those four bottles to the second guy in exchange for the cheese. So now the second guy, who started off with a pound of cheese and 2 bottles of wine every day, now ends up with a pound of cheese and 3 bottles of wine.

The first guy, who originally had a pound of cheese and 12 bottles of wine, ends up with a bottle of cheese and 13 bottles of wine. The world has become richer, on net, by two bottles of wine.

Notice that this result occurred even though the first guy enjoyed an absolute advantage over the second guy in both wine and cheese. But absolute advantage isn't as important as comparative advantage. By going entirely out of the cheese business, the first guy was able to exploit his comparative advantage in wine.

Now how does this example apply to the real world?

Obviously, the first guy is the US and the second guy is -- China, India, you name it. Steel may be a necessity of our life -- like cheese in the example. But we're going out of the steel business, even though we are the best at making steel, or at least could be if we wanted to be. But we don't want to be. Because we're even better at designing fiber optic networks or figuring out financial derivatives or making blockbuster action-hero movies -- or something.

But of course it's not that simple. A nation is not a single individual who does two things -- and as soon as he stops doing one, he just does more of the other. A nation is many people who are specialized into different things. If a nation stops making cheese, its cheese makers can't just suddenly become winemakers. US steel workers can't just start designing fiber optic networks. So at least in the short term, there will be winners and losers

And any time there are losers, politics gets involved. The winners from the deal are busily reinvesting their gains -- but the losers run to their lobbyists. So we end up with things like the Bush administration's tariffs on foreign steel. Sure, it protects the domestic steel industry -- sort of. But any advantage conveyed to steel producers becomes a disadvantage to steel consumers. So this ends up being a problem from which you can run, but you can't hide.

Another consideration is that certain industries may be seen as necessary for national security, no matter how uneconomical they are for a nation to do. If cheese is strictly necessary for life, do you really dare let someone else make yours? Does America dare to not have a steel industry? What would happen if there were a major war and we needed lots of steel?

Well, what would we really do if we really believed that, anyhow? Would we have the Army operate our steel industry, just in case we ever needed one? Would we have to draft people who would otherwise be fiber optic network designers and force them to labor two years of their lives in our militarized steel industry -- all supported by tax dollars? That's where the logic takes you. Again, you can run but you can't hide.

So what can we do in terms of policy to address these issues?

You do the hardest thing of all. Nothing. And the more nothing the better.

That's because of all America's absolute and comparative advantages, the most important one we've got is freedom. And freedom consists mostly of having a government policy to do nothing. Let free individual economic actors figure it out for themselves by trial and error. Yes, it's painful. And it's hard to stand by and do nothing when a displaced steel worker goes on Lou Dobbs' show and complains about it (although I've found the answer for that -- just turn the TV off).

But it's only under a policy of do-nothing economic freedom that we can maximize our chances to find the thing we're good at doing instead of making cheese, steel, or even wine.

What if it turns out we're not good at anything? What if it turns out that China and India are better at everything? Well, if that's true, then there's no law we're going to pass that's going to save us. And we'd still be better off trading with them. If we're so bad at everything, we certainly don't want to try to make it on out own. Again, we can run, but we can't hide.

Just remember, there was a time in the 1970s when the US was afraid of competition from Europe. That's right, Europe. Can you imagine that now?

Then in the 1980s we were afraid of Japan. Can you imagine that now?

Then in the 1990s we were afraid of the giant sucking sound of NAFTA. Can you imagine that now?

What happened in all these cases was that America's politicians did pretty much nothing. We deregulated our economy, and let individual economic actors figure it out for themselves. Europe and Japan laid regulation on top of regulation on top of industrial policy on top of managed trade. We won, they lost.

We could have all won, by the way. I think that's generally how it's turned out with our NAFTA partners, so far. This isn't a zero-sum game, as the cheese-and-wine example shows.

So now we're back in the same place, déjà vu all over again. But this time it's China and India we're worried about. If it's not one thing it's another. But the answer is the same -- to do nothing.

The problem, of course, is that it's an election year -- a close one, and a nasty one. John Kerry has a presidency to win, and not all that many issues to win it with. Lou Dobbs has a show to do. Paul Krugman has columns to write. And none of those guys ever got anywhere by saying "do nothing." That has never been the agenda of the conspiracy to keep you poor and stupid.

And Bush has an election to win, too. He generally believes in free trade, but we face a very real risk that he will "do something" just to get in front of the issue. We've already seen him "do something" with steel tariffs, and that was a disaster. We've seen him try to "do something" by sending John Snow over to China to try to get them to revalue the yuan. There's six months to go till the election -- it could get worse.

The people who are supposed to "do something" are us. If that means outsourcing something your business does to China or India or anywhere else, I say go for it.

But be careful. For all the same reasons that the hype about outsourcing makes it a red-hot political issue, it's also potentially a dangerous fad. Remember, those consultants with all the big forecasts have consulting services to sell. They make money helping you do your outsourcing whether it ends up making money for you in the long run, or not.

And like all fads, the first ones in make all the money. Then it gets harder. Already wage rates in India for call center operators are rising at 20% a year. That sweet spot gets less sweet every day. But the consultants keep on consulting.

So it's a self-correcting process, like most economic processes, if we are just patient. So try to tune out the conspiracy to keep you poor and stupid. If you're a worker, don't feel afraid. If you're a manager, don't feel guilty.

That simple world of cheese and wine can be ours if we just stick patiently to the basic axioms developed by classical economics 200 years ago. If you have the courage to build a world based on trade, you'll get your daily cheese. Plus you'll get more wine.

In fact, that's what I'm going to do right now. Have some more wine.

Unless you have any questions or comments. Thank you very much.

Posted by Donald L. Luskin at 11:54 PM | link    

Inspired, no doubt, by my evidence that George W. Bush ominously resembles Paul Lynde, reader Jameson Campaigne sends in this alarming evidence about Mr. Bush's rival.

Posted by Donald L. Luskin at 6:42 AM | link    

Posted by Donald L. Luskin at 6:31 AM | link    

Posted by Donald L. Luskin at 6:29 AM | link    

Wednesday, May 05, 2004

Posted by Donald L. Luskin at 12:21 PM | link    

Posted by Donald L. Luskin at 8:35 AM | link    

Media Matters for America is a new website "dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation." It's been developed with the zillions of tax-deductible dollars that George Soros and others contributed to the leftist Center for American Progress. It's run by a confessed liar, former conservative author David Brock, who has admitted that he knowingly lied in his book about Anita Hill, and has apologized for his reporting on Bill Clinton's sexual misadventures.

So far the work from Media Matters isn't very impressive. But what should we expect when a liar is put in charge of a quest for truth?

The first major article posted on the Media Matters website is an attempted exposé of the often-heard conservative claim that the last economic recession began during the Clinton administration, and was already underway before George W. Bush took office in 2001. The article painstakingly traces the history of this claim through numerous statements by Bush administration officials and conservative commentators, and presents it all as a "successful three-and-a-half year media campaign" that has led to polling results showing "62% of Americans think the recession began under Clinton."

The claim that the last recession started under Clinton is absolutely true. To deny that is not only to blame Bush for a problem that he didn't cause, but to deprive him of the credit for fixing it with effective policies -- which is exactly why the left is so eager to do it. Here are the facts:

• The unemployment rate bottomed at 3.8% in April 2000, and started deteriorating steadily from there (during the Clinton administration).
• The fed funds rate -- the overnight interest rate administered by Alan Greenspan and the Federal Reserve -- peaked at 6.5% in 2000, and had to be lowered in an emergency move on January 3, 2001 "in light of further weakening of sales and production" (during the Clinton administration).
• And as the chart below shows, GDP growth fell off a cliff in the third quarter of 2000 (during the Clinton administration). Despite the shock of the 9/11 terrorist attacks, growth started to revive in the fourth quarter of 2001 (during the Bush administration).

The one and only piece of evidence to the contrary offered by Media Matters is that fact that the National Bureau of Economic Research set the beginning of the last recession at March 2001, two months into the Bush administration. Check that date on the chart above -- this well-respected economic research group set the beginning of the recession after GDP growth had already crashed from almost 5% to almost zero. But according to Media Matters, this single authority determines truth, and everyone else is a liar. The article declares, "...if NBER says the recession began in March 2001, the recession began in March 2001."

The reality is that NBER is just like any other group of economists, struggling with partial and imperfect information to characterize phenomena that don't have any hard-and-fast definitions. Since NBER set the March 2001 recession start date in November 2001, there have been important negative revisions to key data. Most important, back then third quarter 2000 GDP growth was reported at 1.3% -- but now it's been revised all the way down to a negative 0.5%. NBER had no way of knowing that then.

Liberals have never felt constrained by NBER's "official" dates. For example, last year in a New York Times Magazine article ultra-leftist economist Paul Krugman cited dates for the economic expansion during the Reagan administration that not only didn't correspond to NBER's dates, but didn't even correspond to Ronald Reagan's years in the White House! The only virtue of Krugman's unofficial dates is that they made Reagan's economic performance look worse (natch).

And, of course, liberals are not at all happy with NBER's judgment that the recession that began in March 2001 ended only eight months later, in November 2001. Krugman called it "a controversial decision," and has since stated that the economy is, in fact, "still depressed." And John Kerry can't bring himself to admit that the recession has ended, even though Media Matters might lecture him that "...if NBER says the recession ended in November 2001, the recession ended in November 2001." Instead, Kerry refers in speeches to November 2001 as the date when "the recession supposedly ended."

The great thing about economics, though, is that reality speaks louder than the left's words. 62% of the American public knows that the recession began under Clinton, because they were there and they experienced it. Now, with GDP growth running stronger than in any 12-month period under the Clinton administration, the American public knows that an expansion is well underway.

Against that, nothing that Media Matters says matters.

Posted by Donald L. Luskin at 5:10 AM | link    

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Tuesday, May 04, 2004

LE CHURCH C'EST MOI    Once again, Andrew Sullivan interprets the political landscape through the lens of his own wishes. This time he blasts conservative Catholics like Bob Novak for insisting that John Kerry adhere to the policies of the church, rather than pick the ones he likes and discard the rest as Sullivan does. Hey, it's fine with me what people do behind closed doors (or even open ones). But don't call yourself a chess player if you intend to move your knight like a rook (I could have picked other chess pieces for my metaphor, I suppose, but I don't want to be incorrect about this). Why should Kerry (or Sullivan) get to make up their own privileged definitions of what it means to be a Catholic, or a war hero, or anything else?

Posted by Donald L. Luskin at 8:44 PM | link    

HASSETT ON KRUGMAN THE "SHOCK PUNDIT"    I love that expression!

Posted by Donald L. Luskin at 7:30 PM | link    

A BIG BUDGET SURPRISE   Unexpectedly large tax receipts may mean that the federal budget deficit will be as much as $100 billion less than the $521 billion White House forecast. You can almost feel the pain in every sentence of the story on it by the Washington Post's smug DC reporter Jonathan Weisman. Thanks to reader Mark LaRochelle for the link.

Posted by Donald L. Luskin at 7:26 PM | link    

QUATTRONE CAUGHT IN THE WEB    Reader Tom Scheeler reacts to my short post yesterday about the conviction of Frank Quattrone, with this apt quotation from Ayn Rand's Atlas Shrugged:

"Did you really think we want those laws observed?" said Dr. Ferris. "We want them to be broken. You'd better get it straight that it's not a bunch of boy scouts you're up against... We're after power and we mean it... There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What's there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced or objectively interpreted - and you create a nation of law-breakers - and then you cash in on guilt. Now that's the system, Mr. Reardon, that's the game, and once you understand it, you'll be much easier to deal with."

Posted by Donald L. Luskin at 8:17 AM | link    

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Monday, May 03, 2004

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TAX CUTS TRIGGERED THE IRAQ INSURGENCY    According to Paul Krugman in today's column, tax cuts are responsible for our difficulties in Iraq. And he's got a lie that proves it. Krugman writes,

"A number of people, including Jay Garner, the first U.S. administrator of Iraq, think that the Bush administration shunned early elections, which might have given legitimacy to a transitional government, so it could impose economic policies that no elected Iraqi government would have approved. Indeed, over the past year the Coalition Provisional Authority has slashed tariffs, flattened taxes and thrown Iraqi industry wide open to foreign investors — reinforcing the sense of many Iraqis that we came as occupiers, not liberators."

Who the "number of people" are -- and where General Jay Garner said that he "think[s] that the Bush administration shunned early elections, which might have given legitimacy to a transitional government, so it could impose economic policies that no elected Iraqi government would have approved" -- is unknown. But from what I can tell, it's another Krugman lie.

If the source is an interview with the BBC in March, then Garner never said it. Garner talked only about his doubts about plans to privatize Iraq's state-controlled oil industry. There's talk about how the Bush administration had "elaborate plan to redesign Iraq's economy on a radical free-market model" -- but all that's in the words of BBC interviewer Greg Palast: Garner simply says nothing of the sort. Palast, by the way, is a virulently anti-Bush columnist whose work appears not only on the BBC, but in Hustler.

Of course it's especially ironic to see Krugman, the great free-trade advocate, complaining about slashing tariffs and opening up to foreign investors. But it's worth it, because it's all part of this week's talking points. With the economy booming thanks to Bush's economic policies, what can Krugman do except to try to cast any doubt he can on those policies by spuriously linking them to difficulties in Iraq? Who knows... if these tax cuts go on, we could be facing guerilla insurgencies all over the United States.

Posted by Donald L. Luskin at 11:46 PM | link    

GEORGE BUSH TO BLOCK!    Have you ever noticed anything a little strange about the "head-cut" -- the engraving-style portrait -- of George W. Bush that's always used in Wall Street Journal stories? Something hauntingly familiar?

Posted by Donald L. Luskin at 10:13 PM | link    

FIRST MARTHA, AND NOW QUATTRONE    Another persecuted capitalist. Notice that these convictions are never about the crime that was being investigated? They're always about some minor slip-up that an innocent man or woman makes in the process of defending himself/herself.

Posted by Donald L. Luskin at 10:00 PM | link    

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KERRY'S EXCELLENT COOKIE ADVENTURE A PHONY: WSJ    The front page of the supposedly conservative Wall Street Journal runs a front page puffer on John Kerry's effort to portray himself as pro-business. Included is Kerry's often-repeated claim that "He helped found a Boston cookie company that still survives, and he invokes his background as an entrepreneur." In an accompanying interview available online, Kerry expands,

I started my own small business once... A tiny little deal. (A cookie store in Boston's Fanueil Market.) It's still there. it's still there, exactly as I created it. I could have franchised it across the country... I had had this idea about combining it, taking it nationally, putting it into malls and supermarkets. I could have been Mr. Kerry instead of Mrs. Fields... It was great fun. I did everything. I did the layout. I did the purchasing and the equipment... I must have had, I don't know, 35 part-time employees. And I learned a lot about paperwork, about leasing, about the burden of the health inspections, and the laws you have to live up to, the withholding tax issues, just, you know, how difficult it is as a small business...

Yeah... yeah... you coulda been a contenda. But the truth turns out to be quite different. Sadly, you have to pay the Journal an extra fee to get it. In today's edition of "Political Diary," the subscription-only daily email service run by the Journal's op-ed star Holman Jenkins reveals that no only did Kerry steal the cookie business he supposedly founded, but then later tried to sell it back to the person he stole it from:

It turns out that the founder of the David's Cookies chain says Mr. Kerry is a phony and ripped off every element of the store from his blueprints... last January, Sam Dealey reported in "The Hill" newspaper that Mr. Kerry had been bragging so frequently that David Liederman, founder of the David's Cookies chain, finally decided to call him on it. "The bottom line is he just stole it from me," Mr. Liederman, now a New York restaurant owner, told The Hill...

Mr. Liederman says the Kerry version of reality is half-baked. "Some guy who called me up was John Kerry, in '79 or '80," he recalls. "He said he wanted to come down and talk to me about franchising. He came to the office and said he had an incredible space in Boston, which was Faneuil Hall. He said he needed some plans and some layouts and all sorts of things to get the approval of the landlord.

"So I gave him the layout, the package, and he went back and I didn't hear from him for six or seven months." Then someone Mr. Liederman knew called to tell him that a David's Cookies store was operating in Faneuil Hall. "It was a direct, 100-percent knock-off of David's Cookies," he told The Hill, from the appliances to the shop's design to the cookies themselves. "If you had walked into a David's Cookie's store in Manhattan at the same time he opened 'John's Cookies' in Boston, you couldn't tell the difference."

Mr. Liederman wrote in his 1989 autobiography that he once challenged Mr. Kerry on the Fanueil Hall store: "I told him he had stolen my idea, and he replied: 'You're absolutely right. I am a politician; I shouldn't be in the cookie business, so let me sell you my store."

Posted by Donald L. Luskin at 1:02 PM | link    

IDENTITY POLITICS, MADE IN AMERICA    "Even though they do have national rivalries, a Mexican is not the same as a Peruvian or a Cuban, there is an overarching cultural commonality. When they come here, that becomes stronger because none of these people are Hispanic until they come here." From an interview with immigration expert Mark Krikorian on the Right Wing News blog.

Posted by Donald L. Luskin at 7:52 AM | link    

ECONOMIC DISSONANCE, OR JUST PLAIN B.S.?    Bloomberg's Caroline Baum asks whether the words coming out of the FOMC meeting Tuesday will match the music of the April payroll jobs announcement on Friday -- will it be harmony or dissonance? Good question -- but the reality is that each, separately, is a broken process moving nearly at random, neither one having any important link to the real world. If they appear to be in synch, will it be any better than if they don't?

Posted by Donald L. Luskin at 7:49 AM | link    

SOCIAL SECURITY REFORM    Acutally, it's more than that. It's about creating an "all-investor nation."

Posted by Donald L. Luskin at 7:41 AM | link    

PENN & TELLER, FAITH AND REASON    The first season of Penn & Teller's show "Bullshit" is available now on DVD. In an online interview, Penn Jillette stresses the primacy of science and reason over faith as the theme of the show -- and throws out anti-faith zingers that seemed designed to stir backlash (and promote sales) such as "There is no difference between Mel Gibson’s faith and the terrorist’s faith."

I've only seen a couple episodes of the show, and it doesn't seem to me that it's about reason-versus-faith at all. It's actually about something far more interesting: it's about the way putatively "documentary" film can distort information for the sake of persuasion. In one episode I recall, the spokeswoman for an environmental group is made to look foolish by having embarrassing out-takes from her interview taken out of context -- the usual stuff that goes with any taped interview: false starts, long "uhhh" pauses, and so on. Jillette's narration -- with its embarrassing out-takes left discretely on the cutting room floor, natch -- accuses the spokeswoman of being confused and inarticulate. This doesn't come off as grossly unfair to the interviewee, because the trick is so painfully obvious -- and funny. It's not unlike the way Penn & Teller's magic performances often work by revealing the "trick" to an illusion. The "trick" revealed here is the same one that shows like "60 Minutes" use every week. Greedy corporate CEOs get unflattering close-ups as they react nervously to tough questions -- Bill and Hillary Clinton are posed nicely in the middle distance as they smile fetchingly to each other while they lie.

Posted by Donald L. Luskin at 7:39 AM | link    

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