Are Hundreds Of New Billionaires A Problem Or An Opportunity?

Back in the day, as they say, Europe developed a system of noble families and inherited wealth. The seventeenth Duke of Lancaster inherited his estates from the sixteenth Duke, who inherited his from the fifteenth, and so forth back into the bowels of history.  The nobility was rightly viewed as a "class" that commoners had no hope of cracking into.  But go through the Forbes 400 today, and perhaps the most remarkable thing you'll find is the scarcity of inherited wealth.  Overwhelmingly these people have made the wealth in the current generation.  Of the top ten (Gates, Buffett, Ellison, Bezos, C. Koch, D. Koch, Zuckerberg, Bloomberg, Jim Walton, Page), seven literally made all of their money from scratch, and only one (Walton) is mainly living off the inheritance.  And what the heck has happened to the scions of the great wealth of just a couple of generations ago?  Where are the Vanderbilts, the Whitneys, the Carnegies, the Morgans, the Fords?

Clearly America is in the midst of creating a round of new fortunes, the direct consequence of large numbers of highly successful new businesses.    So question:  Is this a huge problem that must be fixed by the government?  Or should it instead be seen as a big opportunity for the rest of us?

Why opportunity, you ask?  It's an opportunity because wealth isn't any fun unless you spend it.  What are these guys going to do with their billions -- make a gigantic pile of dollar bills and sit in the middle of it throwing the money up in the air and shouting "whee"?  Wrong.  They want stuff!  And services!  And if you can figure out the kind of stuff and services they want, you can sell it to them and share in the abundance.  Lord knows this is exactly the game plan of big law firms, who can do very well for themselves (thank you) by getting some of the new billionaires as clients.  Then there are the purveyors of an infinite variety of luxury goods, and the people who build the $100 million condos, and the wealth managers, and on and on.  And thus the wealth gradually gets circulated around the society through voluntary transactions.

Or alternatively, you can get angry and jealous and demand that the government take the money away from the newly wealthy right now and create and expand lots of redistributionist programs.  Bernie Sanders!  (And Clinton and O'Malley aren't far behind.)

Of course, in Greenwich Village, the prevailing attitude is the anger and jealousy.  In the latest issue of one of our local papers, Westview News, the lead article goes by the title "Bernie Sanders Can Be Elected President.  Amazing!"  The author is Arthur Schwartz, perhaps best known for his stint as general counsel of ACORN just before that organization collapsed in scandal.  Schwartz is entranced by the Sanders agenda:

Bernie Sanders’ remarkable campaign continues to shed the most light on issues and offer the country the most hope. . . .  He says: break up the big banks. He says “cancel all student debt.” He says to give all new parents twelve weeks of paid leave, and he wants a single payer health care system, not one enriching insurance companies.             

It's classic Greenwich Village progressivism.  You might think that Greenwich Village, barely over a mile from Wall Street, would be the home of many of those evil bankers.  And indeed it is the home of more than a few of them, but they are a minority.  And this is a minority that is mostly delusional in thinking that the "evil bankers" that Sanders, Schwartz, et al., are talking about must be somebody other than themselves.  But anyway, most of the people in the Village are not in the top one percent of the income distribution, but rather in percents 2, 3 and 4.  Those are the percents where are found the journalists, the writers, the academics, the teachers, the therapists, the "healing professions."  This is the perfect audience for the play to anger and jealousy.

George Will in today's Washington Post argues that Bernie Sanders just doesn't understand economic equality.  While Sanders rails about income inequality, Will argues, the programs that he stands for actually bring about regressive redistribution and the worsening of inequality:

First, the entitlement state exists primarily to transfer wealth regressively, from the working-age population to the retired elderly who, after a lifetime of accumulation, are the wealthiest age cohort. Second, big, regulatory government inherently exacerbates inequality because it inevitably serves the strong — those sufficiently educated, affluent, articulate and confident to influence the administrative state’s myriad redistributive actions.          

And sure enough, when you look at the Sanders program, it turns out to be mostly about enhancing regressive redistribution, that is, redistribution from the relatively poor to the relatively rich.  Single payer healthcare?  We already have free healthcare for the poor (Medicaid) so this must be entirely about government payment on behalf of the non-poor and rich.  Free college tuition?  That will go largely to the top half of the income distribution.  Enhance social security?  That will only worsen the current regressiveness of transfers from the poor/young to the rich/old.

So how can we understand the mentality of those who rail against the rich and against income inequality while in fact advocating a program of regressive redistribution and that will only worsen the lot of the actual poor?  I'm not sure it's possible to understand this completely, but it at least starts to make sense if you see it as the program of percents 2, 3 and 4 to take out their anger on percent one -- while, of course, taking care of themselves.

Well, percents 2, 3 and 4, you should be careful what you wish for.  In the coming worldwide redistribution, you will suddenly all find yourselves deep into worldwide percent number one. 

When The Official Narrative Trumps The Facts

It seems that the world is full these days of examples of official -- some might say "politically correct" -- narrative trumping the truth.  And thus when certain facts seem to be established beyond any possible ability to deny them any more, many people continue proclaiming exactly the opposite as the truth.  Having spent a career in the trial business, I'm fully aware of the slippery nature of the truth, and indeed that at some level it is actually impossible to establish the absolute truth of any particular facts.  I mean, how do we really know that somebody didn't come through in our sleep last night and transplant everybody's brain with a new brain having new memories?  As that example illustrates, at some point the possibilities for continuing to argue "not so" become so implausible that you would think no one would continue to soldier on.

But not only are there plenty of examples where the advocates of alternative reality don't give up, there are many cases where the alternative reality achieves broad acceptance right in the face of the overwhelming evidence against it.  Now here's what's odd:  In every good example of this phenomenon that I can come up with, the evidence-trumping narrative is somehow an icon of the Left, drawing support from widespread acceptance among certain circles of journalists, academics, Manhattanites, Hollywood stars and moguls, and other cool left-leaners.  I'm going to lay out a few examples here.  If anyone can give me an example of a right-side narrative that has achieved comparable widespread acceptance despite overwhelming evidence against it, I'll be very interested to hear about it.  But I really can't think of one, despite some effort.

Alger Hiss.  I'll start with a truly classic example of the genre, one that is native to my Greenwich Village home.  One of my daughters attended a high school in lower Manhattan called the Friends Seminary.  A couple of years behind her at that school was a kid named Jacob Hiss.  Turns out that Jacob was Alger's grandson.  Around the time my daughter was a senior (2007), the school invited Jacob's father Tony, an alum of the school and Alger's son, to give a talk on the Hiss case.  (Apparently Friends was the Hiss family school.)  Of course the talk was all about why Alger was innocent and had been framed.  And in this context I came to learn that the official Greenwich Village belief is indeed that Alger was framed.  Even as late as 2007!  I haven't checked around recently, but I have little doubt that most Villagers today who remember anything about this case will still believe that Hiss was framed.  After all, he was one of us -- Village resident, supporter of high-minded progressive causes, graduate of Harvard Law School.  (Wait a minute -- now we're getting a little too close for comfort!)

But what about the evidence?  Hiss was a high-ranking State Department official who was accused in the late 40s by a guy named Whittaker Chambers of having been a co-member of a Soviet cell in the 30s and early 40s, and of having passed State Department secrets to Soviet agents.  Hiss strenuously denied it, including in testimony before Congress.  It was all just "he said, she said" until Chambers came up with some papers that he claimed Hiss had given him for transmission to the Russkies.  The papers had been retyped on a manual typewriter of the day.  The FBI got hold of a Hiss family typewriter and established that every quirk of that device was reflected in the retyped documents produced by Chambers.  At that point the Hiss story became that the FBI had elaborately created a "forged typewriter" to mimic the physical characteristics of the Hiss typewriter.

Now, I above all others am prepared to believe just about anything about the FBI; and this was the J. Edgar Hoover FBI of the late 40s, which I'm prepared to believe was even worse than today's edition.  But, really?  Based largely on the typewriter evidence, Hiss was convicted of perjury for his testimony before Congress denying his involvement in Soviet spying.

Then in the 90s lots of information got released from former Soviet archives, and many who have reviewed decrypted communications have concluded that a certain agent identified as "Ales" could only be Hiss.  A Commission on government secrecy in the late 90s chaired by then-Senator Daniel Patrick Moynihan concluded that the case for complicity of Hiss was "settled".

Anyway, for those with any interest in this case, here is a website called the Alger HIss Story, maintained by a long-time colleague of Alger, and continuing to soldier on with making the case for Alger's innocence.  And yes, the "forged typewriter" bit is a key element of the defense.

Dan Rather/Memogate.   And now we have opening today in theaters a movie called "Truth."  As with the Hiss story, to believe the narrative peddled in "Truth" you need to believe completely implausible things about how certain documents were created.  And yet it seems that formerly respected newsman Dan Rather, his producer Mary Mapes, actor Robert Redford, director and screenwriter James Vanderbilt, and zillions more of the leftist persuasion, are more than prepared to go with the narrative over the evidence.

Some brief background:  In September 2004, two months before the Bush-Kerry presidential election, the CBS news show 60 Minutes II ran a story touting some newly discovered documents as establishing that then-President Bush, while serving in the Texas Air National Guard in the early 70s, basically went AWOL by failing to show up for a required physical exam because he was working on someone's Senate campaign in Alabama, and then exerted pressure from above on his commanding officer to avoid a bad report.  The story was produced by CBS producer Mary Mapes and presented on air by Dan Rather.  It rapidly fell apart.  It seems that the documents, supposedly generated by Bush's commanding officer Jerry Killian in the early 70s, bore none of the physical characteristics of documents generated on typewriters of the day, and instead appeared to have been generated by a 2003 version of Microsoft Word.  For example, 70s typewriters gave all letters equal amounts of space, whereas Word gave more space to a "w" than to an "l"; and Word would automatically superscript the "th" in 5th, something that is very tricky to do on one of those old typewriters.  Here is Megan McArdle of Bloomberg, rehashing the story on July 15:

The documents that backed this story up were probably forgeries.  Now, I say "probably," because I can't exclude the very remote possibility that in the early 1970s Bush's commanding officer, for reasons lost to history, decided to type up these memos himself (even though his wife said he couldn't type) rather than getting his secretary to do it.  I can't prove that he never got his hands on a rather exotic typewriter instead of using the ones that were in his office, spent some time working on it with a soldering gun, and managed to coincidentally produce a document that looked exactly like what you would get if you opened up Microsoft Word 2003 and started typing.

You quickly get the picture of how completely implausible this would be.  To the credit of CBS, Rather and Mapes were quickly dispatched.  You would think that those two would have quietly gone into another line of work and hoped nobody remembered this embarrassment, but no.  Mapes strenuously asserted in multiple interviews that it had never been "proved" that the documents were forgeries, and then in 2005 came out with a book, "Truth and Duty," presenting her side of the case (with herself of course in the role of heroine standing up to the corrupt President Bush).  Ten years on, it's now a movie.

So given the evidence out there at this point could anyone possibly give this the time of day?  Here is the New York Times on October 14 reporting on a preview showing of the film that took place last week at the Museum of Modern Art -- literally one block from my office:

Last week, the former CBS News producer Mary Mapes was back on West 53rd Street at the Museum of Modern Art for the premiere of the movie “Truth.” Ms. Mapes, the author of the book that inspired this movie, got a Hollywood welcome from an adoring crowd and blew a kiss to the film’s director and screenwriter, James Vanderbilt. 

Yes, it was a "Hollywood welcome from an adoring crowd."  That bit of publicity was followed by the rave review for the film that appeared in yesterday's Pravda, calling it "a gripping, beautifully executed journalistic thriller about the events that ended Dan Rather’s career as a CBS anchorman . . . ."   The review studiously avoids taking any position on whether the 60 Minutes II story was true or the journalists performed their jobs with any semblance of competence, versus getting taken in by an obvious hoax that they failed to question because the story helped their side in the heat of a presidential campaign.  After all, of what relevance is it to a movie going by the title "Truth" whether the story it is peddling is true or not?  That's not what this is about at all!:

“Truth” doesn’t try to resolve mysteries that may never be solved or to drum up paranoia for the sake of extra heartbeats. But it still casts a pall of dread, an ominous sense that people in high places, whether in government or the news media, will stop at almost nothing to protect themselves and their interests. 

Sure.  I've got news for you, Pravda:  this one is not a mystery.  At PowerLine today, Scott Johnson also points out with serious understatement that "[Times reviewer] Holden’s thick clichés about people in high places apply perfectly to Mapes herself rather than to the putative villains of Mapes’s piece." 

I was planning to cover several more examples of this genre, including the cases of executed Soviet spies Julius and Ethel Rosenberg, as well as the "Hands Up Don't Shoot" narrative that came out of the killing of Michael Brown in Ferguson, Missouri.  But this is getting way too long.   So let me close with what is undoubtedly the most extraordinary case today of mass groupthink acceptance of a politically-correct narrative over seemingly definitive evidence disproving the narrative.  I am referring, of course, to global warming.

Global warming.  Those who follow this issue at all know that in 1979 the U.S. put up sophisticated satellites to measure global temperatures.  The satellites were intended to resolve many thorny issues arising out of trying to measure global temperature by scattered thermometers located at surface weather stations.  Those issues include that large parts of the earth's surface (e.g., oceans, poles, Amazonia, sub-Saharan Africa) have no or few weather stations, that stations move, that cities grow around stations, that instruments get changed, and so forth.  So from 1979 forward we have satellites that measure nearly everywhere in the world equally, with far greater accuracy than the prior thermometer networks, and with none of these old issues.  Two different and independent scientific groups, known as UAH and RSS, were retained to analyze and publish the satellite temperature data.  So now we would really know whether global warming was occurring or not.

The latest monthly report on the satellite data covering September came out at the beginning of this month.  The basic story of the satellite data is that during the first 18 years (1979 - 1997) they showed some warming, but since early 1997 -- a period of now 18 years and 8 months -- there has been no warming at all.  Zero, zilch, nada.  Here is the chart of the RSS temperatures since early 1997, with the calculated slope line going through the middle (from Watts Up With That here):

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It's important to note that the slope line shown is not some kind of estimate, but rather is calculated from the data points.  As indicated on the chart, these 224 months have seen a tremendous increase of human production of CO2, particularly with the growth of the economies of China and India, such that fully one-third of all human-produced CO2 has been in this period -- with no warming at all to show for it.

So what is the reaction over at the New York Times?  They actually had an editorial on this subject just last week (October 10), titled "Teaching The Truth About Climate Change," and  advocating that children as young as middle-school be taught that “human activities, such as the release of greenhouse gases from burning fossil fuels, are major factors in the current rise in Earth’s mean surface temperature.”   

Misinformation about climate change is distressingly common in the United States — a 2014 Yale study found that 35 percent of Americans believe that global warming is caused mostly by natural phenomena rather than human activity, and 34 percent think there is a lot of disagreement among scientists about whether global warming is even happening. (In fact, an overwhelming majority of scientists agree that climate change is here and that it is caused by humans.) One way to stop the spread of this misinformation is to teach children about climate change.     

Well then!  "An overwhelming majority of scientists agree that climate change is here".  I guess that sure trumps the facts!  Time to teach all the pre-teens how to groupthink!

Will Proximity To The Rich Lift The Poor Out Of Poverty?

Back in June the genius bureaucrats at the Department of Housing and Urban Development moved to finalize their rule going by the Orwellian name of Affirmatively Furthering Fair Housing.  I covered that development here.

As I reported, the idea behind HUD's AFFH Rule is that HUD itself cannot possibly be responsible for keeping the poor poor by imprisoning them in poverty traps known as "housing projects," because after all the bureaucrats at HUD are perfect and all-knowing government experts.  Therefore it must be that rich communities are responsible for keeping the poor poor by putting in place exclusionary practices to prevent subsidized HUD housing from coming to their communities and thereby keeping the poor out.  If only the poor had the opportunity to live in the same towns with the rich and successful, the "barriers to access" to good jobs and higher incomes would dissolve and the poor would rapidly rise up.  Or something like that.  So by the AFFH Rule we the expert genius bureaucrats are going to fix poverty by requiring every wealthy community in the country to accept a minimum amount of some form of public or subsidized housing!  An article in The Hill on June 11 quoted an HUD spokeswoman on the AFFH Rule as follows:

“HUD is working with communities across the country to fulfill the promise of equal opportunity for all,” a HUD spokeswoman said. “The proposed policy seeks to break down barriers to access to opportunity in communities supported by HUD funds.”      

Well, that was in June.  Now it is October.  Has all that been declared inoperative?  You be the judge.

It seems that here in New York we have a situation that is much the opposite of rich communities excluding the poor.  Here, in a rapidly moving process known as "gentrification," large numbers of prosperous young people have been settling in what were formerly very poor neighborhoods, often neighborhoods dominated by the HUD-subsidized low-income projects of the New York City Housing Authority.  The Daily News reports on Monday October 12.   A study has recently been released by a firm called Abt Associates, in association with the Furman Center for Real Estate at NYU.  The trend:

The study found that in the past, NYCHA developments used to be mostly located in areas with persistent poverty. Due to real estate trends most now sit in either "increasing income” or “high income” neighborhoods. Those are neighborhoods where the average income is greater than the city's median income of $51,865.      

The Abt/Furman study covers three NYCHA projects and their surrounding neighborhoods: Sedgwick Houses in Morris Heights (Bronx), Queensbridge Houses in Long Island City (Queens), and Elliott-Chelsea Houses in Chelsea (Manhattan).  The News correctly describes these three neighborhoods today as "stubbornly poor" (Morris Heights), "rapidly gentrifying" (Long Island City), and "playground of the rich" (Chelsea).  OK, that last one may be a bit of an exaggeration, but not by much.

So lots of upscale people -- even "rich" people in the case of Chelsea -- have been moving in right next door to these huge warehouses for the poor.  Shouldn't that mean that the barriers that have so far kept the poor poor have now been broken?  Now the poor are so close to the rich that they can literally rub elbows.  By HUD's theory, this has to be a great thing.  Right????  Wrong!

Actually, according to this study, everything about living in proximity to the rich makes things worse for the poor.  The article goes on and on, but I'll give you a good sampling:

"The study confirms what those in public housing have seen with their own eyes: gentrification offers a lavish living to a privileged few while leaving NYCHA residents behind with nothing more than a remnant of their former purchasing power," said Councilman Ritchie Torres (D-Bronx), who chairs the public housing committee. . . .   

The study noted there was also no guarantee that the upscale gentrifiers would send their kids to the often lousy public schools in the area NYCHA residents' children attend or even buy milk at the local bodega.  Newcomers "may opt to send their children to private schools and support new grocery stores that may include only expensive fare, out of the financial reach of NYCHA residents," the report read.

The most extreme version of this unhappy dynamic emerged at Queensbridge Houses, where hundreds of new upscale condos have sprung up a few blocks south in the last decade, bringing in new amenities like improved streets and fresh produce.  Residents there "felt that these improvements were meant to benefit new condo owners, often called the "runners and bikers" in the neighborhood, “rather than NYCHA residents."  They noted "disparities" between the quality of housing and groceries nearest NYCHA versus the condos farther south. They "felt that condo residents — and not NYCHA residents — are the impetus for and primary beneficiaries of the changes."  Queensbridge tenants and staff at job placement centers in the neighborhood "did not feel that the changes to the neighborhood's economic landscape, such as new hotels and corporate headquarters, have translated into increased local opportunities for NYCHA residents."

At the Chelsea Houses in Manhattan, tenants often felt that the gold rush caused by the influx of luxury condos and art galleries into the neighborhood starting some 20 years ago has passed them by entirely.     

Let me know if you can think of any reason why all these same considerations would not apply in the case of HUD's grand AFFH plan to move large numbers of poor people into rich communities.  However, there's no word so far that HUD is backing off its plan.

Might I gently suggest that the failure of subsidized public housing everywhere it is tried is not an issue of modest failures in proper execution of the mission, but rather arises from the fundamental flaw of the "to each according to his need" socialist model.  HUD's business is creating poverty traps to keep the poor in poverty.  HUD-subsidized apartments will still be poverty traps wherever they are located, not because of some mythical "barriers" that may or may not exist in some places but not others, but rather because of the poisonous incentives of the subsidized housing itself that cause people to stop striving in order to keep their housing subsidy.   

Update On Unions In The Private Sector

Did you notice that President Obama held a little mini-summit with labor union leaders in Washington on Wednesday this past week?  It didn't get much play in the press, but here is some coverage from Reuters.  Probably Obama's main idea was to assuage the Democratic Party's union allies after having just dissed them with the Trans Pacific Partnership.  But he did take the occasion to restate his oft-expressed view that unions are a positive force for workers in rising up to the middle class:

"I believe when people attack unions, they're attacking the middle class," Obama told attendees of the first-ever White House Summit on Worker Voice.  "We've got to make sure ... working Americans don't get lost in the shuffle," he said. "They can come together and they can win."   

So it's an appropriate time to take stock of the status of the union movement in the private sector.  Have the union-friendly Obama administration and NLRB made any progress in reversing the long-term decline?

The answer is no.  Perhaps the continuing decline would have been even faster if a Republican had been President, but what we have is continuing decline nonetheless.  Here is the latest (January 2015) summary release from the Bureau of Labor Statistics on union membership.  In the private sector, union membership in 2014 slipped another tenth of a percent to 6.6% from 6.7%.  It's not much in any given year, but it's a steady drip, drip, drip.

But how could the steady decline continue when the NLRB is currently so friendly to union organizing drives?  Part of the answer is that workers increasingly work in situations that are very difficult to organize.  Think Uber or, more generally, the so-called "gig" economy.  But an even bigger part of the decline is the distressing tendency of unions to drive their employers out of business or, if not quite that, to make them uncompetitive and cause them to shrink drastically.

A notable example of a union killing off a major employer is currently playing out here in the New York area in the supermarket industry.  The supermarket chain called A&P is now in round 2 of bankruptcy after a previous round just a few years ago.  This time the chain is liquidating.  A&P stores are organized by a union known as the UFCW (United Food & Commercial Workers Union).  At its peak A&P had some 16,000 stores.  The latest pre-bankruptcy count was about 300.  Oh, and that 300 is not just stores under the A&P name.  The current company is basically a roll-up of a collection of the unionized chains in the northeast -- besides A&P, it's also Food Emporium, Waldbaum's and Pathmark.  The 300 is what is left for all of them following round after round of downsizing.

On October 7 the New York Post reported that in recent auctions in the bankruptcy court, only about a third of the A&P stores had attracted bids from other supermarket operators who planned to continue them as grocery stores.  Close to half of the stores either received no bids, or only bids from operators who decline to hire the workers.  Basically, very few people are willing to take on the task of dealing with the UFCW and its onerous work rules.  The latest projection is that nearly half of A&P's current 28,500 workers will lose their jobs by Thanksgiving.

Now it's not like the supermarket business overall is shrinking in the New York area.  The amount of food that people eat is not changing.  Here in Manhattan, two very large and successful chains have recently grown substantially -- Whole Foods and Trader Joe's.  They are non-union.  Two other non-union operations have expanded in the downtown area -- Garden of Eden and Mrs. Green's.  In the outer boroughs and near suburbs, non-union Target has moved in.  One other unionized operator, Fairway, has been growing until recently, but in May announced plans to rein in its expansion -- because it is losing money.   Around the corner from where I live, a unionized operator called D'Agostino hangs on despite the new non-union competition.  All the employees there seem to have chips on their shoulders.  My bet is that they will be gone within a couple of years.

All this is not much different from what has happened in the automotive industry over the past few decades.  In 1979 the UAW had over 1.5 million members, and in 2001 it was still around 700,000.  Meanwhile lots of foreign carmakers opened non-union plants in the south -- Toyota, Nissan, BMW, Mercedes, VW.  When GM and Chrysler went through their bankruptcies in 2009 and thereafter, the UAW lost another 200,000 or so members.  Today, the membership is under 400,000, although it has increased by small amounts in the last few years.  You would think that the UAW would realize that it has a fundamental problem with its business model, and would be seeking to help the employers become more efficient and compete more effectively.  But that's just not their way.  The new head of the UAW, Dennis Williams, is reputed to be "aggressive," and made a point of showing the aggressiveness in the recent negotiations with Chrysler.  How is that going to help Chrysler grow and compete against the Japanese, German and Korean competition?  Now Michigan has a new Right to Work law, and UAW members in that state will start to have the right to opt out of paying dues starting in 2016.  Good luck!

Over at the (unionized) Postal Service, this chart shows that they lost only about 3000 employees last year, after years of losses in the range of 25,000 to 30,000 per year.  But they just lost $1.5 billion in their second quarter, and $600 million in their third quarter.  With losses that big, their ability to sustain the current level of employment of almost 500,000 is very doubtful.  FedEx?  Non-union.

It's a slow decline, but it shows no signs of turning around any time soon or, for that matter, ever.

Is Paul Krugman Really An Economist?

Paul Krugman was designated as the Manhattan Contrarian Official Worst Economics Writer way back in March 2013.  At the time, I said that Krugman "takes everything about economics and turns it around a full 180 degrees."  I made particular note of a Krugman column on March 28, 2013 that took the position that "we're cheating our children" by the economic policy of having too little government spending and not taking on enough debt.  And I'm 100% sure that he really meant it, and did not realize that it was a self-parody.  I have also frequently taken note, for example here, of Krugman's regular advocacy, often contained in endless tirades against what he calls "austerity,"  that the best government economic policy is to borrow as much money as possible and waste it as fast as possible.  Is it really possible that he does not realize that this is a fallacy?

But with Krugman, there's always a new low to be reached.  The most recent new low came with his column on Monday October 5, titled "Enemies Of the Sun."    The theme here is that the Republican presidential contenders, particularly Jeb Bush and Marco Rubio, are ignoramuses because they do not support government direction of investment into "clean" forms of power, mainly solar, and also wind.  Why?  Take it away, Paul:

[S]olar panels are becoming cheaper and more efficient at a startling rate, reminiscent of the progress in microchips that underlies the information technology revolution. As a result, renewables account for essentially all recent growth in electricity generation capacity in advanced countries. 

And how does this apply to Bush and Rubio?

So you might expect people like Mr. Rubio, who says he wants to “unleash our energy potential,” and Mr. Bush, who says he wants to “unleash the Energy Revolution,” to embrace wind and solar as engines of jobs and growth. But they don’t. 

But here's the thing, Paul:  If solar and wind power are so great, why does any politician need to "embrace" them?  You say that they are becoming "cheaper" and "more efficient" at a "startling rate."  OK then, but if and when they are actually competitive with other forms of power, the market will then produce them without any need for government to do anything at all, just like the government doesn't have to tell anyone to drill for oil or to "frack" for gas or to mine for coal.  It just happens, unless the government somehow puts a stop to it.

But solar and wind power don't just happen.  They require big government subsidies, because even after big recent price declines, they are not competitive.  Government subsidizing inefficient producers to keep them in business against more efficient producers -- when I studied economics we called that "wealth destruction."  Comment please, Paul?

Furthermore, renewables have become major industries in their own right, employing several hundred thousand people in the United States. Employment in the solar industry alone now exceeds the number of coal miners, and solar is adding jobs even as coal declines.

Let me try to get my head around this.  Employing lots of people in an uncompetitive industry that could not exist without massive government subsidies is supposed to be a good thing?  According to information from the government's Energy Information Agency here, in 2014 the U.S. generated 39% of its electricity from coal and 0.4% from solar.  So then if I believe Krugman's employment statistic, the solar industry used more people than the coal industry to generate about 1% the amount of electricity?  OK, I admit that there are other people involved in generating electricity from coal than just the miners.  Suppose in the whole coal power industry it's four times as many people as in the total solar industry.  Then solar would still take 25 times the number of people to generate the same amount of electricity.  And Krugman thinks that this is somehow a positive?

Really, if this guy were in my intro economics course, he would get an F.  And yet I hear that he has won a Nobel Prize in economics.  And this is where the likes of Obama, Sanders, Clinton and Biden get their economics.  For myself, I'm sorry, but I don't believe that he is really an economist.

Some Reaction To The End Of Non-Insider Insider Trading

I can't claim to have read every article today about the Supreme Court's denial of cert yesterday in the Newman case, but I have read a bunch of them.  As examples, there is the New York Times article, the New York Post article, and one in the New York Law Journal.  All of these (as well as others I have read) pitch the story as whether the prosecution of insider trading is now going to be "harder" or "more difficult."  None of these ever mentions the most important issue, which to my mind is whether Congress has ever passed a law making non-insider insider trading a crime.  Damn right it should be "more difficult" for prosecutors to put people in jail for something that no law passed by Congress says is a crime.  How about making it "impossible"?

For an opinion coming at least close to the mark, there is the Wall Street Journal editorial page.  They almost (but not quite) say that there never was a statute making this conduct illegal, although not quite in those words:

U.S. Attorney Preet Bharara['s . . .] prosecutions of Wall Street have pushed aggressive interpretations of insider-trading law. 

For the other news organizations, although it's no excuse, perhaps they were led astray by the fact that Mr. Bharara, undoubtedly panicked by the looming damage to his reputation, held a conference call for reporters yesterday afternoon to pitch his spin of the story.  Here's a quote of Bharara's spin from the New York Post:

"The [Todd] Newman decision goes some way to creating an obvious roadmap for unscrupulous investors," Bharara said Monday.  "You can think of this as a potential bonanza for friends and family of rich people with access to material non-public information."     

For Bharara, it's all about stirring up anger and jealousy over income inequality, and he will never address the issue of whether it is acceptable conduct for a prosecutor to seek to put somebody in jail for something that no statute says is a crime.  Hey, these traders are "rich" and in my personal opinion they are "unscrupulous."  Therefore I will turn the full resources of the federal government on them to put them in jail whether or not they violated any actual law.

Still, even Bharara's outrageous statement does not support the Post's headline, which is "Roadmap to Steal."  How exactly is non-insider insider trading "stealing"?  Even Bharara did not claim that.  At the Times, the lede is:

The Supreme Court on Monday refused to review an appeals court decision that made it harder to prosecute insider trading and threatens to undermine a number of convictions.    

In the New York Law Journal article, the lede is:

Southern District U.S. Attorney Preet Bharara has lost his last chance to reverse a decision that makes it more difficult for prosecutors to win convictions in insider trading cases. 

There is no recognition in either the Times or Law Journal articles that the so-called "insider trading" that will now be "harder" or "more difficult" to prosecute is actually trading by people who are not insiders at all; nor is there any recognition that the statute under which these people were convicted doesn't mention "insider trading," let alone insider trading by non-insiders, and only prohibits "any manipulative or deceptive device or contrivance."  How again was this conduct supposed to by "manipulative"?  And who was supposedly "deceived," and by what false statement?  They just don't find these questions at all interesting.

As reported by the Post, Bharara claimed in his conference call that after the fallout from this decision he would still have a conviction rate of 90 percent.  I don't know how he's coming up with that, but I'll believe that when I see it.  Most likely he will just never mention the subject again and hope that nobody is able to put together a count.  But there is one area where we can put together a count, and that is of Bharara's convictions for insider trading after trial.  In 2014, Bharara claimed six insider trading convictions after trial without a loss.  Then in July 2014 Rengan Rajaratnam was acquitted by a jury.  Now Newman and Chiasson have been cleared.  The conviction of Michael Steinberg is totally undermined by the Newman/Chiasson reversal (Steinberg was in the same information chain as Newman and Chiasson, but one more level removed from the original sources).  That looks to me like the conviction rate will shortly be 3 out of 7, or 42.8% -- and that's assuming that all of the remaining three survive.  Not very impressive if you ask me.  And I'm definitely not impressed by convictions through strings of guilty pleas, when the prosecutors present people with cases that take many millions of dollars to even attempt to defend, and they forum shop for favorable judges who are known in advance to buy into legal theories not supported by the underlying statute, meaning that to defend successfully you must first live through a trial and suffer a wrongful conviction and then appeal for years, and they threaten you with a sentence three times as long if you go to trial and lose than if you take the guilty plea.  Sorry, Mr. Bharara, but your real conviction rate is 42.8%.

Really, wouldn't life be just so much more perfect and fair if the federal prosecutors could make up the criminal law as they go along, based on their own personal sense of what is "unscrupulous"?