Archive for July, 2006

Reign of Error

July 28, 2006

 

By: Paul Krugman

 

July 28, 2006

Amid everything else that’s going wrong in the world, here’s one more piece of depressing news: a few days ago the Harris Poll reported that 50 percent of Americans now believe that Iraq had weapons of mass destruction when we invaded, up from 36 percent in February 2005. Meanwhile, 64 percent still believe that Saddam had strong links with Al Qaeda.

At one level, this shouldn’t be all that surprising. The people now running America never accept inconvenient truths. Long after facts they don’t like have been established, whether it’s the absence of any wrongdoing by the Clintons in the Whitewater affair or the absence of W.M.D. in Iraq, the propaganda machine that supports the current administration is still at work, seeking to flush those facts down the memory hole.

But it’s dismaying to realize that the machine remains so effective.

Here’s how the process works.

First, if the facts fail to support the administration position on an issue — stem cells, global warming, tax cuts, income inequality, Iraq — officials refuse to acknowledge the facts.

Sometimes the officials simply lie. “The tax cuts have made the tax code more progressive and reduced income inequality,” Edward Lazear, the chairman of the Council of Economic Advisers, declared a couple of months ago. More often, however, they bob and weave.

Consider, for example, Condoleezza Rice’s response a few months ago, when pressed to explain why the administration always links the Iraq war to 9/11. She admitted that Saddam, “as far as we know, did not order Sept. 11, may not have even known of Sept. 11.” (Notice how her statement, while literally true, nonetheless seems to imply both that it’s still possible that Saddam ordered 9/11, and that he probably did know about it.) “But,” she went on, “that’s a very narrow definition of what caused Sept. 11.”

Meanwhile, apparatchiks in the media spread disinformation. It’s hard to imagine what the world looks like to the large number of Americans who get their news by watching Fox and listening to Rush Limbaugh, but I get a pretty good sense from my mailbag.

Many of my correspondents are living in a world in which the economy is better than it ever was under Bill Clinton, newly released documents show that Saddam really was in cahoots with Osama, and the discovery of some decayed 1980’s-vintage chemical munitions vindicates everything the administration said about Iraq’s weapons of mass destruction. (Hyping of the munitions find may partly explain why public belief that Saddam had W.M.D. has made a comeback.)

Some of my correspondents have even picked up on claims, mostly disseminated on right-wing blogs, that the Bush administration actually did a heck of a job after Katrina.

And what about the perceptions of those who get their news from sources that aren’t de facto branches of the Republican National Committee?

The climate of media intimidation that prevailed for several years after 9/11, which made news organizations very cautious about reporting facts that put the administration in a bad light, has abated. But it’s not entirely gone. Just a few months ago major news organizations were under fierce attack from the right over their supposed failure to report the “good news” from Iraq — and my sense is that this attack did lead to a temporary softening of news coverage, until the extent of the carnage became undeniable. And the conventions of he-said-she-said reporting, under which lies and truth get equal billing, continue to work in the administration’s favor.

Whatever the reason, the fact is that the Bush administration continues to be remarkably successful at rewriting history. For example, Mr. Bush has repeatedly suggested that the United States had to invade Iraq because Saddam wouldn’t let U.N. inspectors in. His most recent statement to that effect was only a few weeks ago. And he gets away with it. If there have been reports by major news organizations pointing out that that’s not at all what happened, I’ve missed them.

It’s all very Orwellian, of course. But when Orwell wrote of “a nightmare world in which the Leader, or some ruling clique, controls not only the future but the past,” he was thinking of totalitarian states. Who would have imagined that history would prove so easy to rewrite in a democratic nation with a free press?

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Black and Blue

July 27, 2006

 

July 24, 2006

By: Paul Krugman

According to the White House transcript, here’s how it went last week, when President Bush addressed the N.A.A.C.P. for the first time:

THE PRESIDENT: “I understand that many African-Americans distrust my political party.”

AUDIENCE: “Yes! (Applause.)”

But Mr. Bush didn’t talk about why African-Americans don’t trust his party, and black districts are always blue on election maps. So let me fill in the blanks.

First, G.O.P. policies consistently help those who are already doing extremely well, not those lagging behind — a group that includes the vast majority of African-Americans. And both the relative and absolute economic status of blacks, after improving substantially during the Clinton years, have worsened since 2000.

The G.O.P. obsession with helping the haves and have-mores, and lack of concern for everyone else, was evident even in Mr. Bush’s speech to the N.A.A.C.P. Mr. Bush never mentioned wages, which have been falling behind inflation for most workers. And he certainly didn’t mention the minimum wage, which disproportionately affects African-American workers, and which he has allowed to fall to its lowest real level since 1955.

Mr. Bush also never used the word “poverty,” a condition that afflicts almost one in four blacks.

But he found time to call for repeal of the estate tax, even though African-Americans are more than a thousand times as likely to live below the poverty line as they are to be rich enough to leave a taxable estate.

Economic issues alone, then, partially explain African-American disdain for the G.O.P.

But even more important is the way Republicans win elections.

The problem with policies that favor the economic elite is that by themselves they’re not a winning electoral strategy, because there aren’t enough elite voters. So how did the Republicans rise to their current position of political dominance? It’s hard to deny that barely concealed appeals to racism, which drove a wedge between blacks and relatively poor whites who share the same economic interests, played a crucial role.

Don’t forget that in 1980, the sainted Ronald Reagan began his presidential campaign with a speech on states’ rights in Philadelphia, Miss., where three civil rights workers were murdered in 1964.

These days the racist appeals have been toned down; Trent Lott was demoted, though not drummed out of the party, when he declared that if Strom Thurmond’s segregationist presidential campaign had succeeded “we wouldn’t have had all these problems.” Meanwhile, the G.O.P. has found other ways to obscure its economic elitism. The Bush administration has proved utterly incompetent in fighting terrorists, but it has skillfully exploited the terrorist threat for domestic political gain. And there are also the “values” issues: abortion, stem cells, gay marriage.

But the nasty racial roots of the G.O.P.’s triumph live on in public policy and election strategy.

A revelatory article in yesterday’s Boston Globe described how the Bush administration has politicized the Justice Department’s civil rights division, “filling the permanent ranks with lawyers who have strong conservative credentials but little experience in civil rights.”

Not surprisingly, there has been a shift in priorities: “The division is bringing fewer voting rights and employment cases involving systematic discrimination against African-Americans, and more alleging reverse discrimination against whites and religious discrimination against Christians.”

Above all, there’s the continuing effort of the G.O.P. to suppress black voting.

The Supreme Court probably wouldn’t have been able to put Mr. Bush in the White House in 2000 if the administration of his brother, the governor of Florida, hadn’t misidentified large numbers of African-Americans as felons ineligible to vote. In 2004, Ohio’s Republican secretary of state tried to impose a ludicrous rule on the paper weight of voter registration applications; last year, Georgia Republicans tried to impose an onerous “voter ID” rule. In each case, the obvious intent was to disenfranchise blacks.

And if the Republicans hold on to the House this fall, it will probably only be because of a redistricting plan in Texas that a panel of Justice Department lawyers unanimously concluded violated the Voting Rights Act — only to be overruled by their politically appointed superiors.

So yes, African-Americans distrust Mr. Bush’s party — with good reason.

The Price of Fantasy

July 27, 2006

By: Paul Krugman

July 21, 2006

Today we call them neoconservatives, but when the first George Bush was president, those who believed that America could remake the world to its liking with a series of splendid little wars — people like Dick Cheney and Donald Rumsfeld — were known within the administration as “the crazies.” Grown-ups in both parties rejected their vision as a dangerous fantasy.

But in 2000 the Supreme Court delivered the White House to a man who, although he may be 60, doesn’t act like a grown-up. The second President Bush obviously confuses swagger with strength, and prefers tough talkers like the crazies to people who actually think things through. He got the chance to implement the crazies’ vision after 9/11, which created a climate in which few people in Congress or the news media dared to ask hard questions. And the result is the bloody mess we’re now in.

This isn’t a case of 20-20 hindsight. It was clear from the beginning that the United States didn’t have remotely enough troops to carry out the crazies’ agenda — and Mr. Bush never asked for a bigger army.

As I wrote back in January 2003, this meant that the “Bush doctrine” of preventive war was, in practice, a plan to “talk trash and carry a small stick.” It was obvious even then that the administration was preparing to invade Iraq not because it posed a real threat, but because it looked like a soft target.

The message to North Korea, which really did have an active nuclear program, was clear: “The Bush administration,” I wrote, putting myself in Kim Jong Il’s shoes, “says you’re evil. It won’t offer you aid, even if you cancel your nuclear program, because that would be rewarding evil. It won’t even promise not to attack you, because it believes it has a mission to destroy evil regimes, whether or not they actually pose any threat to the U.S. But for all its belligerence, the Bush administration seems willing to confront only regimes that are militarily weak.” So “the best self-preservation strategy … is to be dangerous.”

With a few modifications, the same logic applies to Iran. And it’s easier than ever for Iran to be dangerous, now that U.S. forces are bogged down in Iraq.

Would the current crisis on the Israel-Lebanon border have happened even if the Bush administration had actually concentrated on fighting terrorism, rather than using 9/11 as an excuse to pursue the crazies’ agenda? Nobody knows. But it’s clear that the United States would have more options, more ability to influence the situation, if Mr. Bush hadn’t squandered both the nation’s credibility and its military might on his war of choice.

So what happens next?

Few if any of the crazies have the moral courage to admit that they were wrong. Vice President Cheney continues to insist that his two most famous pronouncements about Iraq — his declaration before the invasion that we would be “greeted as liberators” and his assertion a year ago that the insurgency was in its “last throes” — were “basically accurate.”

But if the premise of the Bush doctrine was right, why are things going so badly?

The crazies respond by retreating even further into their fantasies of omnipotence. The only problem, they assert, is a lack of will.

Thus William Kristol, the editor of The Weekly Standard, has called for a military strike — an airstrike, since we don’t have any spare ground troops — against Iran.

“Yes, there would be repercussions,” he wrote in his magazine, “and they would be healthy ones.” What would these healthy repercussions be? On Fox News he argued that “the right use of targeted military force” could cause the Iranian people “to reconsider whether they really want to have this regime in power.” Oh, boy.

Mr. Kristol is, of course, a pundit rather than a policymaker. But there’s every reason to suspect that what Mr. Kristol says in public is what Mr. Cheney says in private.

And what about The Decider himself?

For years the self-proclaimed “war president” basked in the adulation of the crazies. Now they’re accusing him of being a wimp. “We have been too weak,” writes Mr. Kristol, “and have allowed ourselves to be perceived as weak.”

Does Mr. Bush have the maturity to stand up to this kind of pressure? I report, you decide.

March of Folly

July 27, 2006

By PAUL KRUGMAN 
July 17, 2006
Since those who fail to learn from history are doomed to repeat it — and since the cast of characters making pronouncements on the crisis in the Middle East is very much the same as it was three or four years ago — it seems like a good idea to travel down memory lane. Here’s what they said and when they said it:

”The greatest thing to come out of [invading Iraq] for the world economy would be $20 a barrel for oil.” Rupert Murdoch, chairman of News Corporation (which owns Fox News), February 2003

”Oil Touches Record $78 on Mideast Conflict.” Headline on http://www.foxnews.com, July 14, 2006

”The administration’s top budget official estimated today that the cost of a war with Iraq could be in the range of $50 billion to $60 billion,” saying that ”earlier estimates of $100 billion to $200 billion in Iraq war costs by Lawrence B. Lindsey, Mr. Bush’s former chief economic adviser, were too high.” The New York Times, Dec. 31, 2002

”According to C.B.O.’s estimates, from the time U.S. forces invaded Iraq in March 2003, $290 billion has been allocated for activities in Iraq. Additional costs over the 2007-2016 period would total an estimated $202 billion under the first [optimistic] scenario, and $406 billion under the second one.” Congressional Budget Office, July 13, 2006

”Peacekeeping requirements in Iraq might be much lower than historical experience in the Balkans suggests. There’s been none of the record in Iraq of ethnic militias fighting one another that produced so much bloodshed and permanent scars in Bosnia.” Paul Wolfowitz, deputy secretary of defense and now president of the World Bank, Feb. 27, 2003

”West Baghdad is no stranger to bombings and killings, but in the past few days all restraint has vanished in an orgy of ‘ethnic cleansing.’ Shia gunmen are seeking to drive out the once-dominant Sunni minority and the Sunnis are forming neighborhood posses to retaliate. Mosques are being attacked. Scores of innocent civilians have been killed, their bodies left lying in the streets.” The Times of London, July 14, 2006

”Earlier this week, I traveled to Baghdad to visit the capital of a free and democratic Iraq.” President Bush, June 17, 2006

”People are doing the same as [in] Saddam’s time and worse. These were the precise reasons that we fought Saddam and now we are seeing the same things.” Ayad Allawi, Mr. Bush’s choice as Iraq’s first post-Saddam prime minister, November 2005

”Iraq’s new government has another able leader in Speaker Mashhadani. He rejects the use of violence for political ends. And by agreeing to serve in a prominent role in this new unity government, he’s demonstrating leadership and courage.” President Bush, May 22, 2006

”Some people say ‘we saw you beheading, kidnappings and killing. In the end we even started kidnapping women who are our honor.’ These acts are not the work of Iraqis. I am sure that he who does this is a Jew and the son of a Jew.” Mahmoud Mashhadani, speaker of the Iraqi Parliament, July 13, 2006

”My fellow citizens, not only can we win the war in Iraq, we are winning the war in Iraq.” President Bush, Dec. 18, 2005

”I think I would answer that by telling you I don’t think we’re losing.” Gen. Peter Schoomaker, the Army chief of staff, when asked whether we’re winning in Iraq, July 14, 2006

”Regime change in Iraq would bring about a number of benefits for the region. Extremists in the region would have to rethink their strategy of jihad. Moderates throughout the region would take heart, and our ability to advance the Israeli-Palestinian peace process would be enhanced.” Vice President Dick Cheney, Aug. 26, 2002

”Bush — The world is coming unglued before his eyes. His naïve dreams are a Wilsonian disaster.” Newsweek Conventional Wisdom Watch, July 24, 2006 edition

”It’s time for Democrats who distrust President Bush to acknowledge that he will be the commander in chief for three more critical years, and that in matters of war, we undermine presidential credibility at our nation’s peril.” Senator Joseph Lieberman, Democrat of Connecticut, Dec. 6, 2005

”I cannot support a failed foreign policy. History teaches us that it is often easier to make war than peace. This administration is just learning that lesson right now.” Representative Tom DeLay, Republican of Texas, on the campaign against Slobodan Milosevic, April 28, 1999

Left Behind Economics

July 27, 2006

By PAUL KRUGMAN
July 14, 2006
I’d like to say that there’s a real dialogue taking place about the state of the U.S. economy, but the discussion leaves a lot to be desired. In general, the conversation sounds like this:

Bush supporter: ”Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”

Informed economist: ”But it’s not a great economy for most Americans. Many families are actually losing ground, and only a very few affluent people are doing really well.”

Bush supporter: ”Why doesn’t President Bush get credit for a great economy? I blame liberal media bias.”

To a large extent, this dialogue of the deaf reflects Upton Sinclair’s principle: it’s difficult to get a man to understand something when his salary depends on his not understanding it. But there’s also an element of genuine incredulity. Many observers, even if they acknowledge the growing concentration of income in the hands of the few, find it hard to believe that this concentration could be proceeding so rapidly as to deny most Americans any gains from economic growth.

Yet newly available data show that that’s exactly what happened in 2004.

Why talk about 2004, rather than more recent experience? Unfortunately, data on the distribution of income arrive with a substantial lag; the full story of what happened in 2004 has only just become available, and we won’t be able to tell the full story of what’s happening right now until the last year of the Bush administration. But it’s reasonably clear that what’s happening now is the same as what happened then: growth in the economy as a whole is mainly benefiting a small elite, while bypassing most families.

Here’s what happened in 2004. The U.S. economy grew 4.2 percent, a very good number. Yet last August the Census Bureau reported that real median family income — the purchasing power of the typical family — actually fell. Meanwhile, poverty increased, as did the number of Americans without health insurance. So where did the growth go?

The answer comes from the economists Thomas Piketty and Emmanuel Saez, whose long-term estimates of income equality have become the gold standard for research on this topic, and who have recently updated their estimates to include 2004. They show that even if you exclude capital gains from a rising stock market, in 2004 the real income of the richest 1 percent of Americans surged by almost 12.5 percent. Meanwhile, the average real income of the bottom 99 percent of the population rose only 1.5 percent. In other words, a relative handful of people received most of the benefits of growth.

There are a couple of additional revelations in the 2004 data. One is that growth didn’t just bypass the poor and the lower middle class, it bypassed the upper middle class too. Even people at the 95th percentile of the income distribution — that is, people richer than 19 out of 20 Americans — gained only modestly. The big increases went only to people who were already in the economic stratosphere.

The other revelation is that being highly educated was no guarantee of sharing in the benefits of economic growth. There’s a persistent myth, perpetuated by economists who should know better — like Edward Lazear, the chairman of the president’s Council of Economic Advisers — that rising inequality in the United States is mainly a matter of a rising gap between those with a lot of education and those without. But census data show that the real earnings of the typical college graduate actually fell in 2004.

In short, it’s a great economy if you’re a high-level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport.

Can anything be done to spread the benefits of a growing economy more widely? Of course. A good start would be to increase the minimum wage, which in real terms is at its lowest level in half a century.

But don’t expect this administration or this Congress to do anything to limit the growing concentration of income. Sometimes I even feel sorry for these people and their apologists, who are prevented from acknowledging that inequality is a problem by both their political philosophy and their dependence on financial support from the wealthy. That leaves them no choice but to keep insisting that ordinary Americans — who have, in fact, been bypassed by economic growth — just don’t understand how well they’re doing.

The New York Paradox

July 27, 2006

By Paul Krugman

July 10, 2006
I live and work in New Jersey, but I’ve always loved the energy and variety of the city that’s just an hour’s train ride away. So I was happy to read in The New York Times about a New York success story: the surprising resurgence of Manhattan as a site for corporate headquarters.

What’s interesting about the corporate return to Manhattan is that it flies in the face of today’s conventional wisdom, which says that modern technology is making geography irrelevant. Since work can now be done anywhere, the story goes, jobs move wherever the wages and other costs of doing business are lowest. And this should mean trouble for a high-wage, high-cost location like New York.

But somebody forgot to tell New York about the new rules: in spite of high costs, the city’s economy is thriving.

And the report on the headquarters boom suggests that New York may, paradoxically, be doing well precisely because technology has made it possible to move many jobs away from high-cost locations.

During the 1960’s and 1970’s, New York lost much of its historical role as a headquarters city, as companies moved out to suburban campuses around the country. ”But in the last several years,” the Times article declares, ”New York has regained its magnetic force”: there are more than twice as many headquarters and subsidiaries in the city as there were in 1990.

Why are corporations moving back to New York? Manhattan’s appeal is obvious: the Big Apple is the best place for top executives to ”network face to face with their peers in the hub of the financial, legal and communications industries,” as the article puts it. But that’s an advantage New York has offered ever since it became America’s largest city.

In the past, however, this face-to-face communication came at a high price: in order to keep their top executives in Manhattan, companies also had to pay the rent on large office buildings and fill those buildings with thousands of lower-level employees, paying those employees wages high enough to compensate for New York’s high cost of living. Many companies decided that the benefits of a New York headquarters weren’t worth the cost.

Now, however, it’s possible for many of the people who would formerly have worked at corporate headquarters to work somewhere else instead, communicating with management electronically. And that makes it worthwhile to move top executives back to the center of things.

The same thing may be happening in the financial industry, which these days is New York’s principal ”export” — that is, New Yorkers sell all sorts of things to each other, but they mainly sell financial services to other Americans and the rest of the world.

If you looked only at the employment numbers, you might think that New York’s export base is in trouble. A recent report by the Federal Reserve Bank of New York points out that over the past 30 years, finance-sector employment has been shifting away from New York City toward lower-cost locations, both in the outer parts of the New York metropolitan area and in places like Dallas and San Antonio.

But what seems to be happening is that only relatively low-paid finance jobs are moving out of New York, while highly paid jobs are actually moving in. The Fed study shows that New York’s share of U.S. financial industry earnings, as opposed to employment, is actually higher now than it was in 1970. And it’s a good guess that financial firms, like corporate headquarters, find it easier to put their top people in New York now that the back-office work can be carried out someplace cheaper.

The story of the New York economy isn’t entirely a happy one. The city has essentially lost all of its manufacturing, and it’s now in the process of outsourcing both routine office work and many middle-management functions to other parts of the country.

What’s left is an urban economy that offers a mix of very highly paid financial jobs and low-wage service jobs, with relatively little in the middle. Economic disparities in New York, as in the United States as a whole, are wider than they have been since the 1920’s.

But for once, let me focus on the positive: the world’s greatest city, a city that a generation ago seemed to be in irreversible decline, seems to be doing O.K.

The Treason Card

July 7, 2006

July 7, 2006

By: Paul Krugman
The nature of the right-wing attack on The New York Times — an attack not on the newspaper’s judgment, but on its motives — seems to have startled many people in the news media. After an editorial in The Wall Street Journal declared that The Times has what amount to treasonous intentions — that it “has as a major goal not winning the war on terror but obstructing it” — The Journal’s own political editor pronounced himself “shocked,” saying that “I don’t know anybody on the news staff of The Wall Street Journal that believes that.”

But anyone who was genuinely shocked by The Journal’s willingness to play the treason card must not have been paying attention these past five years.

Over the last few months a series of revelations have confirmed what should have been obvious a long time ago: the Bush administration and the movement it leads have been engaged in an authoritarian project, an effort to remove all the checks and balances that have heretofore constrained the executive branch.

Much of this project involves the assertion of unprecedented executive authority — the right to imprison people indefinitely without charges (and torture them if the administration feels like it), the right to wiretap American citizens without court authorization, the right to declare, when signing laws passed by Congress, that the laws don’t really mean what they say.

But an almost equally important aspect of the project has been the attempt to create a political environment in which nobody dares to criticize the administration or reveal inconvenient facts about its actions. And that attempt has relied, from the beginning, on ascribing treasonous motives to those who refuse to toe the line. As far back as 2002, Rush Limbaugh, in words very close to those used by The Wall Street Journal last week, accused Tom Daschle, then the Senate majority leader, of a partisan “attempt to sabotage the war on terrorism.”

Those of us who tried to call attention to this authoritarian project years ago have long marveled over the reluctance of many of our colleagues to acknowledge what was going on. For example, for a long time many people in the mainstream media applied a peculiar double standard to political speech, denouncing perfectly normal if forceful political rhetoric from the left as poisonous “Bush hatred,” while chuckling indulgently over venom from the right. (That Ann Coulter, she’s such a kidder.)

But now the chuckling has stopped: somehow, nobody seems to find calls to send Bill Keller to the gas chamber funny. And while the White House clearly believes that attacking The Times is a winning political move, it doesn’t have to turn out that way — not if enough people realize what’s at stake.

For I think that most Americans still believe in the principle that the president isn’t a king, that he isn’t entitled to operate without checks and balances. And President Bush is especially unworthy of our trust, because on every front — from his refusal to protect chemical plants to his officials’ exposure of Valerie Plame, from his toleration of war profiteering to his decision to place the C.I.A. in the hands of an incompetent crony — he has consistently played politics with national security.

And he has done so with the approval and encouragement of the same people now attacking The New York Times for its alleged lack of patriotism.

Does anyone remember the editorial that The Wall Street Journal published on Sept. 19, 2001? “So much for Florida,” the editorial began, celebrating the way the terrorist attack had pushed aside concerns over the legitimacy of the Supreme Court decision that installed Mr. Bush in the White House. The Journal then warned Mr. Bush not to give in to the “temptation” to “subjugate everything else to the priority of getting bipartisan support for the war on terrorism.” Instead, it urged him to use the “political capital” generated by the atrocity to push through tax cuts and right-wing judicial appointments.

Things have changed since then: Mr. Bush’s ability to wrap his power grab in the flag has diminished now that most Americans no longer consider him either competent or honest. But the administration and its supporters still believe that they can win political battles by impugning the patriotism of those who won’t go along.

For the sake of our country, let’s hope that they’re wrong.