Skip to content

This week, the House of Representatives chose to use about three days of its precious time discussing the following nonbinding resolution:

Resolved by the House of Representatives (the Senate concurring) that —

(1) Congress and the American people will continue to support and protect the members of the United States Armed Forces who are serving or who have served bravely and honorably in Iraq; and

(2) Congress disapproves of the decision of President George W. Bush announced on Jan. 10, 2007, to deploy more than 20,000 additional United States combat troops to Iraq.

The choice to spend three days on this was made from a long list of things the House could have been doing, whether about the war in Iraq or other pressing matters.

I choose to take them at their word, and the word they used was "disapproves." When I read about the event in the New York Times this morning, I saw the following:

A sharply divided House of Representatives passed a resolution on Friday formally repudiating President Bush’s decision to send more than 20,000 new combat troops to Iraq.

The rare wartime rebuke to the commander in chief — an act that is not binding, but that carries symbolic significance — was approved 246-to-182, with 17 Republicans breaking ranks to join all but two Democrats in supporting the resolution.

I don't see where the words "repudiating" and "rebuke" are supported in the text of the resolution. In order for a disapproval to qualify as a rebuke, it has to be sharp or stern. This nonbinding resolution is neither. In order for a statement to repudiate, it must reject something. A nonbinding resolution rejects nothing. The troop surge is no less feasible for the President now than it was three days ago.

Opponents of the President's plan to add more combat troops may wish that House members would have actually repudiated or rebuked, but in a nonbinding resolution that uses only the word "disapproves," they clearly did not in their formal capacity as legislators.

House members have said many things to a largely empty chamber during the preceding three days, but we don't elect them to make speeches. We elect them to legislate. They have not done so, and were I a journalist, I would have written it that way in the opening paragraphs of my report.

In today's Washington Post, Joseph Fuller (founder of the Monitor Group) and Brock Reeve (executive director of the Harvard Stem Cell Institute) argue that the United States may soon lose its leadership position in stem cell research. Their concluding paragraph:

In short, the stem cell sector is at risk of experiencing a failure to launch at the national level. Yes, some progress is being made: WARF has just revised some of its licensing policies; venture capital activity has picked up recently; and academic research and clinical centers, disease foundations and patient-advocacy groups are adopting a more aggressive stance in breaking down existing barriers. But will this be enough? Or will foreign governments, using America's biotech success as a model, systematically encourage the development of stem cell research and, not satisfied with emulating our competitive performance, succeed in outstripping us?

This experience is contrasted in the body of the op-ed with past successes in biotech, and the consumer electronics and automotive sectors are held out as examples where the United States "fumbled" its global leadership position.

It is quite possible that everything the authors argue is true, but even in that case, their argument is incomplete. Consider the last question they pose in their concluding paragraph. So what if foreign governments tax their citizens to support stem cell research? What have we lost?

We will not have lost the opportunity to benefit from that research. Some part of the research will find its way into products--those products will be available here at prices similar to what they would be if the products were developed domestically. No loss to the consumers.

We will not necessarily have lost the opportunity to invest in these technologies as private entities--the capital markets in Europe and Asia are generally open to U.S. investments. The governments on these continents would have to specifically block or discourage that investment.

We will not have taxed our citizens to support production of these goods. So we will have that money, whether in the government or the private sector. How do we know whether that money is better spent on stem cell research than keeping it in the private sector or with the government?

That's the key element that is missing from the op-ed: what is the opportunity cost of committing the money to stem cell research relative to its best (or most likely alternative use)? Ultimately, the authors cannot be persuasive just by claiming that the gross returns to stem cell research conducted domestically are positive or high. The returns to the activity--net of the opportunity cost of the investment--must be positive or high.

On October 3, 2006, five national journalists were on the Dartmouth campus to discuss their work in covering economic and business news. Their visit included a public panel discussion titled "Beyond the Headlines" moderated by yours truly, in my capacity as director of Dartmouth's Rockefeller Center. Our guests were Peter Coy, Greg Ip, Steve Liesman, Eduardo Porter, and Andrew Serwer.

The panel discussed how economic and public policy issues are covered by the media, the public's understanding of these issues, and how these issues are likely to influence elections in the coming years. Panelists also described factors that impact the media's role in reporting these issues. Journalists also discussed new methods of communication and their impact on the future of traditional media in our rapidly changing environment influenced by technology.

You can watch the video here, courtesy of James Reese at RadioEconomics. Enjoy

I finally decided to go in for TimesSelect. I am greeted by Tom Friedman's column, "Let's (Third) Party," where I read this gem about gasoline prices:

Like someone who will tell the truth: The only way Americans are ever going to enjoy relatively cheap gasoline again is if we raise the price now with a gasoline tax— and fix it at that higher level for several years — so investors know that it is not coming down, and therefore it makes economic sense for them to make the long-term investments in alternative, renewable sources of energy. That is the only way to break our oil addiction and ultimately bring down the price.

That's a fascinating "truth." Note that he is not writing here about the externalities associated with our dependence on oil--he is writing about the direct consumption of it through gasoline. So in order to have cheap gasoline later, we should insist on having expensive gasoline today, even if the price of gasoline would fall in the interim. That is beyond silly.

I understand that post-9/11, Friedman has been frustrated by the failure of the President to launch a national initiative about anything, but particularly about our energy consumption. I share much of that frustration. I even advocate for a higher gasoline tax (because of the externalities associated with its consumption and instead of idiotic CAFE standards). I also wish more people understood Brad DeLong's very cogent point that the correct side of this debate to be on is to have people face the market price of gasoline and certainly to do nothing to shield them from it (again because of the externalities). But Friedman is doing the same sort of pandering as the politicians he is criticizing when he holds out the promise of a future with cheaper gas as the rationale for his proposal.

It doesn't have to be complicated. Estimate the monetary cost of the negative externalities associated with gasoline use, set the appropriate tax, and then do nothing else. The market price then sends the correct signal to investors about how to take advantage of new opportunities in alternative energy.

Apparently, when students from this class get jobs:

Covering the Economy: The Story Behind the Numbers
Journalism 298, Spring 2006:
J-School B1
2:30-4 Tuesday
10-12 Wednesday
Susan Rasky
J. Bradford DeLong

You are all guinea pigs.

We have never done this before. Neither has anybody else as far as we know.

In fact, it is not at all clear to us what "this" is or will be. But a number of our colleagues in economics and journalism think we’re on to something and want to help. You’ll be hearing from them in person, over the speaker phone and in Washington, D.C. over spring break.

Susan Rasky is here to get people ready to cover the U.S. and world economy for the wire services, for daily newspapers and websites and for week-in-review style pieces in print and broadcast.

Brad DeLong is here for two reasons: first, because Susan thinks he has something to offer; second, because he is being gradually driven insane by stories in major newspapers and other outlets. He’ll share some bad budget reporting from his bag of journalistic atrocities in the first class.

We both start with this premise: Nobody goes into journalism to write bad stories that mislead their readers and omit or downplay the important news of the events that they are covering. Journalists, especially daily journalists have a very difficult job. They are under ferocious deadline pressure. They are beat reporters--which means that they cannot afford to alienate their sources too far, for they have to go back to them again and again. They are dealing with complicated and subtle issues. And at least half the people they talk to are telling them subtle (and sometimes not so subtle) lies.

So what has gone wrong? And how can journalists--and those among their sources who are interested in public education and in raising the level of the debate--make things go right?

We plan to spend about the first six weeks looking at how the bread-and-butter economic news is covered and how it should be covered. What the standard statistical releases suggest about whether the economy is going up, down, or sideways--and what "up," "down," and "sideways" mean.

During the next six weeks, we will focus more closely on four or five big economic trends from which you will select story projects for publication or broadcast:

1. Pensions and Social Security - who pays for retirement.
2. Health Insurance, Drugs, and Medicare.
3. The Government: Taxing and Spending.
4. Trade, Jobs, and Earnings

Students with approved Washington reporting agendas will travel there over Spring break (week of March 27 April 2) to interview sources and meet journalistic and economic contacts.)

Tuesday classes will be Brad’s informal lectures on the economy; his readings will be posted on our JSchool intranet and on his website.

Wednesday classes will be discussion of readings, sources and story project planning and pitching. During the first few weeks we’ll also do some timed writing exercises on the indicators just to keep your fingers warm.

Guests will be scheduled for both sessions. We’re still working on the final line-up.

This is a fantastic idea. The first part of the course--understanding the major pieces of economic news--is a course that we (as a profession) ought to develop for undergraduates to take after intermediate macro. Combining it with longer term issues and focusing it on journalism are great additions. And the instructors invite you to play along at home.

A while ago, I wondered why newspapers bother to have editorial opinions at all. Today's New York Times reminds us why this question is still relevant, with "The Next Alan Greenspan." The relevant paragraphs:

The four names circulating around Washington are Martin Feldstein, a Bush adviser on Social Security and an economics professor at Harvard; Glenn Hubbard, Mr. Bush's former chairman of the Council of Economic Advisers and now dean of Columbia University Business School; Lawrence Lindsey, the former director of the White House National Economic Council; and Ben Bernanke, chairman of the Council of Economic Advisers.

Two of them - Mr. Bernanke and Mr. Feldstein - come with some independent credentials. Mr. Bernanke is deeply conservative, economists say, but respected for independent thinking and not inclined to wear that conservatism on his sleeve. Mr. Feldstein has pushed for Social Security privatization, but in the past criticized deficits run up by Ronald Reagan, for whom he was working at the time, to the everlasting ire of many Republicans. That hardly makes him a shoo-in for the job, but those are exactly the independent traits that Mr. Bush should be looking for if he is indeed serious about appointing a Fed chairman who isn't politically beholden to the White House.

Hopes die hard, so we strongly encourage Mr. Bush to put his money where his mouth is this time around. This job is too important for another taste of cronyism.

An exceptional piece of creative writing, on many levels.

First, I'll take exception to the phrasing of "deeply conservative ... but respected for independent thinking." There is nothing about the words "deeply conservative" that merits the word "but" to connect them to the words "respected for independent thinking."

Second, I'll take exception to the analogous phrasing with regard to Feldstein and Social Security reform. Feldstein has been advocating Social Security reform for over 30 years. (Read this WSJ op-ed from November 1997 to convince yourself that this pre-dates any association of President Bush with the issue.) The Times has confused cause and effect: it would be more accurate to say that the White House is interested in Social Security reform because Feldstein has been advocating for it.

Third, I'll take exception to the insinuation that nominating Glenn Hubbard and Larry Lindsey would be evidence of cronyism. The definition of "cronyism" is:

Favoritism shown to old friends without regard for their qualifications, as in political appointments to office.

Note the phrase "without regard for their qualifications." It's not optional in the definition. So are we to infer that Hubbard and Lindsey have no qualifications, but for the fact that they served as economic principals in the Bush administration? This is easily put to the test. Here is Lindsey's bio. It reports that he was a Governor of the Federal Reserve System for 6 years, after seriving as a Special Assistant to the President in the first Bush White House and a senior staff economist at the CEA. All of this occurred before he served as a principal in the current administration. He seems qualified to me. That doesn't mean I endorse him, or that I think he's the best one for the job. It just means that the Times editorial page is way off base with its insinuation.

Now let's look at Glenn Hubbard's bio and cv. We observe that prior to being CEA chairman in the current administration, he was the author of a leading textbook on financial markets and a deputy assistant secretary at the Treasury. His current position as Dean of Columbia's Business School was foreshadowed by his service as a senior vice dean from 1994-1997. His scholarship is also exceptional, with his 1988 Brookings Paper spawning and entire literature about financial constraints and investment. (I am also a huge fan of his 1999 Journal of Financial Economics article on managerial ownership and firm performance and his 1995 Journal of Political Economy article on precautionary saving and social insurance.) Translation for those at the Times: he's qualified, even if he's not your (or my) first choice.

Perhaps someone should tell the editorial page editors at the Times about Google and what a free and fantastic tool it can be for preventing them from embarrassing themselves with drivel like this. Failing that, perhaps we could ask that they place such exceptional opinion pieces like this behind the Times Select veil of secrecy.

Blogsearch Technorati

We bring the Voxy out of retirement to honor Gilbert M. Gaul's series of articles in the Washington Post this week on the waste in Medicare spending. He gets off to a good start last Sunday in "Bad Practices Net Hospitals More Money," the first of the series:

As far back as 1999, federal and state regulators began to receive complaints that the heart surgery unit at Palm Beach Gardens Medical Center in Florida was a breeding ground for germs.

Dust and dirt covered some surgical equipment. Trash cans and soiled linens were stored in hallways. IV pumps were spattered with dried blood. One patient's wife said she saw a medical assistant tear surgical tape with his teeth.

State inspectors in 2002 found "massive post operative infections" in the heart unit, requiring patients to undergo more surgery and lengthy hospital stays.

In a four-year period, 106 heart patients at Palm Beach Gardens developed infections after surgery, according to lawsuits and government records. More than two dozen were readmitted with fevers, pneumonia and serious blood infections. The lawsuits included 16 patients who died.

How did Medicare, the federal health insurance program for the elderly, respond?

It paid Palm Beach Gardens more.

Under Medicare's rules, each time a patient comes back for another treatment, a hospital qualifies for an additional payment. In effect, Palm Beach Gardens was paid a bonus for its mistakes.

Medicare's handling of Palm Beach Gardens is an extreme example of a pervasive problem that costs the federal insurance program billions of dollars a year while rewarding doctors, hospitals and health plans for bad medicine. In Medicare's upside-down reimbursement system, hospitals and doctors who order unnecessary tests, provide poor care or even injure patients often receive higher payments than those who provide efficient, high-quality medicine.

This moral hazard problem exists everywhere in the economy where actions are imperfectly monitored. The problem here is that Medicare is a $300 billion a year program that is rife with hidden actions. The classic economic answer is to pay based on performance (or the quality of care), assuming that there are measures of performance that are informative about the actions taken. In an environment like health care, where there are lots of random factors that can affect outcomes, the following statistic is particularly disheartening:

Medicare has difficulty controlling waste because of deficiencies in the way it monitors and enforces quality standards. Its oversight system is fragmented, underfunded and marred by conflicts of interest, records and interviews show. For every $1,000 that it pays to hospitals and doctors, it invests just $1 or $2 to oversee and improve patient care.

Plenty of progress has beeen made in health outcomes research. Some of the most interesting work is done by a team at the Dartmouth Medical School on the geographic variation in health care spending, compiled in the Dartmouth Atlas of Health Care. This work figures prominently in the article:

One result: striking variations in what Medicare pays for care in different states, or even neighboring Zip codes. In 2001, the typical Medicare patient in Los Angeles cost the government $3,152 more than a comparable patient in the District. A patient in Miami cost $3,615 more than one in Baltimore.

Those disparities cannot be explained by differences in local prices or rates of illness, said John E. Wennberg, a Dartmouth physician and an expert on geographical variations in medical care. Rather, higher spending is related to the number of specialists, hospital beds and technology available. "If you have twice as many docs in a community," said Wennberg, "you end up with twice as many office visits."

Yet most high-spending states rank near the bottom in quality of care, Medicare data show. Louisiana ranked 50th in quality yet first in Medicare spending in 2001, the most recent year available. New Hampshire was first in quality but 47th in spending.

Medicare acknowledges that its system rewards bad care. Officials have only recently begun to address the problem.

This year, Medicare began requiring hospitals to report their performance on a handful of measures, such as how many heart attack patients received recommended beta blockers and aspirin. Officials say the reports will pressure hospitals to improve and save money. But officials don't use the data to punish poor performers or to steer patients to the best performers.

That last step is critical. A bit later in the article, we learn of more efforts underway:

Recently Medicare officials have begun an effort to transform the way the program pays for care, with a renewed focus on quality. Congress also has joined in, mandating that Medicare try ways to increase competition and link payments to quality.

Medicare has a pilot program to reconfigure how it pays for patients with chronic conditions such as diabetes, heart disease and kidney failure. While relatively small as a percentage of all patients, these beneficiaries account for about half of all money spent. Medicare is testing the idea of paying doctors a single, all-inclusive fee for managing each patient's care, linking the payment to whether the patient gets better.

Another initiative is studying the effect of paying doctors and hospitals small bonuses when they provide preventive treatments such as an annual eye exam for diabetics. Recently, Medicare also began tapping its databanks to give patients access to basic information about the quality of care provided by hospitals, nursing homes, home health and dialysis centers. Much of the information is now reported by the health care providers and posted on Medicare Web sites.

By linking payments to performance, Medicare hopes to shift the culture of medicine away from automatically doing more. In theory, that could lead to savings and improve care.

This is what we would hope for: case management of the highest cost conditions, payment based on best practices, and greater information dispersion through the customer base. The series contains quite a bit more information and good writing.

Other blogs commenting on this post

Former NBC News Anchor Tom Brokaw delivered the Commencement address at Dartmouth this weekend. I give him credit for braving inhospitably hot and humid weather to be a part of the festivities. Here are some excerpts I liked:

You have been hearing all of your life about this moment - your first big step into what you have been called and told is the real world. What, you may be asking yourself this morning, is this real life all about? Ladies and gentlemen of the Class of 2005 at Dartmouth, it's not college - it's not high school. Real life is junior high.

The world you're about to enter is filled with adolescent pettiness, pubescent rivalries, the insecurities of 13-year-olds and the false bravado of 14-year-olds. Forty years from now, I guarantee it, you'll still be making silly mistakes, you'll have a temper tantrum, you'll have your feelings hurt for some trivial slight, you'll say something dumb and at least once a week you'll wonder, "Will I ever grow up?"

You can change that. In pursuit of passions, always be young. In your relationship with others, always be a grown-up. Set a standard and stay faithful to it.

And, on a more serious note, this one:

Your individual hopes and dreams will be seriously compromised if the ship of state is allowed to drift on a hazardous course. We cannot pretend that simply because there has not been another 9-11 the world is as it once was. We are not yet near the end of an epic struggle between the Western ideal of rule of law, tolerance, pluralism and modernity and the advocates of a jihad vision of Islam.

We cannot wish away the complex set of conditions that fuel a rage across a broad band of the globe where too many young men and women your age are caught in a crossfire of claims on their faith and another way of life playing out on the wider screens that reflect the images of our world - a world of unveiled women, material excess, secular joy disconnected from their lives of deprivation and uncertainty.

These young men and women are not incidental to the world that you are entering. They are the fastest growing population in a world already over-crowded, especially in that part of the globe where self-determination remains at best a work in progress. Or at best, a faint rumor or a distant promise.

Many of them, as I know from my recent travels there again just this spring, love our culture and speak our language but we show, in their eyes, no interest in returning the favor. Too many of them love the idea of America but hate our government, envy our freedoms and deeply resent what they see as our sense of entitlement, our determination to tell them how to live their lives. The worst among them had to be punished and the fight goes on, but no army can conquer them all or force them to change.

So as you leave here in pursuit of your dreams, try to imagine theirs. Stand tall. Don't apologize for what you have or what you believe in, but get to know what they don't have, and why.

Best of luck to the Class of 2005!

Other blogs commenting on this post

There has been some chatter in the blogosphere about Daniel Okrent's parting comments about Paul Krugman during their time at the New York Times. The offending sentences are:

Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults. ... No one deserves the personal vituperation that regularly comes Dowd's way, and some of Krugman's enemies are every bit as ideological (and consequently unfair) as he is. ... But that doesn't mean that their boss, publisher Arthur O. Sulzberger Jr., shouldn't hold his columnists to higher standards.

Some have criticized Okrent for taking the shot at Krugman without providing even a single example. (See Brad DeLong's short post, as well as his subsequent links to commentary on the Daily Howler and a sidebar on Andrew Sullivan's treatment of the issue.)

I'm not going to get into the issue of whether Okrent should have provided an example. The discussion that followed Okrent's piece might lead one to believe that there are no examples. I'll remind my readers of one that occupied our time back in October. It started with the post, "Paul Krugman, Meet Irony." The key quote (with the offending statement highlighted) from Krugman's op-ed, "Checking the Facts in Advance" is:

Mr. Bush will boast about the decline in the unemployment rate from its June 2003 peak. But the employed fraction of the population didn't rise at all; unemployment declined only because some of those without jobs stopped actively looking for work, and therefore dropped out of the unemployment statistics. The labor force participation rate - the fraction of the population either working or actively looking for work - has fallen sharply under Mr. Bush; if it had stayed at its January 2001 level, the official unemployment rate would be 7.4 percent.

As I noted in my original post and the considerable discussion that followed (here, here, here, here, and here), there are two channels that allow the unemployment rate and the labor force participation rate to fall while leaving the employment-population ratio unchanged. The first is that people who want to work give up looking for work. (This takes the same person out of both unemployment and the labor force, with no one entering or leaving employment.) The second is that people who have jobs decide they don't want them anymore (perhaps to take care of their kids or go back to school), and they get replaced by someone who was previously looking for work. (This takes one person out of employment and the labor force and another person out of unemployment and into employment. Same net effect.) The two channels have opposite implications for whether we think the statistics are bad news for the economy.

Krugman asserts--via the word "only"--that the second channel doesn't exist. In his interview with Fortune, [Ed. corrected from Forbes] Greg Mankiw succinctly summarizes why many of us are so frustrated with Krugman's writings:

Q: How do you explain what you describe as this change in Krugman?

A: I guess if you're a columnist, you want to be widely talked about and be the most e-mailed. It's the same thing that drives talk show hosts to become Jerry Springer. You end up overstating the case because it makes good reading. The problem is that economists by their nature—with a lot of "on the one hand" and "on the other hand" in their prose—can make boring reading.

Krugman had his choice of (at least) three ways to phrase his statement. He could have said "only because," "primarily because," or "in part because." These three are listed in declining order of their rhetorical effect and ascending order of the confidence with which he could make the assertion. Taking a shortcut like this is inappropriate in any publication that aspires to be good journalism.

The process that my readers and I undertook in that series of posts that followed is an example of what Sulzberger should be implementing at the New York Times--before the op-ed can go to press. Challenge every assertion of fact, provide evidence to support it, or change the language to reflect alternative explanations. If the Times won't do that, then who needs the Times?

And even if the Times won't enforce such a rule, for the life of me, I cannot figure out why Paul Krugman would rather have his marginal $100 than 10 hours of skeptical fact-checking by a smart, conservative Princeton undergraduate economics major. It would make his writing better, like it used to be.

Other comments on my posts pointed out that some of the problems with the article are inherent in the op-ed medium. For example, it took me several posts to be able to get all the facts and the rhetoric right beyond my original statement. I say again, if op-eds suffer from these problems, then who needs op-eds? Any time spent reading Krugman in search of an informed, liberal economist's point of view is time that could be better spent reading Brad DeLong's blog.

Other blogs commenting on this post