Tag: New York Times

The NYT Fails Its Inflation Exam

The front page of today’s New York Times contains reportage by William Neuman and Patricia Torres on the ravages of Venezuela’s inflation. The headline writer produced a very catchy title for Neuman and Torres: “In Venezuela, Even Thieves Prefer Dollars.” While the reporters turned up some colorful anecdotal evidence, they came up short when they attempted to deal with the hard facts.

Neuman and Torres claim that there is no estimate for inflation in war-torn Syria. This is not true. The Johns Hopkins-Cato Troubled Currencies Project, which I direct, produces reliable implied annual inflation rates for Syria each day. I have recently written about Syria’s inflation in the Huffington Post, and was interviewed about it on Bloomberg TV last Friday. At present, Syria’s annual inflation rate is 79.8 percent.

As for Venezuela, Neuman and Torres report that the International Monetary Fund “has predicted that inflation in Venezuela will hit 159 percent this year (though President Nicolás Maduro has said it will be half that)…” Well, our Johns Hopkins-Cato Troubled Currencies Project is not predicting inflation’s course in Venezuela, we are accurately estimating where it is now. At present, Venezuela’s implied annual inflation rate is 717 percent. That’s four-and-a-half times higher than the New York Times reportage.

When it comes to countries with troubled currencies and high inflation rates, The New York Times should do its homework.

Will Immigrants Affect Economic Policy?

The New York Times has some wonderful Room for Debate pieces debating whether the American electorate is getting more liberal.  From Molly Worthen bemoaning the rise of secular libertarianism to Robert Reich repeating the mantra of the New Deal to Kay Hymowitz arguing that Millennials are not so liberal, all are worth reading. 

If the U.S. government does adopt more liberal economic policies over the next few decade, immigrants and their descendants will not be to blame.  There are four pieces of research that lend support to this view.

Congress’s Archaic Information Practices

There have been more than 2,700 bills introduced so far in the current Congress. That’s more than 30 bills per day, every day this year, weekends included. Ordinary Americans have a hard time keeping up, of course. Congress does, too.

The controversy around the anti-sex-trafficking bill in the Senate last week illustrates this well. Debate around the formerly non-controversial bill fell into disarray when Democrats discovered language in the bill that would apply the Hyde Amendment to fines collected and disbursed by the government. (The Hyde Amendment bars government spending on abortion. Democrats argue that it has only applied in the past to appropriated funds, not disbursement of fines.)

How is it that it took until late March for Democrats to discover controversial language in a bill that was introduced in January?

Well, Congress is awash in archaic practices. For one, bills are written in “cut and bite” style—change this line, change that word, change another—rather than in a form that lays out what the law would look like if the bill were passed. That makes bills unreadable—a situation Rep. Justin Amash (R-MI) has sought to remedy.

Prof. Krugman Snared By 364 Trap

In his New York Times column of September 15, 2014, How to Get It Wrong,Paul Krugman pleas for open-mindedness and reason. From whence did Prof. Krugman convert from his embrace of dogmatism?

Well, it’s clear that he has not converted. Indeed, the evidence resides about three quarters of the way through his column:

“The great majority of policy-oriented economists believe that increasing government spending in a depressed economy creates jobs, and that slashing it destroys jobs — but European leaders and U.S. Republicans decided to believe the handful of economists asserting the opposite. Neither theory nor history justifies panic over current levels of government debt, but politicians decided to panic anyway, citing unvetted (and, it turned out, flawed) research as justification.”

This passage brings back vivid memories of the 364. In 1981, Margaret Thatcher was prime minister and my friend and collaborator, the late Sir Alan Walters, was her economic guru. Britain’s fiscal deficit was relatively large, 5.6% of its gross domestic product, and the economy was in the middle of a nasty slump. To restart the economy, Thatcher instituted a fierce fiscal squeeze, coupled with an expansionary monetary policy. This was immediately condemned by 364 dyed-in-the-wool Keynesian economists - virtually all of the British establishment. In a letter to the Times, they wrote, “Present policies will deepen the depression, erode the industrial base of our economy and threaten its social and political stability.”

Thatcher and Walters were vindicated quickly. No sooner had the 364 affixed their signatures than the economy turned around and boomed for the next five years. That result provoked disbelief among the Keynesians. After all, according to their dogma, the relationship between the direction of a fiscal impulse and economic activity is supposed to be positive, not negative.

The 364’s dogma was proven wrong. Thatcher and Walters were right.

Politics and Politicians

The New York Times, which wants politicians to run everything from our schools to our health care to our retirement, has lately been telling us just what kind of people it wants us to trust with our lives. People like mayoral candidate Bill Thompson:

As a first-time candidate for New York City comptroller, William C. Thompson Jr. was feted at a downtown fund-raiser in 2001 by two luminaries of the black business world: the hip-hop mogul Russell Simmons and Mr. Simmons’s money manager, a veteran Wall Street financier who made his fortune promoting hybrid securities known as convertible bonds.

Speaking in between rap and poetry-slam performances, the financier, Tracy V. Maitland, made clear why he had taken an interest in the little-watched race for comptroller. “When you control $85 billion,” he told 200 guests crowded into a popular art gallery, “you get a lot of attention.”

Over the last 12 years, Mr. Thompson has repeatedly gotten Mr. Maitland’s attention.

After that fund-raiser, Mr. Maitland became a regular contributor to the campaigns of Mr. Thompson, a Democrat who is now running for mayor. Later, he pushed unsuccessfully for Mr. Thompson’s wife to be hired as president of the American Society for the Prevention of Cruelty to Animals, where he is a trustee.

Mr. Maitland’s attention was not unrequited. In 2006, Mr. Thompson honored him at a Black History Month observance. And in 2008, his office for the first time began investing city pension assets in convertible bonds, pouring $324 million into Advent Capital Management, the firm Mr. Maitland founded. By the time Mr. Thompson left office, in 2009, Advent was earning $2 million a year in fees on those investments.

Mr. Thompson’s ties to Mr. Maitland reflect a pattern that emerges from an examination of Mr. Thompson’s stewardship of the pension funds and, more broadly, the comptroller’s office: Again and again, Mr. Thompson reaped political gains from those he awarded city business.

As he oversaw the city’s $85 billion pension system, Mr. Thompson steered the funds into a diverse range of new investment categories, expanding from heavy concentrations in stocks and bonds into private equity, real estate and niche funds. Yet performance was lackluster: nationwide, more than half of large public pension funds outperformed the five city funds’ combined 4.84 percent return from 2002 through 2009, according to a widely used yardstick compiled by Wilshire Associates, an investment advisory firm. Meanwhile, the city’s roster of fund managers, and their fees, tripled — and Mr. Thompson collected more than $500,000 in campaign donations from them.

Mr. Thompson’s credentials as comptroller and a seasoned manager are central to his mayoral campaign, in which he has portrayed himself as the grown-up in the Democratic field — less liberal, strident and showy, but best prepared for the sober task of managing an unruly city.

But interviews and a review of thousands of pages of records — schedules, e-mails, pension statements and campaign finance reports — suggest frequent overlap of Mr. Thompson’s political ambitions and the comptroller’s operation, and that like many pension overseers at the time, he raised campaign money aggressively from those seeking business from his office.

And his opponent Bill DeBlasio:

California Officials Deliberately Mislead Public on Obamacare Rate Shock

Ever since Obamacare became law, I have been counseling states not to establish the law’s health insurance “exchanges,” in part because:

to create an Exchange is to create a taxpayer-funded lobbying group dedicated to fighting repeal. An Exchange’s employees would owe their power and their paychecks to this law. Naturally, they would aid the fight to preserve the law.

California was the first state both to reject my advice and to prove my point.

Officials operating California’s exchange–which the marketing gurus dubbed “Covered California“–recently and deliberately misled the entire nation about the cost of health insurance under Obamacare.

They claimed that health plans offered through Covered California in 2014 will cost the same or less than health insurance costs today. “The rates submitted to Covered California for the 2014 individual market,” they wrote, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

See? No rate shock. California’s top Obamacare bureaucrat, Peter Lee, declared his agency had hit “a home run for consumers.” Awesome!

Unfortunately, anyone who knows anything about health insurance or Obamacare knew instantly that this claim was bogus, for three reasons.

  1. Obamacare or no Obamacare, health insurance premiums rise from year to year, and almost always by more than 2 percent. So right off the bat, the fact that Covered California claimed that premiums would generally fall means they’re hiding something. 
  2. Obamacare’s requirement that insurers cover all “essential health benefits” will force most people who purchase coverage on the “individual” market (read: directly from health insurance companies) to purchase more coverage than they purchase today. This will increase premiums for most everyone in that market.
  3. Obamacare’s community-rating price controls (also known as its “pre-existing conditions” provisions) will increase premiums for some consumers (i.e., the healthy) and reduce premiums for others (i.e., the sick). So it is misleading for Covered California to focus on averages because averages can hide some pretty drastic premium increases and decreases.

“Everyone Will Have to Decide For Themselves”

Alessandro Acquisti is one of my favorite privacy researchers, and a quote he gave the New York Times about consumer privacy is all Acquisti, right down to the Italian-born locution.

“Should people be worried? I don’t know,” he said with a shrug in his office at Carnegie Mellon. “My role is not telling people what to do. My role is showing why we do certain things and what may be certain consequences. Everyone will have to decide for themselves.”

Alas, Times reporter Somini Sengupta did not report on Acquisti as neutrally as Acquisti reports on privacy.

We don’t always act in our own best interest, his research suggests. We can be easily manipulated by how we are asked for information. Even something as simple as a playfully designed site can nudge us to reveal more of ourselves than a serious-looking one.

It is just as plausible that people mouth a desire for privacy but then act more consistently with their self-interest when they reveal information that provides them fuller interaction, free Internet content, and broader commercial choices.

Read more of Acquisti on his Economics of Privacy page.