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Lessons Unwanted

Stephens_Bret

Bret Stephens writes in The Wall Street Journal, Obama Needs to Call Bush

Excerpts:

Maybe President Obama also calls Mr. Bush every now and then, just to talk, and one day we’ll find out about it. But I suspect not. No president has so completely built his administration with a view toward doing—and being—the opposite of his predecessor. Long private talks wouldn’t just be out of character for this president. They’d be awkward.

But having a long conversation with Mr. Bush is what Mr. Obama needs to do if he means to start salvaging his failing presidency. It would be an act of contrition: for six years of vulgar ridicule and sophomoric condescension. Also, humility: for finally understanding that the intel is often wrong (and that doesn’t make you a “liar”), that the choices in war are never clear or simple, that the allies aren’t always with you, and that evil succumbs only to force.

And it would be an act of bipartisanship: not the fake kind to which the president pays occasional lip service, but the kind that knows there is no party monopoly on wisdom, and that there is no democracy without compromise, and that there can be no compromise when your opponents sense you hold them in contempt.

Maybe then the two presidents can start talking about a few things they have in common. Like going from big re-elections to dismal ratings in a matter of months. Like realizing that you will soon lose the Congress, and that your own party is turning on you. Like figuring out that your top cabinet officers and White House confidantes are failing you. Like having your past boasts about military success rendered ridiculous by events. Like needing to come up with a new strategy, quickly, before a foreign-policy setback becomes a full-blown calamity.

Don’t make promises in private that you’ll renege on in public.  Don’t give speeches denouncing Republicans as mean and greedy. Listen as if you might actually learn something. Give something if you want to get something.

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Cherry-picking CEO Data

Economist Mark Perry writes in Carpe Diem When we consider all US CEOs and all US workers, the ‘CEO-to-worker pay ratio’ falls from 331:1 to below 4:1

Excerpts:

The AFL-CIO is comparing: a) the average salary of a small sample (350) of the highest paid US CEOs, out of a total CEO population in 2013 of 248,760 CEOs, according to BLS data here, and b) the average worker pay for production and nonsupervisory workers, which represents only 8.5 million factory workers out of a total of 136.3 million payroll employees nationwide. In other words, the AFL-CIO’s reported “CEO-to-worker pay ratio” of 331:1 is calculated by ignoring 99.9% of all US CEOs and 93.8% of all US workers. A more accurate description would be to call it a ratio of the pay for 350 of the highest-paid US CEOs to the pay of only 6.2% of the American labor force, or a ratio of an unrepresentative, infinitesimally small, and statistically insignificant group of CEOs to a small minority and unrepresentative group of US factory workers. It’s a completely bogus and meaningless comparison.

The top chart above shows a more statistically valid comparison of CEO pay to average worker in the US pay by considering: a) the average annual pay of all US CEOs in every year from 2002 to 2013 (data here) and b) the average annual pay of all US workers in a comprehensive, national BLS dataset that includes workers in 22 major occupational groups, 94 minor occupational groups, 458 broad occupations, and 821 detailed occupations (132.6 million workers for 2013). Based on those data, the average CEO earned $178,400 last year, the average worker earned $46,440, and the “CEO-to-worker pay ratio” was 3.84:1, and that’s a LOT different from the AFL-CIO’s ratio of 331:1 by a factor of more than 86 times! Call it a “statistical falsehood-to-truth ratio” of 86:1 for the AFL-CIO’s exaggerated, bogus ratio. The chart also shows that the real CEO-to-worker pay ratio has not been increasing as is frequently reported, but instead has been remarkably constant over the last 12 years, averaging 3.8:1 in a tight range between a maximum of 3.89:1 in 2004 and a minimum of 3.69:1 in both 2005 and 2006. The ratio of 3.84:1 in the most recent year (2013) was actually slightly lower than the ratios in 2004 (3.89:1) and in all years between 2009 and 2012.

Likewise, the bottom chart displays a more statistically valid comparison of average CEO pay to the annual pay of a full-time minimum wage worker. In 2013, a full-time minimum wage worker earned $14,500, and therefore the CEO-to-minimum-wage-worker pay ratio was only 12.3:1 compared to the grossly inflated 774:1 ratio reported by the AFL-CIO. That’s a “statistical falsehood-to-truth ratio” of 63:1 for the AFL-CIO’s exaggerated ratio. Because of the recent increases in the minimum wage between 2007-2009, the CEO-to-minimum-wage-worker pay ratio in recent years has been lower than the most recent 12-year average of 12.76:1.

HKO

They cherry pick data to compare a subgroup of the wealthiest CEOs with a subgroup of the lowest paid production workers.  This is statistical malfeasance of such a high order that any student of statistics can see right through it.  Is this a matter of incompetence or fraud?

This gross misuse of such data is becoming both typical and dangerous.  Is the media too ignorant of basic statistics to see such obvious flaws or are they so monolithically indoctrinated that they refuse to consider that the complete information may shake their poorly founded beliefs about their reality?

A simple Google search will reveal that there are far more articles available that reinforce this falsehood than there are to correct or clarify it.  This is also true in the discussion of inequality,  AGW, and other social issues that require clear information to make correct policies.

“A lie gets halfway around the world before the truth has a chance to get its pants on.” Winston Churchill

 

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Squandered Opportunities

Bret Stephens writes The Meltdown in the September Commentary.

Excerpts:

If anything, the international situation Obama faced when he assumed the presidency was, in many respects, relatively auspicious. Despite the financial crisis and the recession that followed, never since John F. Kennedy has an American president assumed high office with so much global goodwill. The war in Iraq, which had done so much to bedevil Bush’s presidency, had been won thanks to a military strategy Obama had, as a senator, flatly opposed. For the war in Afghanistan, there was broad bipartisan support for large troop increases. Not even six months into his presidency, Obama was handed a potential strategic game changer when a stolen election in Iran led to a massive popular uprising that, had it succeeded, could have simultaneously ended the Islamic Republic and resolved the nuclear crisis. He was handed another would-be game changer in early 2011, when the initially peaceful uprising in Syria offered an opportunity, at relatively little cost to the U.S., to depose an anti-American dictator and sever the main link between Iran and its terrorist proxies in Lebanon and Gaza.

Incredibly, Obama squandered every single one of these opportunities. An early and telling turning point came in 2009, when, as part of the Russian reset, the administration abruptly cancelled plans—laboriously negotiated by the Bush administration, and agreed to at considerable political risk by governments in Warsaw and Prague—to deploy ballistic-missile defenses to Poland and the Czech Republic. “We heard through the media,” was how Witold Waszczykowski, the deputy head of Poland’s national-security team, described the administration’s consultation process. Adding unwitting insult to gratuitous injury, the announcement came on the 70th anniversary of the Nazi-Soviet pact, a stark reminder that Poland could never entrust its security to the guarantees of great powers.

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The Planner’s Pretense

F. A. Hayek

F. A. Hayek

Kevin Williamson writes The Unmanageable Man in The National Review.

Excerpt:

The scientific study of complex adaptive systems such as markets has taken Ludwig von Mises’s philosophical critique of central planning and developed a formidable body of knowledge that suggests a much more general and sweeping understanding of Mises’s underlying principle. Even a relatively simple economic activity — say, the cultivation and sale of wheat — is far too complex to be comprehended, anticipated, or managed by any bureaucracy, agency, or committee, no matter how intelligent and well-meaning its agents, no matter how well-equipped and incentivized they may be.

F. A. Hayek warned us against the “pretense of knowledge.” But the fact is that our public-policy debate is broadly organized around that very pretense, which is practically an article of faith.

Reality is remorselessly wearing away at the planners’ pretense. In 2008, the best and brightest in Washington, who believe themselves to be among the most intelligent and powerful men and women in the world, stood by helplessly as their ambitions were done in by the very houses in which we live, like cells turning against the body as cancer. Washington’s response was to apply to health care the same effective management it had brought to housing policy, executing its program with approximately the ineptitude that one might have expected.

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Piketty’s Absence of Historical Context

Jonah Goldberg writes Mr. Piketty’s Big Book of Marxiness in the July issue of Commentary.

Excerpt:

Of course, America has poor people, though it has relatively few who go hungry because capitalism has failed them. The average poor person in America, in material terms, lives quite well in comparison with a poor person elsewhere in the world or the average American else-when in time. The “actual living conditions of people counted as living ‘in poverty’ in America today,” Nicholas Eberstadt recently explained in the Weekly Standard, “bear very little resemblance to those of Americans enumerated as poor in the first official government count attempted in 1965.” He continued:

By 2011, for example, average per capita housing space for people in poverty was higher than the U.S. average for 1980, and crowding (more than one person per room) was less common for the 2011 poor than for the nonpoor in 1970. More than three-quarters of the 2011 poor had access to one or more motor vehicles, whereas nearly three-fifths were without an auto in 1972–73. Refrigerators, dishwashers, washers and dryers, and many other appliances were more common in officially impoverished homes in 2011 than in the typical American home of 1980 or earlier. Microwaves were virtually universal in poor homes in 2011, and DVD players, personal computers, and home Internet access are now typical in them—amenities not even the richest U.S. households could avail themselves of at the start of the War on Poverty.  Further, Americans counted as poor today are manifestly healthier, better nourished (or overnourished), and more schooled than their predecessors half a century ago.

That is the sort of historical context one would expect from an economist who claims to be interested in historical context. There’s nothing like that here. Instead, Piketty glibly segues from the South African strikers to the 1886 Haymarket Square riots in Chicago, asking: “Does this kind of violent clash between capital and labor belong to the past, or will it be an integral part of twenty-first century history?”