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February 15, 2004 - Should we stand by and hope?

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The Madness of King George? 
Yeah, yeah.  But this covers mainly the economy.



In public life it seems one must be careful of one's statements. 

On Sunday, February 8th in his interview with Tim Russert on NBC's Meet the Press show, George Bush said this:

"I don't think America can stand by and hope for the best from a madman."

Really?  Yes, quoted out of context this seems too good to pass up. 

Yes, domocrats. com last summer launched a website petition to declare Bush insane under the 25th amendment.  A joke? 

Indeed he said we went to war - or said in one of the previous explanations - because Saddam Hussein refused to let inspectors into Iraq.  Hans Blix was fiction of our own imaginations?  Those briefings Blix gave to the UN never happened?  We must have been hallucinating?  Must be so.  Bush said this last July at the White House with Kofi Anan at his side.  Anan subtly rolled his eyes.  The statement has been repeated by various Republican congressmen, and by James Woolsey, the former director of the CIA.  Must be so. 

Who is mad here?  As Groucho Marx once said, "Who are you going to believe me or you own eyes?"  Make your choice. 

Oh heck, why we went to war gets more mysterious every week.  It's kind of fun to guess what the next reason will be.  The problem is forgetting you heard the previous reasons, or if you remember them, telling yourself you're mad to think you actually heard them. 

It's a matter of who is mad.  You or them. 

This week we had the budget projections:

White House expects 320,000 new jobs a month this year, a number not seen in a decade.  
Job forecast: higher than it looks
Mark Gongloff, CNN/Money staff writer , CNN, February 10, 2004: 6:47 PM EST


The White House forecast for job growth this year is even more optimistic than it appeared at first blush. 

When the Bush administration issued the Economic Report of the President Monday, several news organizations reported there would be 2.6 million new jobs this year.  But that number was based on the difference between projected average payrolls for this year and last year. 

In order to achieve that number, a White House source explained Tuesday, the President's Council of Economic Advisers (CEA) is forecasting about 320,000 new jobs will be created every month this year.  That would be about 3.8 million in total, or about 2.9 percent higher than the December 2003 total estimated by the Labor Department.


Not very likely.  The best we've done in any month in the last several years has been last month's 112,00 new jobs.  The month before was 1,000 as you recall.  We need 150,000 a month to just break even with population growth. 

How is this job growth going to happen?  No one in the administrations is saying, but that the tax cuts helped businesses make much more money, and sooner or later they should start hiring folks.  It could happen.  Have faith. 

Faith is good.  The GDP rose over seven percent in the last several quarters, while wages rose only 0.6 percent - so there's a lot of excess profit out there.  Surely that means using some of that money to staff up these corporations.  On the other hand, paying dividends to the shareholders takes a lot of that money - and now the tax on dividends has been halved (it's no longer "taxed twice" as your recall).  And there are executive salaries.  Oh well.  They might staff up.  It could happen. 

Actually, from what I can find, this would be the biggest spurt in job creation in the last sixty years.  The evidence that this could actually happen is scant, to say the least.  But my conservative friends say a positive attitude works wonders.  We'll see. 

As major corporations add jobs they will add those that provide the best results at the lowest cost, so they may staff up in Bombay or Lahore rather than here.  Oh well. 

And thus this week you also have this:


The movement of American factory jobs and white-collar work to other countries is part of a positive transformation that will enrich the U. S. economy over time, even if it causes short-term pain and dislocation, the Bush administration said yesterday. 

The embrace of foreign "outsourcing," an accelerating trend that has contributed to U. S. job losses in recent years and has become an issue in the 2004 elections, is contained in the president's annual report to Congress on the U. S. economy. 

"Outsourcing is just a new way of doing international trade," said N. Gregory Mankiw, chairman of Bush's Council of Economic Advisors, which prepared the report.  "More things are tradable than were tradable in the past.  And that's a good thing. "


Really?  It does make our corporations more cost-competitive.  And you really can't fault them for wanting to reduce costs.  That keeps prices lower. 

Three more million out of work?  That's just a regrettable byproduct of a healthy economy. 

Well, this is not madness.  The madness is in believing that folks will like this stance - and that particular madness comes from believing there are more corporate owners of businesses in the country than people who are - what do you call them? - employees.  How quaint a concept!  People still work and not own?  Couldn't be.  Their thinking is that most people want businesses to do well, even if they lose their jobs.  Even if they end up sleeping in the streets.  Strong businesses make America strong. 

Hard to sell - but the current administration really seems to believe that. 

Senator John Edwards of North Carolina said it would come as a "news bulletin" to the American people that the outsourcing of jobs overseas is good for the country.  "These people," he said of the Bush administration, "what planet do they live on?  They are so out of touch."

Well, Edwards is running for the nomination, so he cannot just flat-out call Bush and his team mad as hatters.  "Out of touch" is a strong as he gets. 

One blogger, Atrios, looks at it this way:


... Few policy changes benefit all citizens - generally there are winners and losers and the strongest claim that can be made is that in principle when policy changes increase the overall level of income/output, then the losers can be compensated by the winners with an appropriate amount of redistribution.  These people fall into the trap of perceiving the level of GDP or average income as value-free metrics of the health of the economy.  They aren't value free.  Saying improvements in GDP are "always good," and voters should always support policies which in theory do so, embraces the idea that, say, this is the case even if it will make life worse for 90% of the population, while improving things for 10% on the basis that the "average" will be higher.  It's simply a fetishizing of GDP, and embracing the belief that we all should.  It's reducing "the greater good" down to one number. 

Look, most economic theory (and most economists) will say that free trade is a rising tide, but no one does or should claim that it's a rising tide which lifts all boats.  It doesn't.  And, asking people to support policies which go against their own self-interest on the grounds that it's going to increase the value of some economic statistic is ludicrous.  

... it isn't as if I don't think people are capable of supporting policies which go against their own narrow self-interests - either by truly making charitable sacrifices or simply pursuing some notion of "enlightened self-interest" which recognizes an overall personal net benefit from some action of collective choice which, say, raises their taxes.  I just reject that the simple metric of per capita GDP, or some abstract notion of "economic efficiency," does or should embody this notion of the "greater good."  There's a sense that per capita GDP is a valueless measure of an economy's wellbeing, but it isn't.  If policies which lead to higher per capita GDP also have huge distributional consequences, then ignoring those consequences isn't eschewing value judgments - it's simply sticking your head in the sand and pretending the consequences don't exist.


In short?  These guys are mad - crazier than Michael Jackson and his sister combined. 

But maybe not.  They've sold this stuff so far. 

We all got an average tax rebate last year of three hundred dollars.  A whole lot of folks didn't see even that, as you got around forty-five thousand back if you earned more than three hundred thousand a year, and more the more you made.  Between thirty and a hundred thousand you probably missed the whole thing.  But yes, the average was three hundred dollars.  Pretty impressive.  Folks liked the idea - the concept - even if they didn't get the money. 

Perhaps they should have paid attention to the concepts of average and mean values back in school.  Oh well, the big tax breaks for corporations and the wealthy helped businesses get healthy, and staff up on Pakistani employees.  Good for the country. 

The folks who support Bush seem to be as mad as the White House crew. 

As for other madness? 

Yes, Afghanistan produces seventy percent of the world's opium, and yes, we control Afghanistan.  We won that "preview war" the year before we whipped Iraq.  But we cannot let the economy there collapse and a civil war to start up.  Let it be.  That's not madness.  That's pragmatism. 

Pakistan?  One of their top scientists fessed up to selling nuclear technology to Libya and North Korea and God knows who else, and yes, the president of Pakistan pardoned him, and yes, we're okay with that because they're our ally in this war on terror.  Yep, they have their own nukes aimed at India and ready.  But they're not North Korea, damn it!  Everyone makes mistakes. 

And that Osama fellow is floating around in the mountains between these two allied nations of ours.  And they're doing next to nothing to help us find the fellow before the Republican convention.  But we love them anyway. 

Yes, Afghanistan has opium - the bulk of the world's production - and Pakistan has nukes that they have discussed with the bad guys to help the bad guys get their own nukes, and the worst of the real terrorists in the hills, the guys who hit us over two years ago. 

Our response?  We defeated Iraq and got Hussein.  That makes things better. 

But it's not madness.  Nope.  We need allies there, even the Saudis, who persist in supporting the Muslim sects out to kill us all.  The Saudis - friends of the Bush family for generations (see All in the Family by Kevin Phillips, Viking Penguin) - will keep the oil flowing, as they are the key player in OPEC. 

Except this week OPEC jacked up oil prices to compensate for the weak dollar.  Starting April 1st - an interesting date - they reduce output by a million gallons a day, or more.  Oil futures spiked. 

But the Saudis are our friends.  They have been forever.  And the weak dollar helps the country - we can sell our stuff better overseas, and stuff from France and Germany will cost much, much more - punishing them for telling us Iraq wasn't a threat and blocking us from getting rid of the weapons of mass destruction we proved were there, if you remember Colin Powell at the UN last year. 

Oops.  Try not to remember that. 

Work on forgetting a lot of stuff. 

Or, alternatively heed Bush's advice

"I don't think America can stand by and hope for the best from a madman. "

It's true.  Really.