Friday, August 01, 2003
And What He’s Not Telling
But, as ever, that won’t stop him from trying to go head-to-head with Princeton University economics professor and New York Times columnist, Paul Krugman, even without having any facts to support the vague insinuations underlying his bitter invective.
In a post over at the supreme vanity site, one entitled “Hey, Big Spender,” Sullivan today writes:
In one quarter, federal spending jumped 25 percent. As often, wars are good for economies. . . . Poor Krugman. It doesn’t get much worse than this, does it?
The reference is not, as Sullivan implies, to the most recent federal budget data, but rather to the report on second-quarter gross domestic product (GDP), released yesterday by the Commerce Department.
It’s a report Sullivan fails to mention is known among practicing economists, financial and market analysts, and academicians as “the advance report” on GDP. As such, yesterday’s report is subject to future revision: twice in the next two months, with the release of the preliminary and final estimates of second-quarter GDP, “final” estimates that will, in the future, undergo numerous so-called benchmark revisions.
The advance report estimated the U.S. economy grew at a seasonally adjusted (Any clue what that means, Sullivan?) annual rate of 2.4 percent in the quarter, significantly higher than the consensus of economists’ pre-announcement forecasts, which called for economic growth of around 1.7 percent.
So, yes, the report was both surprising to economists and was greeted as good news by the financial markets. But the report is subject to further review and, more important, has less to do with federal spending from a budgetary (i.e., fiscal policy) perspective, than it does with contemporaneous government purchases of goods and services.
(At this point I will spare you a long, complicated, but extremely relevant explanation of the different ways and different time periods the same federal expenditures appear in different government reports, to say nothing of corporate-profit announcements. Accrual accounting, anyone? Andy? Do you know what that means?)
Besides, the gains in stock prices generated Thursday, which may or may not have had much to do with the much-vaunted GDP report at all -- I’m an EMH type myself (Still with me, Sullivan?) -- were all but erased by this morning’s disappointing report on the employment situation. I suppose what Sullivan giveth himself, the market shall taketh away.
Naturally, Sullivan, with his newly found ursine pride and all-around snarkiness, couldn’t resist this little thorn, referring to Krugman: “He’ll be really bummed if people start getting jobs again.”
Now that statement is one thing, and one thing only: a calumny. To hear the underemployed Sullivan claim Krugman takes cheer in the job market’s persistent and well documented sluggishness, and in unemployment rates not seen in nearly a decade, is nothing less than grotesque.
As for Sullivan’s simplistic notion that “wars are good for economies,” on this subject can we all, the Prussian of Provincetown included, just try to think a little bit beyond the level of knowledge needed for a “gentleman’s C” in Economics 101? (And, no, that’s not a barb aimed at President George W. Bush. The hell it isn’t.)
Yes, “wars are good for economies,” particularly stubbornly constipated economies like ours. But spending on wars, particularly wars fought thousands of miles away, is helpful to the associated economy only in the short run. Long wars, e.g., World War II, while they may create the impression of a strong economy, are actually economically disruptive. And lengthy wars lawmakers refuse to fund through taxation generally have been destructive, e.g., the Vietnam War and, it’s becoming increasing apparent, the latest war on Iraq.
“Wars are good for economies” because they provide a much-needed fiscal stimulus to the aforementioned stubbornly constipated economies. (“Dr. Keynes, please call your office.”) But they are not necessary to generate that fiscal stimulus. Tax cuts, the holy grail of selfish and shortsighted right wingers, can achieve the same effect, though tax cuts are most effective when they put money into the hands of citizens most likely to spend it. And government spending can provide a far better short- and long-term stimulus to the economy when it is invested -- here at home -- in such things as public works, construction, roads, public transit, education, job training, and the like.
I thought everyone knew that.
I can’t resist departing from this post, already having referenced Sullivan’s bizarre and self-evidently embarrassing piece at Salon.com today, “I Am Bear, Hear Me Roar!,” in which he -- Mr. Monogamy -- praises, albeit through the words of an anonymous stranger in a bar -- at closing time, no less -- his very own “pot-belly,” which, best I can gather, has nothing to do with his oft-stated love for marijuana, without asking just one question: Whatever happened to that 32-inch waist he used to brag about?
Okay, just one more thing: Sullivan, in a separate post today, means to say “One Fewer Catholic” not “One Less Catholic.”
And in case you’re interested, and you’re probably not, here’s Sullivan as a “leather man”:
Photo: Gay City News
Any caricatures around depicting Sullivan’s current bearish persona?
[Post-publication addendum (August 2): On Sullivan’s lack of knowledge of economics, see Semi-Daily Journal, the weblog of the indispensable real-life economist Brad DeLong of the University of California, Berkeley. Oh, and also Elton Beard’s take at Busy, Busy, Busy. BBB Bonus: Photo of “Shut-in von Clausewitz.”]The Rittenhouse Review | Copyright 2002-2006 | PERMALINK |